10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2015

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-36642

VIVINT SOLAR, INC.

(Exact name of Registrant as specified in its Charter)

Delaware	45-5605880
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3301 N. Thanksgiving Way, Suite 500

Lehi, UT

84043

(Address of principal executive offices) (Zip Code)

(877) 404-4129

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, Par Value $0.01 Per Share; Common stock traded on the New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    YES  ¨     NO  x

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.    YES  ¨    NO  x

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES  x     NO  ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).    YES  x     NO  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨ (Do not check if a small reporting company)	Small reporting company	¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     YES  ¨     NO  x

As of June 30, 2015, the last business day of the registrant’s most recently completed second quarter, the aggregate market value of voting stock held by non-affiliates of the registrant based on the closing price of $12.17 for shares of the registrant’s common stock as reported by the New York Stock Exchange, was approximately $264.1 million.

As of March 2, 2016, there were 106,595,407 shares of registrant’s common stock outstanding.

Portions of the Registrant’s Definitive Proxy Statement relating to the Annual Meeting of Shareholders, scheduled to be held on June 6, 2016, are incorporated by reference into Part III of this report.

Table of Contents

		Page
PART I
Item 1.	Business	1
Item 1A.	Risk Factors	35
Item 1B.	Unresolved Staff Comments	35
Item 2.	Properties	36
Item 3.	Legal Proceedings	36
Item 4.	Mine Safety Disclosures	37
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	38
Item 6.	Selected Financial Data	39
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	41
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	67
Item 8.	Financial Statements and Supplementary Data	68
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	110
Item 9A.	Controls and Procedures	110
Item 9B.	Other Information	111
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	112
Item 11.	Executive Compensation	112
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	112
Item 13.	Certain Relationships and Related Transactions, and Director Independence	112
Item 14.	Principal Accounting Fees and Services	112
PART IV
Item 15.	Exhibits, Financial Statement Schedules	113

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PART I

Forward-looking Statements

This report, including the sections entitled “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and certain information incorporated by reference into this report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are identified by words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “will,” “may,” “seek” and other similar expressions. You should read these statements carefully because they discuss future expectations, contain projections of future results of operations or financial condition or state other “forward-looking” information. These statements relate to our future plans, objectives, expectations, intentions and financial performance and the assumptions that underlie these statements.

These forward-looking statements include, but are not limited to:

· federal, state and local regulations and policies governing the electric utility industry;

· the regulatory regime for our offerings and for third-party owned solar energy systems;

· technical limitations imposed by operators of the power grid;

· the continuation of tax rebates, credits and incentives, including changes to the rates of the income tax credit, or ITC, beginning in 2020;

· the price of utility-generated electricity and electricity from other sources;

· our ability to finance the installation of solar energy systems;

· our ability to efficiently install and interconnect solar energy systems to the power grid;

· our ability to sustain and manage growth and costs;

· our ability to further penetrate existing markets, expand into new markets and expand into markets for non-residential solar energy systems, such as the commercial and industrial market, or C&I;

· our ability to develop new product offerings and distribution channels;

· our relationship with our sister company Vivint Inc., or Vivint, and The Blackstone Group L.P., our sponsor;

· our ability to manage our supply chain;

· the cost of solar panels and the residual value of solar panels after the expiration of our customer contracts;

· the course and outcome of litigation and other disputes; and

· our ability to maintain our brand and protect our intellectual property.

In combination with the risk factors we have identified, we cannot assure you that the forward-looking statements in this report will prove to be accurate. Further, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all, or as predictions of future events. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Item 1. Business.

BUSINESS

Overview

We primarily offer distributed solar energy — electricity generated by a solar energy system installed at or near customers’ locations — to residential customers based on 20-year contracts at prices below their current utility rates. Our customers pay little to no money upfront, and typically save 20% to 40% on solar-generated electricity rates relative to utility-generated electricity rates following system interconnection to the power grid and continue to benefit from locked-in energy prices over the term of their contracts, insulating them against unpredictable increases in utility rates. In 2015, we began offering our customers the option to purchase solar energy systems.

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Our 20-year customer contracts generate predictable, recurring cash flows and establish a long-term relationship with homeowners. Through our investment funds, we own an interest in the solar energy systems we install and ownership of the solar energy systems allows us and the other fund investors to benefit from various local, state and federal incentives. We obtain financing based on these cash flows and incentives. When customers decide to move or sell the home prior to the end of their contract term, the customer contracts allow our customers to transfer their obligations to the new home buyer, subject to a creditworthiness determination. If the home buyer is not creditworthy or does not wish to assume the customer’s obligations, the contract allows us to require the customer to purchase the system. Our sources of financing are used to offset our direct installation costs and most, if not all, of our allocated overhead expenses.

From our inception in May 2011 through December 31, 2015, we have experienced rapid growth, installing solar energy systems with an aggregate of 458.9 megawatts of capacity at more than 68,500 homes in 12 states for an average solar energy system capacity of approximately 6.7 kilowatts. According to GTM Research, an industry research firm, we were the second largest installer of solar energy systems to the U.S. residential market in 2015, capturing approximately 11% market share in the third quarter of 2015, down from approximately 16% in the third quarter of 2014. We attribute the decrease in market share to distractions from the proposed SunEdison acquisition and increased competition in the residential solar market. We believe the key ingredients to our growth include the following:

· High growth industry. The market for residential distributed solar energy is growing rapidly and disrupting the traditional electricity market. According to GTM Research, the U.S. residential solar energy market is expected to grow at a compound annual growth rate, or CAGR, of approximately 19% from 2015 through 2020.

· Differentiated and scalable platform. We have developed an integrated approach to providing residential distributed solar energy where we fully control the lifecycle of our customers’ experience including the initial professional consultation, design and engineering process, installation and ongoing monitoring and service. We deploy our sales force on a neighborhood-by-neighborhood basis, which allows us to cultivate a geographically concentrated customer base that reduces our costs and increases our operating efficiency. We couple this model with repeatable and scalable processes to establish warehouse facilities, assemble and train sales and installation teams and open new offices. We believe that our processes enable us to expand within existing markets and into new markets. We also believe that our direct sales model and integrated approach represent a differentiated platform, unique in the industry that accelerates our growth by maximizing sales effectiveness, delivering high levels of customer satisfaction and driving cost efficiency.

· Long-term, highly visible, recurring cash flow. The majority of our customers sign 20-year contracts for solar electricity generated by the system owned by us and pay us directly over the term of their contracts. These customer contracts generate recurring monthly customer payments. As of December 31, 2015, the average estimated nominal contracted payment for our customer contracts was approximately $28,500, and there is the potential for additional payments if customers choose to renew their contracts at the end of the term. The solar energy systems we install are eligible for ITCs, accelerated tax depreciation and other utility and governmental incentives. We have historically financed the assets created by substantially all of these contracts through investment funds.

As of February 29, 2016, we had raised 16 residential investment funds to which investors such as banks have committed to invest approximately $1.1 billion which will enable us to install solar energy systems of total fair market value approximating $2.6 billion. As of February 29, 2016, we had remaining tax equity commitments to fund approximately 55 megawatts of future deployments, which we estimate to be sufficient to fund solar energy systems with a total fair market value of approximately $241 million.

Our Approach

We secure financing that enables our customers to access solar energy for little to no upfront cost to them. The key elements of our integrated approach to providing distributed solar energy include:

· Professional consultation. We deploy our direct-to-home sales force to provide in-person professional consultations to prospective customers to evaluate the feasibility of installing a solar energy system at their residence. Our sales closing and referral rates are enhanced by homeowners’ responsiveness to our direct-to-home, neighborhood-by-neighborhood outreach strategy.

· Design and engineering. We have developed a process that enables us to design and install a custom solar energy system that delivers customer savings. This process, which incorporates proprietary software, standardized templates and data derived from on-site surveys, allows us to design each system to comply with complex and varied state and local regulations and optimize system performance on a per panel basis. We continue to pursue technology innovation to integrate accurate system design into the initial in-person sales consultation as a competitive tool to enhance the customer

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experience and increase sales close rates. For example, in 2015 we released our internal-use SunEye 360 site survey and system design tool that improves the accuracy of our solar energy generation estimates and decreases the number of homes where our personnel need to get on the roof for pre-installation measurements, which reduces the invasiveness of these initial processes on the customer experience.  

· Installation. We are a licensed contractor in the markets we serve and are responsible for each customer installation. Once we complete the system design, we obtain the necessary building permits and begin installation. Upon completion, we schedule the required inspections and arrange for interconnection to the power grid. By directly handling these logistics, we control quality and streamline the system installation process for our customers. Throughout this process, we apprise our customers of the project status with regular updates from our account representatives.

· Monitoring and service. We monitor the performance of our solar energy systems, leveraging a combination of internally developed solutions as well as capabilities provided by our suppliers. Our systems use communication gateways and monitoring services to collect performance data and we use this data to ensure that we deliver quality operations and maintenance services for our solar energy systems. If services are required, our strong local presence enables rapid response times.

· Referrals. We believe our commitment to delivering customer satisfaction and our concentrated geographic deployment strategy have generated a significant amount of sales through customer referrals, which increase our neighborhood penetration rates, lower our customer acquisition costs and drive our growth. Our financial returns also benefit from the cost savings derived from increasing the density of installations in a neighborhood.

Our Strategy

Our goal is to become the premier provider of distributed solar energy. Key elements of our strategy include:

· Further penetrating our existing markets. While we have chosen to initially introduce our solar energy systems in states whose utility prices, sun exposure, climate conditions and regulatory policies provide for the most compelling market for distributed solar energy, we believe that many of those states are still significantly underpenetrated. Accordingly, we intend to increase our presence in many of these markets by introducing our solar energy systems into new neighborhoods and communities in states in which we already have operations. We intend to leverage our existing customer base to grow in these markets at lower customer acquisition and installation costs relative to our competitors. In addition, we have complemented our existing go-to-market strategy with outright sales of solar energy systems.

· Expanding into new locations and commercial markets. To enlarge our addressable market, we plan to expand our presence to new states and we have entered the C&I market, which includes small businesses such as community retailers as well as larger retailers and manufacturers. We plan to pursue similar debt, equity and other financing strategies consistent with our approach in the residential market, including creating investment funds, to help finance our C&I operations. In May 2015, we entered into a C&I solar investment fund arrangement with a fund investor. As of December 31, 2015, we have contracts in place with commercial off-takers but no projects have been accepted into the fund. The development cycle of C&I projects is typically longer than the development of residential solar energy systems due to complexities associated with larger system sizes and installations. The project approval process by the fund investor has been delayed due to uncertainty related to the proposed SunEdison acquisition.

· Capitalizing on opportunities to increase sales and lower costs. We intend to capitalize on our opportunities to increase sales and lower costs through internal development initiatives and alternative financing structures. We plan to make additional investments in new technologies related to our system design and installation and ongoing customer service practices. Such investments will enable us to continue to improve our operating efficiency, cost structure and customer satisfaction.

· Building and leveraging strategic relationships. We plan to build and leverage strategic relationships with new and existing partners to grow our business and drive cost reductions. For example, in addition to our direct sales channel, we are currently exploring opportunities to sell solar energy systems to customers through a number of distribution channels including relationships with real estate management companies, homebuilders, home improvement stores, large construction, electrical and roofing companies and other third parties that have access to large numbers of potential customers. In February 2016, we entered into an agreement with a real estate management company to install solar on 488 homes in Utah. We expect to enter into other similar agreements with real estate management companies. In addition, we expect to benefit from Blackstone’s network of strategic relationships.

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Customer Contracts

Prior to the first quarter of 2014, all of our long-term contracts were structured as power purchase agreements. In 2014, we began offering legal-form leases to residential customers. In 2015, we began offering contracts whereby customers could purchase solar energy systems with cash or enter into a loan product administered by a third party. Of our over 68,500 cumulative installations through December 31, 2015, approximately 1,300 systems were leased. Through December 31, 2015, a de minimis number were sold; however, we expect installations related to sales to grow in future periods.

In the power purchase agreement structure, we charge customers a fee per kilowatt hour based on the amount of electricity the solar energy system actually produces. In the lease structure, the customer’s monthly payment is fixed based on a calculation that takes into account expected solar energy generation. The lease includes a performance guarantee under which we agree to refund a proportion of the customer payments if the leased solar energy system does not meet the annual guaranteed energy production level. As of December 31, 2015, the average FICO score of our customers was approximately 760. The power purchase agreement and lease terms are typically for 20 years, and all of the prices that we charge to our customers are subject to pre-determined annual fixed percentage price escalations as specified in the customer contract. Since January 2014, substantially all of our customer contracts have included an annual price escalator of 2.9%. Over the term of these agreements, we operate the systems and agree to maintain them in good condition. Customers who buy energy from us under power purchase agreements or lease systems are covered by our workmanship warranty equal to the length of the term of these agreements.

Sales and Marketing

We place our integrated residential solar energy systems through a scalable sales organization that primarily uses a direct-to-home sales model. We believe that a high-touch, customer-focused selling process is important before, during and after the sale of our products to maximize our sales success. The members of our sales force typically reside and work within the market they serve. We also generate a significant amount of sales through customer referrals. We have found that customer referrals increase in relation to our penetration in a particular market and shortly after entering a new market become an increasingly effective way to market our solar energy systems. In addition to direct sales, we sell to customers through our inside sales team and through our retail channel that reaches new customers at kiosks in malls and other locations. We also continue to explore opportunities to sell solar energy systems to customers through a number of other distribution channels, including relationships with real estate management companies, home builders, home improvement stores, large construction, electrical and roofing companies and other third parties that have access to large numbers of potential customers.

We establish a sales office in each market that we enter. A typical sales team may consist of 15 to 20 sales representatives, depending on the sales region, which we refer to as sales managers, and one to two district managers. Sales managers are typically recruited by district managers or through our sales recruiting team. These sales teams are supported by approximately 30 installation technicians and an operations manager. There are also regional managers who generally oversee 10 to 20 sales offices. As of December 31, 2015, we had 66 total sales offices.

Operations and Suppliers

We purchase solar panels directly from multiple manufacturers. During 2015, Trina Solar Limited, Yingli Green Energy Americas, Inc. and JinkoSolar Holding Co., Ltd. accounted for substantially all of our solar photovoltaic module purchases and Enphase Energy, Inc. and SolarEdge Technologies Inc. accounted for substantially all of our inverter purchases. Ecolibrium Solar, EcoFasten Solar and Mounting Systems Inc. accounted for substantially all of our racking purchases. We generally source the other products related to our solar energy systems, such as fasteners, wiring and electrical fittings, through a variety of distributors.

If we fail to develop, maintain and expand our relationships with these or other suppliers, our ability to meet anticipated demand for our solar energy systems may be adversely affected, or we may only be able to offer our systems at higher costs or after delays. If one or more of the suppliers that we rely upon to meet anticipated demand ceases or reduces production due to its financial condition, acquisition by a competitor or otherwise, it may be difficult to quickly identify alternative suppliers or to qualify alternative products on commercially reasonable terms, and our ability to satisfy this demand may be adversely affected.

We screen all suppliers and components based on expected cost, reliability, warranty coverage, ease of installation and other ancillary costs. We typically enter into master contract arrangements with our major suppliers that define the general terms and conditions of our purchases, including warranties, product specifications, indemnities, delivery and other customary terms. We typically purchase solar panels, inverters and racking from our suppliers at then prevailing prices pursuant to purchase orders issued under our master contract arrangements.

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The declining cost of solar panels and the raw materials necessary to manufacture them has been a key driver in the price we charge for electricity and customer adoption of solar energy. According to industry experts, solar panel and raw material prices are not expected to continue to decline at the same rate as they have over the past several years. The resulting prices we pay for components could slow our growth and cause our financial results to suffer. In the past we have purchased virtually all of the solar panels used in our solar energy systems from manufacturers based in China and we expect that our manufacturers will begin to seek lower tariff countries such as Vietnam, Malaysia and Thailand.

As of December 31, 2015, we operated in Arizona, California, Connecticut, Hawaii, Maryland, Massachusetts, New Jersey, New Mexico, New York, Pennsylvania, South Carolina and Utah. Our corporate headquarters are located in Utah. We manage inventory through our local warehouses and maintain a fleet of nearly 900 trucks and other vehicles to support our installers and operations. In 2015, our field teams completed on average approximately 2,730 residential installations per month. Our project management teams simultaneously manage thousands of projects as they move through the stages of engineering, permitting, installation, maintenance and monitoring.

We offer an installation warranty that the solar energy systems under our customer contracts will be free from material defects in design and workmanship for the term of the contract as well as a limited warranty on roof penetrations. We are also obligated to maintain the solar energy systems in good condition for the term of the contract or for a stated period, usually 20 years.

We provide a performance guarantee to our lease customers that requires us to refund money to the lessee if the solar energy system fails to generate the minimum amount of electricity in a given term, as specified in the lease. We compensate customers if their systems produce less energy than the guaranteed amount in any given year by making a payment to customers with under-performing systems. Through December 31, 2015, such compensation has been de minimis. As of December 31, 2015, approximately 1,300 of our systems in service had been leased. As the number of leased systems grows, payments for underperforming systems may increase over time and may vary from period-to-period based on a number of factors, including weather conditions in the areas in which we lease systems, which may adversely impact our results of operations.

We further offer a range of warranties on our solar energy systems to our investment funds. All of our systems feature a workmanship warranty during which we are obligated, at our cost and expense, to correct defects in our installation work, which depending on the particular investment fund, is for periods of five to twenty years. Generally our maintenance obligations to our investment funds do not include the cost of panels, inverters or racking, should such major components require replacement. The cost of such components are borne instead by the applicable investment fund, although we are obligated to install such equipment as part of our services covered by the agreed maintenance services fee. This obligation is satisfied by Vivint Solar Developer, LLC, on behalf of Vivint Solar Provider, LLC, which provides operations and maintenance services to each of our investment funds. As part of Vivint Solar Provider’s operations and maintenance work, we provide a pass-through of the inverter and panel manufacturers’ warranty coverage to our customers, which generally range from 10 to 25 years. We also provide ongoing service and repair during the entire term of the customer relationship, regardless of whether or not such repairs are covered by our or a manufacturer’s warranty. We expect the costs we incur in providing these services will continue to grow as the number of systems in our portfolio increases and as installed solar energy systems age.

Competition

We believe that our primary competitors are the traditional utilities that supply electricity to our potential customers. We compete with these traditional utilities primarily based on price (cents per kilowatt hour), predictability of future prices (by providing pre-determined annual price escalations) and the ease by which customers can switch to electricity generated by our solar energy systems. We believe that we compete favorably with traditional utilities based on these factors in the states where we operate.

We also compete with companies that are not regulated like traditional utilities but that have access to the traditional utility electricity transmission and distribution infrastructure pursuant to state and local pro-competitive and consumer choice policies and with solar companies with business models that are similar to ours, such as SolarCity Corporation and Sunrun Inc. We believe that we compete favorably with these companies; however, in 2015, we experienced a decrease in market share which we attribute to distractions associated with the proposed SunEdison acquisition.

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In addition, we compete with solar companies in the downstream value chain of solar energy. For example, we face competition from purely finance driven organizations that acquire customers and then subcontract out the installation of solar energy systems, from installation businesses that seek financing from external parties, from large construction companies and utilities and increasingly from sophisticated electrical and roofing companies. These distributed energy competitors typically work in contractual arrangements with third parties, leaving the customer in the position of having to deal with different companies for different aspects of their solar energy systems. We believe that we compete favorably with these companies because we offer an integrated approach to residential solar energy systems, which includes in-house sales, financing, engineering, installation, maintenance and monitoring. Many of our competitors offer only a subset of the services we provide. Aside from simple cost efficiency, we offer distinct practical benefits as an all-in-one provider such as providing a single point of contact and accountability for our offerings during the relationship with our customers. Further, we are not dependent on installation subcontractors, enabling us to better scale our business while maintaining quality control.

Technology and Intellectual Property

As of December 31, 2015, we, directly or through our wholly owned subsidiary Vivint Solar Labs (formerly known as Solmetric Corporation) had five patents and 12 pending applications with the U.S. Patent and Trademark Office. These patents and applications relate primarily to shade and site analysis. Our issued patents start expiring in 2026. We intend to file additional patent applications as we innovate through our research and development efforts.

Vivint Solar Labs is our research and development team focused on proprietary photovoltaic installation instruments and software. In February 2015, we decided to discontinue external sales of two of the three main Vivint Solar Labs products, which were at the end of their product life cycles. We will continue selling the PV Analyzer product, which is commercially used in commissioning, auditing, operating, maintaining and troubleshooting issues with photovoltaic systems. We will continue to develop and produce the discontinued products for internal use only.

As part of our strategy, we may expand our technological capabilities through targeted acquisitions such as Solmetric, licensing technology and intellectual property from third parties, joint development relationships with partners and suppliers and other strategic initiatives as we strive to offer the industry’s best operational efficiency, performance prediction, operations and management.

Government Regulation, Policies and Incentives

Government Regulation

We are not regulated as a public utility in the United States under current applicable national, state or other local regulatory regimes where we conduct business.

To operate our systems we obtain interconnection permission from the applicable local primary electric utility. Depending on the size of the solar energy system and local law requirements, interconnection permission is provided by the local utility and us and/or our customer. In almost all cases, interconnection permissions are issued on the basis of a standard process that has been pre-approved by the local public utility commission or other regulatory body with jurisdiction over net metering procedures. We maintain a utility administration function, with primary responsibility for engaging with utilities and ensuring our compliance with interconnection rules.

Our operations are subject to stringent and complex federal, state and local laws, including regulations governing the occupational health and safety of our employees and wage regulations. For example, we are subject to the requirements of the federal Occupational Safety and Health Act, as amended, or OSHA, the U.S. Department of Transportation, or DOT, and comparable state laws that protect and regulate employee health and safety. We strive to maintain compliance with applicable OSHA, DOT and similar government regulations; however, as discussed in the section captioned “Risk Factors—Compliance with occupational safety and health requirements and best practices can be costly, and noncompliance with such requirements may result in potentially significant monetary penalties, operational delays and adverse publicity,” there have been instances in which we experienced workplace accidents and received citations from regulators, resulting in fines. Such instances have not materially impacted our business or relations with our employees.

Government Policies

Net metering is one of several key policies that have enabled the growth of distributed solar in the United States. Net metering allows a homeowner to pay his or her local traditional utility only for their power usage net of production from the solar energy system installed on his or her roof. Where the customer’s utility provides for net metering, the customer typically pays for the net energy used or receives a credit against future bills at the retail rate if more energy is produced than consumed. Homeowners receive credit for the energy that the solar installation exports to the local power grid, and are reimbursed by the utility for net excess

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generation in some utility markets, including some of those in which we operate. Forty-one states, Puerto Rico, the District of Columbia, American Samoa and the U.S. Virgin Islands have adopted some form of net metering law or regulation. According to the U.S. Energy Information Administration, or EIA, the total number of net metered customers in the United States has grown at a CAGR of approximately 90%, from approximately 19,000 households in 2005 to approximately 6,213,130 households in 2014. Net metering programs have been subject to regulatory scrutiny or legislative proposals in Arizona, California, Colorado, Hawaii, Nevada, Puerto Rico, Utah and several other states. Regulators in these states have considered imposing limits on the aggregate capacity of net metering generation, fees on net metering customers, reducing the rate that net metering customers are paid for the power that they deliver back to the grid and allegations that homeowners with net metered solar systems shift the costs of maintaining the electric grid onto non-solar ratepayers. In California, the Public Utilities Commission largely upheld net metering in its current form with full retail compensation for exports, but did impose some additional fees on net metering customers, and will require such customers to take service on time-of-use rates. In 2015, Hawaii’s Public Utilities Commission significantly lowered the rate of compensation paid to net metering customers. In late 2015, the Nevada Public Utilities Commission voted in favor of a plan which limits export compensation to net metering customers and imposed high monthly fees, which greatly reduced the economic benefit to Nevada customers of residential solar. As a result we no longer have a presence in Nevada.

Government Incentives

Federal, state and local government bodies and utilities provide incentives to various parties, including owners, end users, distributors, system integrators and manufacturers of solar energy systems to promote solar energy. These incentives come in various forms, including rebates, tax credits and other financial incentives such as system performance payments, payments for renewable energy credits associated with renewable energy generation and exclusion of solar energy systems from property tax assessments. These incentives enable us to lower the price we charge our customers, helping to catalyze customer acceptance of solar energy as an alternative to utility-provided power.

The Federal government currently offers a 30% ITC under Section 48(a) of the Internal Revenue Code for the installation of certain solar power facilities; legislation was passed in December 2015 which extended this 30% rate until December 31, 2019. The rate will decrease to 26% in 2020 and 22% in 2021. By statute, this tax credit is scheduled to decrease to 10% on January 1, 2022.

The economics of purchasing a solar energy system are also improved by eligibility for accelerated depreciation, also known as the modified accelerated cost recovery system, or MACRS, which allows for the depreciation of equipment according to an accelerated schedule established by the Internal Revenue Service. The acceleration of depreciation creates a valuable tax benefit that reduces the overall cost of the solar energy system and increases the return on investment.

Approximately half of the states in which we operate offer a personal and/or corporate investment or production tax credit for solar energy that is additive to the ITC. Further, most of the states and local jurisdictions have established property tax incentives for renewable energy systems that include exemptions, exclusions, abatements and credits.

Many state governments, traditional utilities, municipal utilities and co-operative utilities offer a rebate or other cash incentive for the installation and operation of a solar energy system or energy efficiency measures. Capital costs or “up-front” rebates provide funds to solar customers or developers or systems owners based on the cost, size or expected production of a customer’s solar energy system. Performance-based incentives provide cash payments to solar customers or a system owner based on the energy generated by the solar energy system during a pre-determined period.

Many states also have adopted procurement requirements for renewable energy production. Twenty-nine states, the District of Columbia and three U.S. territories have adopted a renewable portfolio standard that requires regulated utilities to procure a specified percentage of total electricity delivered to customers in the state from eligible renewable energy sources, such as solar energy systems, by a specified date. To prove compliance with such mandates, utilities usually must surrender solar renewable energy certificates, or SRECs to the applicable authority. Solar energy system owners such as our investment funds often are able to sell SRECs to utilities directly or in SREC markets.

Workforce

As of December 31, 2015, we had a total workforce of 3,685, including 1,750 employees in installation, 831 service providers in sales and marketing, 790 employees in operations, 282 employees in general and administrative and 32 employees in research and development. Our sales and marketing headcount includes 721 active direct sellers. We consider a direct sales person to be active if they completed at least four customer pre-surveys in the prior four weeks. Our operations personnel work primarily in installation, design and account management. Our general and administrative personnel work primarily in finance, business development, capital markets and human resources. None of our service providers are represented by a labor union and we consider relations with our workers to be good.

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Item 1A. Risk Factors

You should carefully consider the following risk factors, together with all of the other information included in this report, including the section of this report captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes. If any of the following risks occurred, it could materially adversely affect our business, financial condition or operating results. This report also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of factors that are described below and elsewhere in this report.

Risk Related to our Proposed Acquisition by SunEdison

SunEdison’s failure to complete the acquisition has affected and may in the future, materially and adversely affect our results of operations and stock price.

On July 20, 2015, we entered into an Agreement and Plan of Merger, or Merger Agreement, as amended by the Amendment to the Agreement and Plan of Merger, dated as of December 9, 2015, with SunEdison, Inc., or SunEdison, a Delaware corporation, and SEV Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of SunEdison, pursuant to which the we were to have been acquired by SunEdison.

We delivered notice to SunEdison on February 26, 2016, and again on March 1, 2016, that, pursuant to the terms of the Merger Agreement, SunEdison was required to cause the closing of the acquisition to occur on February 26, 2016, and remained obligated to cause the closing to occur, given that all conditions to SunEdison’s obligations to close the acquisition in the Merger Agreement were satisfied on February 24, 2016 when (1) our stockholders adopted the Merger Agreement, and (2) the marketing period contemplated by the Merger Agreement related to SunEdison’s financing of the acquisition (which commenced when we delivered all required information to SunEdison on February 11, 2016) terminated on February 21, 2016. SunEdison’s failure to cause the closing within three business days of the delivery of the notices specified in the preceding sentence triggered our right to terminate the Merger Agreement pursuant to Section 7.01(i) thereof.

Moreover, as of SunEdison’s failure to cause the closing to occur on February 26, 2016, SunEdison was in breach of its covenants under Sections 1.02 and 4.05(a) of the Merger Agreement, and such breach resulted in the failure of the conditions set forth in Section 6.02 of the Merger Agreement to be satisfied on such date. SunEdison’s representatives subsequently informed us that SunEdison was unable to cause the closing to occur in the foreseeable future. Since such breach was therefore incurable prior to March 18, 2016, the date on which the Merger Agreement would otherwise terminate, we have the right to terminate the Merger Agreement pursuant to Section 7.01(e) thereof.

As a result of the foregoing and in accordance with and pursuant to our rights under Section 7.01(i) and 7.01(e) of the Merger Agreement, we terminated the Merger Agreement on March 7, 2016. On March 8, 2016, we filed suit in the Court of Chancery State of Delaware against SunEdison and SEV Merger Sub Inc. alleging that SunEdison willfully breached its obligations under the Merger Agreement. While we believe that SunEdison willfully breached its obligations under the Merger Agreement and that our claims have merit and are likely to succeed, the outcomes of lawsuits are inherently unpredictable, and we may be unsuccessful in our claims.

However, SunEdison’s failure to close the acquisition presents significant risks to us, including:

· we will not realize any or all of the potential benefits of the acquisition, including any synergies that could result from combining the resources of us and SunEdison, which could have a negative effect on our stock price;

· we will remain liable for significant transaction costs, including legal, accounting, financial advisory and other costs relating to the transaction;

· the attention of our management and employees has been diverted, and may continue to be diverted, from day-to-day operations as we pursue our remedies under the Merger Agreement;

· our business has been disrupted by customer uncertainty over when or if the acquisition will be completed or customers’ and investors’ perception of us as a standalone company and our business may continue to be affected by the residual impact of these or similar factors;

· under the Merger Agreement, we were subject to certain restrictions on the conduct of our business prior to completing the acquisition, which restrictions have adversely affected our ability to conduct business as we otherwise would have done if we were not subject to these restrictions and our business may continue to be affected by the residual impact of these or similar factors;

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· due to investor uncertainty regarding the acquisition, our ability to raise additional financing was limited, which may adversely affect our ability to raise additional financing in a timely manner or on favorable terms; and 

· our ability to retain current key employees or attract new employees may be harmed by uncertainties associated with our future as a standalone company.

The occurrence, continuation or exacerbation of any of these events individually or in combination could materially and adversely affect our results of operations and stock price.

The announcement and pendency of the acquisition caused disruptions in our business, which has had, and may continue to have, an adverse effect on our business operations and financial results.

During the pendency of the acquisition, we and SunEdison operated independently. Uncertainty about the effect of the acquisition on customers and employees has had, and may continue to have, an adverse effect on us and consequently, may have an adverse effect on our business operations and financial results as a standalone company. During the pendency of the acquisition, current and prospective employees experienced uncertainty about their future with SunEdison, us or the combined company. These uncertainties have impaired, and may continue to impair the ability of us to retain, recruit or motivate key personnel, and may have negatively impacted the productivity of current employees. In addition, due to these uncertainties and to SunEdison’s required approvals, we ceased certain employee actions such as hiring, terminating and reallocating personnel. Our employees and our management teams reallocated significant time to integration efforts. We deferred transitions to key IT systems as a standalone company. We were also caused to defer and delay financing options, including additional acquiring investment funds and debt facilities, which has decreased our operational efficiency and effectiveness. Further, SunEdison withheld approval of power purchase agreement enhancements as a leverage tool, which further decreased our effectiveness in attracting and obtaining prospective customers.

In response to the announcement of the acquisition, and due to uncertainty regarding the closing of the acquisition, our existing or prospective customers or suppliers have or may have:

· delayed, deferred and may cease purchasing products or services from or providing products or services to us;

· delayed or deferred other decisions concerning us; or

· otherwise sought to change the terms on which they do business with us.

These such delays or changes to terms have disrupted, and may continue to disrupt our business and adversely impact our results of operations as we continue to operate as a standalone company.

Risks Related to our Business

We need to enter into substantial additional financing arrangements to facilitate new customers’ access to our solar energy systems, and if financing is not available to us on acceptable terms when needed, our ability to continue to grow our business would be materially adversely impacted.

Our future success depends on our ability to raise capital from third-party investors on competitive terms to help finance the deployment of our solar energy systems. We seek to minimize our cost of capital in order to maintain the price competitiveness of the electricity produced by, or the lease payments for, our solar energy systems. If we are unable to establish new investment funds when needed, or upon desirable terms, to enable our customers’ access to our solar energy systems with little to no upfront cost to them, we may be unable to finance installation of our customers’ systems or our cost of capital could increase, either of which would have a material adverse effect on our business, financial condition, results of operations and prospects. As of February 29, 2016, we had raised 16 residential investment funds to which investors such as banks and other large financial investors have committed to invest approximately $1.1 billion which will enable us to install solar energy systems of total fair market value approximating $2.6 billion. As of February 29, 2016, we had remaining residential tax equity commitments to fund approximately 55 megawatts of future deployments, which we estimate to be sufficient to fund solar energy systems with a total fair market value of approximately $241 million. As of February 29, 2016, we had entered into one C&I investment fund with a total committed capital amount of $150.0 million, however, no projects had been accepted into the investment fund as of February 29, 2016. The contract terms in certain of our investment fund documents impose conditions on our ability to draw on financing commitments from the fund investors, including if an event occurs that could reasonably be expected to have a material adverse effect on the fund or on us. If we do not satisfy such conditions due to events related to our business or a specific investment fund or developments in our industry or otherwise, and as a result we are unable to draw on existing commitments, our inability to draw on such commitments could have a material adverse effect on our business, liquidity, financial condition and prospects. In addition to our inability to draw on the investors' commitments, we mayincur financial penalties for non-performance, including delays in the installation process and interconnection to the power grid of solar energy systems and other factors. Based on the terms of the investment fund agreements, we will either reimburse a

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portion of the fund investor’s capital or pay the fund investor a penalty fee. For the C&I investment fund, we could incur a non-performance fee of up to $3.0 million primarily due to a delay in solar energy systems being interconnected to the power grid.

To meet the capital needs of our growing business, we will need to obtain additional financing from new investors and investors with whom we currently have arrangements. If any of the financial institutions that currently provide financing decide not to invest in the future due to general market conditions, concerns about our business or prospects or any other reason, or decide to invest at levels that are inadequate to support our anticipated needs or materially change the terms under which they are willing to provide future financing, we will need to identify new financial institutions and companies to provide financing and negotiate new financing terms. In addition, the pendency of the SunEdison acquisition and the risks and uncertainties associated with it adversely affected the willingness of parties to enter into financing arrangements with us. This, combined with restrictions under the Merger Agreement on our ability to incur, assume or guarantee any indebtedness, or make any loans or advances to any other person, restricted our ability to raise additional capital during the pendency of the acquisition and our business may continue to be affected by the residual impact of these or similar factors. If we are unable to raise additional capital in a timely manner, our ability to meet our capital needs and fund future growth may be limited.

In the past, we have sometimes been unable to timely establish investment funds in accordance with our plans, due in part to the relatively limited number of investors attracted to such types of funds, competition for such capital and the complexity associated with negotiating the agreements with respect to such funds. Delays in raising financing could cause us to delay expanding in existing markets or entering into new markets and hiring additional personnel in support of our planned growth. Any future delays in capital raising could similarly cause us to delay deployment of a substantial number of solar energy systems for which we have signed power purchase agreements or leases with customers. Our future ability to obtain additional financing depends on banks’ and other financing sources’ continued confidence in our business model and the renewable energy industry as a whole. It could also be impacted by the liquidity needs of such financing sources themselves. We face intense competition from a variety of other companies, technologies and financing structures for such limited investment capital. If we are unable to continue to offer a competitive investment profile, we may lose access to these funds or they may only be available to us on terms that are less favorable than those received by our competitors. For example, if we experience higher customer default rates than we currently experience in our existing investment funds, this could make it more difficult or costly to attract future financing. In our experience, there are a relatively small number of investors that generate sufficient profits and possess the requisite financial sophistication that can benefit from and have significant demand for the tax benefits that our investment funds can provide. Historically, in the distributed solar energy industry, investors have typically been large financial institutions and a few large, profitable corporations. Our ability to raise investment funds is limited by the relatively small number of such investors. Any inability to secure financing could lead us to cancel planned installations, could impair our ability to accept new customers and could increase our borrowing costs, any of which would have a material adverse effect on our business, financial condition, results of operations and prospects.

A material reduction in the retail price of traditional utility-generated electricity or electricity from other sources or other reduction in the cost of such electricity would harm our business, financial condition, results of operations and prospects.

We believe that a significant number of our customers decide to buy solar energy because they want to pay less for electricity than what is offered by the traditional utilities. However, distributed residential solar energy has yet to achieve broad market adoption.

The customer’s decision to choose solar energy may also be affected by the cost of other renewable energy sources. Decreases in the retail prices of electricity from the traditional utilities or from other renewable energy sources would harm our ability to offer competitive pricing and could harm our business. The cost of electricity from traditional utilities could decrease as a result of:

· construction of new power generation plants, including plants utilizing natural gas, nuclear, coal, renewable energy or other generation technologies;

· relief of transmission constraints that enable local centers to generate energy less expensively;

· reductions in the price of natural gas or other fuel sources;

· utility rate adjustment and customer class cost reallocation;

· energy conservation technologies and public initiatives to reduce electricity consumption;

· widespread deployment of existing or development of new or lower-cost energy storage technologies that have the ability to reduce a customer’s average cost of electricity by shifting load to off-peak times; and

· development of new energy generation technologies that provide less expensive energy.

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A reduction in utility electricity costs would make the purchase of electricity under our power purchase agreements or the lease of our solar energy systems less economically attractive. If the cost of energy available from traditional utilities were to decrease due to any of these reasons, or other reasons, we would be at a competitive disadvantage, we may be unable to attract new customers and our growth would be limited.

Electric utility industry policies and regulations may present technical, regulatory and economic barriers to the purchase and use of solar energy systems that may significantly reduce demand for electricity from our solar energy systems.

Federal, state and local government regulations and policies concerning the electric utility industry, utility rate structures, interconnection procedures, and internal policies of electric utilities, heavily influence the market for electricity generation products and services. These regulations and policies often relate to electricity pricing and the interconnection of distributed electricity generation systems to the power grid. Policies and regulations that promote renewable energy and customer-sited energy generation have been challenged by traditional utilities and questioned by those in government and others arguing for less governmental spending and involvement in the energy market. To the extent that such views are reflected in government policy, the changes in such policies and regulations could adversely affect our results of operations, cost of capital and growth prospects.

In the United States, governments and the state public service commissions that determine utility rates continuously modify these regulations and policies. These regulations and policies could result in a significant reduction in the potential demand for electricity from our solar energy systems and could deter customers from entering into contracts with us. In addition, depending on the region, electricity generated by solar energy systems competes most effectively with the most expensive retail rates for electricity from the power grid, rather than the less expensive average price of electricity. Modifications to the utilities’ peak hour pricing policies or rate design, such as to a flat rate, would make our current products less competitive with the price of electricity from the power grid. For example, the California Public Utilities Commission recently issued a decision that will transition residential rates over the next four years from a four-tiered structure to a two-tiered structure, with only a 25% differential between the two rates and a surcharge for very high energy users. It is possible that this change could have the effect of lowering the incentive for residential customers of California’s large investor-owned utilities to reduce their purchases of electricity from their utility by supplying more of their own electricity from solar, and thereby reduce demand for our products. In addition, California is in the process of shifting to a time-of-use rate structure in the coming years. A shift in the timing of peak rates for utility-generated electricity to a time of day when solar energy generation is less efficient could make our solar energy system offerings less competitive and reduce demand for our offerings. The California Public Utilities Commission determined in January of 2016 that net metering customers taking service on the net energy metering (NEM) successor tariff will be required to take service on time-of-use rates. This transition may occur in 2016 for some of our potential customers. In addition, since we are required to obtain interconnection permission for each solar energy system from the local utility, changes in a local utility’s regulations, policies or interconnection process have in the past delayed and in the future could delay or prevent the completion of our solar energy systems. This in turn has delayed and in the future could delay or prevent us from generating revenues from such solar energy systems or cause us to redeploy solar energy systems, adversely impacting our results of operations.

In addition, any changes to government or internal utility regulations and policies that favor electric utilities could reduce our competitiveness and cause a significant reduction in demand for our offerings or increase our costs or the prices we charge our customers. Certain jurisdictions have proposed allowing traditional utilities to assess fees on customers purchasing energy from solar energy systems or have imposed or proposed new charges or rate structures that would disproportionately impact solar energy system customers who utilize net metering, either of which would increase the cost of energy to those customers and could reduce demand for our solar energy systems. For example, the California Public Utilities Commission issued a decision in July 2015 that allowed utilities to impose a minimum $10 monthly bill for residential customers, approved the concept of fixed charges and will permit the utilities to propose such fixed charges again in 2018. A decision issued in January 2016 will allow new interconnection fees and additional nonbypassable charges to be assessed on customers taking service on California’s net metering successor tariff. This will result in monthly charges being imposed on our customers in California. Additionally, certain utilities in Arizona have approved increased rates and charges for net metering customers, and others have proposed doing away with the state’s renewable electricity standard carve-outs for distributed generation as well as the state’s net metering program. These policy changes may negatively impact our customers and affect demand for our solar energy systems, and similar changes to net metering policies may occur in other states. It is also possible that these or other changes could be imposed on our current customers, as well as future customers. Due to the current and expected continued concentration of our solar energy systems in California, any such changes in this market would be particularly harmful to our reputation, customer relations, business, results of operations and future growth in these areas. We may be similarly adversely affected if our business becomes concentrated in other jurisdictions.

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Our business currently depends on the availability of rebates, tax credits and other financial incentives. The expiration, elimination or reduction of these rebates, credits or incentives could adversely impact our business.

Federal, state and local government and regulatory bodies provide for tariff structures and incentives to various parties including owners, end users, distributors, system integrators and manufacturers of solar energy systems to promote solar energy in various forms, including rebates, tax credits and other financial incentives such as system performance payments, renewable energy credits associated with renewable energy generation, exclusion of solar energy systems from property tax assessments and net metering. We rely on these governmental and regulatory programs to finance solar energy system installations, which enables us to lower the price we charge customers for energy from, and to lease, our solar energy systems, helping to catalyze customer acceptance of solar energy with those customers as an alternative to utility-provided power. However, these programs may expire on a particular date, end when the allocated funding is exhausted or be reduced or terminated. These reductions or terminations often occur without warning. For example, the Arizona Department of Revenue recently decided that it will begin to collect property taxes in 2015 on rooftop solar energy systems such as ours. In addition, the financial value of certain incentives decreases over time. For example, the value of solar renewable energy certificates, or SRECs, in a market tends to decrease over time as the supply of SREC-producing solar energy systems installed in that market increases. If we overestimate the future value of these incentives, it could adversely impact our financial results.

The federal government currently offers a 30% investment tax credit, or the ITC, under Section 48(a) of the Internal Revenue Code for the installation of certain solar power facilities; the 30% rate continues until December 31, 2019. By statute, the ITC is scheduled to decrease to 26% for 2020, 22% for 2021 and 10% of the fair market value of a solar energy system on January 1, 2022, and the amounts that fund investors are willing to invest could decrease or we may be required to provide a larger allocation of customer payments to the fund investors as a result of this scheduled decrease. To the extent we have a reduced ability to raise investment funds as a result of this reduction, the rate of growth of installations of our residential solar energy systems could be negatively impacted. The ITC has been a significant driver of the financing supporting the adoption of residential solar energy systems in the United States and its scheduled reduction beginning in 2020, unless modified by an intervening change in law, will significantly impact the attractiveness of solar energy to these investors and could potentially harm our business.

Applicable authorities may adjust or decrease incentives from time to time or include provisions for minimum domestic content requirements or other requirements to qualify for these incentives. Reductions in, eliminations or expirations of or additional application requirements for, governmental incentives could adversely impact our results of operations and ability to compete in our industry by increasing our cost of capital, causing us to increase the prices of our energy and solar energy systems and reducing the size of our addressable market. In addition, this would adversely impact our ability to attract investment partners and to form new investment funds and our ability to offer attractive financing to prospective customers.

We rely on net metering and related policies to offer competitive pricing to our customers in all of our current markets, and changes to net metering policies may significantly reduce demand for electricity from our solar energy systems.

Our business benefits significantly from favorable net metering policies in states in which we operate. Net metering allows a homeowner to pay his or her local electric utility only for their power usage net of production from the solar energy system, transforming the conventional relationship between customers and traditional utilities. Homeowners receive credit for the energy that the solar installation generates in excess of that needed by the home to offset energy usage at times when the solar installation is not generating energy. In states that provide for net metering, the customer typically pays for the net energy used or receives a credit against future bills at the retail rate if more energy is produced by the solar installation than consumed. In some states and utility territories, customers are also reimbursed by the electric utility for net excess generation on a periodic basis.

Forty-one states, Puerto Rico, the District of Columbia, American Samoa and the U.S. Virgin Islands have adopted some form of net metering. Each of the states where we currently serve customers has adopted some form of a net metering policy.

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In recent years, net metering programs have been subject to regulatory scrutiny and legislative proposals in some states, such as Arizona, California, Colorado, Hawaii, Nevada and Utah. In California, for example, after the earlier of July 1, 2017 or the date the applicable investor owned utility reaches its statutory net metering cap, customers will take service on a new net metering successor tariff. The net metering cap is measured based on the nameplate capacity of net metered systems within the applicable utility’s service territory. Currently, the net metering caps for the three large investor-owned utilities are: 617 megawatts for San Diego Gas and Electric Company; 2,240 megawatts for Southern California Edison Company; and 2,409 megawatts for Pacific Gas and Electric Company. As reflected in their January 31, 2016 reports required by statute, these investor-owned utilities have approximately 12%, 35% and 22%, respectively, of capacity remaining under their respective net metering caps. The statute providing the current caps also provides that, once the new net metering rules are effective, there will be no net metering caps applied to these utilities. For the NEM successor tariff, the California Public Utilities Commission largely upheld net metering in its current form with full retail compensation for exports and rejected utility requests to impose extremely high fixed and capacity charges. The Commission did allow the utilities to impose reasonable interconnection fees and some additional charges on customers, and will require such customers to take service on time-of-use rates.

On October 12, 2015, the Hawaii Public Utilities Commission issued an order closing the Hawaiian Electric Company’s net metering program to new participants and replaced this program with two new options for customers to interconnect to the utilities’ electric grids, neither of which provides for compensation for exports at retail electricity rates. Solar advocates have filed suit challenging this order and seeking to enjoin its effectiveness.

In late 2015, the Nevada Public Utilities Commission voted in favor of a plan which limits export compensation to net metering customers to avoided cost rates and imposes high monthly fees on such customers. This order greatly reduced the economic benefit to Nevada customers of residential solar. Solar advocates have filed suit challenging this order. Several other states plan to revisit their net metering policies in the coming years, and the First Circuit Court’s order denying the plaintiff’s requested relief is currently on appeal.

If and when net metering caps in certain jurisdictions are reached while they are still in effect, the value of the credit that customers receive for net metering is significantly reduced, utility rate structures are altered, or fees are imposed on net metering customers, future customers may be unable to recognize the same level of cost savings associated with net metering that current customers enjoy. The absence of favorable net metering policies or of net metering entirely, or the imposition of new charges that only or disproportionately impact customers that use net metering would significantly limit customer demand for our solar energy systems and the electricity they generate and could adversely impact our business, results of operations and future growth. For example, shortly after expanding our operations into Nevada, the state’s primary electric utility reached its net metering cap. As a result, we have suspended operations in Nevada pending revisions to the net metering available in the state.

Technical and regulatory limitations may significantly reduce our ability to sell electricity from our solar energy systems and retain employees in certain markets.

Technical and regulatory limits may curb our growth in certain key markets, which may also reduce our ability to retain employees in those markets. For example, the Federal Energy Regulatory Commission, in promulgating the first form small generator interconnection procedures, recommended limiting customer-sited intermittent generation resources, such as our solar energy systems, to a certain percentage of peak load on a given electrical feeder circuit. Similar limits have been adopted by many states as a de facto standard and could constrain our ability to market to customers in certain geographic areas where the concentration of solar installations exceeds this limit. For example, Hawaiian electric utilities have adopted certain policies that limit distributed electricity generation in parts of their service territories. In the first half of 2014, Hawaii was the second largest market in which we operated as measured by total installations. However, despite legislative and regulatory actions to allow further distributed electricity penetration, these limitations constrained growth of distributed residential solar energy in Hawaii in the second half of 2014 and beyond, and Hawaii has become a less important market to us as a result; which in turn resulted in the loss of employees located in that market that were not willing to relocate. While a recent Hawaii Public Utilities Commission order seeks to streamline the interconnection process, and while our growth in other markets has more than offset the impact of these limitations in Hawaii, if we experienced similar or other limitations on the deployment of solar energy systems, our business, operating results and growth prospects could be materially adversely affected. Furthermore, in certain areas, we benefit from policies that allow for expedited or simplified procedures related to connecting solar energy systems to the power grid. If such procedures are changed or cease to be available, our ability to sell the electricity generated by solar energy systems we install may be adversely impacted. As adoption of solar distributed generation rises along with the commercial operation of utility scale solar generation in key markets such as California, the amount of solar energy being fed into the power grid will surpass the amount planned for relative to the amount of aggregate demand. Some traditional utilities claim that in less than five years, solar generation resources may reach a level capable of producing an over-generation situation, which may require some solar generation resources to be curtailed to maintain operation of the grid. While the prospect of such curtailment is somewhat speculative, the adverse effects of such curtailment without compensation could adversely impact our business, results of operations and future growth.

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We have incurred operating losses and may be unable to achieve or sustain profitability in the future.

We have incurred operating losses since our inception. We incurred net losses of $253.3 million and $165.9 million for the years ended December 31, 2015 and 2014. We expect to continue to incur net losses from operations as we finance the expansion of our operations, expand our installation, engineering, administrative, sales and marketing staffs, and implement internal systems and infrastructure to support our growth. Failure to grow at a sufficient rate to support these investments in personnel, systems and infrastructure, have adversely impacted and in the future could adversely impact our business and results of operations. Our ability to achieve profitability depends on a number of factors, including:

· growing our customer base;

· finding investors willing to invest in our investment funds;

· maintaining and further lowering our cost of capital;

· reducing the time between system installation and interconnection to the power grid, which allows us to begin generating revenue;

· reducing the cost of components for our solar energy systems; and

· reducing our operating costs by optimizing our sales, design and installation processes and supply chain logistics.

Even if we do achieve profitability, we may be unable to sustain or increase our profitability in the future.

The vast majority of our business is conducted primarily using one channel, direct-selling.

Historically, our primary sales channel has been a direct sales model. Recently, we have opened a new retail sales channel and set up an inside sales team as new means of reaching customers. We compete against companies with experience selling solar energy systems to customers through a number of distribution channels, including homebuilders, home improvement stores, large construction, electrical and roofing companies and other third parties and companies that access customers through relationships with third parties in addition to other direct-selling companies. Our less diversified distribution channels may place us at a disadvantage with consumers who prefer to purchase products through these other distribution channels. Additionally, we are experienced in reaching customers efficiently through a direct sale model; however, due to limited experience, acquiring customers through other channels has been slow to develop, leading to less market penetration in these channels. We are also vulnerable to changes in laws related to direct marketing as regulations have limited unsolicited residential sales calls and may impose additional restrictions. If additional laws affecting direct marketing are passed in the markets in which we operate, it would take time to train our sales force to comply with such laws, and we may be exposed to fines or other penalties for violations of such laws. If we fail to compete effectively through our direct-selling efforts or are not successful in executing our strategy to sell our solar energy systems through other channels, our financial condition, results of operations and growth prospects will be adversely affected.

We are highly dependent on our ability to attract, train and retain an effective sales force.

The success of our direct-selling channel efforts depends upon the recruitment, retention and motivation of a large number of sales personnel to compensate for a high turnover rate among sales personnel, which is a common characteristic of a direct-selling business. In order to grow our business, we need to recruit, train and retain sales personnel on a continuing basis. Historically, we have recruited a large portion of our sales personnel from our sister company, Vivint, particularly in California, where a significant portion of our business is concentrated. Pursuant to a non-competition agreement entered into in connection with our initial public offering, we and Vivint have agreed not to solicit for employment any of the other’s employees who primarily manage sales, installation or servicing of the other’s products and services. The commitment not to solicit those employees lasts for 180 days after the employee finishes employment with us or Vivint. In the future, we will need to recruit greater numbers of our sales personnel from other sources and we may be unable to successfully do so. Sales personnel are attracted to direct-selling by competitive earnings opportunities and so direct-sellers typically compete for sales personnel by providing a more competitive earnings opportunity than that offered by the competition. Competitors devote substantial effort to determining the effectiveness of such incentives so that they can invest in incentives that are the most cost effective or produce the best return on incentive. For example, we have historically compensated our sales personnel on a commission basis, based on the size of the solar energy systems they sell. Some sales personnel may prefer a compensation structure that also includes a salary and equity incentive component. We may need to adjust our compensation model to include such components, and these adjustments could adversely impact our operating results and financial performance.

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In addition to our sales compensation model, our ability to recruit, train and retain effective sales personnel could be harmed by additional factors, including:

· the residual impact of uncertainty associated with the termination of the SunEdison acquisition or our future as a standalone company;

· any adverse publicity regarding us, our solar energy systems, our distribution channel or our industry;

· lack of interest in, or the technical failure of, our solar energy systems;

· lack of a compelling product or income opportunity that generates interest for potential new sales personnel, or perception that other product or income opportunities are more attractive;

· any negative public perception of our sales personnel and direct-selling businesses in general;

· any regulatory actions or charges against us or others in our industry;

· general economic and business conditions; and

· potential saturation or maturity levels in a given market which could negatively impact our ability to attract and retain sales personnel in such market.

We are subject to significant competition for the recruitment of sales personnel from other direct-selling companies and from other companies that sell solar energy systems in particular. Furthermore, the regional and district managers of our sales personnel are instrumental in recruiting, retaining and motivating our sales personnel. When managers have elected to leave us and join other companies, the sales personnel they supervise have often left with them. We expect to experience similar attrition in our sales personnel in the future which may impact our results of operations and growth. The impact of such attrition could be particularly acute in those jurisdictions, such as California, where contractual non-competition agreements for service providers are not enforceable or subject to significant limitations.

It is therefore continually necessary to innovate and enhance our direct-selling and service model as well as to recruit and retain new sales personnel. If we are unable to do so, our business will be adversely affected.

We are not currently regulated as an electric utility under applicable law, but we may be subject to regulation as an electric utility in the future.

We are not regulated as a public utility in any of the markets in which we currently operate. As a result, we are not subject to the various federal, state and local standards, restrictions and regulatory requirements applicable to traditional utilities that operate transmission and distribution systems and that have an obligation to serve electric customers within a specified jurisdiction. Any federal, state, or local regulations that cause us to be treated as an electric utility, or to otherwise be subject to a similar regulatory regime of commission-approved operating tariffs, rate limitations, and related mandatory provisions, could place significant restrictions on our ability to operate our business and execute our business plan by prohibiting, restricting or otherwise regulating our sale of electricity. If we were subject to the same state or federal regulatory authorities as electric utilities in the United States or if new regulatory bodies were established to oversee our business in the United States, then our operating costs would materially increase.

Our business depends in part on the regulatory treatment of third-party owned solar energy systems.

Retail sales of electricity by non-utilities such as us face regulatory hurdles in some states and jurisdictions, including states and jurisdictions that we intend to enter where the laws and regulatory policies have not historically embraced competition to the service provided by the incumbent, vertically integrated electric utility. Some of the principal challenges pertain to whether non-customer owned systems qualify for the same levels of rebates or other non-tax incentives available for customer-owned solar energy systems, whether third-party owned systems are eligible at all for these incentives and whether third-party owned systems are eligible for net metering and the associated significant cost savings. Furthermore, in some states and utility territories third parties are limited in the way that they may deliver solar to their customers. In jurisdictions such as Arizona, South Carolina and Utah and in Los Angeles, California, laws have been interpreted to prohibit the sale of electricity pursuant to our standard power purchase agreement, in some cases, leading residential solar energy system providers to use leases in lieu of power purchase agreements. Changes in law, reductions in, eliminations of or additional application requirements for, these benefits could reduce demand for our systems, adversely impact our access to capital and could cause us to increase the price we charge our customers for energy.

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If the Internal Revenue Service or the U.S. Treasury Department makes a determination that the fair market value of our solar energy systems is materially lower than what we have reported in our fund tax returns or cash grant applications, we may have to pay significant amounts to our investment funds, to our fund investors and/or the U.S. government. Such determinations could have a material adverse effect on our business, financial condition and prospects.

We report in our fund tax returns and we and our fund investors claim the ITC based on the fair market value of our solar energy systems. While we are not aware of any audits or results of audits related to our appraisals or fair market value determinations of any of our investment funds by the Internal Revenue Service, or IRS, scrutiny with respect to fair market value determinations has increased industry-wide in recent years. If as part of an examination the IRS were to review the fair market value that we used to establish our basis for claiming ITCs and determine that the ITCs previously claimed should be reduced, we would owe certain of our investment funds or our fund investors an amount equal to 30% of the investor’s share of the difference between the fair market value used to establish our basis for claiming ITCs and the adjusted fair market value determined by the IRS, plus any costs and expenses associated with a challenge to that fair market value, plus a gross up to pay for additional taxes. We could also be subject to tax liabilities, including interest and penalties based on our share of claimed ITCs. To date, we have not been required to make such payments under any of our investment funds.

Our ability to provide solar energy systems to customers on an economically viable basis depends on our ability to finance these systems with fund investors who require particular tax and other benefits.

Substantially all of our solar energy systems installed to date have been eligible for ITCs or U.S. Treasury grants, as well as accelerated depreciation benefits. We have relied on, and will continue to rely on, financing structures that monetize a substantial portion of those benefits and provide financing for our solar energy systems. If, for any reason, we were unable to continue to monetize those benefits through these arrangements, we may be unable to provide solar energy systems for new customers and maintain solar energy systems for new and existing customers on an economically viable basis. The availability of this tax-advantaged financing depends upon many factors, including:

· our ability to compete with other renewable energy companies for the limited number of potential investment fund investors, each of which has limited funds and limited appetite for the tax benefits associated with these financings;

· the state of financial and credit markets;

· changes in the legal or tax risks associated with these financings; and

· non-renewal of these incentives or decreases in the associated benefits.

Solar energy system owners are currently allowed to claim the ITC that is equal to 30% of the system’s eligible tax basis, which is generally the fair market value of the system. By statute, the ITC is scheduled to decrease to 26% for 2020, 22% for 2021 and 10% on January 1, 2022. Moreover, potential fund investors must remain satisfied that the structures we offer qualify for the tax benefits associated with solar energy systems available to these investors, which depends both on the investors’ assessment of tax law and the absence of any unfavorable interpretations of that law. Changes in existing law and interpretations by the IRS and the courts could reduce the willingness of fund investors to invest in funds associated with these solar energy system investments. We cannot assure you that this type of financing will continue to be available to us. Alternatively, new investment fund structures or other financing mechanisms may become available, and if we are unable to take advantage of these fund structures and financing mechanisms it may place us at a competitive disadvantage. If, for any reason, we are unable to finance solar energy systems through tax-advantaged structures or if we are unable to realize or monetize depreciation benefits, or if we are otherwise unable to structure investment funds in ways that are both attractive to investors and allow us to provide desirable pricing to customers, we may no longer be able to provide solar energy systems to new customers on an economically viable basis. This would have a material adverse effect on our business, financial condition, results of operations and prospects.

Rising interest rates could adversely impact our business.

Rising interest rates could have an adverse impact on our business by increasing our cost of capital. The majority of our cash flows to date have been from customer contracts that have been partially monetized under various investment fund structures. One of the components of this monetization is the present value of the payment streams from the customers who enter into these contracts. If the rate of return required by the fund investor rises as a result of a rise in interest rates, the present value of the customer payment stream and the total value that we are able to derive from monetizing the payment stream will each be reduced. Interest rates are at historically low levels. It is likely that interest rates will rise in 2016, which would cause our costs of capital to increase.

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Our investment funds contain arrangements which provide for priority distributions to fund investors until they receive their targeted rates of return. In addition, under the terms of certain of our investment funds, we may be required to make payments to the fund investors if certain tax benefits that are allocated to such fund investors are not realized as expected. Our financial condition may be adversely impacted if a fund is required to make these priority distributions for a longer period than anticipated to achieve the fund investors’ targeted rates of return or if we are required to make any tax-related payments.

Our investment funds contain terms that contractually require the investment funds to make priority distributions to the fund investor, to the extent cash is available, until it achieves its targeted rate of return. The amounts of potential future distributions under these arrangements depends on the amounts and timing of receipt of cash flows into the investment fund, almost all of which is generated from customer payments related to solar energy systems that have been previously purchased (or leased, as applicable) by such fund. If such cash flows are lower than expected, the priority distributions to the investor may continue for longer than initially anticipated. Additionally, certain of our investment funds require that, under certain circumstances, we forego distributions from the fund that we are otherwise contractually entitled to, or make capital contributions to the fund, so that such distributions owed to us, or additional capital contributions made by us, can be redirected to the fund investor such that it achieves the targeted return. For example, as of December 31, 2015, we accrued an estimated $5.2 million capital contribution to reimburse a fund investor a portion of its capital contribution in order to true-up the investor’s expected rate of return primarily due to a delay in solar energy systems being interconnected to the power grid and other factors.

Our fund investors also expect returns partially in the form of tax benefits and, to enable such returns, our investment funds contain terms that contractually require us to make payments to the funds that are then used to make payments to the fund investor in certain circumstances so that the fund investor receives value equivalent to the tax benefits it expected to receive when entering into the transaction. The amounts of potential tax payments under these arrangements depend on the tax benefits that accrue to such investors from the funds’ activities.

Due to uncertainties associated with estimating the timing and amounts of these cash distributions and allocations of tax benefits to such investors, we cannot determine the potential maximum future impact on our cash flows or payments that we could have to make under these arrangements. We may agree to similar terms in the future if market conditions require it. Any significant payments that we may be required to make or distributions to us that are reduced or diverted as a result of these arrangements could adversely affect our financial condition.

We may incur substantially more debt or take other actions that could restrict our ability to pursue our business strategies.

In September 2014, we entered into an aggregation credit facility, which was subsequently amended in February 2015 and November 2015, pursuant to which we may borrow up to an aggregate of $375.0 million and, upon the satisfaction of certain conditions and the approval of the lenders, up to an aggregate of $175.0 million in additional borrowings. In addition, in March 2015, we entered into a revolving credit facility pursuant to which we may borrow up to an aggregate of $131.0 million. In May 2015, certain conditions were satisfied and the aggregate amount of available revolver borrowings was increased to $150.0 million. These credit facilities restrict our ability to dispose of assets, incur indebtedness, incur liens, pay dividends or make other distributions to holders of our capital stock, repurchase our capital stock, make specified investments or engage in transactions with our affiliates. In addition, we do not have full access to the cash and cash equivalents held in our investments funds until distributed per the terms of the arrangements. We and our subsidiaries may incur substantial additional debt in the future and any debt instrument we enter into in the future may contain similar, or more onerous, restrictions. These restrictions could inhibit our ability to pursue our business strategies. Furthermore, if we default on one of our debt instruments, and such event of default is not cured or waived, the lenders could terminate commitments to lend and cause all amounts outstanding with respect to the debt to be due and payable immediately, which in turn could result in cross acceleration under other debt instruments. Our assets and cash flow may not be sufficient to fully repay borrowings under all of our outstanding debt instruments if some or all of these instruments are accelerated upon a default.

Furthermore, there is no assurance that we will be able to enter into new debt instruments on acceptable terms. If we are unable to satisfy financial covenants and other terms under existing or new instruments or obtain waivers or forbearance from our lenders or if we are unable to obtain refinancing or new financings for our working capital, equipment and other needs on acceptable terms if and when needed, our business would be adversely affected.

Our business is concentrated in certain markets, putting us at risk of region specific disruptions.

As of December 31, 2015, approximately 39% of our cumulative installations and total offices were located in California. In addition, we expect future growth to occur in California, which could further concentrate our customer base and operational infrastructure. Accordingly, our business and results of operations are particularly susceptible to adverse economic, regulatory, political, weather and other conditions in California and in other markets that may become similarly concentrated.

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It is difficult to evaluate our business and prospects due to our limited operating history.

Since our formation in 2011, we have focused our efforts exclusively on the sales, financing, engineering, installation, maintenance and monitoring of solar energy systems for residential customers. We may be unsuccessful in significantly broadening our customer base through installation of solar energy systems within our current markets or in new markets we may enter. Our limited operating history, combined with the rapidly evolving and competitive nature of our industry, may not provide an adequate basis for you to evaluate our operating and financial results and business prospects. In addition, we have limited insight into emerging trends that may adversely impact our business, prospects and operating results.

Additionally, due to our limited operating history, we do not have empirical evidence of the effect of our systems on the resale value of our customers’ houses. Due to the length of our customer contracts, the system deployed on a customer’s roof may be outdated prior to the expiration of the term of the customer contract reducing the likelihood of renewal of our contracts at the end of the 20-year term, and possibly increasing the occurrence of defaults. This could have an adverse effect on our business, financial condition, results of operations and cash flow. As a result, our limited operating history may impair our ability to accurately forecast our future performance and to invest accordingly.

We have identified a material weakness in our internal control over financial reporting relating to inadequate financial statement preparation and review procedures in connection with the preparation of our consolidated financial statements that resulted in the restatement of certain of our financial statements, and we may identify material weaknesses in the future.

In connection with the preparation, audits and interim reviews of our consolidated financial statements, we and our independent registered public accounting firm identified a material weakness in internal control over financial reporting. Under standards established by the Public Company Accounting Oversight Board of the United States, a material weakness is a deficiency, or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

We previously reported a material weakness in internal control over financial reporting for the year ended December 31, 2014. This material weakness has not been fully remediated and as a result, for the year ended December 31, 2015, we continued to have deficiencies in our internal controls including those associated with the HLBV method of attributing net income or loss to non-controlling interests and redeemable non-controlling interests and with our financial statement close process.

The nature of our investment funds increases the complexity of our accounting for the allocation of net income (loss) between our stockholders and non-controlling interests under the HLBV method and the calculation of our tax provision. As we enter into additional investment funds, which may have contractual provisions different from those of our existing funds, the calculation under the HLBV method and the calculation of our tax provision could become increasingly complicated. This additional complexity could increase the chance that we experience additional errors in the future, particularly because we have a material weakness in internal controls. In addition, our need to devote our resources to addressing this complexity could delay or prolong our remediation efforts and thereby prolong the existence of the material weakness.

We continue to take steps to remediate the underlying causes of the material weakness that was reported for the year ended December 31, 2014. We have hired a number of additional financial, accounting and tax personnel. In January 2015, we hired a director of internal audit to assist us in implementing and improving our existing internal controls. In February 2015, we hired a chief information officer to assist us in improving our underlying information technology systems and to decrease our reliance on manual processes. We continue to engage third-party consultants to provide support over our accounting and tax processes to assist us with our evaluation of complex technical accounting matters. We continue to engage consultants to advise us on making further improvements to our internal controls over financial reporting. We believe that these additional resources will enable us to broaden the scope and quality of our controls relating to the oversight and review of financial statements and our application of relevant accounting policies. Furthermore, we continue to implement and improve systems to automate certain financial reporting processes and to improve information accuracy. These remediation efforts are still in process and have not yet been completed. Because of this material weakness, there is heightened risk that a material misstatement of our annual or quarterly financial statements will not be prevented or detected.

The actions that we are taking are subject to ongoing senior management review as well as audit committee oversight. We are working diligently on this remediation process; however, we cannot estimate how long it will take to remediate this material weakness. In addition, the remediation steps we have taken, are taking and expect to take may not effectively remediate the material weakness, in which case our internal control over financial reporting would continue to be ineffective. We cannot guarantee that we will be able to complete our remedial actions successfully. Even if we are able to complete these actions successfully, these measures may not adequately address our material weakness. In addition, it is possible that we will discover additional material weaknesses in our internal control over financial reporting or that our existing material weakness will result in additional errors in or restatements of our financial statements.

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If in future periods we determine that this material weakness has not been remediated or we identify other material weaknesses in internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective, which could result in the loss of investor confidence. In addition, to date, the audit of our consolidated financial statements by our independent registered public accounting firm has included a consideration of internal control over financial reporting as a basis of designing their audit procedures, but not for the purpose of expressing an opinion on the effectiveness of our internal controls over financial reporting. When we cease to be an emerging growth company we will be required to have our independent registered accounting firm perform such an evaluation, and additional material weaknesses or other control deficiencies may be identified.

If we are unable to successfully remediate our current material weakness or avoid or remediate any future material weakness, our stock price may be adversely affected and we may be unable to maintain compliance with applicable stock exchange listing requirements.

Expansion into new markets could be costly and time-consuming. Historically, we have only provided our offerings to residential customers, which could put us at a disadvantage relative to companies who also compete in other markets.

We have historically only provided our offerings to residential customers. We compete with companies who sell solar energy systems in the commercial, industrial and government markets, in addition to the residential market. While we have recently entered the commercial and industrial market and we have contracts in place with commercial off-takers, no projects have been initiated as of December 31, 2015. The development cycle of these projects typically has a longer time horizon than the development of residential solar energy systems due to complexities associated with significantly larger system sizes and installations. The project approval process by project customers and our C&I fund investor has been delayed as a result of uncertainty related to the pending acquisition of our company and we may face continued delays following the termination of the Merger Agreement. While we believe that in the future we may have opportunities to expand our operations into other markets, there are no assurances that our design and installation systems will work for non-residential customers or that we will be able to compete successfully with companies with historical presences in such markets or we may not realize the anticipated benefits of entering such markets, and entering new markets has numerous risks, including the following:

· incurring significant costs if we are required to adapt our current or develop new design and installation processes for use in non-residential applications;

· diversion of our management and employees from our core residential business;

· difficulty adapting our current or developing new marketing strategies and sales channels to non-residential customers;

· inability to obtain key customers, brand recognition and market share and compete successfully with companies with historical presences in such markets; and

· inability to achieve the financial and strategic goals for such market.

If we are unable to successfully compete in the commercial and industrial market, our operating results and growth prospects could be materially adversely affected. Additionally, there is intense competition in the residential solar energy market in the markets in which we operate. As new entrants continue to enter into these markets, we may be unable to gain or maintain market share and we may be unable to compete with companies that earn revenue in both the residential market and non-residential markets.

We face competition from traditional regulated electric utilities, from less-regulated third party energy service providers and from new renewable energy companies.

The solar energy and renewable energy industries are both highly competitive and continually evolving as participants strive to distinguish themselves within their markets and compete with large traditional utilities. We believe that our primary competitors are the traditional utilities that supply electricity to our potential customers. Traditional utilities generally have substantially greater financial, technical, operational and other resources than we do. As a result, these competitors may be able to devote more resources to the research, development, promotion and sale of their products or respond more quickly to evolving industry standards and changes in market conditions than we can. Traditional utilities could also offer other value-added products or services that could help them to compete with us even if the cost of electricity they offer is higher than ours. In addition, a majority of utilities’ sources of electricity is non-solar, which may allow utilities to sell electricity more cheaply than electricity generated by our solar energy systems.

We also compete with companies that are not regulated like traditional utilities but that have access to the traditional utility electricity transmission and distribution infrastructure pursuant to state and local pro-competitive and consumer choice policies. These energy service companies are able to offer customers electricity supply-only solutions that are competitive with our solar energy system options on both price and usage of renewable energy technology while avoiding the long-term agreements and physical installations that our current fund-financed business model requires. This may limit our ability to attract new customers, particularly those who wish to avoid long-term contracts or have an aesthetic or other objection to putting solar panels on their roofs.

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We also compete with solar companies with business models that are similar to ours. In addition, we compete with solar companies in the downstream value chain of solar energy. For example, we face competition from purely finance driven organizations that acquire customers and then subcontract out the installation of solar energy systems, from installation businesses that seek financing from external parties, from large construction companies and utilities, and increasingly from sophisticated electrical and roofing companies. Some of these competitors specialize in the residential solar energy market, and some may provide energy at lower costs than we do. Additionally, some of our competitors may offer their products through sales channels that they have more fully developed, such as retail sales. Further, some of our competitors are integrating vertically in order to ensure supply and to control costs. Many of our competitors also have significant brand name recognition and have extensive knowledge of our target markets. For us to remain competitive, we must distinguish ourselves from our competitors by offering an integrated approach that successfully competes with each level of products and services offered by our competitors at various points in the value chain. If our competitors develop an integrated approach similar to ours including sales, financing, engineering, manufacturing, installation, maintenance and monitoring services, this will reduce our marketplace differentiation.

As the solar industry grows and evolves, we will also face new competitors who are not currently in the market. Our industry is characterized by low technological barriers to entry and well-capitalized companies could choose to enter the market and compete with us. Our failure to adapt to changing market conditions and to compete successfully with existing or new competitors will limit our growth and will have a material adverse effect on our business and prospects.

Developments in alternative technologies or improvements in distributed solar energy generation may materially adversely affect demand for our offerings.

Significant developments in alternative technologies, such as advances in other forms of distributed solar power generation, storage solutions such as batteries, the widespread use or adoption of fuel cells for residential or commercial properties or improvements in other forms of centralized power production may materially and adversely affect our business and prospects in ways we do not currently anticipate. Any failure by us to adopt new or enhanced technologies or processes, or to react to changes in existing technologies, could materially delay deployment of our solar energy systems, which could result in product obsolescence, the loss of competitiveness of our systems, decreased revenue and a loss of market share to competitors.

A failure to hire and retain a sufficient number of employees in key functions would constrain our growth and our ability to timely complete our customers’ projects.

To support our growth, we need to hire, train, deploy, manage and retain a substantial number of skilled installers and electricians in the relevant markets. Competition for qualified personnel in our industry has increased substantially and we expect it to continue to do so, particularly for skilled electricians and other personnel involved in the installation of solar energy systems. We also compete with the homebuilding and construction industries for skilled labor. As these industries seek to hire additional workers, our cost of labor may increase. Companies with whom we compete to hire installers may offer compensation or incentive plans that certain installers may view as more favorable. We periodically assess the compensation plans and policies for our service providers, including our installers and electricians, and, if deemed necessary, may decide to revise those plans and policies. Our installers and electricians may not react well to any such revisions, which in turn could adversely affect retention, motivation and productivity.

Furthermore, trained installers are typically able to more efficiently install solar energy systems. Shortages of skilled labor could significantly delay installations or otherwise increase our costs. While we do not currently have any unionized employees, we have expanded, and may continue to expand, into areas such as the Northeast, where labor unions are more prevalent. The unionization of our labor force could also increase our labor costs. In addition, a significant portion of our business has been concentrated in states such as California, where market conditions are particularly favorable to distributed solar energy generation. We have experienced and may in the future experience greater than expected turnover in our installers in those jurisdictions which would adversely impact the geographic mix of new solar energy system installations.

Because we are a licensed electrical contractor in every jurisdiction in which we operate, we are required to employ licensed electricians. As we expand into new markets, we are required to hire and/or contract with seasoned licensed electricians in order for us to qualify for the requisite state and local licenses. Because of the high demand for these seasoned licensed electricians, these individuals currently or in the future may demand greater compensation. In addition, our inability to attract and retain these qualifying electricians may adversely impact our ability to continue operations in current markets or expand into new areas.

If we cannot meet our hiring, retention and efficiency goals, we may be unable to complete our customers’ projects on time, in an acceptable manner or at all. Any significant failures in this regard would materially impair our growth, reputation, business and financial results. If we are required to pay higher compensation than we anticipate, these greater expenses may also adversely impact our financial results and the growth of our business.

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We depend on a limited number of suppliers of solar energy system components and technologies to adequately meet anticipated demand for our solar energy systems. Due to the limited number of suppliers in our industry, the acquisition of any of these suppliers by a competitor or any shortage, delay, price change, imposition of tariffs or duties or other limitation in our ability to obtain components or technologies we use could result in sales and installation delays, cancellations and loss of market share.

We purchase solar panels, inverters and other system components from a limited number of suppliers, making us susceptible to quality issues, shortages and price changes. In 2015, Trina Solar Limited, Yingli Green Energy Americas, Inc. and JinkoSolar Holding Co., Ltd. accounted for substantially all of our solar photovoltaic module purchases and Enphase Energy, Inc. and SolarEdge Technologies Inc. accounted for substantially all of our inverter purchases. If we fail to develop, maintain and expand our relationships with these or other suppliers, our ability to adequately meet anticipated demand for our solar energy systems may be adversely affected, or we may only be able to offer our systems at higher costs or after delays. If one or more of the suppliers that we rely upon to meet anticipated demand ceases or reduces production due to its financial condition, acquisition by a competitor or otherwise, is unable to increase production as industry demand increases or is otherwise unable to allocate sufficient production to us, it may be difficult to quickly identify alternative suppliers or to qualify alternative products on commercially reasonable terms, and our ability to satisfy this demand may be adversely affected. There are a limited number of suppliers of solar energy system components and technologies. While we believe there are other sources of supply for these products available, transitioning to a new supplier may result in additional costs and delays in acquiring our solar products and deploying our systems. These issues could harm our business or financial performance.

In addition, the acquisition of a component supplier or technology provider by one of our competitors could limit our access to such components or technologies and require significant redesigns of our solar energy systems or installation procedures and have a material adverse effect on our business. For example, one of our competitors acquired Zep Solar, Inc., or Zep, in 2013. Zep sold us virtually all of the racking systems used in our hardware in 2013, and the resulting limitation in our ability to acquire Zep products required us to redesign certain aspects of our systems to accommodate alternative racking hardware. In addition, some of our investment funds require the use of designated equipment, and our inability to obtain any such required equipment could limit our ability to finance solar energy systems that we intend to place in those funds.

There have also been periods of industry-wide shortages of key components, including solar panels, in times of rapid industry growth. The manufacturing infrastructure for some of these components has a long lead-time, requires significant capital investment and relies on the continued availability of key commodity materials, potentially resulting in an inability to meet demand for these components. The solar industry is currently experiencing rapid growth and, as a result, shortages of key components, including solar panels, may be more likely to occur, which in turn may result in price increases for such components. Even if industry-wide shortages do not occur, suppliers may decide to allocate key components with high demand or insufficient production capacity to more profitable customers, customers with long-term supply agreements or customers other than us and our supply of such components may be reduced as a result.

Historically, we purchased the components for our solar energy systems on an as-needed basis and did not operate under long-term supply agreements. Recently, we have entered into multi-year agreements with certain of our major suppliers. These agreements are denominated in U.S. dollars. Since our revenue is also generated in U.S. dollars we are mostly insulated from currency fluctuations. However, since our suppliers often incur a significant amount of their costs by purchasing raw materials and generating operating expenses in foreign currencies, if the value of the U.S. dollar depreciates significantly or for a prolonged period of time against these other currencies this may cause our suppliers to raise the prices they charge us, which could harm our financial results. Since we purchase almost all of the solar photovoltaic modules we use from China, we are particularly exposed to exchange rate risk from increases in the value of the Chinese Renminbi. In addition, the U.S. government has imposed tariffs on solar cells produced and assembled in China and Taiwan. These tariffs, and any tariffs or duties, or shortages, delays, price changes or other limitation in our ability to obtain components or technologies we use could limit our growth, cause cancellations or adversely affect our profitability, and result in loss of market share and damage to our brand. Further, certain of these multi-year agreements require us to make minimum volume purchases on a quarterly basis. As of December 31, 2015, we have met these minimum purchase requirements. However, if we fail to meet such minimum purchases in the future, we may be required to make additional payments or breach our contracts, which could adversely affect our results of operations and damage our relationships with these suppliers.

Our operating results may fluctuate from quarter to quarter and year to year, which could make our future performance difficult to predict and could cause our operating results for a particular period to fall below expectations, resulting in a severe decline in the price of our common stock.

Our quarterly and annual operating results are difficult to predict and may fluctuate significantly in the future. We have experienced seasonal and quarterly fluctuations in the past. However, given that we are in a rapidly growing industry, the true extent of these fluctuations may have been masked by our recent growth rates and thus may not be readily apparent from our historical operating results and may be difficult to predict. For example, the amount of revenue we recognize in a given period from our customer contracts is dependent in part on the amount of energy generated by solar energy systems under such contracts. As a result,

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revenue derived from power purchase agreements is impacted by seasonally shorter daylight hours in winter months. In addition, our ability to install solar energy systems is impacted by weather, as for example during the winter months in the Northeastern United States. Such delays can impact the timing of when we can install and begin to generate revenue from solar energy systems. As such, our past quarterly operating results may not be good indicators of future performance.

In addition to the other risks described in this “Risk Factors” section, the following factors could cause our operating results to fluctuate:

· the expiration or initiation of any rebates or incentives;

· significant fluctuations in customer demand for our offerings;

· our ability to complete installations in a timely manner;

· the availability and costs of suitable financing;

· the amount and timing of sales of SRECs;

· our ability to continue to expand our operations, and the amount and timing of expenditures related to this expansion;

· actual or anticipated changes in our growth rate relative to our competitors;

· announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital-raising activities or commitments;

· changes in our pricing policies or terms or those of our competitors, including traditional utilities; and

· actual or anticipated developments in our competitors’ businesses or the competitive landscape.

For these or other reasons, the results of any prior quarterly or annual periods should not be relied upon as indications of our future performance. In addition, our actual revenue, key operating metrics and other operating results in future periods may fall short of the expectations of investors and financial analysts, which could have an adverse effect on the trading price of our common stock.

Our business has benefited from the declining cost of solar panels, and our financial results may be harmed now that the cost of solar panels has stabilized and could increase in the future.

The declining cost of solar panels and the raw materials necessary to manufacture them has been a key driver in the price we charge for electricity and customer adoption of solar energy. According to industry experts, solar panel and raw material prices are not expected to continue to decline at the same rate as they have over the past several years. In addition, growth in the solar industry and the resulting increase in demand for solar panels and the raw materials necessary to manufacture them may also put upward pressure on prices. These resulting prices could slow our growth and cause our financial results to suffer. In addition, in the past we have purchased virtually all of the solar panels used in our solar energy systems from manufacturers based in China which have benefited from favorable governmental policies by the Chinese government. If this governmental support were to decrease or be eliminated, our ability to purchase these products on competitive terms or to access specialized technologies from China could be restricted.

Even if this support were to continue, the U.S. government could impose additional tariffs on solar cells manufactured in China. In 2014, the U.S. government broadened its investigation of Chinese pricing practices in this area to include solar panels and modules produced in China containing solar cells manufactured in other countries. In July 2015, the U.S. government announced antidumping duties ranging from 9.67% to 238.95% on imports of the majority of solar panels made in China, and, in December 2014, rates ranging from 11.5% to 27.6% on imported solar cells made in Taiwan. Countervailing duties ranging from 15.43% to 49.8% for Chinese modules have also been announced, and in July 2015 were set at 20.94% for most Chinese modules. In January 2015, the antidumping duties were confirmed by a determination of the U.S. International Trade Commission that material harm to the U.S. solar industry had occurred. These combined tariffs would make such solar cells less competitively priced in the United States, and the Chinese and Taiwanese manufacturers may choose to limit the amount of solar equipment they sell into the United States. As a result, it may be easier for solar cell manufacturers located outside of China or Taiwan to increase the prices of the solar cells they sell into the United States. If we are required to pay higher prices, accept less favorable terms or purchase solar panels or other system components from alternative, higher-priced sources, our financial results will be adversely affected.

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The residual value of our solar energy systems at the end of the associated term of the lease or power purchase agreement may be lower than projected today and adversely affect our financial performance and valuation.

We intend to amortize the costs of our solar energy systems over a 30-year estimated useful life, which exceeds the period of the component warranties and the corresponding payment streams from our contracts with our customers. If we incur repair and maintenance costs on these systems after the warranties have expired, and if they then fail or malfunction, we will be liable for the expense of repairing these systems without a chance of recovery from our suppliers. We are also contractually obligated to remove, store and reinstall the solar energy systems for a nominal fee if customers need to replace or repair their roofs. The nominal fee is market standard; however, it may not cover our costs to remove, store and reinstall the solar energy systems. In addition, we typically bear the cost of removing the solar energy systems at the end of the term of the customer contract if the customer does not renew his or her contract at the end of its term. Furthermore, it is difficult to predict how future environmental regulations may affect the costs associated with the removal, disposal or recycling of our solar energy systems. If the residual value of the systems is less than we expect at the end of the customer contract, after giving effect to any associated removal and redeployment costs, we may be required to accelerate all or some of the remaining unamortized costs. This could materially impair our future operating results and estimated retained value.

We act as the licensed general contractor for our customers and are subject to risks associated with construction, cost overruns, delays, regulatory compliance and other contingencies, any of which could have a material adverse effect on our business and results of operations.

We are a licensed contractor in every market we service and we are responsible for every customer installation. We are the general contractor, electrician, construction manager and installer for all our solar energy systems. We may be liable to customers for any damage we cause to their home, belongings or property during the installation of our systems. For example, we penetrate our customers’ roofs during the installation process and may incur liability for the failure to adequately weatherproof such penetrations following the completion of installation of solar energy systems. In addition, because the solar energy systems we deploy are high-voltage energy systems, we may incur liability for the failure to comply with electrical standards and manufacturer recommendations. Furthermore, prior to obtaining permission to operate our solar energy systems, the systems must pass various inspections. Any delay in passing, or inability to pass, such inspections, would adversely affect our results of operations. Because our profit on a particular installation is based in part on assumptions as to the cost of such project, cost overruns, delays or other execution issues may cause us to not achieve our expected results or cover our costs for that project.

In addition, the installation of solar energy systems is subject to oversight and regulation in accordance with national, state and local laws and ordinances relating to building, fire and electrical codes, safety, environmental protection, utility interconnection and metering, and related matters. We also rely on certain of our employees to maintain professional licenses in many of the jurisdictions in which we operate, and our failure to employ properly licensed personnel could adversely affect our licensing status in those jurisdictions. It is difficult and costly to track the requirements of every authority having jurisdiction over our operations and our solar energy systems. Any new government regulations or utility policies pertaining to our systems, or changes to existing government regulations or utility policies pertaining to our systems, may result in significant additional expenses to us and our customers and, as a result, could cause a significant reduction in demand for our systems.

Compliance with occupational safety and health requirements and best practices can be costly, and noncompliance with such requirements may result in potentially significant monetary penalties, operational delays and adverse publicity.

The installation of solar energy systems requires our employees to work at heights with complicated and potentially dangerous electrical systems and at potentially high temperatures. The evaluation and modification of buildings as part of the installation process requires our employees to work in locations that may contain potentially dangerous levels of asbestos, lead, mold or other materials known or believed to be hazardous to human health. We also maintain a fleet of nearly 900 trucks and other vehicles to support our installers and operations. There is substantial risk of serious injury or death if proper safety procedures are not followed. Our operations are subject to regulation under the U.S. Occupational Safety and Health Act, or OSHA, the U.S. Department of Transportation, or DOT, and equivalent state laws. Changes to OSHA, DOT or state requirements, or stricter interpretation or enforcement of existing laws or regulations, could result in increased costs. If we fail to comply with applicable OSHA regulations, even if no work-related serious injury or death occurs, we may be subject to civil or criminal enforcement and be required to pay substantial penalties, incur significant capital expenditures or suspend or limit operations. While we have not experienced a high level of injuries to date, we could be exposed to increased liability in the future. In the past, we have had workplace accidents and received citations from OSHA regulators for alleged safety violations, resulting in fines. Any such accidents, citations, violations, injuries or failure to comply with industry best practices may subject us to adverse publicity, damage our reputation and competitive position and adversely affect our business.

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Problems with product quality or performance may cause us to incur expenses, may lower the residual value of our solar energy systems and may damage our market reputation and adversely affect our financial results.

We agree to maintain the solar energy systems installed on our customers’ homes during the length of the term of our customer contracts, which is typically 20 years. We are exposed to any liabilities arising from the systems’ failure to operate properly and are generally under an obligation to ensure that each system remains in good condition during the term of the agreement. As part of our operations and maintenance work, we provide a pass-through of the inverter and panel manufacturers’ warranty coverage to our customers, which generally range from 10 to 25 years. One or more of these third-party manufacturers could cease operations and no longer honor these warranties, leaving us to fulfill these potential obligations to our customers or to our fund investors without underlying warranty coverage. We, either ourselves or through our investment funds, bear the cost of such major equipment. Even if the investment fund bears the direct expense of such replacement equipment, we could suffer financial losses associated with a loss of production from the solar energy systems.

Beginning in 2014, we began structuring some customer contracts as solar energy system leases. To be competitive in the market and to comply with the requirements of jurisdictions where we offer leases, our solar energy system leases contain a performance guarantee in favor of the lessee. Leases with performance guarantees require us to refund money to the lessee if the solar energy system fails to generate a stated minimum amount of electricity in a 12-month period. We may also suffer financial losses associated with such refunds if significant performance guarantee payments are triggered.

Our failure to accurately predict future liabilities related to material quality or performance expenses could result in unexpected volatility in our financial condition. Because of the limited operating history of our solar energy systems, we have been required to make assumptions and apply judgments regarding a number of factors, including our anticipated rate of warranty claims, and the durability, performance and reliability of our solar energy systems. We have made these assumptions based on the historic performance of similar systems or on accelerated life cycle testing. Our assumptions could prove to be materially different from the actual performance of our systems, causing us to incur substantial expense to repair or replace defective solar energy systems in the future or to compensate customers for systems that do not meet their performance guarantees. Equipment defects, serial defects or operational deficiencies also would reduce our revenue from customer contracts because the customer payments under such agreements are dependent on system production or would require us to make refunds under performance guarantees. Any widespread product failures or operating deficiencies may damage our market reputation and adversely impact our financial results.

We are responsible for providing maintenance, repair and billing on solar energy systems that are owned or leased by our investment funds on a fixed fee basis, and our financial performance could be adversely affected if our cost of providing such services is higher than we project.

We typically provide a workmanship warranty for periods of five to 20 years to our investment funds for every system we sell to them. We are also generally contractually obligated to cover the cost of maintenance, repair and billing on any solar energy systems that we sell or lease to our investment funds. We are subject to a maintenance services agreement under which we are required to operate and maintain the system, and perform customer billing services for a fixed fee that is calculated to cover our future expected maintenance and servicing costs of the solar energy systems in each investment fund over the term of the lease or power purchase agreement with the covered customers. If our solar energy systems require an above-average amount of repairs or if the cost of repairing systems were higher than our estimate, we would need to perform such repairs without additional compensation. If our solar energy systems, a majority of which are located in California, are damaged in the event of a natural disaster beyond our control, such as an earthquake, tsunami or hurricane, losses could be outside the scope of insurance policies or exceed insurance policy limits, and we could incur unforeseen costs that could harm our business and financial condition. We may also incur significant costs for taking other actions in preparation for, or in reaction to, such events. When required to do so under the terms of a particular investment fund, we purchase property and business interruption insurance with industry standard coverage and limits approved by the investor’s third-party insurance advisors to hedge against such risk, but such coverage may not cover our losses, and we have not acquired such coverage for all of our funds.

Product liability claims against us or accidents could result in adverse publicity and potentially significant monetary damages.

If one of our solar energy systems injured someone, we could be exposed to product liability claims. In addition, it is possible that our products could injure our customer or third parties, or that our products could cause property damage as a result of product malfunctions, defects, improper installation, fire or other causes. We rely on our general liability insurance to cover product liability claims. Any product liability claim we face could be expensive to defend and divert management’s attention. The successful assertion of product liability claims against us could result in potentially significant monetary damages, penalties or fines, subject us to adverse publicity, damage our reputation and competitive position and adversely affect sales of our systems and other products. In addition, product liability claims, injuries, defects or other problems experienced by other companies in the residential solar industry could lead to unfavorable market conditions to the industry as a whole, and may have an adverse effect on our ability to attract new customers, thus affecting our growth and financial performance.

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Failure by our component suppliers to use ethical business practices and comply with applicable laws and regulations may adversely affect our business.

We do not control our suppliers or their business practices. Accordingly, we cannot guarantee that they follow ethical business practices such as fair wage practices and compliance with environmental, safety and other local laws. A lack of demonstrated compliance could lead us to seek alternative suppliers, which could increase our costs and result in delayed delivery of our products, product shortages or other disruptions of our operations. Violation of labor or other laws by our suppliers or the divergence of a supplier’s labor or other practices from those generally accepted as ethical in the United States or other markets in which we do business could also attract negative publicity for us and harm our business.

Damage to our brand and reputation, or change or loss of use of our brand, would harm our business and results of operations.

We depend significantly on our reputation for high-quality products, best-in-class customer service and the brand name “Vivint Solar” to attract new customers and grow our business. If we fail to continue to deliver our solar energy systems within the planned timelines, if our offerings do not perform as anticipated or if we damage any of our customers’ properties or delay or cancel projects, our brand and reputation could be significantly impaired. Future technical improvements may allow us to offer lower prices or offer new technology to new customers; however, technical limitations in our current solar energy systems may prevent us from offering such lower prices or new technology to our existing customers. The inability of our current customers to benefit from technological improvements could cause our existing customers to lower the value they perceive our existing products offer and impair our brand and reputation.

We have focused particular attention on growing our direct sales force, leading us in some instances to take on candidates who we later determined did not meet our standards. In addition, given our direct sales business model and the sheer number of interactions our sales and other personnel have with customers and potential customers, it is inevitable that some customers’ and potential customers’ interactions with our company will be perceived as less than satisfactory. This has led to instances of customer complaints, some of which have affected our digital footprint on rating websites such as that for Yelp and the Better Business Bureau. If we cannot manage our hiring and training processes to avoid or minimize to the extent possible, these issues, our reputation may be harmed and our ability to attract new customers would suffer.

Given our past relationship with our sister company Vivint and the similarity in our names, customers may associate us with any problems experienced with Vivint, such as complaints with the Better Business Bureau. Because we have no control over Vivint, we may not be able to take remedial action to cure any issues Vivint has with its customers, and our brand and reputation may be harmed if we are mistaken for the same company.

In addition, if we were to no longer use, lose the right to continue to use, or if others use, the “Vivint Solar” brand, we could lose recognition in the marketplace among customers, suppliers and partners, which could affect our growth and financial performance, and would require financial and other investment, and management attention in new branding, which may not be as successful.

Marketplace confidence in our liquidity and long-term business prospects is important for building and maintaining our business.

Our financial condition, operating results and business prospects may suffer materially if we are unable to establish and maintain confidence about our liquidity and business prospects among consumers and within our industry. Our solar energy systems require ongoing maintenance and support. If we were to reduce operations, even years from now, buyers of our systems from years earlier might have difficulty in having us repair or service our systems, which remain our responsibility under the terms of our customer contracts. As a result, consumers may be less likely to purchase our solar energy systems now if they are uncertain that our business will succeed or that our operations will continue for many years. Similarly, suppliers and other third parties will be less likely to invest time and resources in developing business relationships with us if they are not convinced that our business will succeed. Accordingly, in order to build and maintain our business, we must maintain confidence among customers, suppliers and other parties in our liquidity and long-term business prospects. We may not succeed in our efforts to build this confidence.

If we fail to manage our recent and future growth effectively, we may be unable to execute our business plan, maintain high levels of customer service or adequately address competitive challenges.

We have experienced significant growth in recent periods with the cumulative capacity of our solar energy systems growing from 72.8 megawatts as of December 31, 2013 to 458.9 megawatts as of December 31, 2015, and we intend to continue to expand our business significantly within existing markets and in a number of new locations in the future. This growth has placed, and any future growth may place, a significant strain on our management, operational and financial infrastructure. In particular, we will be required to expand, train and manage our growing employee base and scale and otherwise improve our IT infrastructure in tandem with that headcount growth. Our management will also be required to maintain and expand our relationships with customers, suppliers and other third parties and attract new customers and suppliers, as well as manage multiple geographic locations.

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In addition, our current and planned operations, personnel, IT and other systems and procedures might be inadequate to support our future growth and may require us to make additional unanticipated investments in our infrastructure. Our success and ability to further scale our business will depend, in part, on our ability to manage these changes in a cost-effective and efficient manner.

If we cannot manage our growth, we may be unable to meet our or industry analysts’ expectations regarding growth, opportunity and financial targets, take advantage of market opportunities, execute our business strategies or respond to competitive pressures. This could also result in declines in quality or customer satisfaction, increased costs, difficulties in introducing new offerings or other operational difficulties. Any failure to effectively manage growth could adversely impact our business and reputation.

We may not realize the anticipated benefits of past or future acquisitions, and integration of these acquisitions may disrupt our business and management.

We acquired Solmetric Corporation in January 2014 and in the future we may acquire additional companies, project pipelines, products or technologies or enter into joint ventures or other strategic initiatives. We may not realize the anticipated benefits of this acquisition or any other future acquisition, and any acquisition has numerous risks. These risks include the following:

· difficulty in assimilating the operations and personnel of the acquired company;

· difficulty in effectively integrating the acquired technologies or products with our current technologies;

· difficulty in maintaining controls, procedures and policies during the transition and integration;

· disruption of our ongoing business and distraction of our management and employees from other opportunities and challenges due to integration issues;

· difficulty integrating the acquired company’s accounting, management information and other administrative systems;

· inability to retain key technical and managerial personnel of the acquired business;

· inability to retain key customers, vendors and other business partners of the acquired business;

· inability to achieve the financial and strategic goals for the acquired and combined businesses;

· incurring acquisition-related costs or amortization costs for acquired intangible assets that could impact our operating results;

· potential failure of the due diligence processes to identify significant issues with product quality, intellectual property infringement and other legal and financial liabilities, among other things;

· potential inability to assert that internal controls over financial reporting are effective; and

· potential inability to obtain, or obtain in a timely manner, approvals from governmental authorities, which could delay or prevent such acquisitions.

Mergers and acquisitions of companies are inherently risky, and if we do not complete the integration of acquired businesses successfully and in a timely manner, we may not realize the anticipated benefits of the acquisitions to the extent anticipated, which could adversely affect our business, financial condition or results of operations.

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The loss of one or more members of our senior management or key employees may adversely affect our ability to implement our strategy.

We depend on our experienced management team, and the loss of one or more key executives could have a negative impact on our business. In particular, we are dependent on the services of our chief executive officer, Greg Butterfield. We also depend on our ability to retain and motivate key employees and attract qualified new employees. None of our key executives are bound by employment agreements for any specific term and we do not maintain key person life insurance policies on any of our executive officers. In the year ended December 31, 2015, one-third of the outstanding options to purchase shares of our common stock granted to our key executives and other employees under our 2013 Omnibus Incentive Plan vested. In addition, one-third of the options remained outstanding and will vest if 313 Acquisition LLC receives a return on its invested capital at a pre-established threshold, subject to the employee’s continued service through the receipt of such return. While our initial public offering did not itself constitute an event that would trigger vesting, subsequent sales by 313 Acquisition LLC of our common stock could result in the vesting of such options. As a result, the retention incentives associated with these options could lapse for all employees holding these options under our 2013 Omnibus Incentive Plan at the same time or times. This decrease in retention incentive could cause significant turnover after these options vest. We may be unable to replace key members of our management team and key employees if we lose their services. Integrating new employees into our team could prove disruptive to our operations, require substantial resources and management attention and ultimately prove unsuccessful. An inability to attract and retain sufficient managerial personnel who have critical industry experience and relationships could limit or delay our strategic efforts, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members and officers.

As a public company, we are subject to the reporting requirements of the Exchange Act, the listing requirements of the New York Stock Exchange, or NYSE, and other applicable securities rules and regulations. Compliance with these rules and regulations has increased our legal and financial compliance costs, made some activities more difficult, time-consuming or costly and increased demand on our systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and operating results and maintain effective disclosure controls and procedures and internal control over financial reporting. To maintain and improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns which could harm our business and operating results. If in the future, we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to sanctions or investigations by the Securities and Exchange Commission, or the SEC, or other regulatory authorities, which would require additional financial and management resources.

Being a public company has also made it more expensive for us to obtain director and officer liability insurance, and in the future, we may be required to accept reduced coverage or incur substantially higher costs to continue coverage. These factors could also make it more difficult for us to attract and retain qualified executive officers and members of our board of directors, particularly to serve on our audit committee and compensation committee.

We may be subject to intellectual property rights claims by third parties, which are extremely costly to defend, could require us to pay significant damages and could limit our ability to use certain technologies.

Third parties, including our competitors, may own patents or other intellectual property rights that cover aspects of our technology or business methods. Such parties may claim we have misappropriated, misused, violated or infringed third party intellectual property rights, and, if we gain greater recognition in the market, we face a higher risk of being the subject of claims that we have violated others’ intellectual property rights. Any claim that we violate a third party’s intellectual property rights, whether with or without merit, could be time-consuming, expensive to settle or litigate and could divert our management’s attention and other resources. If we do not successfully settle or defend an intellectual property claim, we could be liable for significant monetary damages and could be prohibited from continuing to use certain technology, business methods, content or brands. To avoid a prohibition, we could seek a license from third parties, which could require us to pay significant royalties, increasing our operating expenses. If a license is not available at all or not available on reasonable terms, we may be required to develop or license a non-violating alternative, either of which could require significant effort and expense. If we cannot license or develop a non-violating alternative, we would be forced to limit or stop sales of our offerings and may be unable to effectively compete. Any of these results would adversely affect our business, results of operations, financial condition and cash flows. To deter other companies from making intellectual property claims against us or to gain leverage in settlement negotiations, we may be forced to significantly increase the size of our intellectual property portfolio through internal efforts and acquisitions from third parties, both of which could require significant expenditures. However, a robust intellectual property portfolio may provide little or no deterrence, particularly for patent holding companies or other patent owners that have no relevant product revenues.

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We use “open source” software in our solutions, which may restrict how we distribute our offerings, require that we release the source code of certain software subject to open source licenses or subject us to possible litigation or other actions that could adversely affect our business.

We currently use in our solutions, and expect to continue to use in the future, software that is licensed under so-called “open source,” “free” or other similar licenses. Open source software is made available to the general public on an “as-is” basis under the terms of a non-negotiable license. We currently combine our proprietary software with open source software but not in a manner that we believe requires the release of the source code of our proprietary software to the public. We do not plan to integrate our proprietary software with open source software in ways that would require the release of the source code of our proprietary software to the public, however, our use and distribution of open source software may entail greater risks than use of third-party commercial software. Open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code. In addition, if we combine our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release the source code of our proprietary software to the public. This would allow our competitors to create similar offerings with lower development effort and time and ultimately could result in a loss of sales. We may also face claims alleging noncompliance with open source license terms or infringement or misappropriation of proprietary software. These claims could result in litigation, require us to purchase a costly license or require us to devote additional research and development resources to change our software, any of which would have a negative effect on our business and operating results. In addition, if the license terms for open source software that we use change, we may be forced to re-engineer our solutions, incur additional costs or discontinue the sale of our offerings if re-engineering could not be accomplished on a timely basis. Although we monitor our use of open source software to avoid subjecting our offerings to unintended conditions, few courts have interpreted open source licenses, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our offerings. We cannot guarantee that we have incorporated open source software in our software in a manner that will not subject us to liability, or in a manner that is consistent with our current policies and procedures.

The installation and operation of solar energy systems depends heavily on suitable solar and meteorological conditions. If meteorological conditions are unexpectedly unfavorable, the electricity production from our solar energy systems may be substantially below our expectations and our ability to timely deploy new systems may be adversely impacted.

The energy produced and revenue and cash receipts generated by a solar energy system depend on suitable solar, atmospheric and weather conditions, all of which are beyond our control. Furthermore, components of our systems, such as panels and inverters, could be damaged by severe weather, such as hailstorms or lightning. Although we maintain insurance to cover for many such casualty events, our investment funds would be obligated to bear the expense of repairing the damaged solar energy systems, sometimes subject to limitations based on our ability to successfully make warranty claims. Our economic model and projected returns on our systems require us to achieve certain production results from our systems and, in some cases, we guarantee these results for both our consumers and our investors. If the systems underperform for any reason, our financial results could suffer. Sustained unfavorable weather also could delay our installation of solar energy systems, leading to increased expenses and decreased revenue and cash receipts in the relevant periods. We have experienced seasonal fluctuations in our operations. For example, the amount of revenue we recognize in a given period from power purchase agreements is dependent in part on the amount of energy generated by solar energy systems under such contracts. As a result, operating leases and incentives revenue is impacted by seasonally shorter daylight hours in winter months. In addition, our ability to install solar energy systems is impacted by weather. For example, we have limited ability to install solar energy systems during the winter months in the Northeastern United States. Such delays can impact the timing of when we can install and begin to generate revenue from solar energy systems. However, given that we are in a rapidly growing industry, the true extent of these fluctuations may have been masked by our recent growth rates and thus may not be readily apparent from our historical operating results and may be difficult to predict. As such, our historical operating results may not be indicative of future performance. Furthermore, weather patterns could change, making it harder to predict the average annual amount of sunlight striking each location where we install a solar energy system. This could make our solar energy systems less economical overall or make individual systems less economical. Any of these events or conditions could harm our business, financial condition, results of operations and prospects.

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Disruptions to our solar monitoring systems could negatively impact our revenues and increase our expenses.

Our ability to accurately charge our customers for the energy produced by our solar energy systems depends on customers maintaining a broadband internet connection so that we may receive data regarding solar energy systems production from their home networks. We could incur significant expenses or disruptions of our operations in connection with failures of our solar monitoring systems, including failures of our customers’ home networks that would prevent us from accurately monitoring solar energy production. In addition, sophisticated hardware and operating system software and applications that we procure from third parties may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with the operation of our systems. The costs to us to eliminate or alleviate viruses and bugs, or any problems associated with failures of our customers’ home networks could be significant, and the efforts to address these problems could result in interruptions, delays or cessation of service that may impede our sales, distribution or other critical functions. We have in the past experienced periods where some of our customers’ networks have been unavailable and, as a result, we have been forced to estimate the production of their solar energy systems. Such estimates may prove inaccurate and could cause us to underestimate the power being generated by our solar energy systems and undercharge our customers, thereby harming our results of operations.

We are exposed to the credit risk of our customers.

Our solar energy customers primarily purchase energy or lease solar energy systems from us pursuant to one of two types of long-term contracts: a power purchase agreement or a lease. The power purchase agreement and lease terms are typically for 20 years, and require the customer to make monthly payments to us. Accordingly, we are subject to the credit risk of our customers. As of December 31, 2015, the average FICO score of our customers was approximately 760. However, as we grow our business, we expect that the risk of customer defaults will increase. As a result, our reserve for this exposure is estimated to be $0.9 million as of December 31, 2015, and our future exposure may exceed the amount of such reserves.

A failure to comply with laws and regulations relating to our interactions with current or prospective residential customers could result in negative publicity, claims, investigations and litigation, and adversely affect our financial performance.

Our business substantially focuses on contracts and transactions with residential customers. We must comply with numerous federal, state and local laws and regulations that govern matters relating to our interactions with residential consumers, including those pertaining to privacy and data security, consumer financial and credit transactions, home improvement contracts, warranties, door-to-door solicitation as well as specific regulations pertaining to solar installations. These laws and regulations are dynamic and subject to potentially differing interpretations, and various federal, state and local legislative and regulatory bodies may initiate investigations, expand current laws or regulations, or enact new laws and regulations, regarding these matters. Changes in these laws or regulations or their interpretation could dramatically affect how we do business, acquire customers, and manage and use information we collect from and about current and prospective customers and the costs associated therewith. For example, Arizona recently enacted a new statute that will require increased disclosures and acknowledgements in any agreement governing the financing, sale or lease of distributed energy systems, such as our solar energy systems. This new law, which took effect on December 31, 2015, required us to amend the standard legal-form lease we provide customers in Arizona to, among other things, include an acknowledgement by the customer of any restrictions on the ability to transfer ownership of the solar energy system or underlying property and provide contact information for any party that has the right to review or approve such a transfer. We strive to comply with all applicable laws and regulations relating to our interactions with residential customers. It is possible, however, that these requirements may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. For example, members of the U.S. House of Representatives have sent letters to the Consumer Financial Protection Board, or CFPB, and the Federal Trade Commission, or FTC, requesting that these agencies investigate the sales practices of companies providing solar energy system leases to residential consumers. While we believe our standard sales practices and policies comply with all applicable laws and regulations, if the CFPB or FTC or other regulators or agencies were to initiate an investigation against us or enact regulations relating to the marketing of solar leases to residential consumers, responding to such investigation or complying with such regulations could require us to modify our operations and incur significant additional expenses, which could have an adverse effect on our business, financial condition and results of operations or could reduce the number of our potential customers. Additionally, we cannot ensure that our sales force will comply with our standard practices and policies, and any such non-compliance which violates applicable laws or regulations could also expose us to claims, proceedings, litigation and investigations by private parties and regulatory authorities, as well as substantial fines and negative publicity, each of which may materially and adversely affect our business. We have incurred, and will continue to incur, significant expenses to comply with such laws and regulations.

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Any unauthorized access to, or disclosure or theft of personal information we gather, store or use could harm our reputation and subject us to claims or litigation.

We receive, store and use personal information of our customers, including names, addresses, e-mail addresses, credit information and other housing and energy use information. We also store and use personal information of our employees. In addition, we currently utilize certain shared information and technology systems with Vivint. We take certain steps in an effort to protect the security, integrity and confidentiality of the personal information we collect, store or transmit, but there is no guarantee that inadvertent or unauthorized use or disclosure will not occur or that third parties will not gain unauthorized access to this information despite our efforts. Because techniques used to obtain unauthorized access or sabotage systems change frequently and generally are not identified until they are launched against a target, we and our suppliers or vendors, including Vivint, may be unable to anticipate these techniques or to implement adequate preventative or mitigation measures. In addition, due to a potential time lapse between when a sales representative leaves us and when we are made aware of the separation, sales representatives may have continued access to our customers’ information for a period when they should not.

Unauthorized use or disclosure of, or access to, any personal information maintained by us or on our behalf, whether through breach of our systems, breach of the systems of our suppliers or vendors, including Vivint, by an unauthorized party, or through employee or contractor error, theft or misuse, or otherwise, could harm our business. If any such unauthorized use or disclosure of, or access to, such personal information were to occur, our operations could be seriously disrupted and we could be subject to demands, claims and litigation by private parties, and investigations, related actions, and penalties by regulatory authorities. In addition, we could incur significant costs in notifying affected persons and entities and otherwise complying with the multitude of federal, state and local laws and regulations relating to the unauthorized access to, or use or disclosure of, personal information. Finally, any perceived or actual unauthorized access to, or use or disclosure of, such information could harm our reputation, substantially impair our ability to attract and retain customers and have an adverse impact on our business, financial condition and results of operations.

We are involved, and may become involved in the future, in legal proceedings that, if adversely adjudicated or settled, could adversely affect our financial results.

We are, and may in the future become, party to litigation. For example, in September 2014, two of our former installation technicians, on behalf of themselves and a purported class, filed a complaint for damages, injunctive relief and restitution in the Superior Court of the State of California in and for the County of San Diego against us and unnamed John Doe defendants. The complaint alleges certain violations of the California Labor Code and the California Business and Professions Code based on, among other things, alleged improper classification of installer technicians, installer helpers, electrician technicians and electrician helpers, failure to pay minimum and overtime wages, failure to provide accurate itemized wage statements, and failure to provide wages on termination. In December 2014, the original plaintiffs and three additional plaintiffs filed an amended complaint with essentially the same allegations. On November 5, 2015, the parties agreed to preliminary terms of a settlement of all claims related to allegations in the complaint in return for our payment of $1.7 million to be paid out to the purported class members. The settlement agreement must be approved by the Court, after notice to the purported class. A $1.7 million reserve was recorded related to this proceeding in our consolidated financial statements.

On September 9, 2015, two of our customers, on behalf of themselves and a purported class, named us in a putative class action, Case No. BCV-15-100925(Cal. Super. Ct., Kern County), alleging violation of California Business and Professional Code Section 17200 and requesting relief pursuant to Section 1689 of the California Civil Code. The complaint seeks: (1) rescission of their power purchase agreements along with restitution to the plaintiffs individually and (2) declaratory and injunctive relief. On October 16, 2015, we moved to compel arbitration of the plaintiffs’ claims pursuant to the provisions set forth in the power purchase agreements, which the Court granted and dismissed the class claims without prejudice. Plaintiffs have appealed the Court’s order. We are not able to estimate the amount or range of potential loss, if any, at this time.

In addition, in November and December 2014, two putative class action lawsuits were filed in the U.S. District Court for the Southern District of New York against us, our directors, certain of our officers and the underwriters of our initial public offering of common stock alleging violation of securities laws and seeking unspecified damages. In January 2015, the Court ordered these cases to be consolidated into the earlier filed case, Hyatt v. Vivint Solar, Inc. et al., 14-cv-9283 (KBF). The plaintiffs filed a consolidated amended complaint in February 2015. On May 6, 2015, we filed a motion to dismiss the complaint and on December 10, 2015, the Court issued an Opinion and Order dismissing the complaint with prejudice. On January 5, 2016, the plaintiffs filed a Notice of Appeal to the Second Circuit Court of Appeals. We are unable to estimate a range of loss, if any, that could result were there to be an adverse final decision. If an unfavorable outcome were to occur in thiscase, it is possible that the impact could be material to our results of operations in the period(s) in which any such outcome becomes probable and estimable.

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While we intend to defend against these actions vigorously, the ultimate outcomes of these cases are presently not determinable as they are in a preliminary phase. In general, litigation claims can be expensive and time consuming to bring or defend against, may result in the diversion of management attention and resources from our business and business goals and could result in settlements or damages that could significantly affect financial results and the conduct of our business. It is not possible to predict the final resolution of the litigation to which we currently are or may in the future become party, and the impact of certain of these matters on our business, prospects, financial condition, liquidity, results of operations and cash flows.

Risks Related to our Relationship with Vivint

Vivint provides us with certain information technology support for our business. If Vivint fails to perform its obligations to us or if we do not find appropriate replacement services, we may be unable to perform these services or implement substitute arrangements on a timely and cost-effective basis on terms favorable to us.

We have historically relied on the technical support of Vivint to run our business. Some of the Vivint resources we are using include information technology and infrastructure, employee benefits and certain other services. The implementation of new software support systems requires significant management time, support and cost, and there are inherent risks associated with implementing, developing, improving and expanding our core systems. We cannot be sure that these systems will be fully or effectively implemented on a timely basis, if at all. If we do not successfully implement these systems, our operations may be disrupted and our operating results could be harmed. In addition, the new systems may not operate as we expect them to, and we may be required to expend significant resources to correct problems or find alternative sources for performing these functions.

In order to successfully transition to our own systems and operate as a stand-alone business, we entered into various agreements with Vivint in connection with our public offering. These include a master framework agreement providing the overall terms of the relationship and a transition services agreement detailing various information technology services that Vivint will provide. Vivint will provide each service until we agree that support from Vivint is no longer required for that service. The information technology services provided under the transition services agreement may not be sufficient to meet our needs and we may not be able to replace these services at favorable costs and on favorable terms, if at all. Any failure or significant downtime in our own financial or administrative systems or in Vivint’s financial or administrative systems during the transition period and any difficulty in separating our information technology services from Vivint’s information technology services and integrating newly developed or acquired information technology services into our business could result in unexpected costs, impact our results or prevent us from paying our suppliers and performing other technical, administrative and information technology services on a timely basis and could materially harm our business, financial condition, results of operations and cash flows.

Our inability to resolve any disputes that arise between us and Vivint with respect to our past and ongoing relationships may adversely affect our financial results, and such disputes may also result in claims for indemnification.

Disputes may arise between Vivint and us in a number of areas relating to our past and ongoing relationships, including the following:

· intellectual property, labor, tax, employee benefits, indemnification and other matters arising from our separation from Vivint;

· employee retention and recruiting;

· our ability to use, modify and enhance the intellectual property that we have licensed from Vivint;

· business combinations involving us;

· pricing for shared and transitional services;

· exclusivity arrangements;

· the nature, quality and pricing of products and services Vivint agrees to provide to us; and

· business opportunities that may be attractive to both Vivint and us.

We have entered into certain agreements with Vivint. Pursuant to the terms of the Non-Competition Agreement we have entered into with Vivint, we and Vivint each define our areas of business and our competitors, and agree not to directly or indirectly engage in the other’s business for three years. This agreement may limit our ability to pursue attractive opportunities that we may have otherwise pursued.

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Additionally, this agreement prohibits, for a period of five years, either Vivint or us from soliciting for employment any member of the other’s executive or senior management team, or any of the other’s employees who primarily manage sales, installation or services of the other’s products and services. The commitment not to solicit each other’s employees lasts for 180 days after such employee finishes employment with us or Vivint. Historically we have recruited a majority of our sales personnel from Vivint. This agreement may require us to obtain personnel from other sources, and may limit our ability to continue scaling our business if we are unable to do so.

Pursuant to the terms of the Marketing and Customer Relations Agreement we have entered into with Vivint, we and Vivint are required to compensate one another for sales leads that result in sales. Vivint may direct sales leads to other solar energy companies in markets in which we have not entered. However, once we enter a market, Vivint must exclusively direct to us all leads for customers and potential customers with an interest in solar energy. Vivint’s ability to sell leads to other solar energy providers in markets where we are not currently operating may adversely affect our ability to scale rapidly if we subsequently enter into such market as many of Vivint’s customers with solar energy inclinations may have already been referred to another company by the time we enter into such market.

We may not be able to resolve any potential conflicts relating to these agreements or otherwise, and even if we do, the resolution may be less favorable than if we were dealing with an unaffiliated party. In addition, we have indemnification obligations under the intercompany services agreements we entered into with Vivint, and disputes between us and Vivint may result in claims for indemnification. However, we do not currently expect that these indemnification obligations will materially affect our potential liability compared to what it would be if we did not enter into these agreements with Vivint.

Risks Related to Our Common Stock

The price of our common stock may be volatile, and the value of your investment could decline.

The trading price of our common stock may be highly volatile. For example, from our initial public offering to March 11, 2016, the closing price of our common stock has ranged from a high of $16.01 to a low of $4.09. Our stock price could continue to be subject to wide fluctuations in response to various factors, some of which are beyond our control. These factors include:

· our financial condition and the availability and terms of future financing;

· changes in laws or regulations applicable to our industry or offerings;

· additions or departures of key personnel;

· the failure of securities analysts to cover our common stock;

· actual or anticipated changes in expectations regarding our performance by investors or securities analysts;

· securities litigation involving us;

· price and volume fluctuations in the overall stock market;

· volatility in the market price and trading volume of companies in our industry or companies that investors consider comparable;

· share price and volume fluctuations attributable to inconsistent trading volume levels of our shares;

· our ability to protect our intellectual property and other proprietary rights;

· sales of our common stock by us or our stockholders;

· the expiration of contractual lock-up agreements;

· litigation or disputes involving us, our industry or both;

· major catastrophic events;

· general economic and market conditions; and

· potential acquisitions.

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Further, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. In addition, the stock prices of many renewable energy companies have experienced wide fluctuations that have often been unrelated to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes or international currency fluctuations, may cause the market price of our common stock to decline. If the market price of our common stock decreases, investors may not realize any return on investment and may lose some or all of their investments.

In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We are currently subject to two putative class action lawsuits, subsequently consolidated into an amended complaint, filed in the U.S. District Court for the Southern District of New York, alleging certain misrepresentations by us in connection with our initial public offering. We may become the target of additional securities litigation in the future, which could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business.

As an emerging growth company within the meaning of the Securities Act, we will utilize certain modified disclosure requirements, and we cannot be certain if these reduced requirements will make our common stock less attractive to investors.

We are an emerging growth company, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies” including, but not limited to, not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We have utilized, and we plan in future filings with the SEC to continue to utilize, the modified disclosure requirements available to emerging growth companies. As a result, our stockholders may not have access to certain information they may deem important.

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can utilize the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not “emerging growth companies.”

We could remain an ‘‘emerging growth company’’ for up to five years, or until the earliest of (1) the last day of the first fiscal year in which our annual gross revenue exceeds $1 billion, (2) the date that we become a ‘‘large accelerated filer’’ as defined in Rule 12b-2 under the Exchange Act, which would occur if we become a seasoned issuer and the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (3) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.

Our stock price could decline due to the large number of outstanding shares of our common stock eligible for future sale.

Sales of substantial amounts of our common stock in the public market, or the perception that these sales could occur, could cause the market price of our common stock to decline. These sales could also make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate.

As of December 31, 2015, we had 106.6 million outstanding shares of common stock. These shares may be sold in the public market in the United States, subject to prior registration in the United States, if required, or reliance upon an exemption from U.S. registration, including, in the case of shares held by affiliates or control persons, compliance with the volume restrictions of Rule 144.

In addition, 0.6 million shares of our common stock reserved for future issuance under our Long-Term Incentive Plan were issued, vested and became immediately tradable without restriction on April 15, 2015. Approximately 2.7 million additional shares of our common stock reserved for future issuance under our Long-Term Incentive Plan will issue, vest and be immediately tradable without restriction on the date that The Blackstone Group L.P., our sponsor, and its affiliates achieve specified returns on their invested capital. On the date that is 18 months after the closing of our initial public offering, approximately 0.7 million shares reserved for future issuance under our Long-Term Incentive Plan will issue, vest and be immediately tradable without restriction. For more information regarding the shares reserved under our Long Term Incentive Plan see the section of the Prospectus captioned “Shares Eligible for Future Sale.”

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Further, options to purchase 9.3 million shares of common stock remained outstanding as of December 31, 2015, with 4.2 million of those shares being vested and exercisable as of December 31, 2015. Of the 5.1 million shares that are not yet vested, 1.8 million shares are subject to ratable time-based vesting over a five year period and 0.1 million shares are subject to time-based vesting over a four year period with 25% vesting after 1 year and 6.25% vesting quarterly thereafter. All shares subject to time-based vesting will become immediately tradable once vested. The remaining 3.2 million shares are subject to vesting upon certain performance conditions and will vest and become immediately tradable when 313 Acquisition LLC receives cash proceeds with respect to its holdings of our common stock in an amount that equals $500 million more than its cumulative investment in our common stock (which amount shall be equal to $75 million plus any amounts invested after November 16, 2012). As of December 31, 2015, 0.9 million restricted stock units remained outstanding, most of which are time-based and vest over four years with 25% vesting after 1 year and 6.25% vesting quarterly thereafter.

Stockholders owning an aggregate of 84.7 million shares of our common stock are entitled, under contracts providing for registration rights, to require us to register shares of our common stock owned by them for public sale in the United States, subject to the restrictions of Rule 144. On October 1, 2014, we filed a registration statement on Form S-8 to register 22.9 million shares previously issued or reserved for future issuance under our equity compensation plans and agreements. Upon effectiveness of this registration statement, subject to the satisfaction of applicable exercise periods, the shares of common stock issued upon exercise of outstanding options will be available for immediate resale in the United States in the open market. Sales of our common stock as restrictions end or pursuant to registration rights may make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. These sales also could cause our stock price to fall and make it more difficult for you to sell shares of our common stock.

Our sponsor and its affiliates control us and their interests may conflict with ours or yours in the future.

As ofDecember 31, 2015, 313 Acquisition LLC, which is controlled by our sponsor and its affiliates, beneficially owned approximately 77% of our common stock. Moreover, under our organizational documents and the stockholders agreement with 313 Acquisition LLC, for so long as our existing owners and their affiliates retain significant ownership of us, we will agree to nominate to our board individuals designated by our sponsor, whom we refer to as the sponsor directors. In addition, for so long as 313 Acquisition LLC continues to own shares representing a majority of the total voting power, we will agree to nominate to our board individuals appointed by Summit Partners and Todd Pedersen. Even when our sponsor and its affiliates and certain of its co-investors cease to own shares of our stock representing a majority of the total voting power, for so long as our sponsor and its affiliates continue to own a significant percentage of our stock our sponsor will still be able to significantly influence the composition of our board of directors and the approval of actions requiring stockholder approval. In addition, under the stockholders agreement, affiliates of our sponsor will have consent rights with respect to certain actions involving our company, provided a certain aggregate ownership threshold is maintained collectively by our sponsor and its affiliates, together with Summit Partners, Todd Pedersen and Alex Dunn and their respective affiliates. Accordingly, for such period of time, our sponsor and certain of its co-investors will have significant influence with respect to our management, business plans and policies, including the appointment and removal of our officers. In particular, for so long as our sponsor and its affiliates continue to own a significant percentage of our stock, our sponsor will be able to cause or prevent a change of control of our company or a change in the composition of our board of directors and could preclude any unsolicited acquisition of our company. The concentration of ownership could deprive you of an opportunity to receive a premium for your shares of common stock as part of a sale of our company and ultimately might affect the market price of our common stock.

Our sponsor and its affiliates engage in a broad spectrum of activities, including investments in the energy sector. In the ordinary course of their business activities, our sponsor and its affiliates may from time to time acquire and hold interests in businesses that compete directly or indirectly with us. For example, affiliates of our sponsor regularly invest in utility companies that compete with solar energy and renewable energy companies such as ours. In addition, affiliates of our sponsor own interests in one of the largest solar power developers in India and may in the future make other investments in solar power, including in the United States. Our certificate of incorporation provides that none of our sponsor, any of its affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his or her director and officer capacities) or his or her affiliates will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate. Our sponsor also may pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us. In addition, our sponsor may have an interest in pursuing acquisitions, divestitures and other transactions that, in its judgment, could enhance its investment, even though such transactions might involve risks to you.

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We have elected to take advantage of the “controlled company” exemption to the corporate governance rules for NYSE-listed companies, which could make our common stock less attractive to some investors or otherwise harm our stock price.

Because we qualify as a “controlled company” under the corporate governance rules for NYSE-listed companies, we are not required to have a majority of our board of directors be independent, nor are we required to have a compensation committee or an independent nominating function. In light of our status as a controlled company, in the future we could elect not to have a majority of our board of directors be independent or not to have a compensation committee or nominating and governance committee. Accordingly, should the interests of 313 Acquisition LLC or our sponsor differ from those of other stockholders, the other stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance rules for NYSE-listed companies. Our status as a controlled company could make our common stock less attractive to some investors or otherwise harm our stock price.

Provisions in our certificate of incorporation, bylaws, stockholders agreement and under Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our common stock.

Our certificate of incorporation, bylaws and stockholders agreement contain provisions that could depress the trading price of our common stock by discouraging, delaying or preventing a change of control of our company or changes in our management that the stockholders of our company may believe advantageous. These provisions include:

· establishing a classified board of directors so that not all members of our board of directors are elected at one time;

· authorizing “blank check” preferred stock that our board of directors could issue to increase the number of outstanding shares to discourage a takeover attempt;

· limiting the ability of stockholders to call a special stockholder meeting;

· limiting the ability of stockholders to act by written consent;

· providing that the board of directors is expressly authorized to make, alter or repeal our bylaws;

· establishing advance notice requirements for nominations for elections to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings;

· requiring our sponsor to consent to certain actions, as described under the section of our 2015 Proxy Statement captioned “Related Party Transactions—Agreements with Our Sponsor,” for so long as our sponsor, Summit Partners, Todd Pedersen and Alex Dunn or their respective affiliates collectively own, in the aggregate, at least 30% of our outstanding shares of common stock;

· the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of our company entitled to vote thereon, voting together as a single class, if Blackstone and its affiliates beneficially own, in the aggregate, less than 30% in voting power of the stock of our company entitled to vote generally in the election of directors; and

· that certain provisions may be amended only by the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of our company entitled to vote thereon, voting together as a single class, if Blackstone and its affiliates beneficially own, in the aggregate, less than 30% in voting power of the stock of our company entitled to vote generally in the election of directors.

If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. If any of the analysts who do now, or may in the future, cover us change their recommendation regarding our stock adversely, or provide more favorable relative recommendations about our competitors, our stock price would likely decline. If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

Item 1B. Unresolved Staff Comments.

None.

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Item 2. Properties.

Our corporate headquarters and executive offices are currently located in Lehi, Utah, where we occupy approximately 37,000 square feet of office space. We lease approximately 134,000 square feet of office space with TCO-Canyon Park, LLC in Orem, Utah. We have entered into a lease with T-Stat One, LLC for approximately 150,000 square feet of office space that will replace our current corporate headquarters and executive offices once the building is completed, which is expected to be in the second quarter of 2016. We also entered into a lease for the construction of a second office building and a studio building on the corporate headquarters campus that will increase the leased premises by approximately 160,000 square feet. Construction on the studio building is on hold and the second office building is expected to be available in 2018.

Our other locations include warehouses and sales offices that range from approximately 1,000 to 36,000 square feet in Arizona, California, Connecticut, Hawaii, Maryland, Massachusetts, New Jersey, New Mexico, Nevada, New York, Pennsylvania, South Carolina and Utah.

We lease all of our facilities and we do not own any real property. We believe with the addition of our corporate headquarter space to be completed in 2016 that our Utah offices are sufficient to meet our current needs and our anticipated growth.

Item 3. Legal Proceedings.

In December 2013, one of our former sales representatives, on behalf of himself and a purported class, filed a complaint for unspecified damages, injunctive relief and restitution in the Superior Court of the State of California in and for the County of San Diego against Vivint Solar Developer, LLC, one of our subsidiaries, and unnamed John Doe defendants alleging violations of the California Labor Code and the California Business and Professions Code and seeking penalties of an unspecified amount, interest on all economic damages and reasonable attorney’s fees and costs. In January 2014, we filed an answer denying the allegations in the complaint and asserting various affirmative defenses. In late 2014, the parties agreed to preliminary terms of settlement, which were subsequently revised in mid-2015. The settlement agreement provided for a settlement payment from us in the amount of $0.4 million. On October 30, 2015, the Court entered a final order approving the settlement agreement and the settlement payment was distributed in accordance with the settlement agreement.

In September 2014, two of our former installation technicians, on behalf of themselves and a purported class, filed a complaint for damages, injunctive relief and restitution in the Superior Court of the State of California in and for the County of San Diego against us and unnamed John Doe defendants. The complaint alleges certain violations of the California Labor Code and the California Business and Professions Code based on, among other things, alleged improper classification of installer technicians, installer helpers, electrician technicians and electrician helpers, failure to pay minimum and overtime wages, failure to provide accurate itemized wage statements, and failure to provide wages on termination. In December 2014, the original plaintiffs and three additional plaintiffs filed an amended complaint with essentially the same allegations. On November 5, 2015, the parties agreed to preliminary terms of a settlement of all claims related to allegations in the complaint in return for our payment of $1.7 million to be paid out to the purported class members. The settlement agreement must be approved by the Court, after notice to the purported class. A $1.7 million reserve was recorded related to this proceeding in our consolidated financial statements.

In November and December 2014, two putative class action lawsuits were filed in the U.S. District Court for the Southern District of New York against us, our directors, certain of our officers and the underwriters of our initial public offering of common stock alleging violation of securities laws and seeking unspecified damages. In January 2015, the Court ordered these cases to be consolidated into the earlier filed case, Hyatt v. Vivint Solar, Inc. et al., 14-cv-9283 (KBF). The plaintiffs filed a consolidated amended complaint in February 2015. On May 6, 2015, we filed a motion to dismiss the complaint and on December 10, 2015, the Court issued an Opinion and Order dismissing the complaint with prejudice. On January 5, 2016, the plaintiffs filed a Notice of Appeal to the Second Circuit Court of Appeals. We are unable to estimate a range of loss, if any, that could result were there to be an adverse final decision. If an unfavorable outcome were to occur in thiscase, it is possible that the impact could be material to our results of operations in the period(s) in which any such outcome becomes probable and estimable.

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On July 31, 2015, a putative class action lawsuit was filed in the Court of Chancery State of Delaware against our directors, SunEdison Inc., or SunEdison, and TerraForm Power, or TerraForm, alleging that the proposed acquisition by SunEdison is unfair to our stockholders. On August 7, 2015, a second putative class action lawsuit was filed in the same court alleging similar claims, and including 313, Acquisition, LLC as a named defendant. Both complaints seek injunctive relief and unspecified damages. On or about September 10, 2015, two purported class action lawsuits were also filed in Utah's Fourth District State Court, or the Utah Actions, alleging similar claims to the complaints previously filed in the Delaware Chancery Court. On September 22, 2015, we, through counsel notified plaintiff's counsel in the Utah Actions that pursuant to our Articles of Incorporation, any such derivative action was subject to exclusive jurisdiction in the Delaware Chancery Court, and accordingly, the Utah Actions should be dismissed. After a December 2015 amendment to the proposed acquisition, a new complaint was filed in the Delaware Chancery Court on January 11, 2016. The new complaint alleges breach of fiduciary duty against our directors, certain officers, and SunEdison, and seeks damages on behalf of a putative class. In view of our indemnification obligation to our directors, we are unable to estimate a range of loss, if any, that could result were there to be an adverse final decision. If an unfavorable outcome were to occur in thesecases, it is possible that the impact could be material to our results of operations in the period(s) in which any such outcome becomes probable and estimable.

On September 9, 2015, two of our customers, on behalf of themselves and a purported class, named us in a putative class action, Case No. BCV-15-100925(Cal. Super. Ct., Kern County), alleging violation of California Business and Professional Code Section 17200 and requesting relief pursuant to Section 1689 of the California Civil Code. The complaint seeks: (1) rescission of their power purchase agreements along with restitution to the plaintiffs individually and (2) declaratory and injunctive relief. On October 16, 2015, we moved to compel arbitration of the plaintiffs’ claims pursuant to the provisions set forth in the power purchase agreements, which the Court granted and dismissed the class claims without prejudice. Plaintiffs have appealed the Court’s order. We are not able to estimate the amount or range of potential loss, if any, at this time.

On March 8, 2016, we filed suit in the Court of Chancery State of Delaware against SunEdison and SEV Merger Sub Inc. alleging that SunEdison willfully breached its obligations under the Merger Agreement pursuant to which we were to be acquired and breached its implied covenant of good faith and fair dealing. We are seeking declaratory judgment, award damages, costs and reasonable attorney’s fees and such further relief that the court finds equitable, appropriate and just. While we believe that SunEdison willfully breached its obligations under the Merger Agreement and that our claims have merit and are likely to succeed, the outcomes of lawsuits are inherently unpredictable.

Item 4. Mine Safety Disclosures.

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common stock has been traded on the New York Stock Exchange since October 1, 2014 under the symbol “VSLR.” Prior to October 1, 2014, there was no established public trading market for our common stock. The following table sets forth the high and low sales price for our common stock as reported by the New York Stock Exchange for the period indicated.

	High		Low
Fourth quarter 2015	13.05			6.59
Third quarter 2015		16.00		9.91
Second quarter 2015	15.28			11.52
First quarter 2015	13.56			7.70
Fourth quarter 2014	18.71			7.42

As of March 2, 2016, we had four stockholders of record of our common stock. We also have approximately 11,500 beneficial holders whose stock is in nominee or “street name” accounts through brokers.

Stock Performance Graph

This following graph is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference into any filing of Vivint Solar, Inc. under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

The following graph compares for the period from October 1, 2014 through December 31, 2015, the total cumulative stockholder return on our common stock with the total cumulative return of the New York Stock Exchange Composite Index, the MAC Global Solar Energy Index and a group of publicly traded peer companies. The graph assumes a $100 investment at the beginning of the period in our common stock, the stocks represented in the New York Stock Exchange Composite Index, the MAC Global Solar Energy Index and a group of publicly traded peer companies, and reinvestment of any dividends. Historical stock price performance should not be relied upon as an indication of future stock price performance:

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Recent Sales of Unregistered Securities

None.

Issuer Purchase of Equity Securities

None.

Dividend Policy

We have never declared or paid any cash dividends on our common stock. We currently intend to retain any future earnings to fund our growth, and we do not anticipate declaring or paying any cash dividends in the foreseeable future.Additionally, the terms of one or more of our current debt instruments restrict our ability to pay cash dividends on our common stock. Any future determination to declare cash dividends will be made at the discretion of our board of directors, subject to applicable laws and provisions of our debt instruments and organizational documents, after taking into account our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors may deem relevant.

Item 6. Selected Financial Data.

The following table sets forth selected historical consolidated financial and other data for the periods ended and at the dates indicated below. On November 16, 2012, we were acquired by The Blackstone Group, L.P., our sponsor. We refer to the years ended December 31, 2015, 2014 and 2013 and the period from November 17, 2012 through December 31, 2012 as the Successor Periods or Successor, and the period from January 1, 2012 through November 16, 2012 as the Predecessor Period or Predecessor. Our selected historical consolidated statement of operations data for the years ended December 31, 2015, 2014 and 2013 presented in this table and the balance sheet data as of December 31, 2015 and 2014 have been derived from our historical audited consolidated financial statements included elsewhere in this report. Our historical results are not necessarily indicative of the results that may be expected in the future. The following selected financial data should be read in conjunction with the sections of this document captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this report.

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	Successor												Predecessor
										Period from			Period from
										November 17,			January 1,
										through			through
	Year Ended December 31,									December 31,			November 16,
	2015			2014			2013			2012			2012
	(In thousands, except per share data)
Statement of Operations Data:
Revenue:
Operating leases and incentives	$	61,150		$	21,688		$	5,864		$	109		$	183
Solar energy system and product sales		3,032			3,570			306			—			157
Total revenue		64,182			25,258			6,170			109			340
Operating expenses:
Cost of revenue—operating leases and incentives		131,213			67,984			19,004			1,018			3,302
Cost of revenue—solar energy system and product sales		1,762			1,997			123			—			95
Sales and marketing		48,078			21,869			7,348			533			1,471
Research and development		3,901			1,892			—			—			—
General and administrative		92,664			78,899			16,438			971			7,789
Amortization of intangible assets		13,172			14,911			14,595			1,824			—
Impairment of intangible assets		4,506			—			—			—			—
Total operating expenses		295,296			187,552			57,508			4,346			12,657
Loss from operations		(231,114	)		(162,294	)		(51,338	)		(4,237	)		(12,317	)
Interest expense		12,568			9,323			3,144			96			881
Other (income) expense		(154	)		1,372			1,865			44			240
Loss before income taxes		(243,528	)		(172,989	)		(56,347	)		(4,377	)		(13,438	)
Income tax expense (benefit)		9,737			(7,070	)		123			(1,074	)		7
Net loss		(253,265	)		(165,919	)		(56,470	)		(3,303	)		(13,445	)
Net loss attributable to non-controlling interests and    redeemable non-controlling interests		(266,345	)		(137,036	)		(62,108	)		(699	)		(1,771	)
Net income available (loss attributable) to stockholders		13,080			(28,883	)		5,638			(2,604	)		(11,674	)
Accretion to redemption value of Series B redeemable    preferred stock		—			—			—			—			(20,000	)
Net income available (loss attributable) to common    stockholders	$	13,080		$	(28,883	)	$	5,638		$	(2,604	)	$	(31,674	)
Net income available (loss attributable) per share to    common stockholders(1):
Basic	$	0.12		$	(0.35	)	$	0.08		$	(0.03	)	$	(0.42	)
Diluted	$	0.12		$	(0.35	)	$	0.07		$	(0.03	)	$	(0.42	)
Weighted-average shares used in computing net income available    (loss attributable) per share to common stockholders(1):
Basic		106,088			83,446			75,000			75,000			75,000
Diluted		109,858			83,446			75,223			75,000			75,000

⁽¹⁾  See Note 17—Basic and Diluted Net Income (Loss) Per Share to our consolidated financial statements for an explanation of the method used to calculate basic and diluted net income available (loss attributable) per share to common stockholders and the weighted-average number of shares used in the computation of the per share amounts.

	Year Ended December 31,
	2015		2014		2013		2012
	(In thousands)
Balance Sheet Data:
Cash and cash equivalents	$	92,213	$	261,649	$	6,038	$	11,650
Solar energy systems, net		1,102,157		588,167		188,058		47,089
Total assets		1,609,070		1,064,324		297,707		132,087
Revolving lines of credit, related party		—		—		41,412		15,000
Long-term debt		415,850		105,000		—		—
Redeemable non-controlling interests		169,541		128,427		73,265		17,741
Total equity		609,252		613,136		80,621		71,323

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

You should read the following discussion together with Item 6 “Selected Financial Data” and our consolidated financial statements and the related Notes included in Item 8 of this report. This discussion contains forward-looking statements about our business and operations. Our actual results may differ materially from those we currently anticipate as a result of the many factors, including those we describe under “Risk Factors” and elsewhere in this report. See “Forward-Looking Statements.”

Business Overview

We primarily offer distributed solar energy to residential customers based on long-term contracts at prices below their current utility rates. Our customer focus, neighborhood-driven direct-to-home sales model, brand and operational efficiency have driven our rapid growth in solar energy installations. We believe our continued growth is disrupting the traditional electricity market by satisfying customers’ demand for increased energy independence and less expensive, more socially responsible electricity generation.

We primarily sell the electricity that our solar energy systems produce through long-term power purchase agreements or lease the solar energy systems through long-term leases. Prior to 2014, all of our long-term customer contracts were structured as power purchase agreements. In 2014, we began offering leases to residential customers. Under either contract type, we install our solar energy system at our customer’s home and bill the customer monthly. In the power purchase agreement structure, we charge customers a fee per kilowatt hour based on the amount of electricity the solar energy system actually produces. In the lease structure, the customer’s monthly payment is fixed based on a calculation that takes into account expected solar energy generation. We provide our lease customers a performance guarantee, under which we agree to make a payment at the end of each year to the customer if the solar energy system does not meet the guaranteed production level in the prior 12-month period. The power purchase agreement and lease terms are typically for 20 years, and virtually all the prices that we charge to our customers are subject to pre-determined annual fixed percentage price escalations as specified in the customer contract. Since the beginning of 2014, substantially all of our customer contracts have included an annual price escalator of 2.9%. We do not believe that either form of long-term customer contract is materially more advantageous to us than the other. In 2015, we began offering our customers the option to purchase solar energy systems.

We compete mainly with traditional utilities. In the markets we serve, our strategy is to price the energy we sell below prevailing retail electricity rates. As a result, the price our customers pay to buy energy from us varies depending on the state where the customer is located and the local traditional utility. In markets that are also served by other distributed solar energy system providers, the price we charge also depends on customer price sensitivity, the need to offer a compelling financial benefit and the price other solar energy companies charge in the region.

Our ability to offer long-term customer contracts depends in part on our ability to finance the installation of the solar energy systems by co-investing or entering into lease arrangements with fund investors who value the resulting customer receivables and investment tax credits, accelerated tax depreciation and other incentives related to the solar energy systems through structured investments known as “tax equity.” Tax equity investments are generally structured as non-recourse project financings. In the context of the distributed solar energy market, tax equity investors make an upfront advance payment to a sponsor through an investment fund in exchange for a share of the tax attributes and cash flows emanating from an underlying portfolio of solar energy systems. In these tax equity investments, the U.S. federal tax attributes offset taxes that otherwise would have been payable on the investors’ other operations.

As of February 29, 2016, we had raised 16 residential investment funds to which investors such as banks and other large financial investors have committed to invest approximately $1.1 billion, which will enable us to install solar energy systems of total fair market value approximating $2.6 billion. As of February 29, 2016, we had tax equity commitments to fund approximately 55 megawatts of future deployments, which we estimate to be sufficient to fund solar energy systems with a total fair market value of approximately $241 million. As of February 29, 2016, we had entered into one commercial and industrial, or C&I, investment fund with a total committed capital amount of $150.0 million. The C&I investment fund was not operational, i.e., no projects had been accepted into the fund as of February 29, 2016. The terms and conditions of each investment fund vary significantly by investor and by fund. We continue to negotiate with financial investors to create additional investment funds.

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Our investment funds have adopted the partnership, inverted lease or lease pass-through structures.Under partnership structures, we and our fund investors contribute cash into a partnership company. The partnership uses this cash to acquire solar energy systems developed by us and sells energy from such systems to customers or directly leases the solar energy systems to customers. Under our existing inverted lease structures, we and the fund investor set up a multi-tiered investment vehicle, comprised of two partnership entities, that facilitates the pass through of the tax benefits to the fund investors. In this structure we contribute solar energy systems to a lessor partnership entity in exchange for interests in the lessor partnership and the fund investors contribute cash to a lessee partnership in exchange for interests in the lessee partnership which in turn makes an investment in the lessor partnership entity in exchange for interests in the lessor partnership. The lessor partnership distributes the cash contributions received from the lessee partnership to our wholly owned subsidiary that contributed the projects to the lessor partnership. The lessor partnership leases the contributed solar energy systems to the lessee partnership under a master lease, and the lessee partnership pays the lessor partnership rent for those systems.

In 2015, we entered into a lease pass-through structure in which we set up a lessor entity and the fund investor set up a lessee entity. Under this structure, we lease solar energy systems to the fund investor under a master lease agreement, and the investor in turn subleases the solar energy systems to customers. We receive all of the value attributable to the accelerated tax depreciation and the value attributable to the other incentives. We assign to the fund investor the value attributable to the ITCs and, for the duration of the master lease term, the long-term recurring customer payments. The investor makes a significant upfront cash payments that we classify and allocate between the right to the ITCs and the future customer lease payments and other benefits assigned to the investor, which are recorded as a lease pass-through financing obligation. After the master lease term expires, we receive the customer payments. We record the amounts allocated to the ITCs as deferred revenue on our consolidated balance sheets as the associated solar energy systems are placed in service. We then recognize the deferred revenue in our consolidated statements of operations as revenue from operating leases and incentives, by reducing the deferred revenue balance at each reporting date as the five-year recapture period expires. We record the balance of the amounts received from fund investors as a financing obligation on our consolidated balance sheets and subsequently reduce the obligation by the amounts received by the fund investors from customer payments and the associated incentive rebates. We in turn recognize the incentive rebates and customer payments as revenue over the customer lease term and depreciate the associated solar energy systems over the estimated life of these systems.

We have determined that we are the primary beneficiary in these partnership and inverted lease structures for accounting purposes. Accordingly, we consolidate the assets and liabilities and operating results of these partnerships in our consolidated financial statements. We recognize the fund investors’ share of the net assets of the investment funds as non-controlling interests and redeemable non-controlling interests in our consolidated balance sheets. These income or loss allocations, reflected on our consolidated statement of operations, may create significant volatility in our reported results of operations, including potentially changing net income available (loss attributable) to common stockholders from income to loss, or vice versa, from quarter to quarter.

Recent Developments

SunEdison Acquisition

In July 2015, we entered into the Merger Agreement, which agreement was amended in December 2015, pursuant to which we were to have been acquired by SunEdison.

We delivered notice to SunEdison on February 26, 2016, and again on March 1, 2016, that, pursuant to Section 1.02 of the Merger Agreement, SunEdison was required to cause the closing of the acquisition to occur on February 26, 2016, and remained obligated to cause the closing to occur, given that all conditions to SunEdison’s obligations to close the acquisition in Section 6.01 and 6.03 of the Merger Agreement were satisfied on February 24, 2016 when (1) our stockholders adopted the Merger Agreement, and (2) the marketing period contemplated by the agreement related to SunEdison’s financing of the acquisition (which commenced when we delivered all required information to SunEdison on February 11, 2016) terminated on February 21, 2016. SunEdison’s failure to cause the closing within three business days of the delivery of the notices specified in the preceding sentence triggered our right to terminate the Merger Agreement pursuant to Section 7.01(i) thereof.

Moreover, as of SunEdison’s failure to cause the closing to occur on February 26, 2016, SunEdison was in breach of its covenants under Section 1.02 and 4.05(a) of the Merger Agreement, and such breach resulted in the failure of the conditions set forth in Section 6.02 of the Merger Agreement to be satisfied on such date. SunEdison’s representatives subsequently have informed us that SunEdison is unable to cause the closing to occur in the foreseeable future. Since such breach is therefore incurable prior to March 18, 2016, the date on which the Merger Agreement would otherwise terminate, we have the right to terminate the Merger Agreement pursuant to Section 7.01(e) thereof.

As a result of the foregoing and in accordance with and pursuant to our rights under Section 7.01(i) and 7.01(e) of the Merger Agreement, we terminated the Merger Agreement. 

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On March 8, 2016, we filed suit in the Court of Chancery State of Delaware against SunEdison alleging that SunEdison willfully breached its obligations under the Merger Agreement and breached its implied covenant of good faith and fair dealing. We are seeking declaratory judgment, award damages, costs and reasonable attorney’s fees and such further relief that the court finds equitable, appropriate and just.

During the nine months of the pendency of the potential acquisition of our company by SunEdison, our planning related to being part of a larger organization, which would require a different headcount and cost structure than if we were operating as a standalone entity. During the pendency of the potential acquisition, we were restricted in our ability to obtain financing. As a result, we deferred pursuit of various financing options, including acquiring additional investment funds and incurring additional debt. Our executive leadership team, together with our board of directors, is re-evaluating our operating plan in light of the termination of the Merger Agreement and our financing needs. As a result, as of the date of this report we are uncertain as to what level of growth, resources and ultimately costs that may be incurred in future business operations.

Term Loan Facility

On March 14, 2016, Vivint Solar Financing Holdings, LLC, one of our subsidiaries, entered into a financing agreement pursuant to which it may borrow up to an aggregate principal amount of $200.0 million of term loan borrowings from investment funds and accounts advised by Highbridge Principal Strategies, LLC. We refer to such financing agreement as the “term loan facility.” We will initially incur $75.0 million in borrowings,one-third at closing and the remainder within 30 days of the closing date. We refer to such initial borrowings as “Tranche A” borrowings. The remaining $125.0 million aggregate principal amount in borrowings may be incurred in three installments of at least $25.0 million aggregate principal amount prior to the first anniversary of the closing date. We refer to such subsequent borrowings, if any, as “Tranche B” borrowings. If we do not incur any Tranche B borrowings, we must repay outstanding Tranche A borrowings in December 2016. If we incur any Tranche B borrowings, the maturity date for all borrowings will be extended to the fourth anniversary of the closing date. If we incur any Tranche B borrowings, we may not prepay any borrowings until the second anniversary of the closing date and any subsequent prepayments are subject to a fee equal to a 3.0% penalty. Borrowings under the term loan facility will be used for the construction and acquisition of solar energy systems.

Interest on the Tranche A borrowings accrues at a floating rate of LIBOR plus 5.5%; provided that if any Tranche B borrowings are incurred, the interest rate increases to a floating rate of LIBOR plus 8.0% for the entire principal amount outstanding. The term loan facility includes customary events of default, conditions to borrowing and covenants, including covenants that restrict, subject to certain exceptions, the borrower’s, and the guarantors’ ability to incur indebtedness, incur liens, make investments, make fundamental changes to their business, dispose of assets, make certain types of restricted payments or enter into certain related party transactions. These restrictions do not impact our ability to enter into investment funds, including those that are similar to those entered into previously. Additionally, the parties to the term loan facility must maintain certain consolidated and project subsidiary loan-to-value ratios and a consolidated debt service coverage ratio, with such covenants to be tested as of the last day of each fiscal quarter and upon each incurrence of borrowings. Each of the parties to the term loan facility has pledged assets not otherwise pledged under another existing debt facility as collateral to secure their obligations under the term loan facility. Vivint Solar Financing Holdings Parent, LLC, another of our subsidiaries and the parent company of the borrower and certain other of our subsidiaries guarantee the borrower’s obligations under the financing agreement.

Key Operating Metrics

We regularly review a number of metrics, including the following key operating metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. Some of our key operating metrics are estimates. These estimates are based on our management’s beliefs and assumptions and on information currently available to management. Although we believe that we have a reasonable basis for each of these estimates, these estimates are based on a combination of assumptions that may not prove to be accurate over time, particularly given that a number of them involve estimates of cash flows up to 30 years in the future. Underperformance of the solar energy systems, payment defaults by our customers, cancellation of signed contracts, competition from other distributed solar energy companies, development in the distributed solar energy market and the energy market more broadly, technical innovation or other factors described under the section of this report captioned “Risk Factors” could cause our actual results to differ materially from our calculations. Furthermore, while we believe we have calculated these key metrics in a manner consistent with those used by others in our industry, other companies may in fact calculate these metrics differently than we do now or in the future, which would reduce their usefulness as a comparative measure.

· Solar energy system installations. Solar energy system installations represents the number of solar energy systems installed on customers’ premises. Cumulative solar energy system installations represents the aggregate number of solar energy systems that have been installed on customers’ premises. We track the number of solar energy system installations as of the end of a given period as an indicator of our historical growth and as an indicator of our rate of growth from period to period.

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· Megawatts installed. Megawatts installed represents the aggregate megawatt nameplate capacity of solar energy systems that have been installed during the applicable period. Cumulative megawatts installed represents the aggregate megawatt nameplate capacity of solar energy systems that have been installed. We track the nameplate capacity of our solar energy systems as measured in megawatts DC STC, or direct current standard test conditions. Because the size of solar energy systems varies greatly, we believe that tracking the aggregate megawatt nameplate capacity of the systems is an indicator of our growth rate. We track megawatts installed in a given period as an indicator of asset growth in the period and cumulative megawatts installed as of the end of a given period as an indicator of our historical growth. 

· Estimated nominal contracted payments remaining. Estimated nominal contracted payments remaining equals the sum of the remaining cash payments that our customers are expected to pay over the term of their agreements with us for systems installed as of the measurement date. For a power purchase agreement, we multiply the contract price per kilowatt-hour by the estimated annual energy output of the associated solar energy system to determine the estimated nominal contracted payments. For a customer lease, we include the monthly fees and upfront fee, if any, as set forth in the lease. We use the nominal contracted payments, together with the value attributable to investment tax credits, accelerated depreciation, solar renewable energy certificates, or SRECs, state tax benefits and rebates, to cover the fixed and variable costs associated with installing solar energy systems. Estimated nominal contracted payments remaining is a reporting metric forecasted as of specified dates. It is a forward-looking number, and we use judgment in developing the assumptions used to calculate it. The primary assumption in the calculation is the annual energy output of the associated solar energy systems, which is estimated based on typical annual sun hours given the system’s location, nameplate production capacity of the system, and estimated declines in the solar equipment productivity over the life of the system. Those assumptions may not prove to be accurate over time. Estimated retained value and estimated retained value per watt amounts do not consider the impact of other events that could adversely affect the cash flows generated by the solar energy system during the contract term and anticipated renewal period. These events could include, but are not limited to, non-payment of obligated amounts by the customer, declines in utility rates for residential electricity or early contract termination by the customer as a result of the customer purchasing the solar energy system in connection with the sale of the home on which the solar energy system is installed.

· Estimated retained value. Estimated retained value represents the net cash flows discounted at 6% that we expect to receive from customers pursuant to long-term customer contracts net of estimated cash distributions to fund investors and estimated operating expenses for systems installed as of the measurement date. Estimated retained value, and the other metrics that are based on estimated retained value, are key operating metrics because these amounts reflect the net cash flows we expect to receive from customers pursuant to long-term customer contracts and represent valuable future revenue streams created by our operations, but which are not yet recognized on our financial statements.

· Estimated retained value under energy contracts. Estimated retained value under energy contracts represents the estimated retained value from the solar energy systems during the typical 20-year term of our contracts.

· Estimated retained value of renewal. Estimated retained value of renewal represents the estimated retained value associated with an assumed 10-year renewal term following the expiration of the initial contract term. To calculate estimated retained value of renewal, we assume all contracts are renewed at 90% of the contractual price in effect at the expiration of the initial term.

· Estimated retained value per watt. Estimated retained value per watt is calculated by dividing the estimated retained value as of the measurement date by the aggregate nameplate capacity of solar energy systems under long-term customer contracts that have been installed as of such date, and is subject to the same assumptions and uncertainties as estimated retained value. We have chosen to initially introduce our solar energy systems in states where utility rates, solar resource and regulatory policies provide for the most compelling market for distributed solar energy. Although we believe there are many other markets that have attractive economics for us, estimated retained value per watt will decrease over time because these markets are not as attractive as the ones in which we currently operate. We may experience disproportionate growth in markets that offer attractive incentives such as SRECs, the value of which is not reflected in estimated retained value. In addition, the estimated retained value associated with commercial and industrial solar energy systems is typically less than that for residential solar energy systems. To the extent we expand into the commercial and industrial market, estimated retained value per watt will also be adversely affected. Furthermore, other companies may calculate estimated retained value per watt (or a similar metric) differently than we do, which reduces its usefulness as a comparative measure.

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	Year Ended December 31,
	2015		2014		2013
Solar energy system installations		32,807		22,424		10,521
Megawatts installed		230.8		155.4		58.0
	As of December 31,
	2015		2014		2013
Cumulative solar energy system installations		68,527		35,720		13,296
Cumulative megawatts installed		458.9		228.2		72.8
Estimated nominal contracted payments remaining (in millions)	$	1,871.9	$	1,030.5	$	394.1
Estimated retained value under energy contracts (in millions)	$	705.6	$	383.1	$	151.2
Estimated retained value of renewal (in millions)	$	200.5	$	97.9	$	39.2
Estimated retained value (in millions)	$	906.1	$	480.9	$	190.4
Estimated retained value per watt	$	1.98	$	2.11	$	2.62

Factors Affecting Our Performance

Availability of Capital

Our future success depends on our ability to raise capital from third-party investors on competitive terms to help finance the deployment of our residential solar energy systems. There are a limited number of potential investment fund investors and the competition for these investments is intense. The principal tax credit on which fund investors in our industry rely is the investment tax credit, or ITC. The amount for the ITC is equal to 30% of the value of eligible solar property. By statute, the ITC percentage is scheduled to decrease to 26% on January 1, 2020, 22% on January 1, 2021 and 10% on January 1, 2022. We intend to create additional investment funds with financial investors and corporate investors. We also use debt, equity or other financing strategies to fund our operations, including our obligations to make contributions to investment funds. Such other financing strategies may increase our cost of capital.

Incentives; Net Metering

Our cost of capital, the price we can charge for electricity, the cost of our systems and the demand for residential distributed solar energy is impacted by a number of federal, state and local government incentives and regulations, including: tax credits, particularly the ITC; tax abatements; rebate programs; net metering; and SRECs. These programs have on occasion been challenged by incumbent utilities and questioned by those in government and others arguing for less governmental spending and involvement in the energy market. In recent years, net metering programs have been subject to regulatory scrutiny and legislative proposals in some states, such as Arizona, California, Colorado, Hawaii, Nevada and Utah. Regulators in these states have considered imposing limits on the aggregate capacity of net metering generation, fees on net metering customers, reducing the rate that net metering customers are paid for the power that they deliver back to the grid and allegations that homeowners with net metered solar systems shift the costs of maintaining the electric grid onto non-solar ratepayers. For example, in California, the Public Utilities Commission largely upheld net metering in its current form with full retail compensation for exports, but did impose some additional fees on net metering customers, and will require such customers to take service on time of use rates. Additionally, in late 2015, the Nevada Public Utilities Commission voted in favor of a plan which limits export compensation to net metering customers and imposed high monthly fees, which greatly reduced the economic benefit to Nevada customers of residential solar. As a result we no longer have a presence in Nevada. To the extent that such views are reflected in government policy, the reduction of such incentives could adversely affect our results of operations, cost of capital and growth prospects.

We also apply for and receive SRECs and other state-level incentives in certain jurisdictions for power generated by our solar energy systems, which comprise a significant portion of the value to us of the associated solar energy systems. The market for SRECs is extremely volatile and sellers are often able to obtain better unit pricing by selling a large quantity of SRECs. As a result, we may sell SRECs infrequently, at opportune times and in large quantities and the timing and volume of our SREC sales may lead to fluctuations in our quarterly results.

Cost of Solar Energy Systems

Since our inception, the cost of solar panels and the components necessary to manufacture them has declined, which has been a key driver in the price we charge for electricity and customer adoption of solar energy. We have purchased substantially all of the solar panels used in our solar energy systems from manufacturers based in China which have benefited from favorable governmental policies and subsidies by the Chinese government. More recently, solar panel and component prices have stabilized and could increase in the future. In recent years, the U.S. government has imposed anti-dumping duties and countervailing duties on solar panels and other system components produced in China and Taiwan. See “Risk Factors—Risk Related to our Business—Our business has

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benefited from the declining cost of solar panels, and our financial results may be harmed now that the cost of solar panels has stabilized and could increase in the future.” As a result, we have begun sourcing solar cells from manufacturers located outside of China or Taiwan. The cost of other components, such as inverters, racking systems and other electrical equipment, may also vary from period to period. If solar energy system costs begin to increase, whether as a result of these tariffs or because of the removal of government subsidies, we may be forced to pass these costs on to our customers and the value proposition for customers would decrease. Alternatively, our financial results would decrease if we did not pass these costs on to our customers.

Expansion into New Markets

As of December 31, 2015, we operate in Arizona, California, Connecticut, Hawaii, Maryland, Massachusetts, New Jersey, New Mexico, New York, Pennsylvania, South Carolina and Utah. We chose to introduce our solar energy systems in these states based on the utility prices, sun exposure, climate conditions and regulatory policies in those states. We believe that these states remain underpenetrated. Accordingly, we intend to further penetrate these markets by introducing our solar energy systems into new neighborhoods and communities in states where we already have operations.

In recent years, the combination of declining solar energy system costs and increasing retail electricity prices have made distributed solar energy a cost effective power source for homeowners in an increasing number of markets. We plan to enlarge our addressable market by expanding into new states that present attractive economics for us and homeowners. We believe our scalable approach to entering new geographic markets significantly accelerates the time required for us to effectively sell in a particular market after establishing a new office.

Utility rates, availability of state incentives, other state, regional and local regulations, sun exposure and weather conditions, which can impact sales, installation and system productivity, vary by market. For example, markets in California typically have higher utility rates than markets in the Eastern United States. As a result, systems in California typically have a higher retained value than systems in the Eastern United States. However, we are entitled to receive SRECs and other state incentives in many Eastern states that are not available in Western United States. Although the impact of such incentives is not reflected in the retained value of the associated systems, they do generate value for us. As a result our financial and operating results will be affected by the geographic mix of the systems we install.

In May 2015, we entered into the C&I market with the closing of a tax equity fund specific to the C&I segment. The C&I segment encompasses businesses ranging from large, national retailers, municipal governments and smaller, regional opportunities. As of December 31, 2015, we have contracts in place with commercial off-takers but no projects have been accepted into the investment fund. The development cycle of C&I projects is typically longer than the development of residential solar energy systems due to complexities associated with significantly larger system sizes and installations. The project approval process by the fund investor has been delayed due to uncertainty related to the proposed SunEdison acquisition, and we may face continued delays following the termination of the Merger Agreement. The total available committed capital under the fund is $150.0 million, which is expected to be contributed starting in the second quarter of 2016.

Sales Channels

We place our integrated residential solar energy systems through a sales organization that primarily uses a direct-to-home sales model. We believe that a high-touch, customer-focused selling process is important before, during and after the sale of our products to maximize our sales success. The members of our sales force typically reside and work within the market they serve. We also generate a significant amount of sales through customer referrals. We have found that customer referrals increase in relation to our penetration in a particular market and shortly after entering a new market become an increasingly effective way to market our solar energy systems. We employ a direct-to-home sales model because we believe it improves sales effectiveness. Currently, we ask potential customers to sign long-term customer contracts at no upfront cost to them and prior to us conducting a formal assessment of the home, designing a system, obtaining permits and other actions required prior to installation. As may be expected with a direct sales model, a large number of potential customers who sign long-term customer contracts ultimately elect not to have a system installed or the potential customers fail to meet our underwriting standards. We believe there are opportunities to improve the rate at which potential customers ultimately move forward through system installation, including by conducting the formal assessment of the home on the day the contract is signed, or requiring potential customers to commit to a modest upfront fee that would be credited against payments under our contracts with them. We are currently evaluating such changes to determine if they can improve our signing to installation rate.

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In addition to direct sales, we sell to customers through our inside sales team and through our retail channel that reaches new customers at kiosks in malls and at event locations. We also continue to explore opportunities to sell solar energy systems to customers through a number of other distribution channels, including relationships with home builders, home improvement stores, large construction, electrical and roofing companies and other third parties that have access to large numbers of potential customers. We believe that such initiatives will contribute to our revenue growth. The potential impact of these initiatives on our financial results, however, is uncertain because while the price per kilowatt we can charge may be lower, we expect to benefit from more favorable cost structures by virtue of the larger nature of the installations.

Operations as a Stand-Alone Company

Since inception, we have relied on the administrative and operational support of our sister company Vivint Inc., or Vivint, to run our business. Some of the Vivint resources we have historically used included office space, information and technology resources and systems, purchasing services, operational and fleet services and marketing services. Our use of Vivint services has steadily decreased since 2013 and now consists primarily of IT support. Our historical financial information does not necessarily reflect what our financial position, results of operations, cash flows or costs and expenses would have been had we operated separately from Vivint during the historical periods presented in this report. The historical costs and expenses reflected in our consolidated financial statements include charges to certain corporate functions historically provided to us by Vivint. We and Vivint believe these charges are reasonable reflections of the historical utilization levels of these services in support of our business.

Although we have made and are continuing to make investments to support our near and longer-term growth as a fully independent company, we will continue to have an ongoing relationship with Vivint which will provide services consisting primarily of IT support. Our continued expansion may exceed the capacity that Vivint is able to provide under the terms of such agreement. If Vivint is unable to satisfy its obligations thereunder on a timely basis, we may face difficulties in providing these services internally or implementing acceptable, substitute arrangements with third-party providers. Furthermore, as we transition IT systems from Vivint and rely on our own infrastructure, we have experienced and may continue to experience interruptions or inefficiencies that adversely affect our operations, customer satisfaction and increase our costs.

Components of Results of Operations

Revenue

We classify and account for our long-term power purchase agreements as operating leases, and recognize revenue from these contracts based on the actual amount of power generated at rates specified under the contracts. In 2014, we began offering solar energy systems to customers pursuant to legal-form leases. Depending on the level of the guarantee, we either recognize revenue based on the amount of power generated at rates specified under the contracts and establish a reserve for those lease contracts for which we may have to make a payment at the end of each year to the customer if the solar energy systems do not meet a guaranteed production level in the prior 12-month period or we treat as an operating lease and recognize revenue on a straight-line basis over the lease term. In 2015, we began offering our customers the option to purchase solar energy systems. As these sales are not structured as long-term customer contracts, revenue is recognized when systems are interconnected to local power grids and granted permission to operate, assuming all other revenue recognition criteria are met.

We consider the proceeds from solar energy system rebate incentives offered by certain state and local governments to form part of the payments under our operating leases and recognize such payments as revenue over the contract term. We record revenue from our operating leases over the term of our long-term customer contracts, which is typically 20 years. We also apply for and receive SRECs in certain jurisdictions for power generated by our solar energy systems. We generally recognize revenue related to the sale of SRECs upon delivery. The market for SRECs is extremely volatile and sellers are often able to obtain better unit pricing by selling a large quantity of SRECs. As a result, we may sell SRECs infrequently, at opportune times and in large quantities and the timing and volume of our SREC sales may lead to fluctuations in our quarterly results. For the years ended December 31, 2015, 2014 and 2013, approximately 22%, 10% and 5% of our revenue was attributable to SREC sales, and less than 1% of our revenue was attributable to state and local rebates and incentives in all periods presented. There were no C&I revenues recognized in the periods presented. We also recognize revenue related to the sale of photovoltaic installation devices and software products, a portion of which has consisted of post-contract customer support in prior periods. The following table sets forth our revenue by major product (in thousands):

	Year Ended December 31,
	2015		2014		2013
Revenue:
Operating leases and incentives	$	61,150	$	21,688	$	5,864
Photovoltaic installation devices and software		2,270		3,213		—
Solar energy system sales		762		357		306
Total revenue	$	64,182	$	25,258	$	6,170

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Operating Expenses

Cost of Revenue.     Cost of operating leases and incentives is comprised of the depreciation of the cost of the solar energy systems, which are depreciated for accounting purposes over 30 years; the amortization of initial direct costs, which are amortized over the term of the long-term customer contract; and the indirect costs related to the processing, account creation, design, installation, interconnection and servicing of solar energy systems, which are not capitalized, such as personnel costs not directly associated to a solar energy system installation, warehouse rent, utilities and fleet vehicle executory costs. Under our direct sales model, a vast majority of payments to our direct sales personnel consist of commissions attributable to long-term customer contract acquisition. Capitalized initial direct costs consist of these commissions and other customer acquisition expenses. The cost of operating leases and incentives related to the sales of SRECs is limited to broker fees, which are only paid in connection with certain transactions. Accordingly, the sale of SRECs in a quarter favorably impacts our operating results for that period.

Cost of solar energy system and product sales consists of direct and indirect material and labor costs for solar energy systems. It also consists of materials, personnel costs, depreciation, facilities costs, other overhead costs and infrastructure expenses associated with the manufacturing of the photovoltaic installation devices and software products.

Sales and Marketing Expenses.     Sales and marketing expenses include personnel costs, such as salaries, benefits, bonuses and stock-based compensation for our corporate sales and marketing employees and exclude costs related to our direct sales personnel that are accounted for as cost of revenue. Sales and marketing expenses also include advertising, promotional and other marketing-related expenses; certain allocated corporate overhead costs related to facilities and information technology; travel and professional services.

Research and Development.     Research and development expense is comprised primarily of salaries and benefits and other costs related to the development of photovoltaic installation devices and software products and the development of other solar technologies. Research and development costs are charged to expense when incurred.

General and Administrative Expenses.     General and administrative expenses include personnel costs, such as salaries, bonuses and stock-based compensation related to our general and administrative personnel; professional fees related to legal, human resources, accounting and structured finance services; travel; and allocated facilities and information technology costs. Our financial results have included charges for the use of services provided by Vivint, including shared facilities in 2014. These costs were based on the actual cost incurred by Vivint without mark-up. The charges to us may not be representative of what the costs would have been had we operated separately from Vivint during the periods presented. However, we believe the amounts charged are representative of the incremental cost to Vivint to provide these services to us. We continue to use information and technology resources and systems administered by Vivint; however, we plan to be completely transitioned to our own systems by the end of 2016.

Amortization of Intangible Assets.     We have recorded intangible assets at their fair value related to acquisitions in which we have been involved. Such intangible assets are amortized over their estimated useful lives. In future periods, we expect amortization of intangible assets to decrease as our customer contracts asset became fully amortized in 2015.

Impairment of Intangible Assets.     During 2015, we discontinued the external sale of two Vivint Solar Labs products. This discontinuance was considered an indicator of impairment, and we performed a review regarding the recoverability of the carrying value of the related intangible assets. As a result of this review, we recorded an impairment charge of $4.5 million in the first quarter of 2015.

Non-Operating Expenses

Interest Expense.     Interest expense primarily consists of the interest charges associated with our indebtedness including the amortization of deferred financing costs and the interest component of capital lease obligations. In the future we may incur additional indebtedness to fund our operations and our interest expense would correspondingly increase.

Other (Income) Expense.     Other (income) expense consists primarily of interest and penalties associated with employee payroll withholding tax payments which were not paid in a timely manner offset by the abatement of a portion of such penalties from prior periods.

Income Tax (Benefit) Expense.     All of our business is conducted in the United States, and therefore income tax (benefit) expense consists of current and deferred income taxes incurred in U.S federal, state and local jurisdictions.

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Cost Structure

During the nine months of the pendency of the potential SunEdison acquisition, our operating plans were based on being part of a larger organization, which would have required a different headcount and cost structure than if we had operated as a standalone entity. During the pendency of the potential acquisition, we were restricted in our ability to obtain financing. As a result, we deferred pursuit of various financing options, including acquiring additional investment funds and incurring additional debt. Our executive leadership team, together with our board of directors, is re-evaluating our operating plan in light of the termination of the Merger Agreement and our financing needs. As a result, as of the date of this report we are uncertain as to what level of growth, resources and ultimately costs that may be incurred in future business operations.

Net Income Available (Loss Attributable) to Stockholders

We determine the net income available (loss attributable) to stockholders by deducting from net loss the net loss attributable to non-controlling interests and redeemable non-controlling interests. The net loss attributable to non-controlling interests and redeemable non-controlling interests represents the investment fund investors’ allocable share in the results of operations of the investment funds that we consolidate.

We have determined that the legal provisions in the contractual arrangements of the investment funds in which there is a non-controlling interest represent substantive profit-sharing arrangements, where the allocation to the partners differ from the stated ownership percentages. We have further determined that the appropriate methodology for attributing income and loss to the non-controlling interests and redeemable non-controlling interests each period is a balance sheet approach using the hypothetical liquidation at book value, or HLBV, method. Under the HLBV method, the amounts of income and loss attributed to the non-controlling interests and redeemable non-controlling interests in the consolidated statements of operations reflect changes in the amounts the fund investors would hypothetically receive at each balance sheet date under the liquidation provisions of the contractual agreements of these funds, assuming the net assets of the respective investment funds were liquidated at recorded amounts determined in accordance with GAAP. The fund investors’ interest in the results of operations of these investment funds is determined as the difference in the fund investors’ claim under the HLBV method at the start and end of each reporting period, after taking into account any capital transactions between the fund and the fund investors. For all of our investment funds, the application of HLBV is performed consistently. However, the results of that application and its impact on the income or loss allocated between us and the non-controlling interests and redeemable non-controlling interests depend on the respective funds’ specific contractual liquidation provisions. For all of our investment funds, the HLBV results are generally affected by, among other factors, the tax attributes allocated to the fund investors including tax bonus depreciation and investment tax credits or U.S. Treasury grants received in lieu of the investment tax credits, the amount of preferred returns that have been paid to the fund investors by the investment funds, and the allocation of taxable income or losses in a liquidation scenario.

Regardless of the investment fund structures, the contractual liquidation provisions of our existing funds in which there is a non-controlling interest provide that the allocation percentages between us and the investor change, or “flip,” under certain circumstances. Prior to the point at which the allocation percentage flips, the investor is entitled to receive a contractually agreed upon allocation of the value generated by the solar energy systems. The allocation of cash payments received from customers may differ from the allocation of other tax benefits. Afterwards, we are entitled to receive the majority of the value generated by the solar energy systems. The difference between our current inverted lease structures and our current partnership structures that drives a significant impact on our results from the application of the HLBV method is how the flip point is determined. The result of this difference is described in detail in the following paragraphs.

For our existing investment funds that have adopted the partnership structure, the flip point is tied to the achievement of the fund investor’s targeted after tax rate of return. The receipt of tax benefits by the fund investor count towards the achievement of such target, which reduces the amount distributable to the fund investor in a hypothetical liquidation under these funds’ contractual liquidation provisions. This generally results in a net loss attributable to the fund investor in the period in which these tax benefits are received as a result of our application of the HLBV method.

For our existing investment funds that have adopted the inverted lease structure, the flip point is typically tied to the passage of a period of time that corresponds to the expiration of the recapture period associated with ITCs. An investor in a fund with an inverted lease fund structure will receive tax benefits similar to an investor in a fund that has adopted a partnership structure; however, unlike the partnership investment fund structure, the receipt of tax benefits by the fund investor does not impact the amount distributable to the fund investor in a hypothetical liquidation under these funds’ contractual liquidation provisions. At the flip point, which typically corresponds to the end of the ITC recapture period, the fund investor’s claims on the net assets of the investment fund generally decreases. This is expected to result in a net loss attributable to the fund investor in the period when the flip occurs as a result of our application of the HLBV method.

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These differences are a result of the specific contractual provisions for each of our existing funds and are not necessarily indicative of terms for our future partnership or inverted lease structures. Future investment funds may contain different features than those that we currently employ and, as a result, would not necessarily impact the HLBV calculation and resulting allocation of net income or loss in the same way that our existing funds do.

The HLBV calculation for both fund structures is also impacted by the difference between the cash received by us from the investment funds and the carrying value of the solar energy systems contributed to the investment funds. The purchase price paid for solar energy systems by an investment fund is based on the fair market value, as determined by an independent appraiser. As we consolidate both the subsidiary that develops the solar energy systems and the investment fund, the sales of the solar energy systems are considered transactions under common control and are therefore reflected at their historical cost, or their carryover basis. Cash received in excess of the installed purchased solar energy systems’ carryover basis is treated as deemed distributions from the investment fund to us. In most cases, any excess of the purchase price over the carryover basis of the solar energy systems would result in allocations of income to us.

The HLBV calculation for both fund structures may also be affected by the timing of an investor’s cash contribution to the investment fund relative to the timing of the contribution or sale of the solar energy systems to the applicable investment fund. A portion of the solar energy systems purchased by, or contributed to, an investment fund are not installed at the time of purchase or contribution and therefore do not have any carryover basis allocated to them. Our wholly owned subsidiary has an obligation to purchase, install and provide the solar energy system equipment to an investment fund for any in-progress projects that were previously purchased by such fund. If our wholly owned subsidiary does not ultimately provide the investment fund with the solar energy systems that it purchased, it is required to refund the purchase price to the investment fund. In these specific cases, we determined that the portion of the cash purchase price paid by an investment fund that relates to in-progress projects should be recorded as a receivable by the investment fund, representing the investment fund’s right to receive solar panels and related equipment for solar energy systems that are installed after the project is purchased by the investment fund. Given that our subsidiary controls the investment fund, we have accounted for the receivable balance as a reduction in the investment fund’s members’ equity in accordance with GAAP. Initially this may result in allocations of losses amongst the partners, as the GAAP equity balance is less than the tax capital account. The allocations of such losses amongst the partners follow the contractual liquidation provisions of the partnership agreements. When such solar energy systems are subsequently installed, the systems are recorded at their carryover basis as a common control transaction and the receivable balance is eliminated. With the elimination of the receivable, the investment fund’s member’s equity is increased to the extent of the carrying amount of the assets contributed, which results in the reversal of a portion of the prior allocation of losses. In most cases, the reversal of such losses occurs within a short period of time, approximately three to six months. As discussed above, the difference between the receivable balance eliminated and the carryover basis of the installed solar energy systems is treated as deemed distributions from the investment fund to us, and as a result, that portion of the prior allocation of losses is not reversed over time.

If the redemption value of our redeemable non-controlling interests exceeds their carrying value after attribution of income or loss under the HLBV method in any period, we will make an additional attribution of income to our redeemable non-controlling interests such that their carrying value will at least equal the redemption value.

We apply the HLBV method consistently across our investment funds in which we have an equity interest. However, the impact on non-controlling interests and redeemable non-controlling interests may vary significantly period-to-period depending on the structure of the funds we enter into, the contractual liquidation provisions of such investment funds, the age of such investment funds and the timing of an investor’s cash contribution to the investment fund relative to the timing of the contribution or sale by us of the solar energy system to the applicable investment fund.

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Results of Operations

The results of operations presented below should be reviewed in conjunction with the consolidated financial statements and related notes included elsewhere in this report.

The following table sets forth selected consolidated statements of operations data for each of the periods indicated.

	Year Ended December 31,
	2015			2014			2013
	(In thousands)
Revenue:
Operating leases and incentives	$	61,150		$	21,688		$	5,864
Solar energy system and product sales		3,032			3,570			306
Total revenue		64,182			25,258			6,170
Operating expenses:
Cost of revenue—operating leases and incentives		131,213			67,984			19,004
Cost of revenue—solar energy system and product sales		1,762			1,997			123
Sales and marketing		48,078			21,869			7,348
Research and development		3,901			1,892			—
General and administrative		92,664			78,899			16,438
Amortization of intangible assets		13,172			14,911			14,595
Impairment of intangible assets		4,506			—			—
Total operating expenses		295,296			187,552			57,508
Loss from operations		(231,114	)		(162,294	)		(51,338	)
Interest expense		12,568			9,323			3,144
Other (income) expense		(154	)		1,372			1,865
Loss before income taxes		(243,528	)		(172,989	)		(56,347	)
Income tax expense (benefit)		9,737			(7,070	)		123
Net loss		(253,265	)		(165,919	)		(56,470	)
Net loss attributable to non-controlling interests and redeemable    non-controlling interests		(266,345	)		(137,036	)		(62,108	)
Net income available (loss attributable) to common stockholders	$	13,080		$	(28,883	)	$	5,638

Comparison of Years Ended December 31, 2015 and 2014

Revenue

	Year Ended
	December 31,				$ Change
	2015		2014		2015 from 2014
	(In thousands)
Total revenue	$	64,182	$	25,258	$	38,924

The increase in total revenue of $38.9 million was primarily the result of a $27.9 million increase in operating lease revenue as the total megawatts of solar energy systems placed in service increased 134%. In addition, revenue from the sale of SRECs increased $11.3 million primarily related to the increased solar energy systems in service and solar energy system sales increased by $0.4 million. These increases were partially offset by a $0.9 million decrease in photovoltaic device and software revenue as a result of discontinuing external sales of certain Vivint Solar Labs products.

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Operating Expenses

	Year Ended
	December 31,				$ Change
	2015		2014		2015 from 2014
	(In thousands)
Operating expenses:
Cost of revenue—operating leases and incentives	$	131,213	$	67,984	$	63,229
Cost of revenue—solar energy system and product sales		1,762		1,997		(235	)
Sales and marketing		48,078		21,869		26,209
Research and development		3,901		1,892		2,009
General and administrative		92,664		78,899		13,765
Amortization of intangible assets		13,172		14,911		(1,739	)
Impairment of intangible assets		4,506		—		4,506
Total operating expenses	$	295,296	$	187,552	$	107,744

Cost of Revenue—operating leases and incentives. The $63.2 million increase was in part due to a $33.8 million increase in compensation and benefits primarily due to employee headcount growth and the increase in installed solar energy systems related to solar energy system installation activities. Installation and operations employee headcount increased 53%. Depreciation and amortization of solar energy systems also increased $14.2 million primarily due to the increase in installed solar energy systems. Fleet vehicle maintenance, information technology, warehouse and other installation costs increased $10.1 million due to increased installations and an approximately 70% increase in warehouses in operation. Stock-based compensation increased $2.0 million primarily due to a performance condition being met in 2015. Administrative costs increased $1.8 million primarily due to employee headcount growth and an increase in miscellaneous office expenses, such as office and personnel supplies and telecommunications. Additionally, accrued losses on solar energy system removals were $1.0 million in 2015.

Sales and Marketing Expense. The $26.2 million increase was primarily due to our continued efforts to grow the business by entering into new markets, opening new sales offices and hiring sales and marketing personnel. Compensation and benefits increased $10.8 million due to headcount growth of 82%. Stock-based compensation increased $9.9 million primarily due to the grant and vesting of shares issued to sales personnel under the LTIP and a performance condition being met in 2015. Additionally, sales and marketing management costs increased $3.7 million primarily due to increases in contracted services and customer cancellations; and marketing and brand awareness activity costs increased by $1.6 million.

Research and Development Expense. The $2.0 million increase was primarily due to a 129% growth in research and development employee headcount due to additional development activities to optimize and accelerate business growth.

General and Administrative Expense. The $13.8 million increase included a $10.5 million increase in costs related to the proposed acquisition by SunEdison, an $8.3 million increase in compensation and benefits due to general and administrative employee headcount growth of 68%, and a $1.3 million increase in accrued legal settlements. Additionally, other administrative costs, including banking service charges, new office equipment and franchise tax expense increased $3.2 million; depreciation increased $2.2 million due to growth in equipment and leasehold improvements; and insurance costs increased $1.8 million. These increases were partially offset by a $10.6 million decrease in stock-based compensation primarily due to a charge related to the sale of stock to two directors in 2014 and a $0.6 million decrease in professional services fees related to the initiation and servicing of tax equity investment funds. In addition, professional fees decreased $2.4 million resulting from higher costs that were incurred in 2014 as we prepared to operate as a public company that were partially offset by software configuration costs in 2015 as we transition to standalone technology systems.

Amortization of Intangible Assets. The $1.7 million decrease was primarily due to a $1.8 million decrease in amortization related to our customer contracts intangible asset as it became fully amortized in 2015.

Impairment of Intangible Assets. An impairment charge of $4.5 million was recorded in 2015 to write down the value of intangible assets associated with two Vivint Solar Labs products for which external sales were discontinued in 2015. See Note 7—Intangible Assets and Goodwill for additional information.

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Non-Operating Expenses

	Year Ended
	December 31,					$ Change
	2015			2014		2015 from 2014
	(In thousands)
Interest expense	$	12,568		$	9,323	$	3,245
Other (income) expense		(154	)		1,372		(1,526	)

Interest Expense. Interest expense increased $3.2 million primarily as the cost of financing additional borrowings year over year.

Other (Income) Expense. The $1.5 million change from other expense to income was due to a decrease in incurred tax-related interest and penalties and to an abatement of a portion of prior period tax penalties.

Income Taxes

	Year Ended
	December 31,					$ Change
	2015		2014			2015 from 2014
	(In thousands)
Income tax expense (benefit)	$	9,737	$	(7,070	)	$	16,807

The $16.8 million change from income tax benefit to expense was primarily attributable to the effect of non-controlling interests and redeemable non-controlling interests and increased amortization of the prepaid tax asset which were partially offset by an increase in the domestic production activities deduction.

Net Loss Attributable to Non-controlling Interests and Redeemable Non-controlling Interests

	Year Ended
	December 31,						$ Change
	2015			2014			2015 from 2014
	(In thousands)
Net loss attributable to non-controlling interests and redeemable    non-controlling interests	$	(266,345	)	$	(137,036	)	$	(129,309	)

Net loss attributable to non-controlling interests and redeemable non-controlling interests was allocated using the HLBV method. Generally, gains and losses that are allocated to the fund investors relate to hypothetical liquidation gains and losses resulting from differences between the net assets of the investment fund and the partners’ respective tax capital accounts in the investment fund. Losses allocated to the fund investors were also driven by a reduction in certain fund investors’ claims on net assets due to the agreement of the partnership to take bonus depreciation allowances under Internal Revenue Code Section 168(k), as well as the receipt of ITCs that were primarily allocated to fund investors.

Comparison of Years Ended December 31, 2014 and 2013

Revenue

	Year Ended
	December 31,				$ Change
	2014		2013		2014 from 2013
	(In thousands)
Total revenue	$	25,258	$	6,170	$	19,088

The increase in total revenue of $19.1 million was primarily the result of an increase of $13.4 million related to operating lease and incentives and an increase of $2.3 million in the sale of SRECs as the number of installed solar energy systems in service increased 154%. In addition, subsequent to the Solmetric acquisition in January 2014, we recognized revenue of $3.2 million related to the sale of photovoltaic installation devices and software products. We did not recognize revenue related to the sale of photovoltaic installation devices and software products in 2013 as the Solmetric acquisition occurred in January 2014.

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Operating Expenses

	Year Ended
	December 31,				$ Change
	2014		2013		2014 from 2013
	(In thousands)
Operating expenses:
Cost of revenue—operating leases and incentives	$	67,984	$	19,004	$	48,980
Cost of revenue—solar energy system and product sales		1,997		123		1,874
Sales and marketing		21,869		7,348		14,521
Research and development		1,892		—		1,892
General and administrative		78,899		16,438		62,461
Amortization of intangible assets		14,911		14,595		316
Total operating expenses	$	187,552	$	57,508	$	130,044

Cost of Revenue. The increase in cost of revenue—operating leases and incentives of $49.0 million was in part due to a $21.6 million increase in compensation and benefit costs that were expensed in the period related to the design, installation and interconnection of solar energy systems to the power grid primarily due to growth in installation and operations employee headcount of 127% in 2014 and the increase in the number of installed solar energy systems. Other direct installation costs increased $6.8 million and were comprised of items such as rentals and purchases of tools and equipment, inventory obsolescence, insurance and supplies. In addition, depreciation and amortization of solar energy systems increased $6.1 million primarily due to the increase in the number of installed solar energy systems consistent with the significant growth in revenue over these periods. Facility and information technology expenses increased $5.9 million due to our increased headcount and increased utilization of office space by our employees. Other factors contributing to the increase in these expenses were the increases in fleet vehicle maintenance, insurance, warehouse and other related costs of $4.9 million; travel costs related to design and installation activities of $1.4 million; and stock-based compensation of $1.1 million.

The increase in cost of revenue—solar energy system and product sales of $1.9 million was primarily due to the costs of photovoltaic installation software products following the Solmetric acquisition in January 2014.

Sales and Marketing Expense. The increase in sales and marketing expense of $14.5 million was attributable primarily to our continued efforts to grow our business by entering into new markets, opening new sales offices in various locations and increased hiring of sales and marketing personnel, resulting in a sales and marketing employee headcount increase of 120% in 2014. Additionally, the increase in expenses was primarily due to increased compensation and benefits expense of $7.2 million due to the increased headcount, including an increase of $0.8 million related to stock-based compensation; an increase in costs related to advertising, promotional and other marketing-related expenses of $2.7 million; an increase in travel and housing expenses of $2.3 million; and an increase in sales and marketing related administrative costs of $1.7 million.

Research and Development Expense. The $1.9 million increase in research and development expense was attributable to photovoltaic installation device and software product development in 2014. Prior to the Solmetric acquisition in January 2014, we did not incur any research and development expenses.

General and Administrative Expense. The increase in general and administrative expenses of $62.5 million primarily resulted from an increase in professional service fees and stock-based compensation expense. Our professional service fees increased $17.4 million driven primarily from costs related to our initial public offering and preparations to become a public reporting company. Stock-based compensation increased $21.5 million, of which $14.8 million related to purchases of our stock by two of our directors in September 2014 (see Note 12—Redeemable Non-Controlling Interests, Equity and Preferred Stock for more details on this transaction). Our compensation and benefits increased $12.8 million as our employee headcount increased by 310% in 2014 across our general and administrative functions to a level necessary to support the growth of the business. Fees related to the initiation of tax equity investment funds increased by $6.6 million as we closed seven tax equity investment funds during 2014.

Amortization of Intangible Assets. The increase in amortization of intangible assets relates directly to the intangible assets acquired as part of the Solmetric Acquisition.

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Non-Operating Expenses

	Year Ended
	December 31,				$ Change
	2014		2013		2014 from 2013
	(In thousands)
Interest expense	$	9,323	$	3,144	$	6,179
Other (income) expense		1,372		1,865		(493	)

Interest Expense. The increase in interest expense of $6.2 million was primarily due to additional borrowings in 2014. Of the $6.2 million increase, $4.9 million related to our term loan credit facility and the Aggregation Facility entered into with Bank of America in 2014, and $1.5 million related to our revolving lines of credit with Vivint. Of the $4.9 million in interest expense related to our credit facilities with Bank of America, $2.2 million related to the amortization of loan origination fees. These increases in interest expense were partially offset by a decrease of $0.2 million in interest expense related to the revolving line of credit that was terminated in June 2013.

Other Expense. The decrease in other expenses of $0.5 million was primarily due to a decrease in interest and penalties associated with payroll taxes from 2012 and 2013 that were not paid in a timely manner and which were paid during 2014.

Income Taxes

	Year Ended
	December 31,					$ Change
	2014			2013		2014 from 2013
	(In thousands)
Income tax expense (benefit)	$	(7,070	)	$	123	$	(7,193	)

The change in income tax (benefit) expense of $7.2 million to a $7.1 million income tax benefit was primarily due to an increase in pre-tax book losses in proportion to permanent tax adjustments, such as non-controlling interests and redeemable non-controlling interests, tax credits and other nondeductible expenses.

Net Loss Attributable to Non-controlling Interests and Redeemable Non-controlling Interests

	Year Ended
	December 31,						$ Change
	2014			2013			2014 from 2013
	(In thousands)
Net loss attributable to non-controlling interests and redeemable    non-controlling interests	$	(137,036	)	$	(62,108	)	$	(74,928	)

Net loss attributable to non-controlling interests and redeemable non-controlling interests was allocated using the HLBV method. Generally, gains and losses that are allocated to the fund investors relate to hypothetical liquidation gains and losses resulting from differences between the net assets of the investment fund and the partners’ respective tax capital accounts in the investment fund. Losses allocated to the fund investors were also driven by a reduction in certain fund investors’ claims on net assets due to the agreement of the partnership to take bonus depreciation allowances under Internal Revenue Code Section 168(k), as well as the receipt of ITCs that were primarily allocated to fund investors.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. GAAP require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, cash flows and related footnote disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates. Our future consolidated financial statements will be affected to the extent that our actual results materially differ from these estimates.

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We believe that the assumptions and estimates associated with our principles of consolidation, investment tax credits, revenue recognition, solar energy systems, net, impairment of long-lived assets, goodwill impairment analysis, the recognition and measurement of loss contingencies, stock-based compensation, provision for income taxes and non-controlling interests and redeemable non-controlling interests have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates.

Principles of Consolidation

We consider each of our investment funds to be a separate variable interest entity, or VIE. We use a qualitative approach in assessing the consolidation requirement for these VIEs. This approach focuses on determining whether we have the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and whether we have the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. All of these determinations involve significant management judgments and estimates. We have determined that we are the primary beneficiary in all but one of our operational VIEs, which we consolidate. We evaluate our relationships with the VIEs on an ongoing basis to ensure that we continue to be the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation.

Investment Tax Credits

We apply for and receive investment tax credits under Section 48(a) of the Internal Revenue Code. The amount for the investment tax credit is equal to 30% of the value of eligible solar property. We receive minimal allocations of investment tax credits as the majority of such credits are allocated to the fund investors. Some of our investment funds obligate us to make certain fund investors whole for losses that the investors may suffer in certain limited circumstances resulting from the disallowance or recapture of investment tax credits as a result of the Internal Revenue Service’s, or the IRS, assessment of the fair value of such systems. We have concluded that the likelihood of a recapture event is remote and consequently has not recorded any liability in the consolidated financial statements for any potential recapture exposure. If it becomes probable that a U.S. Treasury grant is required to be repaid, we will assess whether it is necessary to derecognize any grant (or portion thereof) in accordance with Account Standards Codification section 450.

Revenue Recognition

We sell the electricity that our solar energy systems produce through long-term power purchase agreements, we lease our solar energy systems through long-term leases or we sell solar energy systems to customers. Prior to 2014, all of our long-term customer contracts were structured as power purchase agreements. In 2014, we began offering leases to residential customers. In 2015, we began offering our customers the option to purchase solar energy systems. We also generate revenue through sales of SRECs, photovoltaic installation devices and software products and receipt of rebate incentives. We recognize revenue when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery or performance has occurred, (3) the sales price is fixed or determinable and (4) collectability is reasonably assured. Revenue associated with power purchase agreements and solar energy system leases, SRECs and rebate incentives are included within operating leases and incentives revenue. Revenue from the sale of photovoltaic installation devices and software products and solar energy systems sales is recognized within solar energy system and product sales. In the first quarter of 2015, we decided to discontinue the external sales of our photovoltaic installation software products.

Operating Leases and Incentives Revenue

Our primary revenue-generating activity consists of entering into long-term power purchase agreements with residential customers, under which the customer agrees to purchase all of the power generated by the solar energy system for the term of the contract, which is 20 years. The agreement includes a fixed price per kilowatt hour with a fixed annual price escalation percentage (to address the impact of inflation over the period of the contract). Customers have not historically been charged for installation or activation of the solar energy system. For all power purchase agreements, we assess the probability of collectability on a customer-by-customer basis through a credit review process that evaluates their financial condition and ability to pay.

We have determined that power purchase agreements should be accounted for as operating leases after evaluating and concluding that none of the following capitalized lease classification criteria are met: no transfer of ownership or bargain purchase option exists at the end of the lease, the lease term is not greater than 75% of the useful life or the present value of minimum lease payments does not exceed 90% of the fair value at lease inception. As customer payments under a power purchase agreement are dependent on power generation, they are considered contingent rentals and are excluded from future minimum annual lease payments. Revenue from power purchase agreements is recognized based on the actual amount of power generated at rates specified under the contracts, assuming the other revenue recognition criteria discussed above are met.

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In 2014, we began offering solar energy system to customers pursuant to legal-form leases. The customer agreements are structured as legal-form leases due to local regulations that can be read to prohibit the sale of electricity pursuant to our standard power purchase agreement. Pursuant to the lease agreements, the customers’ monthly payments are pre-determined fixed monthly amounts and include an annual fixed percentage price escalation to address the impact of inflation over the period of the contracts, which is 20 years. We provide our legal-form lease customers a performance guarantee, under which we agree to potentially refund a portion of the fixed lease payments at the end of each year to the customer if the solar energy systems do not meet a guaranteed production level in the prior 12-month period.

The guaranteed production levels have varying terms. Dependent on the level of the production guarantee, we either (1) recognize the monthly lease payments as revenue and record a solar energy performance guarantee liability due to the contingent nature of the lease payments, or (2) straight-line the contracted payments over the initial term of the lease. Solar energy performance guarantees were de minimis as of December 31, 2015.

We apply for and receive SRECs in certain jurisdictions for power generated by our solar energy systems. When SRECs are granted, we typically sell them to other companies directly, or to brokers, to assist them in meeting their own mandatory emission reduction or conservation requirements. We recognize revenue related to the sale of these certificates upon delivery, assuming the other revenue recognition criteria discussed above are met.

We consider upfront rebate incentives earned from our solar energy systems to be minimum lease payments and recognize revenue for those payments on a straight-line basis over the life of the long-term customer contracts, assuming the other revenue recognition criteria discussed above are met.

Operating leases and incentives revenue is recorded net of sales tax collected.

Lease Pass-Through Arrangement

In 2015, a lease pass-through fund arrangement became operational under which we contribute solar energy systems and the investor contributes cash. Contemporaneously, our subsidiary entered into a master lease arrangement to lease the solar energy systems and the associated customer lease or power purchase agreements to the fund investor. Our subsidiary makes a tax election to pass-through the investment tax credits, or ITCs, that accrue to the solar energy systems to the fund investor, who as the legal lessee of the property is allowed to claim the ITCs under Section 50(d)(5) of the Internal Revenue Code and the related regulations.

Under this arrangement, the fund investor makes a large upfront lease payment to our subsidiary and subsequently makes periodic lease payments. We allocate a portion of the aggregate payments received from the fund investor to the estimated fair value of the assigned ITCs. Our subsidiary has an obligation to ensure the solar energy system is in service and operational for a term of five years to avoid any recapture of the ITCs. Accordingly, we recognize ITC revenue as the recapture provisions lapse assuming all other revenue recognition criteria have been met. The amounts allocated to ITCs are initially recorded as deferred revenue in the consolidated balance sheet, and subsequently, one-fifth of the amounts allocated to ITCs is recognized as revenue from operating leases and solar energy systems incentives in the consolidated statements of operations based on the anniversary of each solar energy system’s placed in service date over the next five years. As of December 31, 2015, no ITC revenue has been recognized.

Solar Energy System and Product Sales

In 2015, we began offering our customers the option to purchase solar energy systems. As these sales are not structured as long-term customer contracts, revenue is recognized when systems are interconnected to local power grids and granted permission to operate, assuming all other revenue recognition criteria are met.

Revenue from the sale of photovoltaic installation devices and software products is recognized upon delivery of the product to the customer assuming the remaining revenue recognition criteria discussed above have been met.

Multiple-Element Arrangements

Subsequent to the acquisition of Solmetric in January 2014 and prior to the discontinuance of external sales of the SunEye and PV Designer products, we entered into multiple-element arrangements typically involving sales of (1) photovoltaic installation hardware devices containing software essential to the hardware product’s functionality and (2) stand-alone software. We allocated revenue based on our best estimate of selling price, which was determined by considering multiple factors including, but not limited to, market conditions, competitive landscape, internal costs, gross margin objectives and pricing practices. The consideration allocated to the delivered photovoltaic device is recognized at the time of shipment provided that the four general revenue recognition criteria discussed above have been met.

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Solar Energy Systems, Net

Solar energy systems are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization expense is calculated using the straight-line method over the estimated useful lives of the respective assets as follows:

	Useful Lives
System equipment costs	30 years
Initial direct costs related to solar energy systems	Lease term (20 years)

We commence depreciation of our solar energy systems once the respective systems have been installed and interconnected to the power grid.

The determination of the useful lives of assets included within solar energy systems involves significant management judgment.

Impairment of Long-Lived Assets and Indefinite-Lived Intangible Assets

The carrying amounts of our long-lived assets, including solar energy systems, property and intangible assets subject to depreciation and amortization, are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than originally estimated. Factors that we consider in deciding when to perform an impairment review include significant negative industry or economic trends, and significant changes or planned changes in our use of the assets. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate over its remaining life. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. If the useful life is shorter than originally estimated, we amortize the remaining carrying value over the new shorter useful life.

In February 2015, we decided to discontinue the external sales of two Vivint Solar Labs products. This discontinuance was considered an indicator of impairment, and a review regarding the recoverability of the carrying value of the related intangible assets was performed. As a result of this review, we recorded a total impairment charge of $4.5 million for the year ended December 31, 2015. See Note 7—Intangible Assets and Goodwill.

Goodwill Impairment Analysis

Goodwill represents the excess of the purchase price of an acquired business over the fair value of the net assets acquired. We have recorded goodwill as a result of the acquisitions we have been involved in. As of December 31, 2015, our company consists of two operating segments: (1) Residential and (2) C&I. As C&I was created internally in 2015 and our goodwill was recorded prior to 2015, all goodwill remains with the Residential operating segment. As such, our goodwill impairment test is based on a single operating segment and reporting unit structure. We perform our annual impairment test of goodwill as of October 1^st of each fiscal year or whenever events or circumstances change or occur that would indicate that goodwill might be impaired. Triggering events that may indicate impairment include, but are not limited to, a significant adverse change in the business climate, unanticipated competition, loss of key personnel, significant changes in the manner we use the acquired assets or the strategy for the overall business, significant negative industry or economic trends or significant underperformance relative to historical operations or projected future results of operations.

In conducting the impairment test, we first assess qualitative factors, including those stated previously, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. If the qualitative step is not passed, we perform a two-step impairment test whereby in the first step we must compare the fair value of the reporting unit with its carrying amount. If the carrying amount exceeds its fair value, we perform the second step of the goodwill impairment test to determine the amount of impairment. The second step, measuring the impairment loss, compares the implied fair value of the goodwill with the carrying value of the goodwill. Any excess of the goodwill carrying value over the implied fair value is recognized as an impairment loss.

Loss Contingencies

We are subject to the possibility of various loss contingencies arising in the ordinary course of business. We consider the likelihood of loss or impairment of an asset, or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss, in determining loss contingencies. We accrue an estimated loss contingency when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. If we determine that a loss is possible and the range of the loss can be reasonably determined, then we disclose the range of the possible loss. We regularly evaluate current information available to determine whether an accrual is required, an accrual should be adjusted or a range of possible loss should be disclosed.

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Stock-Based Compensation

Expense related to stock-based compensation granted to employees is measured and recognized in the financial statements based on the grant-date fair value of the awards. The fair value of each time-based option award is estimated on the grant date using the Black-Scholes-Merton stock option pricing valuation model. The fair value of each performance-based employee stock option is estimated on the date of grant using the Monte Carlo simulation model. The fair value of each restricted stock award and performance share unit award is determined as the closing price of our stock on the date of grant. The stock-based compensation expense, net of forfeitures, is recognized on an accelerated attribution basis over the requisite service period of an award, which is generally the award’s vesting period.

Stock-based compensation expense for equity instruments issued to non-employees is recognized based on the estimated fair value of the equity instrument. The fair value of the non-employee awards is subject to remeasurement at each reporting period until services required under the arrangement are completed, which is the vesting date.

Use of the Black-Scholes-Merton option-pricing model requires the input of highly subjective assumptions, including (1) the fair value of the underlying common stock, (2) the expected term of the option, (3) the expected volatility of the price of our common stock, (4) risk-free interest rates and (5) the expected dividend yield of our common stock. The assumptions used in the option-pricing model represent our best estimates. These estimates involve inherent uncertainties and the application of our judgment. If factors change and different assumptions are used, our stock-based compensation expense could be materially different in the future.

We have granted options at an exercise price per share not less than what the board of directors had determined was the fair market value per share of our underlying common stock on each date of grant. Up until the time of our initial public offering, our common stock valuations were determined in accordance with the guidelines outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. Because our common stock was not publicly traded, the board of directors exercised significant judgment in determining the fair value of our common stock. Changes in judgments could have a material impact on our results of operations and financial position. Now that our common stock is publicly traded, estimates regarding the fair value of our common stock will not be necessary.

The board of directors is comprised of a majority of non-employee directors that we believe had the relevant experience and expertise to determine a fair value of our common stock on each respective grant date. In the absence of a public trading market for our common stock at that time, the board of directors, with input from management, considered numerous objective and subjective factors to determine the common stock’s fair value as of the date of each option grant, including our operating and financial performance, financial condition, current business conditions and projections, the market performance of companies in the industry in which we compete, the hiring of key personnel and the availability of tax equity and debt financing.

In addition to assumptions used in the Black-Scholes-Merton option-pricing model, we must also estimate a forfeiture rate to calculate the stock-based compensation expense for our awards. Our forfeiture rate is based on an analysis of our actual forfeitures since the adoption of our equity award plan. We routinely evaluate the appropriateness of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover and expectations of future option exercise behavior. Changes in the estimated forfeiture rate can have a significant impact on our stock-based compensation expense as the cumulative effect of adjusting the forfeiture rate is recognized in the period the forfeiture estimate is changed. If a revised forfeiture rate is higher than the previously estimated forfeiture rate, an adjustment is made that will result in a decrease to the stock-based compensation expense recognized in the financial statements. If a revised forfeiture rate is lower than the previously estimated forfeiture rate, an adjustment is made that will result in an increase to the stock-based compensation expense recognized in the financial statements.

We will continue to use judgment in evaluating the expected term, expected volatility and forfeiture rate related to our stock-based compensation expense on a prospective basis. As we continue to accumulate additional data related to our common stock, we may have refinements to the estimates of our expected volatility, expected terms and forfeiture rates, which could materially impact our future stock-based compensation expense as it relates to the future grants of our stock-based awards.

Provision for Income Taxes

We account for income taxes under an asset and liability approach. Deferred income taxes reflect the impact of temporary differences between assets and liabilities recognized for financial reporting purposes and the amounts recognized for income tax reporting purposes, net operating loss carryforwards and other tax credits measured by applying currently enacted tax laws. A valuation allowance is provided when necessary to reduce deferred tax assets to an amount that is more likely than not to be realized.

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In the fourth quarter of 2015, we prospectively adopted Accounting Standards Update, or ASU, 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. This update requires that deferred tax assets and liabilities, including any related valuation allowance, be classified as non-current in a classified statement of financial position and eliminates the requirement that an entity separate deferred tax liabilities and assets into current and non-current amounts. The adoption of this update resulted in a reclassification of our $7.3 million net current deferred tax asset to the net non-current deferred tax liability in our consolidated balance sheet as of December 31, 2015. No prior periods were retrospectively adjusted.

We recognize sales of solar energy systems to the investment funds for income tax purposes. As the investment funds are consolidated by us, the gain on the sale of the solar energy systems is not recognized in the consolidated financial statements. However, this gain is recognized for tax reporting purposes. Since these transactions are intercompany sales for GAAP purposes, any tax expense incurred related to these intercompany sales is deferred and recorded as a prepaid tax asset and amortized over the estimated useful life of the underlying solar energy systems, which has been estimated to be 30 years.

We determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. We use a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon tax authority examination, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.

Our policy is to include interest and penalties related to unrecognized tax benefits, if any, within the provision for taxes in the consolidated statements of operations.

Non-Controlling Interests and Redeemable Non-Controlling Interests

Our non-controlling interests and redeemable non-controlling interests represent fund investors’ interests in the net assets of certain investment funds, which we consolidate, that we have entered into in order to finance the costs of solar energy systems under long-term customer contracts. We have determined that the provisions in the contractual arrangements of the investment funds represent substantive profit-sharing arrangements, which gives rise to the non-controlling interests and redeemable non-controlling interests. We have further determined that the appropriate methodology for attributing income and loss to the non-controlling interests and redeemable non-controlling interests each period is a balance sheet approach using the HLBV method. Under the HLBV method, the amounts of income and loss attributed to the non-controlling interests and redeemable non-controlling interests in the consolidated statements of operations reflect changes in the amounts the fund investors would hypothetically receive at each balance sheet date under the liquidation provisions of the contractual agreements of these funds, assuming the net assets of these respective investment funds were liquidated at recorded amounts. The fund investors’ interest in the results of operations of these investment funds is determined as the difference in the non-controlling interests and redeemable non-controlling interest’s claim under the HLBV method at the start and end of each reporting period, after taking into account any capital transactions between the fund and the fund investors.

Attributing income and loss to the non-controlling interests and redeemable non-controlling interests under the HLBV method requires the use of significant assumptions and estimates to calculate the amounts that fund investors would receive upon a hypothetical liquidation. Changes in these assumptions and estimates can have a significant impact on the amount that fund investors would receive upon a hypothetical liquidation. The use of the HLBV methodology to allocate income to the non-controlling and redeemable non-controlling interest holders may create volatility in our consolidated statements of operations as the application of HLBV can drive changes in net income available and loss attributable to non-controlling interests and redeemable non-controlling interests from quarter to quarter.

We classify certain non-controlling interests with redemption features that are not solely within our control outside of permanent equity on our consolidated balance sheets. Redeemable non-controlling interests are reported using the greater of their carrying value at each reporting date as determined by the HLBV method or their estimated redemption value in each reporting period.

Estimating the redemption value of the redeemable non-controlling interests requires the use of significant assumptions and estimates. Changes in these assumptions and estimates can have a significant impact on the calculation of the redemption value.

Quarterly Results of Operations

The following table presents our unaudited consolidated statement of operations for each of the eight quarters in the 24 month period ended December 31, 2015. Our consolidated statement of operations for each of these quarters have been prepared on a basis consistent with our audited annual consolidated financial statements included elsewhere in this report and, in the opinion of management, include all adjustments necessary for the fair presentation of our consolidated results of operations for these quarters.

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You should read this information together with our consolidated financial statements and the related Notes included elsewhere in this report. The results of operations for any quarter are not necessarily indicative of the results of operations for any future period.

	Three Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,			September 30,			June 30,			March 31,
	2015			2015			2015			2015			2014			2014			2014			2014
	(In thousands except per share data)
Revenue:
Operating leases and incentives	$	15,488		$	21,781		$	15,301		$	8,580		$	5,890		$	7,131		$	5,804		$	2,863
Solar energy system and product sales		540			693			834			965			970			1,202			754			644
Total revenue		16,028			22,474			16,135			9,545			6,860			8,333			6,558			3,507
Operating expenses:
Cost of revenue—operating leases and    incentives		36,414			37,624			33,295			23,880			20,823			19,515			16,459			11,187
Cost of revenue—solar energy system    and product sales		378			470			476			438			487			627			485			398
Sales and marketing		10,897			12,051			18,697			6,433			5,640			5,220			5,790			5,219
Research and development		1,352			1,047			920			582			489			431			500			472
General and administrative		20,716			21,954			31,364			18,630			15,623			37,170			13,752			12,354
Amortization of intangible assets		1,977			3,711			3,721			3,763			3,756			3,727			3,691			3,737
Impairment of intangible assets		—			—			—			4,506			—			—			—			—
Total operating expenses		71,734			76,857			88,473			58,232			46,818			66,690			40,677			33,367
Loss from operations		(55,706	)		(54,383	)		(72,338	)		(48,687	)		(39,958	)		(58,357	)		(34,119	)		(29,860	)
Interest expense		4,360			3,351			2,730			2,127			1,988			3,261			2,673			1,401
Other (income) expense		(553	)		26			60			313			(90	)		297			277			888
Loss before income taxes		(59,513	)		(57,760	)		(75,128	)		(51,127	)		(41,856	)		(61,915	)		(37,069	)		(32,149	)
Income tax (benefit) expense		(6,240	)		(7,448	)		14,577			8,848			(3,784	)		(10,222	)		2,542			4,394
Net loss		(53,273	)		(50,312	)		(89,705	)		(59,975	)		(38,072	)		(51,693	)		(39,611	)		(36,543	)
Net loss attributable to non-controlling    interests and redeemable non-controlling    interests		(40,083	)		(50,780	)		(103,358	)		(72,124	)		(31,933	)		(16,415	)		(45,104	)		(43,584	)
Net (loss attributable) income available to    common stockholders	$	(13,190	)	$	468		$	13,653		$	12,149		$	(6,139	)	$	(35,278	)	$	5,493		$	7,041
Net (loss attributable) income available    per share to common stockholders:
Basic	$	(0.12	)	$	0.00		$	0.13		$	0.12		$	(0.06	)	$	(0.45	)	$	0.07		$	0.09
Diluted	$	(0.12	)	$	0.00		$	0.12		$	0.11		$	(0.06	)	$	(0.45	)	$	0.07		$	0.09
Weighted-average shares used in computing    net (loss attributable) income available    per share to common stockholders:
Basic		106,551			106,492			105,988			105,303			105,079			78,428			75,000			75,000
Diluted		106,551			110,223			109,794			109,051			105,079			78,428			76,267			76,064

Seasonality

We experience seasonal fluctuations in our operations. For example, the amount of revenue we recognize in a given period from power purchase agreements is dependent in part on the amount of energy generated by solar energy systems under such contracts. As a result, operating leases and incentives revenue is impacted by seasonally shorter daylight hours in winter months. In addition, our ability to install solar energy systems is impacted by weather. For example, we have limited ability to install solar energy systems during the winter months in the Northeastern United States. Such delays can impact the timing of when we can install and begin to generate revenue from solar energy systems. However, given that we are in a rapidly growing industry, the true extent of these fluctuations may have been masked by our growth rates and thus may not be readily apparent from our historical operating results and may be difficult to predict. As such, our historical operating results may not be indicative of future performance.

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Liquidity and Capital Resources

As of December 31, 2015, we had cash and cash equivalents of $92.2 million, which consisted principally of cash and time deposits with high-credit-quality financial institutions.

Besides the proceeds from our initial public offering detailed below, we have also financed our solar energy system-related operations from investment fund arrangements that we have formed with fund investors, from borrowings and from revenue from operations. Our principal uses of cash are funding our operations, including the costs of acquisition and installation of solar energy systems, satisfaction of our obligations under our debt instruments and other working capital requirements. Our business model requires substantial outside financing arrangements to grow the business and facilitate the deployment of additional solar energy systems. While there can be no assurances, we anticipate raising additional required capital from new and existing fund investors, additional borrowings and other potential financing vehicles.

We may seek to raise financing through the sale of equity, equity-linked securities, additional borrowings or other financing vehicles. Additional equity or equity-linked financing may be dilutive to our stockholders. If we raise funding through additional borrowings, such borrowings would have rights that are senior to holders of our equity securities and could contain covenants that restrict our operations. We believe our cash and cash equivalents, including our investment fund commitments, projected investment fund contributions and our current debt facilities as further described below, in addition to financing that we may obtain from other sources, including our financial sponsors, will be sufficient to meet our anticipated cash needs for at least the next 12 months. However, if we are unable to secure additional financing when needed, or upon desirable terms, we may be unable to finance installation of our customers’ systems in a manner consistent with our past performance, our cost of capital could increase, or we may be required to significantly reduce the scope of our operations, any of which would have a material adverse effect on our business, financial condition, results of operations and prospects. While we believe additional financing is available and will continue to be available to support our current level of operations, we believe we have the ability and intent to reduce operations to the level of available financial resources at least through 2016.

Sources of Funds

Sale of Equity Securities

On October 6, 2014, we closed our initial public offering in which we sold 20.6 million shares of our common stock at a price of $16.00 per share, resulting in net proceeds of $300.6 million after deducting underwriting discounts and commissions and $8.8 million in offering expenses payable by us.

In August and September 2014, we issued and sold an aggregate of 9.7 million shares of common stock to 313 Acquisition LLC and two of our directors for $10.667 per share for aggregate gross proceeds of $103.5 million. The transactions were negotiated on an arms’ length basis and represented what we believed to be the most agreeable alternative at the time. For additional discussion regarding these transactions, refer to Note 12—Redeemable Non-Controlling Interests, Equity and Preferred Stock.

Investment Fund Commitments

As of February 29, 2016, we have raised 16 residential investment funds to which investors such as banks and other large financial investors have committed to invest approximately $1.1 billion, which will enable us to install solar energy systems of total fair market value approximating $2.6 billion. The undrawn committed capital for these funds as of February 29, 2016 is approximately $148 million, which includes approximately $73 million in payments that will be received from fund investors upon interconnection to the respective power grid of solar energy systems that have already been allocated to investment funds. As of February 29, 2016, we had tax equity commitments to fund approximately 55 megawatts of future deployments, which we estimate to be sufficient to fund solar energy systems with a total fair market value of approximately $241 million.

Debt Instruments

Aggregation Credit Facility.In September 2014, we entered into the Aggregation Facility which was subsequently amended in February 2015 and November 2015, pursuant to which we may borrow up to an aggregate principal amount of $375.0 million and, for which Bank of America, N.A. is acting as administrative agent. Upon the satisfaction of certain conditions and the approval of the lenders, we may increase the aggregate amount of principal borrowings to $550.0 million. As of December 31, 2015, we had incurred an aggregate of $269.1 million in term loan borrowings under this agreement and we had a remaining borrowing capacity of $105.9 million under this facility.

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The February 2015 amendment to the Aggregation Facility increased the funding commitment by $25.0 million pursuant to which we may borrow up to an aggregate of $375.0 million. In addition, the right to which we may request additional borrowing capacity, upon the satisfaction of certain conditions and the approval of the lenders, was reduced to $175.0 million, such that the total potential capacity under the facility remains at $550.0 million. The other terms of the Aggregation Facility remained unchanged.

The November amendments primarily included (i) changing the formula for determining the amount that we may borrow subject to the satisfaction of certain conditions, without changing the $375.0 million loan commitment, enabling us to draw additional loan proceeds from the existing conditions satisfied, (ii) converting the facility from a term facility into a revolving facility and (iii) requiring us to enter into an interest rate hedging agreement before September 13, 2016.

Prepayments are permitted under the Aggregation Facility and the principal and accrued interest on any outstanding loans mature on March 12, 2018. Under the Aggregation Facility, interest on borrowings accrues at a floating rate equal to (1) a margin that varies between 3.25% during the period during which we may incur borrowings and 3.50% after such period plus either of (2)(a) the London Interbank Offer Rate, or LIBOR, or (b) the greatest of (i) the Federal Funds Rate plus 0.5%, (ii) the administrative agent’s prime rate and (iii) LIBOR plus 1%. As of December 31, 2015, the borrowings under the Aggregation Facility accrued interest at 3.8%.

The Aggregation Facility includes customary covenants, including covenants that restrict, subject to certain exceptions, the borrower’s, and the guarantors’ ability to incur indebtedness, incur liens, make investments, make fundamental changes to their business, dispose of assets, make certain types of restricted payments or enter into certain related party transactions. Among other restrictions, the Aggregation Facility provides that the borrower may not incur any indebtedness other than that related to the Aggregation Facility or in respect of permitted swap agreements, and that the guarantors may not incur any indebtedness other than that related to the Aggregation Facility or as permitted under existing investment fund transaction documents. These restrictions do not impact our ability to enter into investment funds, including those that are similar to those entered into previously. As of December 31, 2015, we were in compliance with such covenants. As of December 31, 2015, we had not entered into any interest rate hedges as required by the latest debt modification.

Working Capital Credit Facility.In March 2015, we entered into the Working Capital Facility pursuant to which we may borrow up to an aggregate principal amount of $131.0 million from certain financial institutions for which Goldman Sachs Lending Partners LLC is acting as administrative agent and collateral agent. In May 2015, certain conditions were satisfied and the aggregate amount of available revolver borrowings was increased to $150.0 million. Loans under the Working Capital Facility will be used to pay for the costs incurred in connection with the design and construction of solar energy systems, and letters of credit may be issued under the Working Capital Facility for working capital and general corporate purposes. The Working Capital Facility matures in March 2020. As of December 31, 2015, we had incurred $146.8 million in borrowings under this credit facility and $3.2 million in a letter of credit related to an insurance contract. As such, there was no remaining borrowing capacity available as of December 31, 2015.

Prepayments are permitted under the Working Capital Facility, and the principal and accrued interest on any outstanding loans mature in March 2020. Interest accrues on borrowings at a floating rate equal to, dependent on the type of borrowing, (1) a rate equal to the Eurodollar Rate for the interest period divided by one minus the Eurodollar Reserve Percentage, plus a margin of 3.25%; or (2) the highest of (a) the Federal Funds Rate plus 0.50%, (b) the Citibank prime rate and (c) the one-month interest period Eurodollar rate plus 1.00%, plus a margin of 2.25%. Interest is payable dependent on the type of borrowing at the end of (1) the interest period that we elect as a term and not to exceed three months, (2) quarterly or (3) at maturity of the Working Capital Facility. As of December 31, 2015, the borrowings under the Working Capital Facility accrued interest at 3.5%.

The Working Capital Facility includes customary covenants, including covenants that restrict, subject to certain exceptions, our ability to incur indebtedness, incur liens, make investments, make fundamental changes to our business, dispose of assets, make certain types of restricted payments or enter into certain related party transactions. Among other restrictions, the Working Capital Facility provides that we may not incur any indebtedness other than that related to the Working Capital Facility or in respect of permitted swap agreements. These restrictions do not impact our ability to enter into investment funds, including those that are similar to those entered into previously. We are also required to maintain $25.0 million in cash and cash equivalents and certain investments as of the last day of each quarter. As of December 31, 2015, we were in compliance with such covenants.

Revenue from Operations

In the year ended December 31, 2015, we generated $64.2 million in revenue from operations, which approximates cash inflow. The cash from our revenue partially offsets the cash used in operations for the period.

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Uses of Funds

Our principal uses of cash are funding our operations, including the costs of acquisition and installation of solar energy systems, satisfaction of our obligations under our debt instruments and other working capital requirements, including growing our corporate and sales staff to support the growth of the business.

Over the past two years, our operating expenses have increased from year to year due to the significant growth of our business. We expect our capital expenditures to continue to increase as we continue to grow our business.

We expect our operating cash requirements to increase in the future as we increase sales and marketing activities to expand into new markets and increase sales coverage in markets in which we currently operate. In addition, the agreements governing each of our investment funds include options that, when exercised, either require us to purchase, or allow us to elect to purchase, our fund investor’s interest in the investment fund. No options have been exercised or become exercisable to date, however, such options are expected to become exercisable in the future and the exercise of one or more options could require us to expend significant funds. Regardless of whether these options are exercised, we will need to raise financing to support our operations, and such financing may not be available to us on acceptable terms, or at all. If we are unable to raise financing when needed, our operations and ability to execute our business strategy could be adversely affected. We may seek to raise financing through the sale of equity, equity-linked securities or the incurrence of indebtedness. Additional equity or equity-linked financing may be dilutive to our stockholders. If we raise funding through the incurrence of indebtedness, such indebtedness would have rights that are senior to holders of our equity securities and could contain covenants that restrict our operations.

Historical Cash Flows

The primary drivers of our uses and sources of cash are described in the sections above. The following table summarizes our cash flows for the periods indicated:

	Year Ended December 31,
Consolidated cash flow data:	2015			2014			2013
	(In thousands)
Net cash used in operating activities	$	(189,244	)	$	(135,918	)	$	(20,873	)
Net cash used in investing activities		(556,446	)		(400,763	)		(127,522	)
Net cash provided by financing activities		576,254			792,292			142,783
Net (decrease) increase in cash and cash equivalents		(169,436	)		255,611			(5,612	)

Operating Activities

In 2015, we had a net cash outflow from operations of $189.2 million. This outflow was primarily due to a $253.3 million net loss and a $165.6 million increase in prepaid tax assets. The outflow was partially offset by noncash adjustments of $107.5 million for deferred income taxes, $25.6 million for stock-based compensation, $24.9 million for depreciation and amortization and $17.7 million for impairment and amortization of intangible assets. The outflow was further offset by increases in operating liabilities of $43.5 million in deferred revenue and $12.9 million in accrued and other current liabilities.

Investing Activities

In 2015, we used $556.4 million in investing activities primarily to purchase $540.4 million associated with the design, acquisition and installation of solar energy systems. In addition, our restricted cash increased by $8.5 million and we paid $6.3 million for property and equipment and $1.2 million to develop internal-use software.

Financing Activities

In 2015, we generated $576.3 million from financing activities, of which $310.9 million was received in proceeds from long-term debt, $300.0 million was received in proceeds from fund investors, including a lease pass-through financing obligation, and $1.7 million was recognized as the excess tax benefit from stock option exercises. These proceeds were partially offset by distributions to non-controlling interests and redeemable non-controlling interests of $25.5 million and payments for debt issuance and capital lease obligations of $10.8 million.

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Contractual Obligations

Our contractual commitments and obligations were as follows as of December 31, 2015:

	Payments Due by Period(1)
	Less than						More than
	1 Year		1-3 Years		3-5 Years		5 Years		Total
	(In thousands)
Long-term debt	$	—	$	269,100	$	146,750	$	—	$	415,850
Distributions payable to non-controlling interests    and redeemable non-controlling interests(2)		11,347		—		—		—		11,347
Capital lease obligations and interest		6,405		9,815		1,044		—		17,264
Non-cancellable lease obligations		14,223		23,129		18,969		81,216		137,537
Total	$	31,975	$	302,044	$	166,763	$	81,216	$	581,998

(1)

Does not include amounts related to redeemable put options held by fund investors. The redemption price for the fund investors’ interest in the respective fund is equal to the sum of: (a) any unpaid, accrued priority return, and (i) the greater of: (x) a fixed price and (b) the fair market value of such interest at the date the option is exercised. Due to uncertainties associated with estimating the timing and amount of the redemption price, we cannot determine the potential future payments that we could have to make under these redemption options. For additional information regarding the redeemable put options, see Note 12—Redeemable Non-Controlling Interests, Equity and Preferred Stock to our consolidated financial statements. As of December 31, 2015, all fund investors have contributed an aggregate of $773.0 million into the funds. For additional information regarding our investment funds, see Note 11—Investment Funds to our consolidated financial statements.

(2)

Includes a $5.2 million accrued distribution reimbursement to a fund investor in order to true up the investor’s expected rate of return due to a delay in systems being interconnected to the power grid. However, does not include any other potential contractual obligations that may arise as a result of the contractual guarantees we have made with certain investors in our investment funds. The amounts of any potential payments we may be required to make depend on the amount and timing of future distributions to the relevant fund investors and the investment tax credits that accrue to such investors from the funds’ activities. Due to uncertainties associated with estimating the timing and amounts of distributions and likelihood of an event that may trigger repayment of any forfeiture or recapture of investment tax credits to such investors, we cannot determine the potential maximum future payments that we could have to make under these guarantees. As a result of these guarantees, as of December 31, 2015, we were required to hold a minimum balance of $10.0 million in the aggregate, which is classified as restricted cash on our consolidated balance sheet. For additional information, see Note 11—Investment Funds to our consolidated financial statements.

Off-Balance Sheet Arrangements

We include in our consolidated financial statements all assets and liabilities and results of operations of investment fund arrangements that we have entered into. We do not have any off-balance sheet arrangements.

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-02, Leases (Topic 842). The objective of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This update primarily changes the recognition by lessees of lease assets and liabilities for leases currently classified as operating leases. Lessor accounting remains largely unchanged. This update is effective in fiscal years beginning after December 15, 2018 for public business entities and early adoption is permitted. The amendments should be applied using a modified retrospective approach. We have operating leases that will be affected by this update and are evaluating the impact on our consolidated financial statements and disclosures. We expect to apply the update upon its effectiveness in the first quarter of 2019.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Topic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The objective of this update is to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The amendments in this update address certain aspects of recognition, measurement, presentation and disclosure of financial instruments. This update is effective in fiscal years beginning after December 15, 2017. The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. We are currently evaluating the impact this new guidance will have on our consolidated financial statements and related disclosures.

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In September 2015, the FASB issued ASU 2015-16, Business Combinations – Simplifying the Accounting for Measurement-Period Adjustments. Under current GAAP, an acquirer is required to retrospectively adjust any provisional amounts recognized at the acquisition date with a corresponding adjustment to goodwill when new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts initially recognized or would have resulted in the recognition of additional assets or liabilities. To simplify the accounting for adjustments to provisional amounts, the update eliminates the requirement to retrospectively account for those adjustments. This update is effective in fiscal years beginning after December 15, 2015 and early adoption is permitted. We do not currently have acquisitions which would be affected by this update.

In August 2015, the FASB issued ASU 2015-15, Interest – Imputation of Interest (Subtopic 835-30) – Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, which addresses an omission in ASU 2015-03. In April 2015, the FASB issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30) – Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs be presented as a direct reduction from the carrying amount of that debt liability similar to debt discounts. Existing recognition and measurement guidance is not impacted. However, ASU 2015-15 acknowledges that ASU 2015-03 does not address the presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. Per ASU 2015-15, an entity may defer and present debt issuance costs as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement. ASU 2015-15 is effective immediately. ASU 2015-03 is effective in fiscal years beginning after December 15, 2015 and early adoption is permitted. We have debt issuance costs related to line-of-credit arrangements and have adopted ASU 2015-15, which resulted in no change of presentation. If we enter into other debt arrangements that fall under ASU 2015-03, we will account for any related debt issuance costs per the update upon its effectiveness in the first quarter of 2016.

In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date, which defers the effective date of ASU 2014-09. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. ASU 2015-14 defers the effective date of ASU 2014-09 for one year, and the standard is now effective for us on January 1, 2018. The deferral allows for early adoption of the standard, which for us would be on January 1, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. We are currently evaluating which transition method to use for adopting ASU 2014-09 when required and do not expect the update to have a significant impact on our consolidated financial statements and related disclosures based on our current business model.

In April 2015, the FASB issued ASU 2015-05, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) – Customers Accounting for Fees Paid in a Cloud Computing Arrangement. This update provides guidance regarding the accounting for fees paid by a customer in cloud computing arrangements. If a cloud computing arrangement includes a software license, the payment of fees should be accounted for in the same manner as the acquisition of other software licenses. If there is no software license, the fees should be accounted for as a service contract. The update is effective in fiscal years beginning after December 15, 2015 and early adoption is permitted. An entity can elect to adopt the amendments either (1) prospectively to all arrangements entered into or materially modified after the effective date or (2) retrospectively. We do not expect that this update will have a significant impact on our consolidated financial statements and disclosures.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. This update makes some targeted changes to current consolidation guidance. These changes impact both the voting and the variable interest consolidation models. In particular, the update will change how companies determine whether limited partnerships or similar entities are VIEs. The update is effective in fiscal years, including interim periods, beginning after December 15, 2015, and early adoption is permitted. We currently consolidate all VIEs in which we have an equity interest and do not expect that ASU 2015-02 will have a significant impact on our consolidated financial statements and related disclosures.

Emerging Growth Company Status

Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not “emerging growth companies.”

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Our exposure to market risk for changes in interest rates relates primarily to our cash and cash equivalents and our indebtedness.

As of December 31, 2015, we had cash and cash equivalents of $92.2 million. Our cash equivalents are money market accounts and time deposits with maturities of three months or less at the time of purchase. Our primary exposure to market risk on these funds is interest income sensitivity, which is affected by changes in the general level of the interest rates in the United States. However, because of the short-term nature of the instruments in our portfolio, a sudden change in market interest rates would not be expected to have a material impact on our consolidated financial statements.

As of December 31, 2015, we had incurred an aggregate of $415.9 million in borrowings under our debt facilities, which currently accrue interest at a weighted-average rate of approximately 3.6%. If our debt facilities had been fully drawn at December 31, 2014 and remained outstanding for all of 2015, the effect of a hypothetical 10% change in our floating interest rate on these borrowings would increase or decrease interest expense by approximately $1.9 million.

All of our operations are in the United States and all purchases of our solar energy system components are denominated in U.S. dollars. However, our suppliers often incur a significant amount of their costs by purchasing raw materials and generating operating expenses in foreign currencies. If the value of the U.S. dollar depreciates significantly or for a prolonged period of time against these currencies (particularly the Chinese Renminbi), our suppliers may raise the prices they charge us, which could have a negative impact on our financial results.

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Item 8. Financial Statements and Supplementary Data.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	69
Consolidated Balance Sheets	70
Consolidated Statements of Operations	71
Consolidated Statements of Redeemable Non-controlling Interests and Equity	72
Consolidated Statements of Cash Flows	73
Notes to Consolidated Financial Statements	74

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Vivint Solar, Inc.

We have audited the accompanying consolidated balance sheets of Vivint Solar, Inc. as of December 31, 2015 and 2014, and the related consolidated statements of operations, redeemable non-controlling interests and equity, and cash flows for each of the three years in the period ended December 31, 2015. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Vivint Solar, Inc. at December 31, 2015 and 2014, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Salt Lake City, Utah

March 14, 2016

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Vivint Solar, Inc.

Consolidated Balance Sheets

(In thousands, except per share data and footnote 1)

	December 31,			December 31,
	2015			2014
ASSETS
Current assets:
Cash and cash equivalents	$	92,213		$	261,649
Accounts receivable, net		3,636			1,837
Inventories		631			774
Prepaid expenses and other current assets		17,078			16,806
Total current assets		113,558			281,066
Restricted cash and cash equivalents		15,035			6,516
Solar energy systems, net		1,102,157			588,167
Property and equipment, net		48,168			13,024
Intangible assets, net		2,031			18,487
Goodwill		36,601			36,601
Prepaid tax asset, net		277,496			111,910
Other non-current assets, net		14,024			8,553
TOTAL ASSETS(1)	$	1,609,070		$	1,064,324
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY
Current liabilities:
Accounts payable	$	49,986		$	51,354
Accounts payable—related party		1,905			2,132
Distributions payable to non-controlling interests and redeemable    non-controlling interests		11,347			6,780
Accrued compensation		13,758			16,794
Current portion of deferred revenue		4,968			314
Current portion of capital lease obligation		5,489			3,502
Accrued and other current liabilities		29,017			14,016
Total current liabilities		116,470			94,892
Capital lease obligation, net of current portion		10,055			6,176
Long-term debt		415,850			105,000
Deferred tax liability, net		216,033			112,227
Deferred revenue, net of current portion		43,304			4,466
Other non-current liabilities		28,565			—
Total liabilities(1)		830,277			322,761
Commitments and contingencies (Note 16)
Redeemable non-controlling interests		169,541			128,427
Stockholders' equity:
Common stock, $0.01 par value—1,000,000 authorized, 106,576 shares issued and    outstanding as of December 31, 2015; 1,000,000 authorized, 105,303 shares issued and    outstanding as of December 31, 2014		1,066			1,053
Additional paid-in capital		530,646			502,785
Accumulated deficit		(12,769	)		(25,849	)
Total stockholders' equity		518,943			477,989
Non-controlling interests		90,309			135,147
Total equity		609,252			613,136
TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY	$	1,609,070		$	1,064,324

(1) The Company’s consolidated assets as of December 31, 2015 and 2014 include $1,005.8 million and $540.1 million consisting of assets of variable interest entities, or VIEs, that can only be used to settle obligations of the VIEs. These assets include solar energy systems, net, of $990.6 million and $525.9 million as of December 31, 2015 and 2014; cash and cash equivalents of $12.0 million and $12.6 million as of December 31, 2015 and 2014; accounts receivable, net, of $3.1 million and $1.5 million as of December 31, 2015 and 2014; and prepaid expenses and other current assets of $0.1 million and zero as of December 31, 2015 and 2014. The Company’s consolidated liabilities as of December 31, 2015 and 2014 included $66.4 million and $11.4 million of liabilities of VIEs whose creditors have no recourse to the Company. These liabilities include distributions payable to non-controlling interests and redeemable non-controlling interests of $11.3 million and $6.8 million as of December 31, 2015 and 2014; deferred revenue of $47.9 million and $4.6 million as of December 31, 2015 and 2014; accrued and other current liabilities of $3.9 million and zero as of December 31, 2015 and 2014; and other non-current liabilities of $3.3 million and zero as of December 31, 2015 and 2014. For further information see Note 11—Investment Funds.

See accompanying notes to consolidated financial statements.

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Vivint Solar, Inc.

Consolidated Statements of Operations

(In thousands, except per share data)

	Year Ended December 31,
	2015			2014			2013
Revenue:
Operating leases and incentives	$	61,150		$	21,688		$	5,864
Solar energy system and product sales		3,032			3,570			306
Total revenue		64,182			25,258			6,170
Operating expenses:
Cost of revenue—operating leases and incentives		131,213			67,984			19,004
Cost of revenue—solar energy system and product sales		1,762			1,997			123
Sales and marketing		48,078			21,869			7,348
Research and development		3,901			1,892			—
General and administrative		92,664			78,899			16,438
Amortization of intangible assets		13,172			14,911			14,595
Impairment of intangible assets		4,506			—			—
Total operating expenses		295,296			187,552			57,508
Loss from operations		(231,114	)		(162,294	)		(51,338	)
Interest expense		12,568			9,323			3,144
Other (income) expense		(154	)		1,372			1,865
Loss before income taxes		(243,528	)		(172,989	)		(56,347	)
Income tax expense (benefit)		9,737			(7,070	)		123
Net loss		(253,265	)		(165,919	)		(56,470	)
Net loss attributable to non-controlling interests and redeemable    non-controlling interests		(266,345	)		(137,036	)		(62,108	)
Net income available (loss attributable) to common stockholders	$	13,080		$	(28,883	)	$	5,638
Net income available (loss attributable) per share to common stockholders:
Basic	$	0.12		$	(0.35	)	$	0.08
Diluted	$	0.12		$	(0.35	)	$	0.07
Weighted-average shares used in computing net income available    (loss attributable) per share to common stockholders:
Basic		106,088			83,446			75,000
Diluted		109,858			83,446			75,223

See accompanying notes to consolidated financial statements.

71

Vivint Solar, Inc.

Consolidated Statements of Redeemable Non-Controlling Interests and Equity

(In thousands)

	Redeemable										(Accumulated
	Non-							Additional			Deficit)			Total			Non-
	Controlling			Common Stock				Paid-in			Retained			Stockholders’			Controlling			Total
	Interests			Shares		Amount		Capital			Earnings			Equity			Interests			Equity
Balance — January 1, 2013	$	17,741		$	75,000	$	750	$	73,177		$	(2,604	)	$	71,323		$	—		$	71,323
Stock-based compensation expense		—			—		—		294			—			294			—			294
Non-cash contributions for services		—			—		—		160			—			160			—			160
Capital contribution from Parent		—			—		—		1,418			—			1,418			—			1,418
Contributions from non-controlling interests and    redeemable non-controlling interests		63,154			—		—		—			—			—			60,000			60,000
Distributions to non-controlling interests and    redeemable non-controlling interests		(3,064	)		—		—		—			—			—			(670	)		(670	)
Net (loss) income		(4,566	)		—		—		—			5,638			5,638			(57,542	)		(51,904	)
Balance — December 31, 2013		73,265			75,000		750		75,049			3,034			78,833			1,788			80,621
Stock-based compensation expense		—			—		—		23,687			—			23,687			—			23,687
Non-cash contributions for services		—			—		—		200			—			200			—			200
Issuance of common stock		—			30,303		303		412,609			—			412,912			—			412,912
Costs related to issuance of common stock		—			—		—		(8,760	)		—			(8,760	)		—			(8,760	)
Contributions from non-controlling interests and    redeemable non-controlling interests		63,735			—		—		—			—			—			275,777			275,777
Deemed dividend		—			—		—		43,430			—			43,430			—			43,430
Return of capital adjustment		—			—		—		(43,430	)		—			(43,430	)		—			(43,430	)
Distributions to non-controlling interests and    redeemable non-controlling interests		(5,154	)		—		—		—			—			—			(8,801	)		(8,801	)
Net loss		(3,419	)		—		—		—			(28,883	)		(28,883	)		(133,617	)		(162,500	)
Balance — December 31, 2014		128,427			105,303		1,053		502,785			(25,849	)		477,989			135,147			613,136
Stock-based compensation expense		—			—		—		25,604			—			25,604			—			25,604
Excess tax effects from stock-based compensation		—			—		—		1,713			—			1,713			—			1,713
Issuance of common stock, net		—			1,273		13		544			—			557			—			557
Contributions from non-controlling interests and    redeemable non-controlling interests		113,896			—		—		—			—			—			178,833			178,833
Distributions to non-controlling interests and    redeemable non-controlling interests		(6,566	)		—		—		—			—			—			(23,542	)		(23,542	)
Net (loss) income		(66,216	)		—		—		—			13,080			13,080			(200,129	)		(187,049	)
Balance — December 31, 2015	$	169,541			106,576	$	1,066	$	530,646		$	(12,769	)	$	518,943		$	90,309		$	609,252

See accompanying notes to consolidated financial statements

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Vivint Solar, Inc.

Consolidated Statements of Cash Flows

(In thousands)

	Year Ended December 31,
	2015			2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(253,265	)	$	(165,919	)	$	(56,470	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		24,924			8,523			1,984
Amortization of intangible assets		13,172			15,042			14,595
Impairment of intangible assets		4,506			—			—
Deferred income taxes		107,466			74,848			30,927
Stock-based compensation		25,604			23,687			294
Loss on removal of solar energy systems and property and equipment		1,024			—			—
Non-cash interest and other expense		3,724			6,512			2,930
Reduction in lease pass-through financing obligation		(231	)		—			—
Non-cash contributions for services		—			200			160
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net		(1,799	)		(1,018	)		(512	)
Inventories		143			(195	)		—
Prepaid expenses and other current assets		(576	)		(10,486	)		(3,605	)
Prepaid tax asset, net		(165,586	)		(81,172	)		(30,738	)
Other non-current assets, net		(5,268	)		(8,451	)		(741	)
Accounts payable		1,636			1,905			1,425
Accounts payable—related party		(227	)		(935	)		2,592
Accrued compensation		(892	)		(1,073	)		10,367
Deferred revenue		43,492			3,387			1,340
Accrued and other current liabilities		12,909			(773	)		4,579
Net cash used in operating activities		(189,244	)		(135,918	)		(20,873	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for the cost of solar energy systems		(540,399	)		(383,522	)		(134,138	)
Payments for property and equipment		(6,307	)		(3,505	)		—
Change in restricted cash and cash equivalents		(8,519	)		(1,516	)		(3,500	)
Purchase of intangible assets		(1,221	)		(370	)		—
Payment in connection with business acquisition, net of cash acquired		—			(12,040	)		—
Proceeds from U.S. Treasury grants		—			190			10,116
Net cash used in investing activities		(556,446	)		(400,763	)		(127,522	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from investment by non-controlling interests and redeemable non-controlling interests		292,729			339,512			123,154
Distributions paid to non-controlling interests and redeemable non-controlling interests		(25,541	)		(8,751	)		(2,284	)
Proceeds from long-term debt		310,850			105,000			—
Proceeds from short-term debt		—			75,500			—
Payments on short-term debt		—			(75,500	)		—
Payments for debt issuance costs		(5,422	)		—			—
Proceeds from lease pass-through financing obligation		7,228			—			—
Proceeds from revolving lines of credit—related party		—			154,500			83,482
Payments on revolving lines of credit—related party		—			(200,192	)		(60,000	)
Payments on revolving lines of credit		—			—			(2,000	)
Principal payments on capital lease obligations		(5,363	)		(2,623	)		(987	)
Proceeds from issuance of common stock		649			412,912			—
Payments for deferred offering costs		(589	)		(8,066	)		—
Excess tax effects from stock-based compensation		1,713			—			—
Capital contribution from Parent		—			—			1,418
Net cash provided by financing activities		576,254			792,292			142,783
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(169,436	)		255,611			(5,612	)
CASH AND CASH EQUIVALENTS—Beginning of period		261,649			6,038			11,650
CASH AND CASH EQUIVALENTS—End of period	$	92,213		$	261,649		$	6,038
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest	$	8,469		$	4,473		$	206
Cash paid for income taxes	$	67,135		$	4,350		$	4
NONCASH INVESTING AND FINANCING ACTIVITIES:
Property acquired under build-to-suit agreements	$	25,560		$	—		$	—
Vehicles acquired under capital leases	$	11,363		$	8,541		$	4,749
Accrued distributions to non-controlling interests and redeemable non-controlling interests	$	4,567		$	5,204		$	1,450
Receivable for tax credit recorded as a reduction to solar energy system costs	$	1,678		$	4,132		$	2,122
Costs of solar energy systems included in changes in accounts payable, accrued    compensation and other accrued liabilities	$	(6,589	)	$	25,990		$	19,946

See accompanying notes to consolidated financial statements.

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Vivint Solar, Inc.

Notes to Consolidated Financial Statements

1.Organization

Vivint Solar, Inc. (the “Company” and formerly known as V Solar Holdings, Inc.) was incorporated as a Delaware corporation on August 12, 2011. Vivint Solar, Inc. and its subsidiaries are collectively referred to as the “Company.” The Company commenced operations in May 2011. In November 2012 (the “Acquisition Date”), investment funds affiliated with The Blackstone Group L.P. (the “Sponsor”) and certain co-investors (collectively, the “Investors”), through 313 Acquisition LLC (“313” or “Parent”), acquired 100% of the equity interests of APX Group, Inc. (“Vivint”) and the Company (the “Acquisition”). The Acquisition was accomplished through certain mergers and related reorganization transactions pursuant to which the Company became a direct wholly owned subsidiary of 313, an entity owned by the Investors. In October 2014, the Company closed its initial public offering with 313 remaining the majority shareholder.

Merger Agreement with SunEdison

On July 20, 2015, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with SunEdison, Inc., a Delaware corporation (“SunEdison”) and SEV Merger Sub, Inc., a wholly-owned subsidiary of SunEdison. The Merger Agreement was subsequently amended on December 9, 2015 to update the terms of the merger. The Company terminated the Merger Agreement on March 7, 2016. 

On March 8, 2016, the Company filed suit in the Court of Chancery State of Delaware against SunEdison alleging that SunEdison willfully breached its obligations under the Merger Agreement and breached its implied covenant of good faith and fair dealing. The Company is seeking declaratory judgment, award damages, costs and reasonable attorney’s fees and such further relief that the court finds equitable, appropriate and just.

Business

The Company primarily offers solar energy to residential customers through long-term customer contracts, such as power purchase agreements and solar energy system leases. The Company enters into these long-term customer contracts primarily through a sales organization that uses a direct-to-home sales model. The long-term customer contracts are typically for 20 years and require the customer to make monthly payments to the Company. In 2015, the Company also began offering customers the option to purchase solar energy systems. In May 2015, the Company began offering solar energy systems to commercial and industrial (“C&I”) customers through long-term customer contracts.

The Company has formed various investment funds and entered into long-term debt facilities to monetize the recurring customer payments under its long-term customer contracts and the investment tax credits, accelerated tax depreciation and other incentives associated with residential solar energy systems. The Company uses the cash received from the investment funds, long-term debt facilities and revenue generated from operations to finance a portion of the Company’s variable and fixed costs associated with installing the residential solar energy systems. The obligations of the Company are in no event obligations of the investment funds.

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Since inception, the Company has relied on Vivint and certain of its affiliates for some of its administrative, managerial, account management and operational services. The Company’s use of Vivint services has steadily decreased since 2013 and now consists primarily of IT support. The Company was consolidated by Vivint as a variable interest entity prior to the Acquisition, and continues to be an affiliated entity and related party subsequent to the Acquisition. The Company has entered into various agreements and transactions with Vivint and its affiliates related to these services. See Note 15—Related Party Transactions.          

2.Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) and reflect the accounts and operations of the Company, its subsidiaries in which the Company has a controlling financial interest and the investment funds formed to fund the purchase of solar energy systems, which are consolidated as variable interest entities (“VIEs”). The Company uses a qualitative approach in assessing the consolidation requirement for VIEs. This approach focuses on determining whether the Company has the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and whether the Company has the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. For all periods presented, the Company has determined that it is the primary beneficiary in the operational VIEs in which it has an equity interest. The Company evaluates its relationships with the VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. For additional information regarding these VIEs, see Note 11—Investment Funds.

The consolidated financial statements reflect all of the costs of doing business, including the allocation of expenses incurred by Vivint on behalf of the Company. For additional information, see Note 15—Related Party Transactions. These expenses were allocated to the Company on a basis that was considered to reasonably reflect the utilization of the services provided to, or the benefit obtained by, the Company. The allocations may not, however, reflect the expense the Company would have incurred as an independent company for the periods presented, and may not be indicative of the Company’s future results of operations and financial position.

With respect to liquidity, the Company believes its cash and cash equivalents, including investment fund commitments, projected investment fund contributions and its current debt facilities, in addition to financing that may be obtained from other sources, including the Company’s financial sponsors, will be sufficient to meet its anticipated cash needs for at least the next 12 months. While the Company believes additional financing is available and will continue to be available to support the current level of operations, the Company believes it has the ability and intent to reduce operations to the level of available financial resources at least through the year ended December 31, 2016.

Certain prior period amounts have been reclassified to conform to current year presentation. These reclassifications did not have a significant impact on the consolidated financial statements.

Segment Information

The Company’s chief operating decision maker is its Chief Executive Officer. The Chief Executive Officer reviews financial information for purposes of allocating resources and evaluating financial performance. Prior to the second quarter of 2015, the Company had one business activity that was focused primarily on providing service to customers in the residential market. During the second quarter of 2015, the Company closed its first C&I investment fund with plans to service customers in the C&I market. As of December 31, 2015, the C&I fund was not operational, i.e., no projects had been initiated within the fund. During the year ended December 31, 2015, the Company has aligned its operations as two reporting segments: (1) Residential and (2) C&I. For additional segment information, see Note 18—Segment Information.

Use of Estimates

The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company regularly makes significant estimates and assumptions including, but not limited to, estimates that affect the Company’s principles of consolidation, investment tax credits, revenue recognition, solar energy systems, net, impairment of long-lived assets, goodwill impairment analysis, the recognition and measurement of loss contingencies, stock-based compensation, provision for income taxes, and non-controlling interests and redeemable non-controlling interests. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ materially from those estimates.

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Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash and cash equivalents. Cash equivalents consist principally of time deposits and money market accounts with high quality financial institutions.

Restricted Cash

The Company’s guaranty agreements with certain of its fund investors require the maintenance of minimum cash balances of $10.0 million. For additional information, see Note 11—Investment Funds. The Company was also required to deposit $5.0 million into a separate interest reserve account in accordance with the terms of its loan credit facility with Bank of America, N.A. For additional information, see Note 10—Debt Obligations. These minimum cash balances are classified as restricted cash.

Accounts Receivable, Net

Accounts receivable are recorded at the invoiced amount, net of allowance for doubtful accounts. Accounts receivable also include unbilled accounts receivable, which is comprised of the monthly power generation under power purchase agreements not yet invoiced and the monthly bill rate of legal-form leases as of the end of the reporting period. The Company estimates its allowance for doubtful accounts based upon the collectability of the receivables in light of historical trends and adverse situations that may affect customers’ ability to pay. Revisions to the allowance are recorded as an adjustment to bad debt expense. After appropriate collection efforts are exhausted, specific accounts receivable deemed to be uncollectible are charged against the allowance in the period they are deemed uncollectible. Recoveries of accounts receivable previously written-off are recorded as credits to bad debt expense. The Company had an allowance for doubtful accounts of $0.9 million and $0.6 million as of December 31, 2015 and 2014.

Inventories

Inventories include components related to photovoltaic installation devices and software products and are stated at the lower of cost, on an average cost basis, or market. Inventories also include solar energy systems held for sale, which are solar energy systems under construction that have yet to be interconnected to the power grid and that will be sold to customers. Solar energy systems held for sale are stated at the lower of cost, on a first-in-first-out basis, or market. Solar energy systems held for sale was $0.1 million as of December 31, 2015. No solar energy systems were held for sale as of December 31, 2014.

The Company evaluates its inventory reserves on a quarterly basis and writes down the value of inventories for estimated excess and obsolete inventories based on assumptions about future demand and market conditions.

Concentrations of Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The associated concentration risk for cash and cash equivalents is mitigated by banking with creditworthy institutions. At certain times, amounts on deposit exceed Federal Deposit Insurance Corporation insurance limits. The Company does not require collateral or other security to support accounts receivable. The Company is not dependent on any single customer. The loss of a customer would not adversely impact the Company’s operating results or financial position.

The Company purchases solar panels, inverters and other system components from a limited number of suppliers. Three suppliers accounted for approximately 50%, 30% and 20% of the solar photovoltaic module purchases for the year ended December 31, 2015. Two of those suppliers accounted for approximately 50% and 40% of these purchases for the year ended December 31, 2014. The same two suppliers each individually accounted for over 48% of these purchases for the year ended December 31, 2013. Two suppliers accounted for approximately 55% and 40% of the Company’s inverter purchases for the year ended December 31, 2015. One of those suppliers accounted for a substantial majority of the Company’s inverter purchases for the years ended December 31, 2014 and 2013. If these suppliers fail to satisfy the Company’s requirements on a timely basis or if the Company fails to develop, maintain and expand its relationship with these suppliers, the Company could suffer delays in being able to deliver or install its solar energy systems, experience a possible loss of revenue, or incur higher costs, any of which could adversely affect its operating results.

As of December 31, 2015, the Company’s customers under long-term customer contracts are primarily located in Arizona, California, Connecticut, Hawaii, Maryland, Massachusetts, New Jersey, New Mexico, New York, Pennsylvania, South Carolina and Utah. Future operations could be affected by changes in the economic conditions in these and other geographic areas, by changes in the demand for renewable energy generated by solar panel systems or by changes or eliminations of solar energy related government incentives.

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Fair Value of Financial Instruments

Assets and liabilities recorded at fair value on a recurring basis in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

· Level I—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

· Level II—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

· Level III—Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

The Company’s financial instruments consist of Level I and Level II assets and liabilities. See Note 3—Fair Value Measurements

Investment Tax Credits

The Company applies for and receives investment tax credits under Section 48(a) of the Internal Revenue Code. The amount for the investment tax credit is equal to 30% of the value of eligible solar property. The Company receives minimal allocations of investment tax credits as the majority of such credits are allocated to the fund investor. Some of the Company’s investment funds obligate it to make certain fund investors whole for losses that the investors may suffer in certain limited circumstances resulting from the disallowance or recapture of investment tax credits as a result of the Internal Revenue Service’s (the “IRS”) assessment of the fair value of such systems. The Company has concluded that the likelihood of a recapture event is remote and consequently has not recorded any liability in the consolidated financial statements for any potential recapture exposure.

U.S. Treasury Grants

In the first quarter of 2014 and prior, certain solar energy systems were eligible to receive U.S. Treasury grants under Section 1603 of the American Recovery and Reinvestment Act of 2009, as amended by the Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of December 2010. The Company recorded a reduction in the basis of the solar energy system in the amount of cash to be received, at the grant approval date. This accounting treatment results in decreased depreciation of such solar energy systems over their useful lives. If it becomes probable that a U.S. Treasury grant is required to be repaid, the Company would assess whether it is necessary to derecognize any grant (or portion thereof) in accordance with Accounting Standards Codification section 450.

Solar Energy Systems, Net

The Company sells energy to customers through power purchase agreements or leases solar energy systems to customers under legal-form lease agreements. The Company has determined that these contracts should be accounted for as operating leases and, accordingly, the related solar energy systems are stated at cost, less accumulated depreciation and amortization. In 2014, the Company began offering leases to customers.

Solar energy systems, net is comprised of system equipment costs and initial direct costs related to solar energy systems. System equipment costs include components such as solar panels, inverters, racking systems and other electrical equipment, as well as costs for design and installation activities once a long-term customer contract has been executed. Initial direct costs related to solar energy systems consist of sales commissions and other direct customer acquisition expenses. System equipment costs and initial direct costs are capitalized and recorded within solar energy systems, net.

Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the respective assets as follows: 

	Useful Lives
System equipment costs	30 years
Initial direct costs related to solar energy systems	Lease term (20 years)

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System equipment costs are depreciated and initial direct costs are amortized once the respective systems have been installed and interconnected to the power grid. As of December 31, 2015 and 2014, the Company had recorded costs of $1,134.7 million and $598.4 million in solar energy systems, of which $882.7 million and $407.7 million related to systems that had been interconnected to the power grid, with accumulated depreciation and amortization of $32.5 million and $10.2 million.

Property and Equipment, Net

The Company’s property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the assets. Vehicles leased under capital leases are depreciated over the life of the lease term, which is typically three years. The estimated useful lives of computer equipment, furniture, fixtures and purchased software are three years. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the assets. The estimated useful lives of leasehold improvements currently range from one to three years. Repairs and maintenance costs are expensed as incurred. Major renewals and improvements that extend the useful lives of existing assets are capitalized and depreciated over their estimated useful lives.

Intangible Assets

Finite-lived intangible assets, which consist of customer contracts, customer relationships, trademarks/trade names and developed technology acquired in business combinations are initially recorded at fair value and presented net of accumulated amortization. These intangible assets are amortized on a straight-line basis over their estimated useful lives. The Company amortizes customer contracts over three years, customer relationships over five years, trademarks/trade names over 10 years and developed technology over five to eight years. See Note 7—Intangible Assets and Goodwill.

In-process research and development reflects research and development projects that have not yet been completed and are capitalized as indefinite-lived intangibles subject to amortization upon completion or impairment if the assets are subsequently impaired or abandoned. In-process research and development projects were acquired in January 2014 as part of the Solmetric acquisition. See Note 4—Solmetric Acquisition.

The Company also capitalizes costs incurred in the development of internal-use software during the application development stage. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. Internal-use software is amortized on a straight-line basis over its estimated useful life. The Company tests these assets for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. During the year ended December 31, 2015, the development for certain internal-use software applications was completed and the Company began to amortize the internal-use software applications over the expected useful lives of three years. For the year ended December 31, 2015, $0.2 million of amortization was recorded for internal-use software. No amortization was recorded for internal-use software prior to the year ended December 31, 2015 as the internal-use software applications were still under development.

Impairment of Long-Lived Assets

The carrying amounts of the Company’s long-lived assets, including solar energy systems, property and equipment and finite-lived intangible assets are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than originally estimated. Factors that the Company considers in deciding when to perform an impairment review include significant negative industry or economic trends, and significant changes or planned changes in the Company’s use of the assets. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate over its remaining life. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. If the useful life is shorter than originally estimated, the Company amortizes the remaining carrying value over the new shorter useful life.

In February 2015, the Company decided to discontinue the external sales of the SunEye and PV Designer products, the rights to which the Company acquired when it acquired Solmetric Corporation, or Solmetric, in January 2014. This discontinuance was considered an indicator of impairment, and a review regarding the recoverability of the carrying value of the related intangible assets was performed. As a result of this review, the Company recorded a total impairment charge of $4.5 million for the year ended December 31, 2015. See Note 7—Intangible Assets and Goodwill.

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Goodwill and Impairment Analysis

Goodwill represents the excess of the purchase price of an acquired business over the fair value of the net tangible and intangible assets acquired. As of December 31, 2015, the Company consisted of two operating segments: (1) Residential and (2) C&I. As C&I was created internally in 2015 and the Company’s goodwill was recorded prior to 2015, all goodwill remains with the Residential operating segment. As such, the Company’s impairment test is based on a single operating segment and reporting unit structure.

The Company performs its annual impairment test of goodwill as of October 1st of each fiscal year or whenever events or circumstances change that would indicate that goodwill might be impaired. Triggering events that may indicate impairment include, but are not limited to, a significant adverse change in the business climate, unanticipated competition, loss of key personnel, significant changes in the manner the Company uses the acquired assets or the strategy for the overall business, significant negative industry or economic trends or significant underperformance relative to historical operations or projected future results of operations.

In conducting the impairment test, the Company first assesses qualitative factors, including those stated previously, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. If the qualitative step is not passed, the Company performs a two-step impairment test whereby in the first step, the Company must compare the fair value of the reporting unit with its carrying amount. If the carrying amount exceeds its fair value, the Company performs the second step of the goodwill impairment test to determine the amount of impairment. The second step, measuring the impairment loss, compares the implied fair value of the goodwill with the carrying value of the goodwill. Any excess of the goodwill carrying value over the implied fair value is recognized as an impairment loss.

The Company determined the two-step test was not necessary based on the results of its qualitative assessments and concluded that it was more likely than not that the fair value of its reporting unit was greater than its respective carrying value as of October 1, 2015 and October 1, 2014.

Prepaid Tax Asset, Net

The Company recognizes sales of solar energy systems to the investment funds for income tax purposes. As the investment funds are consolidated by the Company, the gain on the sale of the solar energy systems has been eliminated in the consolidated financial statements. However, this gain is recognized for tax reporting purposes. Since these transactions are intercompany sales for GAAP purposes, any tax expense incurred related to these intercompany sales is deferred and amortized over the estimated useful life of the underlying solar energy systems, which has been estimated to be 30 years.

Other Non-Current Assets

Other non-current assets primarily consist of deferred financing costs, advances receivable due from sales representatives and long-term refundable rent deposits. Costs incurred in connection with obtaining debt financing are deferred and amortized utilizing the straight-line method, which approximates the effective-interest method, over the term of the related financing. The Company provides advance payments of compensation to direct-sales personnel under certain circumstances. The advance is repaid as a reduction of the direct-sales personnel’s future compensation. The Company has established an allowance related to advances to direct-sales personnel who have terminated their employment agreement with the Company. These are non-interest bearing advances.

Distributions Payable to Non-Controlling Interests and Redeemable Non-Controlling Interests

As discussed in Note 11—Investment Funds, the Company and fund investors have formed various investment funds that the Company consolidates as the Company has determined that it is the primary beneficiary of these VIEs. These VIEs are required to pay cumulative cash distributions to their respective fund investors. The Company accrues amounts payable to fund investors in distributions payable to non-controlling interests and redeemable non-controlling interests in its consolidated balance sheets.

Deferred Revenue

Deferred revenue primarily includes deferred investment tax credit (“ITC”) revenue and rebates and incentives. Deferred ITC revenue is related to a lease pass-through arrangement in which a portion of the rent prepayment is allocated to ITC revenue. Rebates and incentives are received from utility companies and various government agencies and are recognized as revenue over the related lease term of 20 years. See Revenue Recognition below.

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Home Installation Reserve and Warranties

The Company typically warrants solar energy systems sold to customers for periods of one through twenty years against defects in design and workmanship, and for periods of one to ten years that installation will remain watertight. The manufacturers’ warranties on the solar energy system components, which is typically passed through to the customers, has a typical product warranty period of 10 years and a limited performance warranty period of 25 years. The Company warrants its photovoltaic installation devices and software products for one to two years against defects in materials or installation workmanship.

The Company generally assesses a reserve for damages related to home installations and provides for the estimated cost of warranties at the time the related revenue is recognized. The Company assesses the accrued home installation reserve and warranty regularly and adjusts the amounts as necessary based on actual experience and changes in future estimates. Accrued warranty and home installation reserve is recorded as a component of accrued and other current liabilities on the consolidated balance sheets and was $0.3 million as of December 31, 2015. These accruals were not significant as of December 31, 2014.

Comprehensive Income (Loss)

As the Company had no other comprehensive income or loss, comprehensive income (loss) is the same as net income available (loss attributable) to common stockholders for all periods presented.

Revenue Recognition

The Company recognizes revenue when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery or performance has occurred, (3) the sales price is fixed or determinable and (4) collectability is reasonably assured. The Company generates revenue through power purchase agreements and solar energy system leases, solar renewable energy certificates (“SRECs”) sales, rebate incentives and solar energy system sales. Revenue associated with power purchase agreements and solar energy system leases, SRECs and rebate incentives are included within operating leases and incentives revenue. The Company also recognizes revenue related to the sale of photovoltaic installation devices and software products and solar energy system sales within solar energy system and product sales. In the first quarter of 2015, the Company decided to discontinue the external sales of its photovoltaic installation software products.

Operating Leases and Incentives Revenue

The Company’s primary revenue-generating activity consists of entering into long-term power purchase agreements with residential customers, under which the customer agrees to purchase all of the power generated by the solar energy system for the term of the contract, which is 20 years. The agreement includes a fixed price per kilowatt hour with a fixed annual price escalation percentage. Customers have not historically been charged for installation or activation of the solar energy system. For all power purchase agreements, the Company assesses the probability of collectability on a customer-by-customer basis through a credit review process that evaluates their financial condition and ability to pay.

The Company has determined that power purchase agreements should be accounted for as operating leases after evaluating and concluding that none of the following capitalized lease classification criteria are met: no transfer of ownership or bargain purchase option exists at the end of the lease, the lease term is not greater than 75% of the useful life or the present value of minimum lease payments does not exceed 90% of the fair value at lease inception. As customer payments under a power purchase agreement are dependent on power generation, they are considered contingent rentals and are excluded from future minimum annual lease payments. Revenue from power purchase agreements is recognized based on the actual amount of power generated at rates specified under the contracts, assuming the other revenue recognition criteria discussed above are met.

In 2014, the Company began offering solar energy systems to customers pursuant to legal-form leases. The customer agreements are structured as legal-form leases due to local regulations that can be read to prohibit the sale of electricity pursuant to the Company’s standard power purchase agreement. Pursuant to the lease agreements, the customers’ monthly payments are a pre-determined amount calculated based on the expected solar energy generation by the system and includes an annual fixed percentage price escalation over the period of the contracts, which is 20 years. The Company provides its legal-form lease customers a performance guarantee, under which the Company agrees to make a payment at the end of each year to the customer if the solar energy systems do not meet a guaranteed production level in the prior 12-month period.

The guaranteed production levels have varying terms. Dependent on the level of the production guarantee, the Company either (1) recognizes the monthly lease payments as revenue and records a solar energy performance guarantee liability due to the contingent nature of the lease payments, or (2) straight-lines the contracted payments over the initial term of the lease. Solar energy performance guarantee liabilities were de minimis as of December 31, 2015 and 2014.

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Future minimum annual lease receipts from customers under these legal-form lease agreements are as follows (in thousands):

Years Ending December 31,
2016	$	1,668
2017		1,716
2018		1,766
2019		1,817
2020		1,870

The Company applies for and receives SRECs in certain jurisdictions for power generated by its solar energy systems. When SRECs are granted, the Company typically sells them to other companies directly, or to brokers, to assist them in meeting their own mandatory emission reduction or conservation requirements. The Company recognizes revenue related to the sale of these certificates upon delivery, assuming the other revenue recognition criteria discussed above are met. The portion of SRECs included in operating leases and incentives was $13.9 million, $2.6 million and $0.3 million for the years ended December 31, 2015, 2014 and 2013.

The Company considers upfront rebate incentives earned from its solar energy systems to be minimum lease payments and are recognized on a straight-line basis over the life of the long-term customer contracts, assuming the other revenue recognition criteria discussed above are met. The portion of rebates recognized within operating leases and incentives was $0.4 million, $0.2 million and de minimis for the years ended December 31, 2015, 2014 and 2013.

Operating leases and incentives revenue is recorded net of sales tax collected.

Lease Pass-Through Arrangement

In 2015, a lease pass-through fund arrangement became operational under which the Company contributes solar energy systems and the investor contributes cash. Contemporaneously, a subsidiary of the Company entered into a master lease arrangement to lease the solar energy systems and the associated customer lease or power purchase agreements to the fund investor. The Company’s subsidiary makes a tax election to pass-through the investment tax credits (“ITCs”) that accrue to the solar energy systems to the fund investor, who as the legal lessee of the property is allowed to claim the ITCs under Section 50(d)(5) of the Internal Revenue Code and the related regulations.

Under this arrangement, the fund investor makes a large upfront lease payment to the Company’s subsidiary and subsequently makes periodic lease payments. The Company allocates a portion of the aggregate payments received from the fund investor to the estimated fair value of the assigned ITCs. The Company’s subsidiary has an obligation to ensure the solar energy system is in service and operational for a term of five years to avoid any recapture of the ITCs. Accordingly, the Company recognizes ITC revenue as the recapture provisions lapse assuming all other revenue recognition criteria have been met. The amounts allocated to ITCs are initially recorded as deferred revenue in the consolidated balance sheet, and subsequently, one-fifth of the amounts allocated to ITCs is recognized as revenue from operating leases and solar energy systems incentives in the consolidated statements of operations based on the anniversary of each solar energy system’s placed in service date over the next five years. As of December 31, 2015, no ITC revenue has been recognized.

Solar Energy System and Product Sales

Revenue from solar energy system sales is recognized upon the solar energy system passing an inspection by the responsible city department after completion of system installation and interconnection to the power grid per the completed contract method, assuming the remaining revenue recognition criteria discussed above have been met.

Revenue from the sale of photovoltaic installation devices and software products is recognized upon delivery of the product to the customer assuming the remaining revenue recognition criteria discussed above have been met.

Multiple-Element Arrangements

Subsequent to the acquisition of Solmetric in January 2014 and prior to the discontinuance of external sales of the SunEye and PV Designer products, the Company entered into multiple-element arrangements typically involving sales of (1) photovoltaic installation hardware devices containing software essential to the hardware product’s functionality and (2) stand-alone software. The Company allocated revenue based on the Company’s best estimate of selling price, which was determined by considering multiple factors including, but not limited to, market conditions, competitive landscape, internal costs, gross margin objectives and pricing practices. The consideration allocated to the delivered photovoltaic device is recognized at the time of shipment provided that the four general revenue recognition criteria discussed above have been met.

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Cost of Revenue

Cost of Revenue—Operating Leases and Incentives

Cost of revenue—operating leases and incentives includes the depreciation of the cost of the solar energy systems and the amortization of capitalized initial direct costs. It also includes other costs related to the processing, account creation, design, installation, interconnection and servicing of solar energy systems that are not capitalized, such as personnel costs not directly associated to a solar energy system installation, warehouse rent and utilities, and fleet vehicle executory costs. The cost of revenue for the sales of SRECs is limited to broker fees which are paid in connection with certain SREC transactions.

Cost of Revenue—Solar Energy System and Product Sales

Cost of revenue—solar energy system and product sales consists of direct and indirect material and labor costs for solar energy systems. It also consists of materials, personnel costs, depreciation, facilities costs, other overhead costs and infrastructure expenses associated with the manufacturing of the photovoltaic installation devices and software products.

Research and Development

Research and development expense is primarily comprised of salaries and benefits associated with research and development personnel and other costs related to photovoltaic installation devices and software products and the development of other solar technologies. Research and development costs are charged to expense when incurred. The Company’s research and development expense was $3.9 million and $1.9 million for the years ended December 31, 2015 and 2014. Prior to the acquisition of Solmetric in January 2014, the Company did not incur any research and development expenses.

Advertising Costs

Advertising costs are expensed when incurred and are included in sales and marketing expenses in the consolidated statements of operations. The Company’s advertising expense was $4.5 million, $3.5 million and $1.3 million for the years ended December 31, 2015, 2014 and 2013.

Other Income (Expense)

The Company incurred interest and penalties primarily associated with employee payroll withholding tax payments that were not paid in a timely manner of $1.4 million and $1.9 million for the years ended December 31, 2014 and 2013. For the year ended December 31, 2015, the Company received an abatement of a portion of such penalties and interest.

Income Taxes

The Company accounts for income taxes under an asset and liability approach. Deferred income taxes reflect the impact of temporary differences between assets and liabilities recognized for financial reporting purposes and the amounts recognized for income tax reporting purposes, net operating loss carryforwards, and other tax credits measured by applying currently enacted tax laws. A valuation allowance is provided when necessary to reduce deferred tax assets to an amount that is more likely than not to be realized.

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In the fourth quarter of 2015, the Company prospectively adopted Accounting Standards Update (“ASU”) 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. This update requires that deferred tax assets and liabilities, including any related valuation allowance, be classified as non-current in a classified statement of financial position and eliminates the requirement that an entity separate deferred tax liabilities and assets into current and non-current amounts. The adoption of this update resulted in a reclassification of the Company’s $7.3 million net current deferred tax asset to the net non-current deferred tax liability in the Company’s consolidated balance sheet as of December 31, 2015. No prior periods were retrospectively adjusted.

The Company determines whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Company uses a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon tax authority examination, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.

The Company’s policy is to include interest and penalties related to unrecognized tax benefits, if any, within income tax expense (benefit) in the consolidated statements of operations.

Stock-Based Compensation Expense

Stock-based compensation expense for equity instruments issued to employees is measured based on the grant-date fair value of the awards. The fair value of each time-based employee stock option is estimated on the date of grant using the Black-Scholes-Merton stock option pricing valuation model. The fair value of each performance-based employee stock option is estimated on the date of grant using the Monte Carlo simulation model. The fair value of each restricted stock award and performance share unit award is determined as the closing price of the Company’s stock on the date of grant. The Company recognizes compensation costs using the accelerated attribution method for all employee stock-based compensation awards that are expected to vest over the requisite service period of the awards, which is generally the awards’ vesting period. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Stock-based compensation expense for equity instruments issued to non-employees is recognized based on the estimated fair value of the equity instrument. The fair value of the non-employee awards is subject to remeasurement at each reporting period until services required under the arrangement are completed, which is the vesting date.

Post-Employment Benefits

In the periods presented, the Company participated in a 401(k) Plan sponsored by Vivint that covered all of the Company’s eligible employees. The Company did not provide a discretionary company match to employee contributions during any of the periods presented.

Non-Controlling Interests and Redeemable Non-Controlling Interests

Non-controlling interests and redeemable non-controlling interests represent fund investors’ interest in the net assets of certain consolidated investment funds, which have been entered into by the Company in order to finance the costs of solar energy systems under long-term customer contracts. The Company has determined that the provisions in the contractual arrangements represent substantive profit-sharing arrangements. The Company has further determined that the appropriate methodology for attributing income and loss to the non-controlling interests and redeemable non-controlling interests each period is a balance sheet approach referred to as the hypothetical liquidation at book value (“HLBV”) method. Under the HLBV method, the amounts of income and loss attributed to the non-controlling interests and redeemable non-controlling interests in the consolidated statements of operations reflect changes in the amounts the fund investors would hypothetically receive at each balance sheet date under the liquidation provisions of the contractual agreements of these structures, assuming the net assets of these funding structures were liquidated at recorded amounts. The fund investors’ non-controlling interest in the results of operations of these funding structures is determined as the difference in the non-controlling interests’ claim under the HLBV method at the start and end of each reporting period, after taking into account any capital transactions, such as contributions or distributions, between the fund and the fund investors. The use of the HLBV methodology to allocate income to the non-controlling and redeemable non-controlling interest holders may create volatility in the Company’s consolidated statements of operations as the application of HLBV can drive changes in net income available and loss attributable to non-controlling interests and redeemable non-controlling interests from quarter to quarter.

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The Company classifies certain non-controlling interests with redemption features that are not solely within the control of the Company outside of permanent equity on its consolidated balance sheets. Redeemable non-controlling interests are reported using the greater of their carrying value at each reporting date as determined by the HLBV method or their estimated redemption value in each reporting period.

Loss Contingencies

The Company is subject to the possibility of various loss contingencies arising in the ordinary course of business. The Company considers the likelihood of loss or impairment of an asset, or the incurrence of a liability, as well as the Company’s ability to reasonably estimate the amount of loss, in determining loss contingencies. An estimated loss contingency is accrued when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. If the Company determines that a loss is possible and the range of the loss can be reasonably determined, then the Company discloses the range of the possible loss. The Company regularly evaluates current information available to determine whether an accrual is required, an accrual should be adjusted or a range of possible loss should be disclosed.

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-02, Leases (Topic 842). The objective of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This update primarily changes the recognition by lessees of lease assets and liabilities for leases currently classified as operating leases. Lessor accounting remains largely unchanged. This update is effective in fiscal years beginning after December 15, 2018 for public business entities and early adoption is permitted. The amendments should be applied using a modified retrospective approach. The Company has operating leases that will be affected by this update and is evaluating the impact on its consolidated financial statements and disclosures. The Company expects to apply the update upon its effectiveness in the first quarter of 2019.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Topic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The objective of this update is to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The amendments in this update address certain aspects of recognition, measurement, presentation and disclosure of financial instruments. This update is effective in fiscal years beginning after December 15, 2017. The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Company is currently evaluating the impact this update will have on its consolidated financial statements and related disclosures.

In September 2015, the FASB issued ASU 2015-16, Business Combinations – Simplifying the Accounting for Measurement-Period Adjustments. Under current GAAP, an acquirer is required to retrospectively adjust any provisional amounts recognized at the acquisition date with a corresponding adjustment to goodwill when new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts initially recognized or would have resulted in the recognition of additional assets or liabilities. To simplify the accounting for adjustments to provisional amounts, the update eliminates the requirement to retrospectively account for those adjustments. This update is effective in fiscal years beginning after December 15, 2015 and early adoption is permitted. The Company does not currently have acquisitions which would be affected by this update.

In August 2015, the FASB issued ASU 2015-15, Interest – Imputation of Interest (Subtopic 835-30) – Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, which addresses an omission in ASU 2015-03. In April 2015, the FASB issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30) – Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs be presented as a direct reduction from the carrying amount of that debt liability similar to debt discounts. Existing recognition and measurement guidance is not impacted. However, ASU 2015-15 acknowledges that ASU 2015-03 does not address the presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. Per ASU 2015-15, an entity may defer and present debt issuance costs as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement. ASU 2015-15 is effective immediately. ASU 2015-03 is effective in fiscal years beginning after December 15, 2015 and early adoption is permitted. The Company has debt issuance costs related to line-of-credit arrangements and has adopted ASU 2015-15, which resulted in no change of presentation. If the Company enters into other debt arrangements that fall under ASU 2015-03, the Company will account for any related debt issuance costs per the update upon its effectiveness in the first quarter of 2016.

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In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date, which defers the effective date of ASU 2014-09. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. ASU 2015-14 defers the effective date of ASU 2014-09 for one year, and the standard is now effective for the Company on January 1, 2018. The deferral allows for early adoption of the standard, which for the Company would be on January 1, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is currently evaluating which transition method to use for adopting ASU 2014-09 when required and does not expect the update to have a significant impact on its consolidated financial statements and related disclosures based on its current business model.

In April 2015, the FASB issued ASU 2015-05, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) – Customers Accounting for Fees Paid in a Cloud Computing Arrangement. This update provides guidance regarding the accounting for fees paid by a customer in cloud computing arrangements. If a cloud computing arrangement includes a software license, the payment of fees should be accounted for in the same manner as the acquisition of other software licenses. If there is no software license, the fees should be accounted for as a service contract. The update is effective in fiscal years beginning after December 15, 2015 and early adoption is permitted. An entity can elect to adopt the amendments either (1) prospectively to all arrangements entered into or materially modified after the effective date or (2) retrospectively. The Company does not expect that this update will have a significant impact on its consolidated financial statements and disclosures.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. This update makes some targeted changes to current consolidation guidance. These changes impact both the voting and the variable interest consolidation models. In particular, the update will change how companies determine whether limited partnerships or similar entities are VIEs. The update is effective in fiscal years, including interim periods, beginning after December 15, 2015, and early adoption is permitted. The Company currently consolidates all VIEs in which it has an equity interest and does not expect that ASU 2015-02 will have a significant impact on its consolidated financial statements and related disclosures.

3.Fair Value Measurements

The Company measures and reports its cash equivalents at fair value. The following tables set forth the fair value of the Company’s financial assets measured on a recurring basis by level within the fair value hierarchy (in thousands):

	December 31, 2015
	Level I		Level II		Level III		Total
Financial Assets
Time deposits	$	—	$	1,900	$	—	$	1,900
Total financial assets	$	—	$	1,900	$	—	$	1,900
	December 31, 2014
	Level I		Level II		Level III		Total
Financial Assets
Time deposits	$	—	$	1,900	$	—	$	1,900
Money market funds		607		—		—		607
Total financial assets	$	607	$	1,900	$	—	$	2,507

The carrying amounts of certain financial instruments of the Company, consisting of cash and cash equivalents excluding time deposits; accounts receivable; accounts payable; accounts payable—related party and distributions payable to redeemable non-controlling interests (all Level I) approximate fair value due to their relatively short maturities. Time deposits (Level II) approximate fair value due to their short-term nature (30 days) and, upon renewal, the interest rate is adjusted based on current market rates. The Company’s long-term debt is carried at cost and was $415.9 million and $105.0 million as of December 31, 2015 and 2014. The Company estimated the fair value of long-term debt to approximate its carrying value as interest accrues at a floating rate based on market rates. The Company did not have realized gains or losses related to financial assets for any of the periods presented.

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4.Solmetric Acquisition 

In January 2014, the Company completed the acquisition of Solmetric (the “Solmetric Acquisition”), a developer and manufacturer of photovoltaic installation devices and software products. The purchase price agreed to in the purchase agreement with Solmetric was $12.0 million plus a net working capital adjustment resulting in total cash purchase consideration of $12.2 million. The total consideration of $12.2 million was used for the purchase of all outstanding stock and options of Solmetric, settlement of Solmetric’s short-term promissory note and settlement of other liabilities including employee-related liabilities of Solmetric incurred in connection with the acquisition. The Company incurred $0.3 million of costs related to retention bonuses to key Solmetric employees and $0.1 million of transaction fees, all of which were included in the consolidated statements of operations for the year ended December 31, 2014.

Pursuant to the terms of the purchase agreement, $1.0 million of the purchase consideration was placed in escrow and was held for general representations and warranties, rather than specific contingencies or specific assets or liabilities of the Company. The Company had no right to these funds, nor did it have a direct obligation associated with them. Accordingly, the Company did not include the escrow funds in its consolidated balance sheets. Notwithstanding any prior claims to the escrow fund due to a breach of representations and warranties, the escrow was released on the one year anniversary of the Solmetric Acquisition.

The estimated fair values of the assets acquired and liabilities assumed were based on information obtained from various sources including third party valuations, management’s internal valuation and historical experience. The fair values of the intangible assets related to customer relationships, trade names and trademarks, developed technology and in-process research and development were determined using the income approach and significant estimates relate to assumptions as to the future economic benefits to be received, cash flow projections and discount rates.

The purchase price was allocated based on the estimated fair value of net assets acquired and liabilities assumed at the date of the acquisition. The purchase price allocation was finalized as of December 31, 2014.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed (in thousands):

Cash acquired	$	139
Inventories		580
Other current assets acquired		221
Property		77
Customer relationships		738
Trademarks/trade names		1,664
Developed technology		1,295
In-process research and development		2,097
Goodwill		7,056
Deferred tax liability, net		(1,478	)
Current liabilities assumed		(210	)
Total	$	12,179

Goodwill, which represents the purchase price in excess of the fair value of net assets acquired, is not deductible for income tax purposes. This goodwill is reflective of the value derived from the Company utilizing Solmetric’s advanced technology to improve the installation and efficacy of its solar panels as well as the expected growth in the Solmetric business, based on its historical performance and the expectation of continued growth as the solar industry expands.

For tax purposes, the acquired intangible assets are not amortized. Accordingly, a deferred tax liability of $2.5 million was recorded for the difference between the book and tax basis related to the intangible assets. Additionally, a deferred tax asset of $1.0 million was recorded mainly as a result of Solmetric’s net operating losses.

Financial results for Solmetric since the acquisition date are included in the results of operations for the year ended December 31, 2014. Solmetric contributed $3.2 million of revenues and $0.4 million of net income for the year ended December 31, 2014. During 2015, the Company discontinued the external sale of two Solmetric products. This discontinuance was considered an indicator of impairment, and the Company performed a review regarding the recoverability of the carrying value of the related intangible assets. As a result of this review, the Company recorded an impairment charge of $4.5 million in the first quarter of 2015.

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Unaudited Solmetric Pro Forma Information

The following pro forma financial information is based on the historical financial statements of the Company and presents the Company’s results as if the Solmetric Acquisition had occurred as of January 1, 2013 (in thousands):

	Years Ended
	December 31,
	2014			2013
Pro forma revenue	$	25,380		$	9,122
Pro forma net loss		(165,734	)		(57,046	)
Pro forma net (loss attributable) income available to common stockholders		(28,698	)		5,062

The unaudited pro forma results include the accounting effects resulting from the Solmetric Acquisition, such as the amortization charges from acquired intangible assets, reversal of costs related to special retention bonuses and other payments to employees and transaction costs directly related to the Solmetric Acquisition, elimination of intercompany sales and reversal of the related tax effects. The pro forma information presented does not purport to present what the actual results would have been had the Solmetric Acquisition actually occurred on January 1, 2013, nor is the information intended to project results for any future period.

5.Solar Energy Systems

Solar energy systems, net consisted of the following (in thousands):

	December 31,			December 31,
	2015			2014
System equipment costs	$	893,088		$	478,502
Initial direct costs related to solar energy systems		171,081			75,349
		1,064,169			553,851
Less: Accumulated depreciation and amortization		(32,505	)		(10,186	)
		1,031,664			543,665
Solar energy system inventory		70,493			44,502
Solar energy systems, net	$	1,102,157		$	588,167

Solar energy system inventory represents the solar components and materials used in the installation of solar energy systems prior to being installed on customers’ roofs. As such, no depreciation is recorded related to this line item. The Company recorded depreciation and amortization expense related to solar energy systems of $22.3 million, $8.1 million and $2.0 million for the years ended December 31, 2015, 2014 and 2013.

6.Property and Equipment

Property and equipment, net consisted of the following (in thousands):

	Estimated	December 31,			December 31,
	Useful Lives	2015			2014
Vehicles acquired under capital leases	3 years	$	24,149		$	13,351
Furniture and computer and other equipment	3 years		6,524			2,183
Leasehold improvements	1-3 years		4,116			2,088
			34,789			17,622
Less: Accumulated depreciation and amortization			(12,181	)		(4,598	)
			22,608			13,024
Build-to-suit lease asset under construction			25,560			—
Property and equipment, net		$	48,168		$	13,024

The Company recorded depreciation and amortization related to property and equipment of $8.2 million, $3.4 million and $1.2 million for the years ended December 31, 2015, 2014 and 2013.

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The Company leases fleet vehicles that are accounted for as capital leases and are included in property and equipment, net. Depreciation on vehicles under capital leases totaling $5.5 million, $3.0 million and $1.2 million was capitalized in solar energy systems, net for the years ended December 31, 2015, 2014 and 2013. For the years ended December 31, 2015 and 2014, a de minimis amount of depreciation was also expensed. For the year ended December 31, 2013, no depreciation was expensed.

Because of its involvement in certain aspects of the construction of a new headquarters building in Lehi, UT, the Company is deemed the owner of the building for accounting purposes during the construction period. Accordingly, the Company recorded a build-to-suit lease asset of $25.6 million as of December 31, 2015. See Note 16—Commitments and Contingencies.

Future minimum lease payments for vehicles under capital leases as of December 31, 2015 were as follows (in thousands):

Years Ending December 31,
2016	$	6,405
2017		5,679
2018		4,136
2019		1,008
2020		36
Thereafter		—
Total minimum lease payments		17,264
Less: interest		1,720
Present value of capital lease obligations		15,544
Less: current portion		5,489
Long-term portion	$	10,055

7.Intangible Assets and Goodwill

Intangible assets consisted of the following (in thousands):

	December 31,			December 31,
	2015			2014
Cost:
Internal-use software	$	1,591		$	370
Developed technology		522			1,295
Trademarks/trade names		201			1,664
Customer relationships		164			738
Customer contracts		—			43,783
In-process research and development		—			2,097
Total carrying value		2,478			49,947
Accumulated amortization:
Internal-use software		(219	)		—
Developed technology		(126	)		(160	)
Trademarks/trade names		(39	)		(152	)
Customer relationships		(63	)		(135	)
Customer contracts		—			(31,013	)
Total accumulated amortization		(447	)		(31,460	)
Total intangible assets, net	$	2,031		$	18,487

The Company recorded amortization expense of $13.2 million for the year ended December 31, 2015, $14.9 million for the year ended December 31, 2014, of which $0.1 million was recorded in cost of revenue-solar energy system and product sales, and $14.6 million for the year ended December 31, 2013. Customer contracts acquired in the Acquisition were fully amortized in 2015.

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In February 2015, the Company decided to discontinue the external sales of the SunEye and PV Designer products, the rights to which the Company acquired when it acquired Solmetric Corporation, or Solmetric, in January 2014. This discontinuance was considered an indicator of impairment, and a review regarding the recoverability of the carrying value of the related intangible assets was performed. In-process research and development, which was intended to generate Solmetric product sales in the residential market, was discontinued and deemed fully impaired resulting in a charge of $2.1 million. The Solmetric, SunEye and PV Designer trade names will no longer be utilized and were deemed fully impaired resulting in a charge of $1.3 million. The SunEye and PV Designer developed technology assets were deemed fully impaired resulting in a charge of $0.7 million. Customer relationships were deemed partially impaired by $0.4 million due to the loss of external customers who purchased the discontinued products. As a result of this review, the Company recorded a total impairment charge of $4.5 million for the year ended December 31, 2015. No impairment was recorded in the years ended December 31, 2014 and 2013.

As of December 31, 2015, expected amortization expense for the unamortized intangible assets is as follows (in thousands):

Years Ending December 31,
2016	$	656
2017		558
2018		475
2019		129
2020		86
Thereafter		127
Total	$	2,031

No changes to goodwill were recorded for the year ended December 31, 2015. The carrying amount of goodwill for the years ended December 31, 2015 and 2014 was $36.6 million.

8.Accrued Compensation

Accrued compensation consisted of the following (in thousands):

	December 31,		December 31,
	2015		2014
Accrued payroll	$	6,918	$	10,219
Accrued commissions		6,840		6,575
Total accrued compensation	$	13,758	$	16,794

9.Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following (in thousands):

	December 31,		December 31,
	2015		2014
Accrued professional fees	$	7,918	$	1,289
Income tax payable		6,169		4,097
Current portion of lease pass-through financing obligation		3,835		—
Sales and use tax payable		3,524		5,052
Accrued litigation settlements		1,790		450
Deferred rent		1,064		1,090
Accrued unused commitment fees and interest		1,014		478
Other accrued expenses		3,703		1,560
Total accrued and other current liabilities	$	29,017	$	14,016

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10.Debt Obligations  

Debt obligations consisted of the following (in thousands):

	December 31,		December 31,
	2015		2014
Aggregation credit facility	$	269,100	$	105,000
Working capital credit facility		146,750		—
Total debt	$	415,850	$	105,000

Bank of America, N.A. Aggregation Credit Facility

In September 2014, the Company entered into an aggregation credit facility (the “Aggregation Facility”), which was subsequently amended in February 2015 and November 2015, pursuant to which the Company may borrow up to an aggregate of $375.0 million and, upon the satisfaction of certain conditions and the approval of the lenders, up to an additional aggregate of $175.0 million in borrowings with certain financial institutions for which Bank of America, N.A. is acting as administrative agent.

The February 2015 amendment to the Aggregation Facility increased the funding commitment by $25.0 million pursuant to which the Company may borrow up to an aggregate of $375.0 million. In addition, the right to which the Company may request additional borrowing capacity, upon the satisfaction of certain conditions and the approval of the lenders, was reduced to $175.0 million, such that the total potential capacity under the facility remains at $550.0 million. The other terms of the Aggregation Facility remained unchanged.

The November 2015 amendments primarily included (1) changing the formula for determining the amount that the Company may borrow subject to the satisfaction of certain conditions, without changing the $375.0 million loan commitment, enabling the Company to draw additional loan proceeds from the existing conditions satisfied, (2) converting the facility from a term facility into a revolving facility and (3) requiring the Company to enter into an interest rate hedging agreement before September 13, 2016. For accounting purposes, the Aggregation Facility is considered a modification of the term loan credit facility entered into in May 2014 described below.

Prepayments are permitted under the Aggregation Facility, and the principal and accrued interest on any outstanding loans mature in March 2018. Under the Aggregation Facility, interest on borrowings accrues at a floating rate equal to either (1)(a) the London Interbank Offer Rate (“LIBOR”) or (b) the greatest of (i) the Federal Funds Rate plus 0.5%, (ii) the administrative agent’s prime rate and (iii) LIBOR plus 1% and (2) a margin that varies between 3.25% during the period during which the Company may incur borrowings and 3.50% after such period. Interest is payable at the end of each interest period that the Company may elect as a term of either one, two or three months.

The borrower under the Aggregation Facility is Vivint Solar Financing I, LLC, one of the Company’s indirect wholly owned subsidiaries, which in turn holds the Company’s interests in the managing members in the Company’s existing investment funds. These managing members guarantee the borrower’s obligations under the Aggregation Facility. In addition, Vivint Solar Holdings, Inc. has pledged its interests in the borrower, and the borrower has pledged its interests in the guarantors as security for the borrower’s obligations under the Aggregation Facility. The related solar energy systems are not subject to any security interest of the lenders, and there is no recourse to the Company in the case of a default.

The Aggregation Facility includes customary covenants, including covenants that restrict, subject to certain exceptions, the borrower’s, and the guarantors’ ability to incur indebtedness, incur liens, make investments, make fundamental changes to their business, dispose of assets, make certain types of restricted payments or enter into certain related party transactions. Among other restrictions, the Aggregation Facility provides that the borrower may not incur any indebtedness other than that related to the Aggregation Facility or in respect of permitted swap agreements, and that the guarantors may not incur any indebtedness other than that related to the Aggregation Facility or as permitted under existing investment fund transaction documents. These restrictions do not impact the Company’s ability to enter into investment funds, including those that are similar to those entered into previously. As of December 31, 2015, the Company was in compliance with such covenants. As of December 31, 2015, the Company has not entered into any interest rate hedges as required by the latest debt modification.

As of December 31, 2015, the Company had incurred an aggregate of $269.1 million in borrowings under the Aggregation Facility. The remaining borrowing capacity was $105.9 million as of December 31, 2015. However, the Company does not have immediate access to the remaining $105.9 million balance as future borrowings are dependent on when it has solar energy system revenue to collateralize the borrowings.

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The Aggregation Facility also contains certain customary events of default. If an event of default occurs, lenders under the Aggregation Facility will be entitled to take various actions, including the acceleration of amounts due under the Aggregation Facility and foreclosure on the interests of the borrower and the guarantors that have been pledged to the lenders.

Interest expense was approximately $9.9 million and $1.4 million in the years ended December 31, 2015 and 2014. As of December 31, 2015, the current portion of deferred financing costs of $4.0 million was recorded in prepaid expenses and other current assets, and the long-term portion of deferred financing costs of $4.9 million was recorded in other non-current assets, net in the consolidated balance sheet. In addition, a $5.0 million interest reserve amount was deposited in an interest reserve account with the administrative agent and is included in restricted cash and cash equivalents. The interest reserve increases as borrowings increase under the Aggregation Facility.

Working Capital Credit Facility

In March 2015, the Company entered into a revolving credit agreement (the “Working Capital Facility”) pursuant to which the Company may borrow up to an aggregate principal amount of $131.0 million from certain financial institutions for which Goldman Sachs Lending Partners LLC is acting as administrative agent and collateral agent. In May 2015, certain conditions were satisfied and the aggregate amount of available revolver borrowings was increased to $150.0 million. Loans under the Working Capital Facility will be used to pay for the costs incurred in connection with the design and construction of solar energy systems, and letters of credit may be issued for working capital and general corporate purposes. As of December 31, 2015, the Company had incurred an aggregate of $146.8 million in borrowings under the Working Capital Facility. Further, the Company established a letter of credit under the Working Capital Facility for $3.2 million related to an insurance contract. As such, there was no remaining borrowing capacity available as of December 31, 2015.

The Company has pledged the interests in the assets of the Company and its subsidiaries, excluding Vivint Solar Financing I, LLC, as security for its obligations under the Working Capital Facility. Prepayments are permitted under the Working Capital Facility, and the principal and accrued interest on any outstanding loans mature in March 2020. Interest accrues on borrowings at a floating rate equal to, dependent on the type of borrowing, (1) a rate equal to the Eurodollar Rate for the interest period divided by one minus the Eurodollar Reserve Percentage, plus a margin of 3.25%; or (2) the highest of (a) the Federal Funds Rate plus 0.50%, (b) the Citibank prime rate and (c) the one-month interest period Eurodollar rate plus 1.00%, plus a margin of 2.25%. Interest is payable dependent on the type of borrowing at the end of (1) the interest period that the Company may elect as a term and not to exceed three months, (2) quarterly or (3) at maturity of the Working Capital Facility.

The Working Capital Facility includes customary covenants, including covenants that restrict, subject to certain exceptions, the Company’s ability to incur indebtedness, incur liens, make investments, make fundamental changes to its business, dispose of assets, make certain types of restricted payments or enter into certain related party transactions. Among other restrictions, the Working Capital Facility provides that the Company may not incur any indebtedness other than that related to the Working Capital Facility or permitted swap agreements. These restrictions do not impact the Company’s ability to enter into investment funds, including those that are similar to those entered into previously. The Company is also required to maintain $25.0 million in cash and cash equivalents and certain investments as of the last day of each quarter. As of December 31, 2015, the Company was in compliance with such covenants.

The Working Capital Facility also contains certain customary events of default. If an event of default occurs, lenders under the Working Capital Facility will be entitled to take various actions, including the acceleration of amounts then outstanding.

Interest expense for this facility was approximately $2.3 million for the year ended December 31, 2015. As of December 31, 2015, the current portion of deferred debt issuance costs of $0.5 million was recorded in prepaid expenses and other current assets, and the long-term portion of deferred debt issuance costs of $1.8 million was recorded in other non-current assets, net in the consolidated balance sheet.

Bank of America, N.A. Term Loan Credit Facility

In May 2014, the Company entered into a term loan credit facility for an aggregate principal amount of $75.5 million with certain financial institutions for which Bank of America, N.A. acted as administrative agent. In September 2014 in connection with the entry into the Aggregation Facility, the Company repaid the then outstanding $75.5 million in aggregate borrowings and terminated the agreement. Under this credit facility, the Company incurred interest on the term borrowings that accrued at a floating rate based on (1) LIBOR plus a margin equal to 4%, or (2) a rate equal to 3% plus the greatest of (a) the Federal Funds Rate plus 0.5%, (b) the administrative agent’s prime rate and (c) LIBOR plus 1%. Interest expense from inception of this credit facility in May 2014 through payoff in September 2014 was approximately $1.3 million.

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The credit facility included customary covenants, including covenants that restricted, subject to certain exceptions, the Company’s ability to incur indebtedness, incur liens, make investments, make fundamental changes to the Company’s business, dispose of assets, make certain types of restricted payments or enter into certain related party transactions. As of the day on which borrowings under the credit facility were repaid, the Company was in compliance with all such covenants. In addition, the $1.6 million interest reserve amount that was deposited in an interest reserve account with the administrative agent was released upon termination of the credit facility.

Revolving Lines of Credit—Related Party

On October 9, 2014, the Company repaid $58.8 million in aggregate borrowings and interest owed to Vivint under the 2013 Loan Agreement and the 2012 Loan Agreement defined below. These loan agreements were terminated upon repayment.

In May 2013, the Company entered into a Subordinated Note and Loan Agreement with APX Parent Holdco, Inc., pursuant to which the Company was able to incur up to $20.0 million in revolver borrowings (“2013 Loan Agreement”). From May 2013 through December 2013, the Company incurred $18.5 million in principal borrowings under the agreement. Interest accrued on these borrowings at 12% per year through November 2013 and 20% per year thereafter, and accrued interest was paid-in-kind through additions to the principal amount on a semi-annual basis. In January 2014, the Company amended and restated the 2013 Loan Agreement, pursuant to which the Company was able to incur an additional $30.0 million in revolver borrowings, resulting in a total borrowing capacity of $50.0 million, with interest on the borrowings accruing at a rate of 12% per year. From January 2014 through September 2014, the Company incurred an aggregate of $154.5 million in revolver borrowings under the 2013 Loan Agreement of which $141.5 million was repaid within one to eight days from the respective borrowing date. None of these borrowings individually exceeded the borrowing capacity of $50.0 million. Interest expense was $3.1 million and $1.5 million for the years ended December 31, 2014 and 2013.

In December 2012 and amended in July 2013, the Company entered into a Subordinated Note and Loan Agreement with Vivint pursuant to which the Company could incur revolver borrowings of up to $20.0 million (“2012 Loan Agreement”). In December 2012, the Company incurred $15.0 million in revolver borrowings. From January 2013 through May 2013, the Company incurred an additional $5.0 million in revolver borrowings. Interest accrued on these borrowings at 7.5% per year, and accrued interest was paid-in-kind through additions to the principal amount on a semi-annual basis. Interest expense was $1.3 million and $1.5 million for the years ended December 31, 2014 and 2013.

In November 2013, the Company entered into a Subordinated Note and Loan Agreement with APX Parent Holdco, Inc. for a one day loan of $20.0 million to obtain funding for an investment fund and repaid the full amount the next day. The imputed interest on the principal amount was not significant.

In July 2013, the Company entered into a Subordinated Note and Loan Agreement with APX Parent Holdco, Inc. for a one day loan of $40.0 million to obtain funding for an investment fund and repaid the full amount the next day. The imputed interest on the principal amount was not significant.

Interest Expense and Amortization of Deferred Financing Costs

For the years ended December 31, 2015 and 2014, total interest expense incurred under debt obligations was $12.2 million and $9.3 million, of which $3.5 million and $2.2 million was amortization of deferred financing costs. For the year ended December 31, 2013, total interest expense incurred under debt obligations was $3.1 million and did not include amortization of deferred financing costs as no deferred financing costs had been incurred.

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11.Investment Funds 

As of December 31, 2015, the Company had formed 17 investment funds for the purpose of funding the purchase of solar energy systems. The Company has aggregated the financial information of the investment funds in the table below. The aggregate carrying value of these funds’ assets and liabilities (after elimination of intercompany transactions and balances) in the Company’s consolidated balance sheets were as follows (in thousands):

	December 31,		December 31,
	2015		2014
Assets
Current assets:
Cash and cash equivalents	$	12,014	$	12,641
Accounts receivable, net		3,063		1,542
Prepaid expenses and other current assets		121		—
Total current assets		15,198		14,183
Solar energy systems, net		990,609		525,903
Other non-current assets, net		18		—
Total assets	$	1,005,825	$	540,086
Liabilities
Current liabilities:
Distributions payable to non-controlling interests and redeemable    non-controlling interests	$	11,347	$	6,780
Current portion of deferred revenue		4,824		237
Accrued and other current liabilities		3,869		—
Total current liabilities		20,040		7,017
Deferred revenue, net of current portion		43,094		4,335
Other non-current liabilities		3,283		—
Total liabilities	$	66,417	$	11,352

The Company consolidates the investment funds in which it has an equity interest, and all intercompany balances and transactions between the Company and the investment funds are eliminated in the consolidated financial statements. The Company determined that each of these investment funds meets the definition of a VIE. The Company uses a qualitative approach in assessing the consolidation requirement for VIEs that focuses on determining whether the Company has the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and whether the Company has the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

The Company has considered the provisions within the contractual arrangements that grant it power to manage and make decisions that affect the operation of these VIEs, including determining the solar energy systems and associated long term customer contracts to be sold or contributed to the VIE, and installation, operation and maintenance of the solar energy systems. The Company considers that the rights granted to the other investors under the contractual arrangements are more protective in nature rather than participating rights. As such, the Company has determined it is the primary beneficiary of the VIEs for all periods presented. The Company evaluates its relationships with the VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary.

Under the related agreements, cash distributions of income and other receipts by the fund, net of agreed-upon expenses and estimated expenses, tax benefits and detriments of income and loss, and tax benefits of tax credits, are assigned to the fund investor and Company’s subsidiary as specified in contractual arrangements. Certain of these arrangements have call and put options to acquire the investor’s equity interest as specified in the contractual agreements.

Residential Investment Funds

As of December 31, 2015, the Company had formed 16 residential investment funds. Fund investors for three of the funds are managed indirectly by the Sponsor and are considered related parties. As of December 31, 2015 and 2014, the cumulative total of contributions into the VIEs by all investors was $773.0 million and $480.2 million. Of these contributions, a cumulative total of $110.0 million was contributed by related parties in prior periods.

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C&I Investment Fund

In May 2015, a wholly owned subsidiary of the Company entered into a C&I solar investment fund arrangement with a fund investor. The fund was not operational, i.e., no projects had been initiated within the fund as of December 31, 2015, and as such, the Company did not have any assets or liabilities associated with the fund. The total available committed capital under the fund is $150.0 million, which is expected to be contributed in 2016.

Lease Pass-Through Financing Obligation

In the year ended December 31, 2015, a new lease pass-through fund arrangement became operational under which the Company contributes solar energy systems and the investor contributes cash. Contemporaneously, a subsidiary of the Company entered into a master lease arrangement to lease the solar energy systems and the associated customer lease or power purchase agreements to the fund investor. The Company’s subsidiary makes a tax election to pass-through the ITCs that accrue to the solar energy systems to the fund investor, who as the legal lessee of the property is allowed to claim the ITCs under Section 50(d)(5) of the Internal Revenue Code and the related regulations. The solar energy systems are included under solar energy systems, net in the consolidated balance sheets, and as of December 31, 2015, the net carrying value of the solar energy systems was $64.7 million.

Under the arrangement, the fund investor makes a large upfront payment to the Company’s subsidiary and subsequent periodic payments. The Company allocates a portion of the aggregate payments received from the fund investor to the estimated fair value of the assigned ITCs, and the balance to the future customer lease payments that are also assigned to the investor. The Company’s subsidiary has an obligation to ensure the solar energy system is in service and operational for a term of five years to avoid any recapture of the ITCs. Accordingly, the Company recognizes revenue as the recapture provisions lapse assuming all other revenue recognition criteria have been met. The amounts allocated to ITCs are initially recorded as deferred revenue in the consolidated balance sheet, and subsequently, one-fifth of the amounts allocated to ITCs is recognized as revenue from operating leases and solar energy systems incentives in the consolidated statements of operations based on the anniversary of each solar energy system’s placed in service date over the next five years.

The Company accounts for the residual of the payments received from the fund investor, net of amounts allocated to ITCs, as a borrowing by recording the proceeds received as a lease pass-through financing obligation, which will be repaid through customer payments that will be received by the investor. Under this approach, the Company continues to account for the arrangement with the customers in its consolidated financial statements, whether the cash generated from the customer arrangements is received by the lessor or paid directly to the fund investor. A portion of the amounts received by the fund investor from customer payments is applied to reduce the lease pass-through financing obligation, and the balance is allocated to interest expense. The customer payments are recognized into revenue based on cash receipts during the period as required by GAAP. Interest is calculated on the lease pass-through financing obligation using the effective interest rate method. The effective interest rate is the interest rate that equates the present value of the cash amounts to be received by a fund investor over the master lease term with the present value of the cash amounts paid by the investor to the Company, adjusted for any payments made by the Company.

The lease pass-through financing obligation is nonrecourse once the associated assets have been placed in service and all the customer arrangements have been assigned to the fund investor. However, there is a one-time future lease payment reset mechanism that is set to occur after all of the solar energy systems are delivered and placed in service. This reset date occurs when the installed capacity of the solar energy systems and their in-service dates are known or on an agreed upon date. As part of this reset process, the lease prepayment is updated to reflect certain specified conditions as they exist at such date, including the final installed capacity, cost and in-service dates of the solar energy systems. As a result of this reset process, the Company may be obligated to refund a portion of an investor’s master lease prepayments or may be entitled to receive an additional master lease prepayment. Any additional master lease prepayments by an investor would be recorded as an additional lease pass-through financing obligation, while any refunds of master lease prepayments would reduce the lease pass-through financing obligation. As of December 31, 2015, the Company had recorded financing liabilities of $47.3 million related to this fund arrangement as deferred revenue in its consolidated balance sheet.

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As of December 31, 2015, the future minimum lease payments to be received from the fund investor based on the solar energy systems then under the lease pass-through fund arrangement, for each of the next five years and thereafter, were as follows (in thousands):

Years Ending December 31,
2016	$	1,701
2017		3,009
2018		3,064
2019		3,111
2020		3,159
Thereafter		10,549
Total minimum lease payments to be received	$	24,593

The fund investor is responsible for services such as warranty support, accounting, lease servicing and performance reporting, which have been outsourced to the Company under administrative and maintenance service agreements.

Guarantees

With respect to the investment funds, the Company and the fund investors have entered into guaranty agreements under which the Company guarantees the performance of certain financial obligations of its subsidiaries to the investment funds. These guarantees do not result in the Company being required to make payments to the fund investors unless such payments are mandated by the investment fund governing documents and the investment fund fails to make such payment.

The Company is contractually obligated to make certain VIE investors whole for losses that the investors may suffer in certain limited circumstances resulting from the disallowance or recapture of investment tax credits. The Company has concluded that the likelihood of a significant recapture event is remote and consequently has not recorded any liability in the consolidated financial statements for any potential recapture exposure. The maximum potential future payments that the Company could have to make under this obligation would depend on the IRS successfully asserting upon audit that the fair market values of the solar energy systems sold or transferred to the funds as determined by the Company exceeded the allowable basis for the systems for purposes of claiming ITCs. The fair market values of the solar energy systems and related ITCs are determined and the ITCs are allocated to the fund investors in accordance with the funds governing agreements. Due to uncertainties associated with estimating the timing and amounts of distributions, the likelihood of an event that may trigger repayment, forfeiture or recapture of ITCs to such investors, and the fact that the Company cannot determine how the IRS will evaluate system values used in claiming ITCs, the Company cannot determine the potential maximum future payments that are required under these guarantees.

For a certain fund, if it does not have sufficient cash flows to make a stated cash distribution to the fund investor each annual period, the Company’s subsidiary (which is the managing member of the fund) is obligated to contribute additional cash sufficient to allow the investment fund to make such distribution to the fund investor. The Company has not made payments under its guarantee of performance of the obligations of the subsidiary in prior periods because the fund has generated sufficient cash flow to make the stated cash distributions to the fund investor. The Company has determined that the maximum potential exposure under the guarantee to the fund is not significant.

From time to time, the Company incurs penalties for non-performance, which non-performance may include delays in the installation process and interconnection to the power grid of solar energy systems and other factors. Based on the terms of the investment fund agreements, the Company will either reimburse a portion of the fund investor’s capital or pay the fund investor a penalty fee. As of December 31, 2015 and 2014, the Company accrued an estimated $5.2 million and $4.0 million in distributions to reimburse fund investors a portion of their capital contributions in order to true-up the investors’ expected rate of return primarily due to a delay in solar energy systems being interconnected to the power grid.

As a result of the guaranty arrangements in certain funds, the Company is required to hold minimum cash balances of $10.0 million and $5.0 million as of December 31, 2015 and 2014, which are classified as restricted cash and cash equivalents on the consolidated balance sheets.

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12.Redeemable Non-Controlling Interests, Equity and Preferred Stock 

Common Stock

The Company has 1.0 billion authorized shares of common stock. As of December 31, 2015 and 2014, the Company had 106.6 million and 105.3 million shares of common stock issued and outstanding.

The Company had shares of common stock reserved for issuance as follows (in thousands):

	December 31,		December 31,
	2015		2014
Shares available for grant under equity incentive plans		12,267		8,783
Stock options issued and outstanding		9,277		10,053
Long-term incentive plan		3,382		4,059
Restricted stock units issued and outstanding		930		22
Total		25,856		22,917

On October 6, 2014, the Company closed its initial public offering in which 20.6 million shares of its common stock were sold at a public offering price of $16.00 per share, which generated net proceeds, after deducting underwriting discounts and commissions and $8.8 million in offering expenses, of $300.6 million.

In August 2014, the Company issued and sold an aggregate of 2.7 million shares of common stock to 313 for $10.667 per share for aggregate proceeds of $28.5 million. In September 2014, the Company issued and sold an aggregate of 7.0 million additional shares to 313 and two of its directors for $10.667 per share for aggregate gross proceeds of $75.0 million. The Company intended for the proceeds from such sales to fund its growing operations and to bolster its financial condition in advance of its initial public offering. Subsequent to such transactions, the Company set the preliminary price range for its initial public offering, the mid-point of which was $17.00 per share. The Company determined that, for financial reporting purposes, it was appropriate to record the aggregate difference between the per share purchase price and mid-point of the preliminary price range for its initial public offering with respect to the shares sold to the two directors, or $14.8 million, as stock-based compensation expense, which was recorded in general and administrative expense. Regarding the shares of common stock sold to 313, the Company also determined that, for financial reporting purposes, it was appropriate to record the aggregate difference of $43.4 million as a deemed distribution within additional paid-in capital.

Non-Controlling Interests and Redeemable Non-Controlling Interests

Seven of the investment funds include a right for the non-controlling interest holder to elect to require the Company’s wholly owned subsidiary to purchase all of its membership interests in the fund after a stated period of time (each, a “Put Option”). In one of the investment funds, the Company’s wholly owned subsidiary has the right to elect to require the non-controlling interest holder to sell all of its membership units to the Company’s wholly owned subsidiary (a “Call Option”) after the expiration of the non-controlling interest holder’s Put Option. In the six other investment funds that have Put Options, the Company’s wholly owned subsidiary has a Call Option for a stated period prior to the effectiveness of the Put Option. In nine other investment funds there is a Call Option which is exercisable after a stated period of time. One investment fund has neither a Put Option nor a Call Option. 

The purchase price for the fund investor’s interest in the seven investment funds under the Put Options is the greater of fair market value at the time the option is exercised and a specified amount, ranging from $0.7 million to $4.1 million. The Put Options for these seven investment funds are exercisable beginning on the date that specified conditions are met for each respective fund. None of the Put Options are expected to become exercisable prior to 2019.

Because the Put Options represent redemption features that are not solely within the control of the Company, the non-controlling interests in these investment funds are presented outside of permanent equity. Redeemable non-controlling interests are reported using the greater of their carrying value at each reporting date (which is impacted by attribution under the hypothetical liquidation at book value method) or their estimated redemption value in each reporting period. The carrying values of redeemable non-controlling interests at December 31, 2015 and December 31, 2014 were greater than the redemption values.

The purchase price for the fund investors’ interests under the Call Options varies by fund, but is generally the greater of a specified amount, which ranges from approximately $0.7 million to $7.0 million, the fair market value of such interest at the time the option is exercised, or an amount that causes the fund investor to achieve a specified return on investment. The Call Options are exercisable beginning on the date that specified conditions are met for each respective fund. None of the Call Options are expected to become exercisable prior to 2019.

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Preferred Stock

In October 2014, the Company authorized 10.0 million shares of preferred stock that is issuable in series. As of December 31, 2015 and 2014, there were no series of preferred stock issued or designated.

13.Equity Compensation Plans

Equity Incentive Plans

2014 Equity Incentive Plan

In September 2014, the Company adopted the 2014 Equity Incentive Plan (the “2014 Plan”). Under the 2014 Plan, the Company may grant stock options, restricted stock, restricted stock units, stock appreciation rights, performance units, performance shares and performance awards to its employees, directors and consultants, and its parent and subsidiary corporations’ employees and consultants.

As of December 31, 2015, a total of 13.3 million shares of common stock are reserved for issuance under the 2014 plan, subject to adjustment in the case of certain events. In addition, any shares that otherwise would be returned to the Omnibus Plan (as defined below) as the result of the expiration or termination of stock options may be added to the 2014 Plan. The number of shares available for issuance under the 2014 Plan is subject to an annual increase on the first day of each year, equal to the least of 8.8 million shares, 4% of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year and an amount of shares as determined by the Company. In accordance with the annual increase, an additional 4.2 million shares were reserved for issuance at the beginning of 2015 under the 2014 Plan.

As of December 31, 2015, there were 0.1 million time-based stock options, 0.8 million restricted stock units (“RSUs”), and 0.1 million performance share units (“PSUs”) outstanding under the 2014 Plan. The time-based options are subject to ratable time-based vesting over four years. The RSUs are subject to ratable time-based vesting over one to four years. The PSUs vest quarterly over one to four years subject to individual participants’ achievement of quarterly performance goals.

2013 Omnibus Incentive Plan; Non-plan Option Grant

In July 2013, the Company adopted the 2013 Omnibus Incentive Plan (the “Omnibus Plan”), which was terminated in connection with the adoption of the 2014 Plan in September 2014, and accordingly no additional shares are available for issuance under the Omnibus Plan. The Omnibus Plan continues to govern outstanding awards granted under the plan. In August 2013, the Company granted an option to purchase 0.6 million shares of common stock outside of the Omnibus Plan; however, the provisions of this option were substantially similar to those of the options granted pursuant to the Omnibus Plan.

During 2014 and 2013, the Company granted options of which one-third are subject to ratable time-based vesting over a five year period and two-thirds are subject to vesting upon certain performance conditions and the achievement of certain investment return thresholds by 313. The options have a ten-year contractual period.

In April 2014, the Company amended the vesting schedules of certain options outstanding under the Omnibus Plan and the option granted outside of the Omnibus Plan described above to provide that a portion of each of these options vests upon the Company’s aggregate market capitalization (using the 30-day, volume-weighted average closing bid price listed on the New York Stock Exchange) being equal to or exceeding $1.0 billion at the end of any trading day at least 240 days following the completion of the Company’s public offering.

During the year ended December 31, 2015, the first performance condition was met and 3.3 million performance-based options immediately vested and became exercisable during the second quarter of 2015. The Company accelerated all remaining expense related to the vested options for the first performance condition, resulting in additional stock-based compensation expense of approximately $7.4 million in the second quarter of 2015. For the year ended December 31, 2015, the Company recognized total expense of $10.8 million related to performance-based options. As of December 31, 2015, there were 3.2 million shares subject to outstanding options that are subject to performance and market conditions that have not yet been met. During the year ended December 31, 2014, the Company recorded $5.8 million in stock-based compensation related to the performance conditions as it became probable the performance conditions would be met.

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Long-term Incentive Plan

In July 2013, the Company’s board of directors approved 4.1 million shares of common stock for six Long-term Incentive Plan Pools (“LTIP Pools”) that comprise the 2013 Long-term Incentive Plan (the “LTIP”). The purpose of the LTIP is to attract and retain key service providers and strengthen their commitment to the Company by providing incentive compensation measured by reference to the value of the shares of the Company’s common stock. Eligible participants include nonemployee direct sales personnel, who sell the solar energy system contracts, employees that install and maintain the solar energy systems and employees that recruit new employees to the Company.

Based on the terms of the agreement, participants are allocated a portion of the LTIP Pools relative to the performance of other participants. LTIP awards to employees are considered to be granted when the allocation of the LTIP Pools to each participant is fixed, which occurs once performance and service conditions are met. The Company amended five of six of the LTIP Pools in April 2014 and the final pool in August 2014. The amendment modified the date on which each participant’s award is fixed from the date of a public offering to a subsequent date based on fulfilling certain service or other performance conditions based on stockholder returns, which will be the same date on which the award vests.

Nonemployee awards are granted and will be measured on the date on which the performance is complete, which is the date the service or other performance conditions are achieved. The Company recognizes stock-based compensation expense based on the lowest aggregate fair value of the non-employee awards at the reporting date.

During the year ended December 31, 2015, 0.6 million shares of common stock were awarded to participants under the LTIP. As of December 31, 2015, 3.4 million shares remained outstanding, as 0.1 million shares represented the exercise price that were returned to the 2014 Plan. The Company recognized $8.3 million of expense related to these shares in the year ended December 31, 2015. No shares were awarded and no expense was recognized under the LTIP prior to the year ended December 31, 2015.

Stock Options

Stock Option Activity

Stock options are granted under the 2014 Plan and Omnibus Plan as described above. Stock option activity for the year ended December 31, 2015 was as follows (in thousands, except term and per share amounts):

						Weighted-
				Weighted-		Average
	Shares			Average		Remaining		Aggregate
	Underlying			Exercise		Contractual		Intrinsic
	Options			Price		Term		Value
Outstanding—December 31, 2014		10,053		$	1.21			$	80,790
Granted		114			12.56
Exercised		(595	)		1.09
Cancelled		(295	)		1.23
Outstanding—December 31, 2015		9,277		$	1.36		7.8	$	76,488
Options vested and exercisable—December 31, 2015		4,166		$	1.20		7.8	$	34,842
Options vested and expected to vest—December 31, 2015		8,964		$	1.35		7.8	$	73,568

The following table summarizes stock option activity by range of exercise price as of December 31, 2015 (number of awards in thousands):

	Awards Outstanding					Awards Exercisable
			Weighted-Average
	Number of Awards		Remaining	Weighted-Average		Number of Awards		Weighted-Average
Range of Exercise Price	Outstanding		Contractual Life	Exercise Price		Exercisable		Exercise Price
$0.00 - $1.00		5,859	7.6	$	1.00		2,772	$	1.00
$1.01 - $2.00		2,979	8.1		1.30		1,261		1.30
$2.01 - $10.00	320		8.5		4.14		128		4.14
$10.01 - $16.00	119		9.2		13.01		5		16.00
Total		9,277	7.8	$	1.36		4,166	$	1.20

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The weighted-average grant date fair value of time-based options granted during the years ended December 31, 2015, 2014 and 2013 was $9.39, $4.69 and $0.91 per share. No performance-based stock options were granted during the year ended December 31, 2015. The weighted-average grant date fair value of performance-based options granted during the years ended December 31, 2014 and 2013 was $2.80 and $2.23 per share. The total intrinsic value of options exercised for the year ended December 31, 2015 was $7.4 million. There were no options exercised for the years ended December 31, 2014 and 2013. Intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the common stock for the options that had exercise prices that were lower than the fair value per share of the common stock.

The total fair value of options vested for the years ended December 31, 2015, 2014 and 2013 was $14.8 million, $1.0 million and $0.1 million.

Determination of Fair Value of Stock Options

The Company estimates the fair value of the time-based stock options granted on each grant date using the Black-Scholes-Merton option pricing model and applies the accelerated attribution method for expense recognition. The Company estimated the fair value and the vesting period of the performance-based options granted in 2013 and 2014 under the Omnibus Plan on each grant date using the Monte Carlo simulation method. No performance-based options were granted in 2015.

The fair values using the Black-Scholes-Merton method were estimated on each grant date using the following weighted-average assumptions:

	Year Ended December 31,
	2015			2014			2013
Expected term (in years)	6.2			6.2			6.3
Volatility		89.0	%		87.1	%		80.0	%
Risk-free interest rate		1.8	%		1.9	%		1.7	%
Dividend yield		0.0	%		0.0	%		0.0	%

Use of the Black-Scholes-Merton option-pricing model requires the input of highly subjective assumptions, including (1) the fair value of the underlying common stock, (2) the expected term of the option, (3) the expected volatility of the price of the Company’s common stock, (4) risk-free interest rates and (5) the expected dividend yield of the Company’s common stock. The assumptions used in the option-pricing model represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. If factors change and different assumptions are used, the Company’s stock-based compensation expense could be materially different in the future.

These assumptions and estimates are as follows:

· Fair Value of Common Stock.     As the Company’s common stock is publicly traded, the fair value of the Company’s common stock is the close price on the grant date. Prior to the initial public offering, the fair value of common stock was estimated. The fair values of the common stock underlying the Company’s stock-based awards were determined by the Company’s board of directors, which considered numerous objective and subjective factors to determine the fair value of common stock at each grant date. These factors included, but were not limited to, the lack of marketability of the Company’s common stock and developments in the business. A significant factor considered for awards granted approaching the initial public offering was the expected offering price.

· Expected Term.     The expected term represents the period that the Company’s option awards are expected to be outstanding. The Company utilized the simplified method in estimating the expected term of its options granted. The simplified method deems the term to be the average of the time to vesting and the contractual life of the options. The Company also considered additional factors including the expected lives used by a peer group of companies within the industry that it considers to be comparable to its business.

· Expected Volatility.     The volatility is derived from the average historical stock volatilities of a peer group of public companies within the Company’s industry that it considers to be comparable to its business over a period equivalent to the expected term of the stock-based grants. The Company did not rely on implied volatilities of traded options in the industry peers’ common stock because of the low volume of activity.

· Risk-Free Interest Rate.     The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the option’s expected term.

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· Dividend Yield.     The Company has never declared or paid any cash dividends and does not presently plan to pay cash dividends in the foreseeable future. Consequently, the Company used an expected dividend yield of zero. 

The Company estimates potential forfeitures of stock grants and adjusts stock-based compensation expense accordingly. The estimate of forfeitures will be adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized in the period of change and will also impact the amount of stock-based compensation expenses to be recognized in future periods.

The fair values using the Monte Carlo Simulation method were estimated on each grant date using the following weighted-average assumptions:

	Year Ended
	December 31,
	2014			2013
Volatility		80.0	%		80.0	%
Risk-free interest rate		2.7	%		2.6	%

The assumptions used in the Monte Carlo Simulation were determined in a manner consistent with the assumptions for the Black-Scholes-Merton model. No performance-based options were granted in the year ended December 31, 2015. As such, no Monte Carlo Simulation inputs were required for 2015.

Restricted Stock Units

RSUs are granted under the 2014 Plan and the LTIP as described above. RSU activity for the year ended December 31, 2015 was as follows (awards in thousands):

				Weighted-
				Average
	Number of			Grant Date
	Awards			Fair Value
Outstanding at December 31, 2014		22		$	16.00
Granted		1,650			13.01
Vested		(687	)		13.37
Forfeited		(55	)		12.57
Outstanding at December 31, 2015		930			12.84

 The total fair value of RSUs vested was $9.0 million for the year ended December 31, 2015. No RSUs vested in the years ended December 31, 2014 and 2013. The Company determines the fair value of RSUs granted on each grant date based on the fair value of the Company’s common stock on the grant date.

Stock-Based Compensation Expense

Stock-based compensation was included in operating expenses as follows (in thousands):

	Year Ended December 31,
	2015		2014		2013
Cost of revenue	$	3,068	$	1,105	$	6
Sales and marketing		10,737		860		51
General and administrative		11,310		21,722		237
Research and development		489		—		—
Total stock-based compensation	$	25,604	$	23,687	$	294

The income tax benefit related to share-based compensation expense was $4.8 million for the year ended December 31, 2015. There was no income tax benefit related to share-based compensation recognized in the years ended December 31, 2014 and 2013 as there were no option exercises or RSU releases.

In September 2014, the Company recorded $14.8 million of stock-based compensation expense in general and administrative expense related to the sale of shares of common stock to two of its directors as discussed in Note 12—Redeemable Non-Controlling Interests, Equity and Preferred Stock.

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Unrecognized stock-based compensation expense, net of estimated forfeitures, for time-based stock options, performance-based stock options, RSUs and PSUs as of December 31, 2015 was as follows (in thousands, except years):

	Unrecognized
	Stock-Based		Weighted-
	Compensation		Average Period
	Expense		of Recognition
Time-based stock options	$	2,788	3.0 years
Performance-based stock options		1,832	1.2 years
RSUs and PSUs		6,947	2.8 years
Total unrecognized stock-based compensation expense as of December 31, 2015	$	11,567

14.Income Taxes

The income tax expense (benefit) is composed of the following (in thousands):

	Year Ended December 31,
	2015			2014			2013
Current:
Federal	$	52,578		$	1,358		$	2,492
State		15,275			4,035			569
Total current expense		67,853			5,393			3,061
Deferred:
Federal		(46,364	)		(9,636	)		(2,900	)
State		(11,752	)		(2,827	)		(38	)
Total deferred benefit		(58,116	)		(12,463	)		(2,938	)
Income tax expense (benefit)	$	9,737		$	(7,070	)	$	123

The Company operates in only one federal jurisdiction, the United States. The following table presents a reconciliation of the tax benefit computed at the statutory federal rate and the Company’s tax expense (benefit) (in thousands):

	Year Ended December 31,
	2015			2014			2013
Income tax benefit—computed as 35% of pretax loss	$	(85,235	)	$	(60,546	)	$	(19,721	)
Effect of non-controlling interests and redeemable    non-controlling interests		93,221			47,962			21,737
Effect of domestic production activities deduction		(4,699	)		—			—
Effect of nondeductible expenses		1,232			6,617			1,439
State and local income tax expenses		2,289			616			343
Amortization of prepaid tax asset		6,661			2,199			474
Effect of tax credits		(4,106	)		(3,939	)		(4,472	)
Other		374			21			323
Income tax expense (benefit)	$	9,737		$	(7,070	)	$	123

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Deferred income taxes reflect the impact of temporary differences between assets and liabilities for financial reporting purposes and the amounts recognized for income tax reporting purposes, net operating loss carryforwards and other tax credits measured by applying currently enacted tax laws. The significant components of the Company’s deferred tax assets and liabilities were as follows (in thousands): 

	December 31,
	2015			2014
Deferred tax assets:
Stock-based compensation	$	9,068		$	3,738
Accruals and reserves		4,582			3,335
Transaction costs		4,216			—
Other		395			743
Gross deferred tax assets		18,261			7,816
Valuation allowance		(212	)		(222	)
Net deferred tax assets		18,049			7,594
Deferred tax liabilities:
Investment in solar funds		(220,803	)		(106,664	)
Depreciation and amortization		(13,004	)		(9,493	)
Accruals and reserves		(275	)		—
Gross deferred tax liabilities		(234,082	)		(116,157	)
Net deferred tax liabilities	$	(216,033	)	$	(108,563	)

The Company sells solar energy systems to the investment funds for income tax purposes. As the investment funds are consolidated by the Company, the gain on the sale of the solar energy systems is not recognized in the consolidated financial statements. However, this gain is recognized for tax reporting purposes. Since these transactions are intercompany sales for GAAP purposes, any tax expense incurred related to these intercompany sales is deferred and amortized over the estimated useful life of the underlying solar energy systems, which has been estimated to be 30 years. Accordingly, the Company has recorded a prepaid tax asset, net of $277.5 million and $111.9 million as of December 31, 2015 and 2014.

The future reversal of deferred tax liabilities is expected to produce a sufficient source of future taxable income of the necessary character and in the necessary periods and jurisdictions to support the realization of the deferred tax assets. As such, no valuation allowance is required except for as noted below.

The Company had net operating loss carryforwards of approximately zero and $0.3 million related to federal and $1.3 million and $1.5 million related to state (collectively the “NOLs”), available to offset future taxable income as of December 31, 2015 and 2014. The NOLs expire in varying amounts from 2028 through 2034 for state tax purposes if unused. As of December 31, 2015 and 2014, the Company recognized a valuation allowance of $0.2 million for the existing state NOLs and other existing state tax attributes due to state-imposed limitations on their utilization.

The Company reported federal business tax credits, primarily composed of federal investment tax credits, of $4.1 million and $3.9 million for the years ended December 31, 2015 and 2014. The Company accounts for its federal business tax credits as a reduction of income tax expense in the year in which the credits arise.

Uncertain Tax Positions

As of December 31, 2015 and 2014, the Company had no unrecognized tax benefits. There were no interest and penalties accrued for any uncertain tax positions as of December 31, 2015 and 2014. The Company does not have any tax positions for which it is reasonably possible the total amount of gross unrecognized benefits will increase or decrease within 12 months of the year ended December 31, 2015. The Company is subject to taxation and files income tax returns in the United States and various state and local jurisdictions. Substantially all of the Company’s federal, state and local income tax returns since inception are still subject to audit.

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15.Related Party Transactions 

The Company’s operations included the following expenses from related party transactions (in thousands):

	Year Ended December 31,
	2015		2014		2013
Cost of revenue—operating leases and incentives	$	6,054	$	7,834	$	1,558
Sales and marketing		2,133		2,312		866
General and administrative		5,241		5,909		2,323
Interest expense(1)		—		4,481		2,924

⁽¹⁾ Includes revolving lines of credit—related party. See Note 10—Debt Obligations.

Vivint Services

The Company has negotiated and entered into a number of agreements with Vivint related to services and other support that Vivint provides to the Company.

In July 2015, in connection with the Merger Agreement, the Company, Vivint and SunEdison entered into a letter agreement subject to the close of the merger. Most of the obligations under the letter agreement were terminated in connection with the termination of the Merger Agreement. However, the letter agreement did immediately terminate a schedule to the Marketing and Customer Relations Agreement between the Company and Vivint.

In 2014, the Company entered into agreements with Vivint that included the following:

· Master Intercompany Framework Agreement. This agreement establishes a framework for the relationship between the Company and Vivint, including master terms regarding the protection of each other’s confidential information, and master procedural terms, such as notice procedures, restrictions on assignment, interpretive provisions, governing law and dispute resolution.

· Non-Competition Agreement. This agreement defines each company’s current areas of business and competitors, and the Company and Vivint agree not to directly or indirectly engage in the other’s business for three years.

· Transition Services Agreement. Pursuant to this agreement Vivint provides the Company various enterprise services that it has historically provided to the Company. Under this agreement, Vivint agreed to provide the services at the same degree of care and diligence that it takes in performing services for its own operations. These services include information technology and infrastructure, employee benefits and certain other services. In exchange, the Company pays Vivint for the services, which represents Vivint’s good faith estimate of their full cost of providing the services to the Company, without markup or surcharge.

· Marketing and Customer Relations Agreement.This agreement governs various cross-marketing initiatives between the companies, in particular the provision of sales leads from each company to the other. The commission rate is based on the amount paid to subcontractors for performing similar lead generation services. The term of this agreement, including the term of the schedules defining the terms of the mutual lead generation program, is three years.

· Bill of Sale.Under this agreement, Vivint transferred certain assets such as office equipment from Vivint to the Company.

· Trademark License Agreement. Pursuant to this agreement, the licensor, a subsidiary majority-owned by Vivint and minority-owned by the Company, granted to the Company a royalty-free exclusive license to the trademark “VIVINT SOLAR” in the field of selling renewable energy or energy storage products and services. The agreement is perpetual but may be terminated voluntarily by the Company or by the licensor upon certain specified termination events. Vivint retains ownership of the Vivint trademark and the Company has no right to use “Vivint” except as part of “VIVINT SOLAR”.

The Company incurred fees under these agreements of $8.0 million for the year ended December 31, 2015 and $2.2 million in 2014 following the Company’s initial public offering. These amounts reflect the level of services provided by Vivint on behalf of the Company.

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In June 2013, the Company entered into a full service sublease agreement (the “Sublease Agreement”) with Vivint, which was applied retroactively to be in effect as of January 1, 2013. Under the Sublease Agreement, Vivint provided various administrative services, such as management, human resources, information technology, facilities and use of corporate office space to the Company. The Company paid Vivint a monthly services fee and rent based on headcount and square footage used. In connection with the Company’s initial public offering, the Sublease Agreement was amended to focus exclusively on real estate issues. In 2011, and amended June 2013, the Company entered into a trademark / service mark license agreement (“Trademark Agreement”) with Vivint, pursuant to which the Company paid Vivint a monthly fee in exchange for rights to use certain trademarks, based on kilowatt hours produced by the solar energy systems each month. In June 2013, the Trademark Agreement was amended and restated to grant the Company a royalty-free, non-exclusive license to use certain Vivint marks, subject to certain quality control requirements and was applied retroactively to be in effect as of January 1, 2013. The Trademark Agreement was terminated in connection with the entry into the Trademark License Agreement described above.

The Company incurred fees under the Sublease and Trademark agreements of $7.2 million and $2.9 million for the years ended December 31, 2014 and 2013, which reflect the amount of services provided by Vivint on behalf of the Company. No fees were incurred under these agreements in the year ended December 31, 2015.

Payables to Vivint recorded in accounts payable—related party were $1.9 million and $2.1 million as of December 31, 2015 and 2014. These payables include amounts due to Vivint related to the fees incurred under the service agreements noted above, as well as other miscellaneous intercompany payables including freight, healthcare cost reimbursements and other pass-through purchases.

313 Incentive Units Plan

Incentive units from 313 were granted to certain board members of the Company. Such board members are also employees of Vivint. As a result, the related compensation expense has been allocated between the two companies based on the net equity of the respective companies at the Acquisition. The Company recorded expense of $0.2 million and corresponding noncash capital contributions from 313 during each of the years ended December 31, 2014 and 2013. No expense was incurred in the year ended December 31, 2015. The noncash capital contributions were reported as noncash contributions for services on the Consolidated Statements of Cash Flows and Redeemable Non-Controlling Interests and Equity.

Advisory Agreements

In May 2014, the Company entered into an advisory agreement with Blackstone Advisory Partners L.P., an affiliate of the Sponsor (“BAP”), under which BAP would provide financial advisory and placement services related to the Company’s financing of residential solar energy systems. In August 2015, this agreement was terminated. Under the agreement, the Company was required under certain circumstances to pay a placement fee to BAP ranging from 0.75% to 1.5% of the transaction capital, depending on the identity of the investor and whether the financing related to residential or commercial projects. This agreement replaced the 2013 advisory agreement described below.

Effective May 2013, the Company entered into an advisory agreement with BAP that provided financial advisory and placement services related to the Company’s financing of residential solar energy systems. Under the agreement, BAP was paid a placement fee ranging from 0% to 2% of the transaction capital, depending on the identity of the investor and how contact with the investor was established.

The Company incurred fees under these agreements of $4.4 million, $4.5 million and $1.3 million for the years ended December 31, 2015, 2014 and 2013. The amounts were recorded in general and administrative expense in the Company’s consolidated statements of operations

Advances Receivable—Related Party

Amounts due from direct-sales personnel were $2.9 million and $1.2 million as of December 31, 2015 and 2014. The Company provided a reserve of $0.7 million and $0.9 million as of December 31, 2015 and 2014 related to advances to direct-sales personnel who have terminated their employment agreement with the Company.

Transactions with 313 and Directors

In August and September 2014, the Company issued and sold shares of its common stock to 313 and two of its directors as discussed in Note 12—Redeemable Non-Controlling Interests, Equity and Preferred Stock. In April 2013, the Company received a $1.4 million capital contribution from 313. No other cash contributions were received during the periods presented.

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Investment Funds

Fund investors for three of the funds are indirectly managed by the Sponsor and accordingly are considered related parties. The Company accrued equity distributions to these entities of $1.7 million and $1.3 million as of December 31, 2015 and 2014, included in distributions payable to non-controlling and redeemable non-controlling interests. See Note 11—Investment Funds. In July 2014, the Company also entered into a Backup Maintenance Servicing Agreement with Vivint in which Vivint will provide maintenance servicing of the fund assets in the event that the Company is removed as the service provider for two of the funds. No services have been performed by Vivint under this agreement.

16.Commitments and Contingencies

Non-Cancellable Leases

In September 2014, the Company entered into a non-cancellable lease whereby the Company will terminate the current lease for its corporate headquarters in Lehi, UT and move into another building being constructed in the same general location. In July 2015, the Company amended the new lease for its new corporate headquarters building that is under construction. These amendments included an extension of the lease term to 12 years from five years with the option to extend for two additional periods of five years, an increase in the leased premises by approximately 32,000 square feet and a change in the base rent that will commence at approximately $0.3 million per month and increase over the term of the lease, as amended, at a rate of 2.5% annually. As a result of the amendment, the Company expects to make total lease payments of $53.1 million over the initial term of the lease.

The Company also entered into new non-cancellable leases for the construction of a second office building and a studio building on the corporate headquarters campus that will increase the leased premises by approximately 160,000 square feet. Both leases have a term of 12 years with the option to extend for two additional periods of five years. The aggregate monthly rent payments under both leases will commence at approximately $0.4 million and increase at a rate of 2.5% annually. As a result of these new leases, the Company expects to make total lease payments of $57.5 million over the initial terms of the leases.

During each year of its operations,the Company has entered into lease agreements for warehouses and related equipment located in states in which the Company conducts operations. The warehouse lease agreements range from a term of one to seven years, with the majority having a term of three years. The equipment lease agreements, the longest of which is 12-months, include basic renewal options for an additional set period, continued renting by the month, or return of the unit.

For all non-cancellable lease arrangements, there are no bargain renewal options, penalties for failure to renew, or any guarantee by the Company of the lessor’s debt or a loan from the Company to the lessor related to the leased property. Aggregate lease expense for these non-cancellable lease arrangements was $11.0 million, $4.3 million and $1.2 million for the years ended December 31, 2015, 2014 and 2013.

Future minimum lease payments under non-cancellable leases as of December 31, 2015 were as follows (in thousands):

Years Ending December 31,
2016	$	14,223
2017		12,577
2018		10,552
2019		9,674
2020		9,295
Thereafter		81,216
Total minimum lease payments	$	137,537

Build-to-Suit Lease Arrangements

As discussed in Non-Cancellable Leases, in September 2014, the Company entered into a non-cancellable lease whereby the Company will terminate the current lease for its corporate headquarters in Lehi, UT and move into another building being constructed in the same general location. Because of its involvement in certain aspects of the construction per the terms of the lease, the Company is deemed the owner of the building for accounting purposes during the construction period. Accordingly, as of December 31, 2015, the Company recorded a build-to-suit lease asset of $25.6 million in property and equipment, net, which included a $25.2 million build-to-suit lease liability in other non-current liabilities, capitalized interest of $0.3 million and building costs paid by the Company of $0.1 million.

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Letters of Credit

As of December 31, 2015 and 2014, the Company had $1.8 million stand-by letter of credit related to a three-year forward contract to sell SRECs entered into in November 2013. The agreement expires in January 2017. As the Company expects to be able to deliver the SRECs required under the forward contracts, no liability has been accrued.

As of December 31, 2015, the Company had also established a letter of credit under the Working Capital Facility for $3.2 million related to an insurance contract. See Note 10—Debt Obligations.

Indemnification Obligations

From time to time, the Company enters into contracts that contingently require it to indemnify parties against claims. These contracts primarily relate to provisions in the Company’s services agreements with related parties that may require the Company to indemnify the related parties against services rendered; and certain agreements with the Company’s officers and directors under which the Company may be required to indemnify such persons for liabilities. In addition, under the terms of the agreements related to the Company’s investment funds and other material contracts, the Company may also be required to indemnify fund investors and other third parties for liabilities. As of December 31, 2015 and 2014, the Company accrued an estimated $5.2 million and $4.0 million in distributions to reimburse fund investors a portion of their capital contributions in order to true-up the investors’ expected rate of return primarily due to a delay in solar energy systems being interconnected to the power grid and other factors.

Legal Proceedings

In December 2013, one of the Company’s former sales representatives, on behalf of himself and a purported class, filed a complaint for unspecified damages, injunctive relief and restitution in the Superior Court of the State of California in and for the County of San Diego against Vivint Solar Developer, LLC, one of the Company’s subsidiaries, and unnamed John Doe defendants alleging violations of the California Labor Code and the California Business and Professions Code and seeking penalties of an unspecified amount, interest on all economic damages and reasonable attorney’s fees and costs. In January 2014, the Company filed an answer denying the allegations in the complaint and asserting various affirmative defenses. In late 2014, the parties agreed to preliminary terms of settlement, which were subsequently revised in mid-2015. The settlement agreement provided for a settlement payment from the Company in the amount of $0.4 million. On October 30, 2015, the Court entered a final order approving the settlement agreement and the settlement payment was distributed in accordance with the settlement agreement.

In September 2014, two former installation technicians of the Company, on behalf of themselves and a purported class, filed a complaint for damages, injunctive relief and restitution in the Superior Court of the State of California in and for the County of San Diego against the Company and unnamed John Doe defendants. The complaint alleges certain violations of the California Labor Code and the California Business and Professions Code based on, among other things, alleged improper classification of installer technicians, installer helpers, electrician technicians and electrician helpers, failure to pay minimum and overtime wages, failure to provide accurate itemized wage statements, and failure to provide wages on termination. In December 2014, the original plaintiffs and three additional plaintiffs filed an amended complaint with essentially the same allegations. On November 5, 2015, the parties agreed to preliminary terms of a settlement of all claims related to allegations in the complaint in return for the Company’s payment of $1.7 million to be paid out to the purported class members. The settlement agreement must be approved by the Court, after notice to the purported class. As of December 31, 2015, a $1.7 million reserve was recorded related to this proceeding in the Company’s consolidated financial statements.

In November and December 2014, two putative class action lawsuits were filed in the U.S. District Court for the Southern District of New York against the Company, its directors, certain of its officers and the underwriters of the Company’s initial public offering of common stock alleging violation of securities laws and seeking unspecified damages. In January 2015, the Court ordered these cases to be consolidated into the earlier filed case, Hyatt v. Vivint Solar, Inc. et al., 14-cv-9283 (KBF). The plaintiffs filed a consolidated amended complaint in February 2015. On May 6, 2015, the Company filed a motion to dismiss the complaint and on December 10, 2015, the Court issued an Opinion and Order dismissing the complaint with prejudice. On January 5, 2016, the plaintiffs filed a Notice of Appeal to the Second Circuit Court of Appeals. The Company is unable to estimate a range of loss, if any, that could result were there to be an adverse final decision. If an unfavorable outcome were to occur in thiscase, it is possible that the impact could be material to the Company’s results of operations in the period(s) in which any such outcome becomes probable and estimable.

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On July 31, 2015, a putative class action lawsuit was filed in the Court of Chancery State of Delaware against the Company’s directors, SunEdison Inc. (“SunEdison”), and TerraForm Power (“TerraForm”), alleging that the proposed acquisition by SunEdison is unfair to the Company’s stockholders. On August 7, 2015, a second putative class action lawsuit was filed in the same court alleging similar claims, and including 313, Acquisition, LLC as a named defendant. Both complaints seek injunctive relief and unspecified damages. On or about September 10, 2015, two purported class action lawsuits were also filed in Utah's Fourth District State Court (the "Utah Actions"), alleging similar claims to the complaints previously filed in the Delaware Chancery Court. On September 22, 2015, the Company, through counsel notified plaintiff's counsel in the Utah Actions that pursuant to the Company's Articles of Incorporation, any such derivative action was subject to exclusive jurisdiction in the Delaware Chancery Court, and accordingly, the Utah Actions should be dismissed. After a December 2015 amendment to the proposed acquisition, a new complaint was filed in the Delaware Chancery Court on January 11, 2016. The new complaint alleges breach of fiduciary duty against the Company's directors, certain officers, and SunEdison, and seeks damages on behalf of a putative class. In view of the Company’s indemnification obligation to its directors, the Company is unable to estimate a range of loss, if any, that could result were there to be an adverse final decision. If an unfavorable outcome were to occur in thesecases, it is possible that the impact could be material to the Company’s results of operations in the period(s) in which any such outcome becomes probable and estimable.

On September 9, 2015, two of the Company’s customers, on behalf of themselves and a purported class, named the Company in a putative class action, Case No. BCV-15-100925(Cal. Super. Ct., Kern County), alleging violation of California Business and Professional Code Section 17200 and requesting relief pursuant to Section 1689 of the California Civil Code. The complaint seeks: (1) rescission of their power purchase agreements along with restitution to the plaintiffs individually and (2) declaratory and injunctive relief. On October 16, 2015, the Company moved to compel arbitration of the plaintiffs’ claims pursuant to the provisions set forth in the power purchase agreements, which the Court granted and dismissed the class claims without prejudice. Plaintiffs have appealed the Court’s order. It is not possible to estimate the amount or range of potential loss, if any, at this time.

On March 8, 2016, the Company filed suit in the Court of Chancery State of Delaware against SunEdison and SEV Merger Sub Inc. alleging that SunEdison willfully breached its obligations under the Merger Agreement pursuant to which the Company was to be acquired and breached its implied covenant of good faith and fair dealing. The Company is seeking declaratory judgment, award damages, costs and reasonable attorney’s fees and such further relief that the court finds equitable, appropriate and just. While the Company believes that SunEdison willfully breached its obligations under the Merger Agreement and that the Company’s claims have merit and are likely to succeed, the outcomes of lawsuits are inherently unpredictable.

In addition to the matters discussed above, in the normal course of business, the Company has from time to time been named as a party to various legal claims, actions and complaints. While the outcome of these matters cannot be predicted with certainty, the Company does not currently believe that the outcome of any of these claims will have a material adverse effect, individually or in the aggregate, on its consolidated financial position, results of operations or cash flows.

The Company accrues for losses that are probable and can be reasonably estimated. The Company evaluates the adequacy of its legal reserves based on its assessment of many factors, including interpretations of the law and assumptions about the future outcome of each case based on available information.

107

17.Basic and Diluted Net Income (Loss) Per Share 

The Company computes basic net income (loss) per share by dividing net income available or loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could be exercised or converted into common shares, and is computed by dividing net earnings available to common stockholders by the weighted-average number of common shares outstanding plus the effect of potentially dilutive shares to purchase common stock.

The following table sets forth the computation of the Company’s basic and diluted net income available (loss attributable) per share to common stockholders for the years ended December 31, 2015, 2014 and 2013 (in thousands, except per share amounts):

	Year Ended December 31,
	2015		2014			2013
Numerator:
Net income available (loss attributable) to common stockholders	$	13,080	$	(28,883	)	$	5,638
Denominator:
Shares used in computing net income available (loss attributable)     per share to common stockholders, basic		106,088		83,446			75,000
Weighted-average effect of potentially dilutive shares to purchase    common stock		3,770		—			223
Shares used in computing net income available (loss attributable)    per share to common stockholders, diluted		109,858		83,446			75,223
Net income available (loss attributable) per share to common    stockholders
Basic	$	0.12	$	(0.35	)	$	0.08
Diluted	$	0.12	$	(0.35	)	$	0.07

As of December 31, 2015 and 2013, stock-based awards for 3.3 million and 4.4 million underlying shares of common stock were subject to performance conditions that had not yet been met. Accordingly, these performance-based stock awards were not included in the computation of diluted net income per share for the years ended December 31, 2015 and 2013. In addition, options remaining to be granted under the LTIP Pools were not included in the computation of diluted net income per share as these shares had not been granted as of December 31, 2015 and 2013. For the years ended December 31, 2015 and 2013, a de minimis number of shares were excluded from the dilutive share calculations as the effect on net income per share would have been antidilutive. For the year ended December 31, 2014, the Company incurred net losses attributable to common stockholders. As such, the potentially dilutive shares were anti-dilutive and were not considered in the weighted-average number of common shares outstanding for that period.

18.Segment Information

Prior to the second quarter 2015, the Company had one business activity that was focused primarily on providing service to customers in the residential market. During the second quarter of 2015, the Company closed its first C&I investment fund with plans to service customers in the C&I market. As of December 31, 2015, the C&I fund was not operational, i.e., no projects had been initiated within the fund. During the year ended December 31, 2015, the Company has aligned its operations as two reporting segments: (1) Residential and (2) C&I.

108

As of December 31, 2015, the Company recorded no assets related to the C&I segment. Segment loss from operations is comprised of operating unit revenue less operating expenses attributable to each operating segment. For the year ended December 31, 2015, no revenue was recognized in the C&I segment as the C&I investment fund was not operational. Operating expenses in the C&I segment included fees related to the closing of the C&I fund and costs of employees directly involved in the development of C&I. Prior to the second quarter of 2015, all reported results related to the Residential segment, and as such, no restatement of prior period segment results was necessary. Operating results by reporting segment in 2015 were as follows:

	Year Ended December 31, 2015
	Residential			C&I			Total
Revenue:
Operating leases and incentives	$	61,150		$	—		$	61,150
Solar energy system and product sales		3,032			—			3,032
Total revenue		64,182			—			64,182
Operating expenses:
Cost of revenue—operating leases and incentives		131,213			—			131,213
Cost of revenue—solar energy system and product sales		1,762			—			1,762
Sales and marketing		47,408			670			48,078
Research and development		3,901			—			3,901
General and administrative		90,438			2,226			92,664
Amortization of intangible assets		13,172			—			13,172
Impairment of intangible assets		4,506			—			4,506
Total operating expenses		292,400			2,896			295,296
Loss from operations	$	(228,218	)	$	(2,896	)	$	(231,114	)

19.Subsequent Events

SunEdison Acquisition

The Company previously entered into the Merger Agreement, dated as of July 20, 2015 and amended as of December 9, 2015, by and among SunEdison, SEV Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of SunEdison, and the Company, pursuant to which the Company was to have been acquired by SunEdison. The Company terminated the Merger Agreement on March 7, 2016. 

On March 8, 2016, the Company filed suit in the Court of Chancery State of Delaware against SunEdison alleging that SunEdison willfully breached its obligations under the Merger Agreement and breached its implied covenant of good faith and fair dealing. The Company is seeking declaratory judgment, award damages, costs and reasonable attorney’s fees and such further relief that the court finds equitable, appropriate and just. While the Company believes that SunEdison willfully breached its obligations under the Merger Agreement and that the Company’s claims have merit and are likely to succeed, the outcomes of lawsuits are inherently unpredictable.

Term Loan Facility

On March 14, 2016, Vivint Solar Financing Holdings, LLC, one of the Company’s subsidiaries, entered into a financing agreement pursuant to which it may borrow up to an aggregate principal amount of $200.0 million of term loan borrowings from investment funds and accounts advised by Highbridge Principal Strategies, LLC. The Company refers to such financing agreement as the “term loan facility.” The Company will initially incur $75.0 million in borrowings,one-third at closing and the remainder within 30 days of the closing date. Such initial borrowings are referred to as “Tranche A” borrowings. The remaining $125.0 million aggregate principal amount in borrowings may be incurred in three installments of at least $25.0 million aggregate principal amount prior to the first anniversary of the closing date. Such subsequent borrowings, if any, are referred to as “Tranche B” borrowings. If no Tranche B borrowings are incurred, the Company must repay outstanding Tranche A borrowings in December 2016. If any Tranche B borrowings are incurred, the maturity date for all borrowings will be extended to the fourth anniversary of the closing date. If any Tranche B borrowings are incurred, the Company may not prepay any borrowings until the second anniversary of the closing date and any subsequent prepayments are subject to a fee equal to a 3.0% penalty. Borrowings under the term loan facility will be used for the construction and acquisition of solar energy systems.

109

Interest on the Tranche A borrowings accrues at a floating rate of LIBOR plus 5.5%; provided that if any Tranche B borrowings are incurred, the interest rate increases to a floating rate of LIBOR plus 8.0% for the entire principal amount outstanding. The term loan facility includes customary events of default, conditions to borrowing and covenants, including covenants that restrict, subject to certain exceptions, the borrower’s, and the guarantors’ ability to incur indebtedness, incur liens, make investments, make fundamental changes to their business, dispose of assets, make certain types of restricted payments or enter into certain related party transactions. These restrictions do not impact the Company’s ability to enter into investment funds, including those that are similar to those entered into previously. Additionally, the parties to the term loan facility must maintain certain consolidated and project subsidiary loan-to-value ratios and a consolidated debt service coverage ratio, with such covenants to be tested as of the last day of each fiscal quarter and upon each incurrence of borrowings. Each of the parties to the term loan facility has pledged assets not otherwise pledged under another existing debt facility as collateral to secure their obligations under the term loan facility. Vivint Solar Financing Holdings Parent, LLC, another of the Company’s subsidiaries and the parent company of the borrower and certain other of the Company’s subsidiaries guarantee the borrower’s obligations under the financing agreement.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Internal Control Over Financial Reporting

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2015 pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended December 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined by Rule 13a-15(f) under the Exchange Act). In assessing the effectiveness of our internal control over financial reporting as of December 31, 2015, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

Based on the evaluation of our disclosure controls and procedures as of December 31, 2015, our chief executive officer and chief financial officer concluded that our internal control over financial reporting was not effective as of December 31, 2015 due to the material weakness described below.  

Material Weakness

In connection with the preparation, audits and interim reviews of our consolidated financial statements, we and our independent registered public accounting firm identified a material weakness in internal control over financial reporting. Under standards established by the Public Company Accounting Oversight Board of the United States, a material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

110

We previously reported a material weakness in internal control over financial reporting for the year ended December 31, 2014. This material weakness has not been fully remediated and as a result, for the year ended December 31, 2015, we continued to have deficiencies in our internal controls including those associated with the HLBV method of attributing net income or loss to non-controlling interests and redeemable non-controlling interests and with our financial statement close process.

The nature of our investment funds increases the complexity of our accounting for the allocation of net income (loss) between our stockholders and non-controlling interests under the HLBV method and the calculation of our tax provision. As we enter into additional investment funds, which may have contractual provisions different from those of our existing funds, the calculation under the HLBV method and the calculation of our tax provision could become increasingly complicated. This additional complexity could increase the chance that we experience additional errors in the future, particularly because we have a material weakness in internal controls. In addition, our need to devote our resources to addressing this complexity could delay or prolong our remediation efforts and thereby prolong the existence of the material weakness.

We continue to take steps to remediate the underlying causes of the material weakness that was reported for the year ended December 31, 2014. We have hired a number of additional financial, accounting and tax personnel. In January 2015, we hired a director of internal audit to assist us in implementing and improving our existing internal controls. In February 2015, we hired a chief information officer to assist us in improving our underlying information technology systems and to decrease our reliance on manual processes. We continue to engage third-party consultants to provide support over our accounting and tax processes to assist us with our evaluation of complex technical accounting matters. We continue to engage consultants to advise us on making further improvements to our internal controls over financial reporting. We believe that these additional resources will enable us to broaden the scope and quality of our controls relating to the oversight and review of financial statements and our application of relevant accounting policies. Furthermore, we continue to implement and improve systems to automate certain financial reporting processes and to improve information accuracy.  These remediation efforts are still in process and have not yet been completed. Because of this material weakness, there is heightened risk that a material misstatement of our annual or quarterly financial statements will not be prevented or detected.

The actions that we are taking are subject to ongoing senior management review as well as audit committee oversight. We are working diligently on this remediation process; however, we cannot estimate how long it will take to remediate this material weakness. In addition, the remediation steps we have taken, are taking and expect to take may not effectively remediate the material weakness, in which case our internal control over financial reporting would continue to be ineffective. We cannot guarantee that we will be able to complete our remedial actions successfully. Even if we are able to complete these actions successfully, these measures may not adequately address our material weakness. In addition, it is possible that we will discover additional material weaknesses in our internal control over financial reporting or that our existing material weakness will result in additional errors in or restatements of our financial statements.

We will be required to engage an independent registered public accounting firm to opine on the effectiveness of our internal control over financial reporting beginning at the date we are no longer an “emerging growth company” as defined in the JOBS Act. At such time, our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm may issue a report that is adverse if such firm is not satisfied with the level at which our controls are documented, designed, operated or reviewed. As a result, we may need to undertake various actions, such as implementing new internal controls and procedures and hiring additional accounting or internal audit staff. Our remediation efforts may not enable us to avoid a material weakness in the future. In addition, as a public company, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future.

Inherent Limitation on the Effectiveness of Internal Control

The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting.

Item 9B. Other Information.

None.

111

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information required by this Item 10 of Form 10-K that is found in our 2015 Proxy Statement to be filed with the SEC in connection with the solicitation of proxies for our 2016 Annual Meeting of Stockholders, or the 2015 Proxy Statement, is incorporated by reference to our 2015 Proxy Statement. The 2015 Proxy Statement will be filed with the SEC within 120 days after the end of the fiscal year to which this report relates.

Item 11. Executive Compensation.

The information required by Item 11 of Form 10-K is found in our 2015 Proxy Statement and is incorporated here by reference to our 2015 Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by Item 12 of Form 10-K is found in our 2015 Proxy Statement and is incorporated here by reference to our 2015 Proxy Statement.

Equity Compensation Plan Information

The following table provides information as of December 31, 2015 with respect to the shares of our common stock that may be issued under existing equity compensation plans (shares in thousands):

	A		B		C
					Number of Securities
					Remaining Available
	Number of Securities to be		Weighted-Average		for Future Issuance
	Issued Upon Exercise of		Exercise Price		Under Equity Compensation
	Outstanding Options,		of Outstanding Options,		Plans (Excluding Securities
Plan Category	Warrants and Rights		Warrants and Rights		Reflected in Column A)
Equity compensation plans approved by    security holders		9,277(1)	$	1.36		15,649(2)
Equity compensation plans not approved by    security holders		—		—		—
Total		9,277(1)	$	1.36		15,649(2)

⁽¹⁾ Consists of awards granted under the 2014 Equity Incentive Plan, the 2013 Omnibus Incentive Plan and an option award granted outside of the Omnibus Plan with terms substantially similar to those granted under the Omnibus Plan.

⁽²⁾ Represents the number of securities remaining available for future issuance under the 2014 Equity Incentive Plan and the Long-term Incentive Plan. The number of shares available for issuance under the 2014 Plan is subject to an annual increase on the first day of each year beginning in 2015, equal to the least of 8.8 million shares or 4% of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year and an amount of shares we determine.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by Item 13 of Form 10-K is found in our 2015 Proxy Statement and is incorporated here by reference to our 2015 Proxy Statement.

Item 14. Principal Accounting Fees and Services.

The information required by Item 14 of Form 10-K is found in our 2015 Proxy Statement and is incorporated here by reference to our 2015 Proxy Statement.

112

PART IV

Item 15. Exhibits, Financial Statement Schedules.

(a)(1.) Consolidated Financial Statements:

The following documents are filed as a part of this Annual Report on Form 10-K for Vivint Solar, Inc.:

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm.

Consolidated Balance Sheets as of December 31, 2015 and 2014.

Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013.

Consolidated Statements of Redeemable Non-Controlling Interest and Stockholders’ Equity for the years ended December 31, 2015, 2014 and 2013.

Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013.

Notes to the Consolidated Financial Statements.

(2.) Financial Statement Schedules:

Financial statement schedules are omitted because they are not required, not applicable or because the required information is shown in the consolidated financial statements or notes thereto.

(3.) Exhibits:

Required exhibits are incorporated by reference or are filed with this Annual Report as set forth in the following Exhibit Index, which immediately precedes such exhibits.

113

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Vivint Solar, Inc.
Date: March 14, 2016	By:	/s/ Gregory S. Butterfield
		Gregory S. Butterfield
		Chief Executive Officer and President

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

Name	Title	Date
/s/ Gregory S. Butterfield	Chief Executive Officer and President, Director	March 14, 2016
Gregory S. Butterfield	(Principal Executive Officer)
/s/ Dana C. Russell	Chief Financial Officer and Executive Vice President	March 14, 2016
Dana C. Russell	(Principal Accounting and Financial Officer)
/s/ David F. D’Alessandro	Director	March 14, 2016
David F. D’Alessandro
/s/ Alex J. Dunn	Director	March 14, 2016
Alex J. Dunn
/s/ Bruce McEvoy	Director	March 14, 2016
Bruce McEvoy
/s/ Jay D. Pauley	Director	March 14, 2016
Jay D. Pauley
/s/ Todd R. Pedersen	Director	March 14, 2016
Todd R. Pedersen
/s/ Joseph S. Tibbetts, Jr.	Director	March 14, 2016
Joseph S. Tibbetts, Jr.
/s/ Peter F. Wallace	Director	March 14, 2016
Peter F. Wallace

114

Exhibit Index

Exhibit Number	Description	Form	File No.	Incorporated by Reference	Filing Date
2.1	Agreement and Plan of Merger, dated as of July 20, 2015, by and among SunEdison, Inc., SEV Merger Sub Inc. and Vivint Solar, Inc.	8-K	001-36642	2.1	July 22, 2015
2.2	Amendment to the Agreement and Plan of Merger, dated as of December 9, 2015, by and among SunEdison, Inc., SEV Merger Sub Inc. and Vivint Solar, Inc.	8-K	001-36642	2.1	December 9, 2015
3.1	Amended and Restated Certificate of Incorporation of the Company	10-Q	001-36642	3.1	November 12, 2014
3.2	Amended and Restated Bylaws of the Company	10-Q	001-36642	3.2	November 12, 2014
4.1	Registration Rights Agreement by and among the Company and the investors named therein, dated October 6, 2014	10-K	001-36642	4.1	March 13, 2015
10.1+	Form of Director and Executive Officer Indemnification Agreement	S-1	333-198372	10.1	August 26, 2014
10.2+	2013 Omnibus Incentive Plan, as amended	S-1	333-198372	10.2	August 26, 2014
10.3	Form of Stock Option Agreement under the 2013 Omnibus Incentive Plan	10-Q	001-36642	10.17	November 12, 2014
10.4+	2014 Equity Incentive Plan	S-1/A	333-198372	10.3	September 18, 2014
10.5	Form of Notice of Stock Option Grant and Stock Option Agreement under the 2014 Equity Incentive Plan	10-Q	001-36642	10.15	November 12, 2014
10.6	Form of Notice of Restricted Stock Unit Grant and Restricted Stock Unit Agreement under the 2014 Equity Incentive Plan	10-Q	001-36642	10.16	November 12, 2014
10.7+	Amended and Restated 2013 Long-Term Incentive Pool Plan for District Sales Managers, and forms of agreements thereunder	S-1	333-198372	10.4A	August 26, 2014
10.8+	Amended and Restated 2013 Long-Term Incentive Pool Plan for Operations Leaders, and forms of agreements thereunder	S-1	333-198372	10.4B	August 26, 2014
10.9+	Amended and Restated 2013 Long-Term Incentive Pool Plan for Recruiting Regional Sales Managers, and forms of agreements thereunder	10-K	001-36642	10.9	March 13, 2015
10.10+	Amended and Restated 2013 Long-Term Incentive Pool Plan for Regional Managers (Technicians), and forms of agreements thereunder	S-1	333-198372	10.4D	August 26, 2014

Exhibit Number	Description	Form	File No.	Incorporated by Reference	Filing Date
10.11+	Amended and Restated 2013 Long-Term Incentive Pool Plan for Regional Sales Managers, and forms of agreements thereunder	S-1	333-198372	10.4E	August 26, 2014
10.12+	Amended and Restated 2013 Long-Term Incentive Pool Plan for Sales Managers, and forms of agreements thereunder	S-1	333-198372	10.4F	August 26, 2014
10.13+	Form of 313 Acquisition LLC Unit Plan	S-1/A	333-198372	10.5	September 18, 2014
10.14+	Executive Incentive Compensation Plan, and forms of agreements thereunder	S-1	333-198372	10.6	August 26, 2014
10.15+	Form of Involuntary Termination Protection Agreement between the Company and certain of its officers	S-1	333-198372	10.7	August 26, 2014
10.16+	Letter Agreement, dated August 28, 2014, with Gregory S. Butterfield	S-1/A	333-198372	10.8	September 18, 2014
10.17+	Letter Agreement, dated August 28, 2014, with Dana C. Russell	10-K	001-36642	10.17	March 13, 2015
10.18+	Letter Agreement, dated August 28, 2014, with Shawn J. Lindquist	10-K	001-36642	10.18	March 13, 2015
10.19	Subordinated Note and Loan Agreement between the Company and APX Group, Inc., dated December 27, 2012	S-1	333-198372	10.11	August 26, 2014
10.20	First Amendment to Note and Loan Agreement between the Company and APX Group, Inc., dated July 26, 2013	S-1	333-198372	10.11A	August 26, 2014
10.21	Amended and Restated Subordinated Note and Loan Agreement between the Company and APX Parent Holdco, Inc., dated January 20, 2014	S-1	333-198372	10.12	August 26, 2014
10.22	First Amendment to Amended and Restated Subordinated Note and Loan Agreement between the Company and APX Parent Holdco, Inc., dated April 25, 2014	S-1	333-198372	10.12A	August 26, 2014
10.23†	Credit Agreement between the Company, as a guarantor, Vivint Solar Holdings, Inc., as the borrower, and Bank of America, N.A. as administrative agent, collateral agent and lender, dated May 1, 2014	S-1	333-198372	10.13	August 26, 2014

Exhibit Number	Description	Form	File No.	Incorporated by Reference	Filing Date
10.24†	Credit Agreement among Vivint Solar, Inc., as Borrower, Goldman Sachs Lending Partners LLC, as Administrative Agent and Collateral Agent, and Goldman Sachs Lending Partners LLC, Credit Suisse Securities (USA) LLC, Barclays Bank plc, Citibank, N.A. and Morgan Stanley Senior Funding, Inc., as Joint Lead Arrangers and Joint Bookrunners, dated March 3, 2015	10-Q	001-36642	10.1	May 14, 2015
10.25	Stockholders Agreement by and among the Company and other parties thereto, dated October 6, 2014	10-K	001-36642	10.24	March 13, 2015
10.26	Master Intercompany Framework Agreement between the Company and Vivint, Inc., dated September 30, 2014	10-Q	001-36642	10.1	November 12, 2014
10.27	Transition Services Agreement between the Company and Vivint, Inc., September 30, 2014	10-Q	001-36642	10.2	November 12, 2014
10.28	Non-Competition Agreement between the Company and Vivint, Inc., dated September 30, 2014	10-Q	001-36642	10.3	November 12, 2014
10.29	Product Development and Supply Agreement between Vivint Solar Developer, LLC and Vivint, Inc., dated September 30, 2014	10-Q	001-36642	10.4	November 12, 2014
10.30	Marketing and Customer Relations Agreement between Vivint Solar Developer, LLC and Vivint, Inc., dated September 30, 2014	10-Q	001-36642	10.5	November 12, 2014
10.31	Trademark Assignment Agreement between Vivint Solar Licensing LLC and Vivint, Inc., dated September 30, 2014	10-Q	001-36642	10.6	November 12, 2014
10.32	Trademark Assignment Agreement between the Company and Vivint, Inc., dated September 30, 2014	10-Q	001-36642	10.7	November 12, 2014
10.33	Termination Agreement (Turnkey Full-Service Sublease Agreement) between Vivint Solar Holdings, Inc., and Vivint, Inc., dated September 30, 2014	10-Q	001-36642	10.8	November 12, 2014
10.34	Bill of Sale and Assignment between the Company and Vivint, Inc., dated September 30, 2014	10-Q	001-36642	10.9	November 12, 2014
10.35	Limited Liability Company Agreement of Vivint Solar Licensing, LLC, between the Company and Vivint, Inc., dated September 30, 2014	10-Q	001-36642	10.10	November 12, 2014

Exhibit Number	Description	Form	File No.	Incorporated by Reference	Filing Date
10.36	Trademark License Agreement between the Company and Vivint Solar Licensing, LLC, dated September 30, 2014	10-Q	001-36642	10.11	November 12, 2014
10.37	Engagement Letter between the Company and Blackstone Advisory Partners L.P. dated as of May 30, 2014	S-1	333-198372	10.25	August 26, 2014
10.38	Lease Agreement between the Company and Thanksgiving Park Five, LLC dated as of May 5, 2014	S-1	333-198372	10.26	August 26, 2014
10.39	Sublease Agreement between the Company, Thanksgiving Park LLC and Durham Jones & Pinegar, P.C., dated as of May 19, 2014	S-1	333-198372	10.27	August 26, 2014
10.40	Canyon Park Technology Center Office Building Lease Agreement between the Company and TCU-Canyon Park, LLC	S-1	333-198372	10.28	August 26, 2014
10.41†	Limited Liability Company Agreement of Vivint Solar Mia Project Company, LLC, between Vivint Solar Mia Manager, LLC and Blackstone Holdings Finance Co. L.L.C., dated as of July 16, 2013	S-1/A	333-198372	10.29	September 18, 2014
10.42†	First Amendment to the Limited Liability Company Agreement of Vivint Solar Mia Project Company, LLC, between Vivint Solar Mia Manager, LLC and Blackstone Holdings Finance Co. L.L.C., dated as of September 12, 2013	S-1/A	333-198372	10.29A	September 18, 2014
10.43	Second Amendment to Limited Liability Company Agreement of Vivint Solar Mia Project Company, LLC, between Vivint Solar Mia Manager, LLC and Blackstone Holdings Finance Co. L.L.C., dated as of August 31, 2013	S-1	333-198372	10.29B	September 18, 2014
10.44†	Third Amendment to Limited Liability Company Agreement of Vivint Solar Mia Project Company, LLC between Vivint Solar Mia Manager, LLC and Blackstone Holdings I, L.P., dated April 15, 2015	10-Q	001-36642	10.2	May 14, 2015
10.45†	Development, EPC and Purchase Agreement by and among, Vivint Solar Developer, LLC, Vivint Solar Holdings, Inc., and Vivint Solar Mia Project Company, LLC, dated as of July 16, 2013	S-1/A	333-198372	10.30	September 18, 2014

Exhibit Number	Description	Form	File No.	Incorporated by Reference	Filing Date
10.46	First Amendment to Development, EPC and Purchase Agreement by and among Vivint Solar Developer, LLC, Vivint Solar Holdings, Inc., and Vivint Solar Mia Project Company, LLC, dated as of January 13, 2014	S-1/A	333-198372	10.30A	September 18, 2014
10.47	Second Amendment to Development, EPC and Purchase Agreement by and among, Vivint Solar Developer, LLC, Vivint Solar Holdings, Inc., and Vivint Solar Mia Project Company, LLC dated as of April 25, 2014	S-1/A	333-198372	10.30B	September 18, 2014
10.48	Third Amendment to Development, EPC and Purchase Agreement, between Vivint Solar Developer, LLC, Vivint Solar Holdings, Inc. and Vivint Solar Mia Project Company, LLC, dated April 15, 2015	10-Q	001-36642	10.4	May 14, 2015
10.49	Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Mia Project Company, LLC, dated as of July 16, 2013	S-1/A	333-198372	10.31	September 18, 2014
10.50	First Amendment to Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Mia Project Company, LLC, dated April 15, 2015	10-Q	001-36642	10.3	May 14, 2015
10.51	Guaranty by the Company in favor of Blackstone Holdings Finance Co. L.L.C. and Vivint Solar Mia Project Company, LLC, dated as of July 16, 2013	S-1	333-198372	10.32	September 18, 2014
10.52†	Limited Liability Company Agreement of Vivint Solar Aaliyah Project Company, LLC, between Vivint Solar Aaliyah Manager, LLC and Stoneco IV Corporation, dated as of November 5, 2013	S-1/A	333-198372	10.33	September 18, 2014
10.53†	First Amendment to Limited Liability Company Agreement of Vivint Solar Aaliyah Project Company, LLC, between Vivint Solar Aaliyah Manager, LLC and Stoneco IV Corporation, dated as of January 13, 2014	S-1/A	333-198372	10.33A	September 18, 2014
10.54	Second Amendment to Limited Liability Company Agreement of Vivint Solar Aaliyah Project Company, LLC between Vivint Solar Aaliyah Manager, LLC and Stoneco IV Corporation, dated April 15, 2015	10-Q	001-36642	10.5	May 14, 2015

Exhibit Number	Description	Form	File No.	Incorporated by Reference	Filing Date
10.55†	Development, EPC and Purchase Agreement by and among Vivint Solar Developer, LLC, Vivint Solar Holdings, Inc., and Vivint Solar Aaliyah Project Company, LLC, dated as of November 5, 2013	S-1/A	333-198372	10.34	September 18, 2014
10.56	First Amendment to Development, EPC and Purchase Agreement by and among, Vivint Solar Developer, LLC, Vivint Solar Holdings, Inc., and Vivint Solar Aaliyah Project Company, LLC, dated as of January 13, 2014	S-1/A	333-198372	10.34A	September 18, 2014
10.57†	Second Amendment to Development, EPC and Purchase Agreement by and among Vivint Solar Developer, LLC, Vivint Solar Holdings, Inc., and Vivint Solar Aaliyah Project Company, LLC, dated as of February 13, 2014	S-1/A	333-198372	10.34B	September 18, 2014
10.58	Third Amendment to Development, EPC and Purchase Agreement, between Vivint Solar Developer, LLC, Vivint Solar Holdings, Inc. and Vivint Solar Aaliyah Project Company, LLC, dated April 15, 2015	10-Q	001-36642	10.7	May 14, 2015
10.59	Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Aaliyah Project Company, LLC, dated as of November 5, 2013	S-1/A	333-198372	10.35	September 18, 2014
10.60	First Amendment to Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Aaliyah Project Company, LLC, dated April 15, 2015	10-Q	001-36642	10.6	May 14, 2015
10.61	Guaranty by Vivint Solar, Inc. in favor of Stoneco IV Corporation, LLC and Vivint Solar Aaliyah Project Company, LLC, dated November 5, 2013	S-1	333-198372	10.36	September 18, 2014
10.62†	Limited Liability Company Agreement of Vivint Solar Rebecca Project Company, LLC between Vivint Solar Rebecca Manager, LLC and Blackstone Holdings I L.P., dated as of February 13, 2014	S-1/A	333-198372	10.37	September 18, 2014
10.63	First Amendment to Limited Liability Company Agreement of Vivint Solar Rebecca Project Company, LLC between Vivint Solar Rebecca Manager, LLC and Blackstone Holdings I, L.P., dated April 15, 2015\	10-Q	001-36642	10.8	May 14, 2015

Exhibit Number	Description	Form	File No.	Incorporated by Reference	Filing Date
10.64†	Development, EPC and Purchase Agreement by and among Vivint Solar Developer, LLC, Vivint Solar Holdings, Inc., and Vivint Solar Rebecca Project Company, LLC, dated as of February 13, 2014	S-1/A	333-198372	10.38	September 18, 2014
10.65	First Amendment to Development, EPC and Purchase Agreement, between Vivint Solar Developer, LLC, Vivint Solar Holdings, Inc. and Vivint Solar Rebecca Project Company, LLC, dated April 15, 2015	10-Q	001-36642	10.10	May 14, 2015
10.66	Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Rebecca Project Company, LLC, dated as of February 13, 2014	S-1/A	333-198372	10.39	September 18, 2014
10.67	First Amendment to Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Rebecca Project Company, LLC, dated April 15, 2015	10-Q	001-36642	10.9	May 14, 2015
10.68	Guaranty by Vivint Solar, Inc. in favor of Blackstone Holdings I L.P. and Vivint Solar Rebecca Project Company, LLC, dated as of February 13, 2014	S-1	333-198372	10.40	September 18, 2014
10.69	Subscription Agreement between the Company and 313 Acquisition LLC, dated August 14, 2014	S-1	333-198372	10.41	September 18, 2014
10.70	Subscription Agreement between the Company and the investors named therein, dated September 3, 2014	S-1/A	333-198372	10.43	September 18, 2014
10.71†*	Loan Agreement, among Vivint Solar Financing I, LLC, Bank of America, N.A. and the parties named therein, dated as of September 12, 2014
10.72†	Collateral Agency and Depositary Agreement among Vivint Solar Financing I, LLC, Bank of America, N.A. and the parties named therein, dated as of September 12, 2014	S-1/A	333-198372	10.45	September 18, 2014
10.73†	Pledge and Security Agreement among Vivint Solar Financing I, LLC, Bank of America, N.A. and the parties named therein, dated as of September 12, 2014	S-1/A	333-198372	10.46	September 18, 2014
10.74	Lease Termination Agreement between the Company and Thanksgiving Park Five, LLC, dated September 15, 2014	S-1/A	333-198372	10.47	September 18, 2014

Exhibit Number	Description	Form	File No.	Incorporated by Reference	Filing Date
10.75	Lease Agreement between the Company and T-Stat One, LLC, dated August 12, 2014	S-1/A	333-198372	10.48	September 18, 2014
10.76	Amended and Restated Voting Agreement, dated as of December 9, 2015, by and among SunEdison, Inc., SEV Merger Sub Inc. and 313 Acquisition LLC	8-K	001-36642	10.1	December 9, 2015
10.77	Lock-Up Agreement, dated as of July 20, 2015, by 313 Acquisition LLC	8-K	001-36642	10.2	July 22, 2015
10.78	Letter Agreement, dated as of July 20, 2015, between SunEdison, Inc., Vivint, Inc. and Vivint Solar, Inc.	8-K	001-36642	10.3	July 22, 2015
10.79	Letter Agreement, dated as of July 19, 2015, between Gregory S. Butterfield and Vivint Solar, Inc.	10-Q	001-36642	10.4	November 16, 2015
10.80	Letter Agreement, dated as of July 19, 2015, between Dana Russell and Vivint Solar, Inc.	10-Q	001-36642	10.4	November 16, 2015
21.1*	List of subsidiaries of the Company
23.1*	Consent of Ernst & Young LLP
24.1*	Powers of Attorney (contained on signature page).
31.1*	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document

Exhibit Number	Description	Form	File No.	Incorporated by Reference	Filing Date
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

Legend:
+	Indicates a management contract or compensatory plan.
†	Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.
*	Filed herewith.

EX-10.71

Exhibit 10.71

EXECUTION VERSION

PROJECT SPOTLIGHT

AMENDED AND RESTATED

LOAN AGREEMENT

Dated as of September 12, 2014

And amended and restated as of November 25, 2015

among

VIVINT SOLAR FINANCING I, LLC,

a Delaware limited liability company
(Borrower);

VIVINT SOLAR HOLDINGS, INC.,

a Delaware corporation
(Borrower Member and a Guarantor);

THE OTHER GUARANTORS PARTIES HERETO FROM TIME TO TIME;

THE LENDERS PARTIES HERETO FROM TIME TO TIME;

BANK OF AMERICA, N.A.

(Sole Book Runner, Sole Structuring Agent, Collateral Agent and Administrative Agent);

Deutsche Bank AG, New York Branch

(Joint Lead Arranger and Documentation Bank);

CIT Finance LLC

(Joint Lead Arranger); and

ING Capital LLC

(Joint Lead Arranger)

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

Table of Contents

Page

ARTICLE 1
DEFINITIONS		2
1.1	Definitions	2
1.2	Rules of Interpretation	31

ARTICLE 2
THE CREDIT FACILITY		32
2.1	Loan Facility	32
2.2	Commitments	37
2.3	Fees	38
2.4	Other Payment Terms	38
2.5	Pro Rata Treatment. Subject to Sections 2.12 and 2.13:	46
2.6	Change of Circumstances	47
2.7	Funding Losses	48
2.8	Alternate Office; Minimization of Costs	49
2.9	Increase in Loan Facility	50
2.1	Eligible Structures; Addition of Subject Funds; Release of Subject Funds	53
2.11	Defaulting Lenders	56
2.12	Refinancing Loans	57
2.13	Extended Loans	59

ARTICLE 3
CONDITIONS PRECEDENT		60
3.1	Conditions Precedent to the Closing Date	60
3.2	Conditions Precedent to Each Borrowing	63
3.3	Conditions Precedent to Addition of New Systems to Existing Subject Fund	65
3.4	Conditions Precedent to Inclusion of New Subject Fund	66
3.5	Conditions Precedent to the Restatement Date	68

ARTICLE 4
REPRESENTATIONS AND WARRANTIES		70
4.1	Representations and Warranties	70

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ARTICLE 5
AFFIRMATIVE COVENANTS OF BORROWER AND MANAGING MEMBERS		76
5.1	Use of Proceeds	76
5.2	Notices	76
5.3	Reports; Other Information	79
5.4	Maintenance of Existence	80
5.5	Books, Records, Access	80
5.6	Preservation of Rights; Further Assurance	81
5.7	Taxes and Other Government Changes	81
5.8	Compliance With Laws; Instruments, Etc	81
5.9	Indemnification	82
5.1	Revenue Account	83
5.11	[Intentionally omitted.]	83
5.12	Separateness Provisions; Required Provisions in LLC Agreements	83
5.13	Distributions by Certain Subsidiaries	84
5.14	Borrowing Base Certificate	84
5.15	Amendments; Other Agreements	84
5.16	Insurance	84
5.17	New Subject Funds	86
5.18	Backup Servicer	87
5.19	Hedging Agreement	88

ARTICLE 6
NEGATIVE COVENANTS OF BORROWER AND MANAGING MEMBERS		88
6.1	Cash Flow Coverage Ratio	88
6.2	Limitations on Liens	88
6.3	Indebtedness	88
6.4	Sale or Lease of Assets	88
6.5	Changes	89
6.6	Distributions	89
6.7	Investments	89
6.8	Federal Reserve Regulations	90
6.9	Fundamental Changes	90
6.1	Amendments; Other Agreements	90
6.11	Name and Location; Fiscal Year	91
6.12	Assignment	91
6.13	Transfer of Equity Interest	91
6.14	Accounts	91
6.15	Transaction with Affiliates	91
6.16	Limitation on Dividends and Other Payment Restrictions Affecting Certain Subsidiaries	92
6.17	Hedging Agreement	92
6.18	Operations and Maintenance in Partnership	92

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ARTICLE 7
ACCOUNTS; APPLICATION OF FUNDS		92
7.1	Accounts; Application of Funds in Accounts	92

ARTICLE 8
EVENTS OF DEFAULT; REMEDIES		93
8.1	Events of Default	93
8.2	Remedies	95
8.3	Remedies Under Consents	96
8.4	Borrower’s Right to Cure	96

ARTICLE 9
THE AGENTS; AMENDMENTS; ASSIGNMENTS		97
9.1	Appointment and Authority	97
9.2	Rights as a Lender	97
9.3	Exculpatory Provisions	97
9.4	Reliance by Administrative Agent	98
9.5	Delegation of Duties	99
9.6	Resignation of Administrative Agent	99
9.7	Non-Reliance on Administrative Agent and Other Lenders	100
9.8	Administrative Agent May File Proofs of Claim	100
9.9	Collateral Matters	101
9.1	Indemnification	101
9.11	No Advisory or Fiduciary Responsibility	101
9.12	Amendments	102
9.13	Withholding Tax	105
9.14	Participations	105
9.15	Assignments	106
9.16	Assignability to Federal Reserve Bank or Central Bank	108
9.17	No Other Duties, Etc	109

ARTICLE 10
MISCELLANEOUS		109
10.1	Addresses; Notices	109
10.2	Right to Set-Off	112
10.3	Delay and Waiver	113
10.4	Costs, Expenses and Attorney’s Fees	113
10.5	Entire Agreement	114
10.6	Governing Law	114
10.7	Severability	114
10.8	Headings	114
10.9	Accounting Terms	114
10.1	No Partnership, Etc	114

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10.11	Waiver of Jury Trial	115
10.12	Consent to Jurisdiction; Service of Process	115
10.13	Interest Rate Limitation	116
10.14	Successors and Assigns	116
10.15	Patriot Act Compliance	116
10.16	Binding Effect; Counterparts	116
10.17	Confidentiality	117
10.18	Survival of Agreements	118
10.19	Electronic Execution of Assignments and Certain Other Documents	118

ARTICLE 11
GUARANTY		119
11.1	The Guarantee	119
11.2	Obligations Unconditional	119
11.3	Reinstatement	120
11.4	Subrogation; Subordination	121
11.5	Remedies	121
11.6	Instrument for the Payment of Money	121
11.7	Continuing Guarantee	121
11.8	General Limitation on Guarantee Obligations	121
11.9	Release of Guarantors	122
11.1	Right of Contribution	122
11.11	Keepwell	122
11.12	Limited Recourse	122
11.13	Amendments with respect to a Permitted Swap Agreement	123

ARTICLE 12
CONVERSION TO REVOLVING LOANS		123
12.1	Conversion to Revolving Loans	123
12.2	Conversion to Revolving Commitments	123
12.3	Effect of Amendment and Restatement	123

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INDEX OF EXHIBITS

Exhibit A	Form of Note
Exhibit B-1	Form of Borrowing Notice
Exhibit B-2	Form of Continuation Notice
Exhibit C	Form of Assignment and Acceptance
Exhibit D	Form of Incremental Loan Commitment Increase Notice
Exhibit E	Form of Increasing Incremental Lender Confirmation
Exhibit F	Form of New Lender Accession Agreement
Exhibit G	Form of Borrowing Base Certificate
Exhibit H	Form of Advance Model
Exhibit I	Form of US Tax Compliance Certificate
Exhibit J	Required Tax Equity Consent Provisions
Exhibit K	Potential New Fund Notice
Exhibit L	New Systems Notice
Exhibit M	New Subject Fund Accession Agreement
Exhibit N	Borrowing Date Certificate

INDEX OF SCHEDULES

Schedule 1.1(b)	Knowledge Individuals
Schedule 3.1(m)	Consents
Schedule 4.1(f)	Outstanding Debt
Schedule 4.1(x)	Subsidiaries; Equity Interests
Schedule 6.7	Investments
Schedule 6.15	Transactions with Affiliates

INDEX OF ANNEXES

Annex 1	Account Information
Annex 2	Lenders/Lending Office
Annex 3	Lender Commitments

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INDEX OF APPENDICES

Appendix 1	Advance Rate Calculations
Appendix 2	Borrowing Base Certificate Calculations
Appendix 3	Eligibility Representations
Appendix 4	List of Managing Members, Subject Funds, Cash-Sweep Designations and Investors
Appendix 5	Project Documents
Appendix 6	System Information
Appendix 7	Tax Equity Representations and Other Structure Representations
Appendix 8	Separateness Provisions
Appendix 9	Approved Manufacturers
Appendix 10	Approved Form Agreements (Customer Agreements)
Appendix 11	Tax Equity Structure Characteristics

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AMENDED AND RESTATED LOAN AGREEMENT

This AMENDED AND RESTATED LOAN AGREEMENT, dated as of September 12, 2014 and amended and restated as of November 25, 2015 (this “Agreement”), is made by and among VIVINT SOLAR FINANCING I, LLC, a Delaware limited liability company (the “Borrower”), VIVINT SOLAR HOLDINGS, INC., a Delaware corporation (the “Borrower Member”), each of the other guarantors that is a party to this Agreement identified as a “Guarantor” on the signature pages to this Agreement and listed as a “Managing Member” on Appendix 4 (as updated pursuant to Section 2.10) or that shall become a Guarantor pursuant to the terms of this Agreement and a New Subject Fund Accession Agreement (each individually, a “Guarantor” and, collectively, the “Subsidiary Guarantors,” and together with the Borrower Member, collectively, the “Guarantors”) each of the lenders that is a signatory to this Agreement identified as a “Lender” on the signature pages to this Agreement and listed on Annex 2 or that shall become a “Lender” under this Agreement pursuant to the terms of this Agreement (each individually, a “Lender” and, collectively, the “Lenders”), and BANK OF AMERICA, N.A, as the collateral agent for the Secured Parties (in such capacity, together with its successors in such capacity, the “Collateral Agent”) and as the administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the “Administrative Agent”, and, together with the Collateral Agent, the “Agents”).

WHEREAS, the Borrower requested that the Lenders make loans to the Borrower to monetize certain of the future distributions to be received by the Borrower from the Managing Members in connection with Subject Funds;

WHEREAS, the parties hereto entered into a Loan Agreement, dated September 12, 2014 (as amended prior to the date hereof, the “Original Loan Agreement”), a Collateral Agency and Depositary Agreement, dated September 12, 2014 (as amended prior to the date hereof, the “Original CADA”) and certain other Financing Documents (as defined below), and Lenders made certain term loans upon the terms and subject to the conditions of the Original Loan Agreement, the Original CADA and the other Financing Documents;

WHEREAS, the Borrower requested that the Agents and the Lenders agree to amend and restate the Original Loan Agreement and the Original CADA to effect certain modifications, including the conversion of the outstanding term loans into revolving loans;

WHEREAS, the Borrower, the other Loan Parties, the Agent and the Lenders are willing to agree to such amendments on the terms and subject to the conditions set forth herein and in the CADA.

NOW THEREFORE, in consideration of the agreements herein and in the other Financing Documents and in reliance upon the representations and warranties set forth herein and therein, the parties hereto hereby agree to amend and restate the Original Loan Agreement as of the Restatement Date as follows:

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

ARTICLE 1
DEFINITIONS

1.1Definitions

.  Except as otherwise expressly provided, capitalized terms used in this Agreement and its exhibits and schedules shall have the meanings set forth below:

“Accounts” has the meaning set forth in the CADA.

“Actual Net Cash Flow” means the actual amount of all Revenues paid to and received in the Revenue Account for the benefit of the Borrower, net of expenses permitted under the CADA.

“Administrative Agent” has the meaning set forth in the introductory paragraph of this Agreement.

“Administrative Questionnaire” means an administrative questionnaire in the form supplied by the Administrative Agent.

“Advance Model” has the meaning set forth in Appendix 2.

“Advance Rate” has the meaning set forth in Appendix 1.

“Affiliate” of a specified Person means any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the Person specified.  As used herein, the term “control” means possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of partnership interests or voting securities, by contract or otherwise.

“Agents” has the meaning set forth in the introductory paragraph of this Agreement.

“Agreement” has the meaning set forth in the introductory paragraph of this Agreement.

“All-In Yield” means, as to any Debt, the yield thereof, whether in the form of interest rate, margin, OID, upfront fees or LIBO Rate or Base Rate floor, in each case, incurred or payable by the Borrower generally to all Lenders of such Debt; provided that (a) OID and upfront fees shall be equated to interest rate assuming a 4-year life to maturity on a straight line basis (or, if less, the stated life to maturity at the time of incurrence of the applicable Debt); and (b) “All-In Yield” shall not include amendment fees, arrangement fees, structuring fees, commitment fees, underwriting fees and similar fees payable to any lead arranger (or its affiliate) in connection with the commitment or syndication of such Debt, consent fees paid to consenting Lenders and any other fees not paid or payable generally to all Lenders in the primary syndication of such Debt.

“Applicable Interest Rate” means (i) with respect to the Loans other than Incremental Loans, (a) for any LIBO Loan, during each Interest Period applicable thereto, the per annum rate equal to the sum of the LIBO Rate for such Interest Period plus the Applicable Margin (or, with respect to the initial Interest Period applicable to a LIBO Loan that was not initially made on the 15^th day of a calendar month, the Daily LIBO Rate plus the Applicable Margin) or (b) for any Base Rate Loan, on any day, the per annum rate equal to the sum of the Base Rate for such day plus the

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Applicable Margin and (ii) with respect to each Incremental Loan, the per annum rate specified in the terms of the Incremental Loan Commitment related to such Incremental Loan.

“Applicable Margin” means (i) during the Availability Period, 3.25% and (ii) after the Availability Period, 3.50%.

“Applicable Threshold Test” means, with respect to any date of determination on which the Outstanding Principal is greater than the Available Borrowing Base (for purposes of this definition, the “Test Date”):

(i)if reductions to the Available Borrowing Base since the last Borrowing Date (if any) result solely from interest rate fluctuations, the Outstanding Principal on the Test Date is less than the product of (x) the Available Borrowing Base (calculated on the Test Date using interest rates in effect as of the Test Date), multiplied by (y) 110%;

(ii)if reductions to the Available Borrowing Base since the last Borrowing Date (if any) result solely from any fact or circumstance that would cause a Subject Fund to become a Watched Fund, the Outstanding Principal on the Test Date is less than the product of (x) the Available Borrowing Base (calculated on the Test Date using interest rates in effect as of the Test Date), multiplied by (y) 105%; and

(iii)if reductions to the Available Borrowing Base since the last Borrowing Date (if any) result from a combination of interest rate fluctuations and any fact or circumstance that would cause a Subject Fund to become a Watched Fund, both:

(A)  the Outstanding Principal on the Test Date is less than the product of (x) the Available Borrowing Base (calculated on the Test Date using the interest rates in effect on the later of (i) the date which is 60 days prior to such Test Date and (ii) the most recent date, prior to and not including the Test Date, if any, on which the Borrower notified the Administrative Agent of the existence of a Watched Fund), multiplied by (y) 105% and

(B)  the Outstanding Principal on the Test Date is less than the product of (x) the Available Borrowing Base (calculated on the Test Date using interest rates in effect as of the Test Date), multiplied by (y) 110%.

For the avoidance of doubt, on any date on which the Outstanding Principal is less than or equal to the Available Borrowing Base, the Applicable Threshold Test shall be deemed to be satisfied.

“Approved Form Agreement” means each of the form Customer Agreements attached hereto as Appendix 10 as such forms may be modified from time to time pursuant to Section 6.10(b).

“Approved Manufacturer” means (i) any of the manufacturers set forth in Appendix 9 or (ii) any other manufacturer approved in writing by the Administrative Agent in its reasonable discretion upon Borrower’s request.

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“Assignment and Acceptance” means an assignment and acceptance entered into by a Lender and an Eligible Assignee, and accepted by the Administrative Agent, in the form of Exhibit C or such other form as shall be approved by the Administrative Agent.

“Assumptions” has the meaning set forth in Appendix 2.

“Attributable Indebtedness” means, on any date, in respect of any Capital Lease Obligations of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP.

“Availability Period” means a period commencing on the Closing Date and ending on March 12, 2017.

“Available Borrowing Base” has the meaning set forth in Appendix 2.

“Bank of America” means Bank of America, N.A., a national banking association.

“Bankruptcy Event” shall be deemed to occur with respect to any Person if (a) such Person shall institute a voluntary case seeking liquidation or reorganization under the Bankruptcy Law or shall consent to the institution of an involuntary case thereunder against it; (b) such Person shall file a petition, answer or consent or shall otherwise institute any similar proceeding under any other applicable federal, State or other applicable law, or shall consent thereto; (c) such Person shall apply for, or by consent there shall be an appointment of, a receiver, liquidator, sequestrator, trustee or other officer with similar powers for itself or any substantial part of its assets; (d) such Person shall make an assignment for the benefit of creditors; (e) such Person shall admit in writing its inability to pay its debts generally as they become due; (f) if an involuntary case shall be commenced seeking the liquidation or reorganization of such Person under the Bankruptcy Law or any similar proceeding shall be commenced against such Person under any other applicable federal, State or other applicable law and (i) the petition commencing the involuntary case is not timely controverted; (ii) the petition commencing the involuntary case is not dismissed within sixty (60) days of its filing; (iii) an interim trustee is appointed to take possession of all or a portion of the property, and/or to operate all or any part of the business of such Person and such appointment is not vacated within sixty (60) days; or (iv) an order for relief shall have been issued or entered therein; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee or other officer having similar powers of such Person or of all or a part of its property, shall have been entered; or (h) any other similar relief shall be granted against such Person under any federal, State or other applicable law.

“Bankruptcy Law” means Title 11, United States Code, and any other State or federal insolvency, reorganization, moratorium or similar law for the relief of debtors.

“Base Rate” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus ½ of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate”, and (c) the LIBO Rate plus 1.0%.  The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

announced rate.  Any change in such “prime rate” announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

“Base Rate Loan” means any Loan that bears interest at rates based upon the Base Rate.

“Benefited Lender” has the meaning set forth in Section 2.5(b).

“Borrower” has the meaning set forth in the introductory paragraph of this Agreement.

“Borrower Materials” has the meaning set forth in Section 10.1(d).

“Borrower Member” has the meaning set forth in the introductory paragraph of this Agreement.

“Borrowing” means Loans of the same Type made, converted or continued on the same date and, in the case of LIBO Loans, as to which a single Interest Period is in effect.

“Borrowing Base Certificate” means the certificate in the form of Exhibit G, setting forth the matters specified on Appendix 2 in the manner set forth therein.

“Borrowing Base Certificate Date” means each date upon which a Borrowing Base Certificate is submitted in accordance with the terms of Section 2.1(a)(iv) or Section 5.15.

“Borrowing Base Requirement” means, as of the date of a Borrowing Base Certificate, (i) the Available Borrowing Base exceeds the Outstanding Principal, (ii) the Cash-Sweep Concentration of each Cash-Sweep Fund Category does not exceed the Concentration Limit applicable thereto and (iii) the Inspected-Only Systems Borrowing Base does not exceed [***] percent ([***]%) of the Cash-Sweep Adjusted Available Borrowing Base.

“Borrowing Date” means that date on which a Borrowing occurs pursuant to the terms herein.

“Borrowing Date Certificate” has the meaning set forth in Section 3.2(a).

“Borrowing Notice” has the meaning set forth in Section 2.1(a)(iii).

“Breakage Event” has the meaning set forth in Section 2.7.

“Bridge Loan Credit Facility” means that certain Credit Agreement, dated May 1, 2014, between Borrower Member, Lender and the other parties thereto.

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located and if such day relates to any Eurocurrency Rate Loan, means any such day on which dealings in deposits are conducted by and between banks in the London interbank Eurocurrency market.

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

“CADA” means the Collateral Agency and Depositary Agreement, dated as of September 12, 2014 and amended and restated as of the Restatement Date, among the Borrower; the Collateral Agent, the Depositary, each Managing Member and, the Lenders, solely for the purposes of Section 2.1 and Article 7 thereof.

“Calculation Period” has the meaning set forth in Section 2.3(a).

“Capital Adequacy Requirement” has the meaning set forth in Section 2.6(b).

“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

“Cash Flow Coverage Ratio” means, as of any Quarterly Date, for any trailing 6-month period ending on such Quarterly Date (or with respect to the first two quarters following the Closing Date, such period from the Closing Date to the Quarterly Date), the quotient of (i) the sum of (A) Actual Net Cash Flow received by Borrower for such period less Borrower’s expenses (excluding interest on the Loans) due and payable during such period, (B) any amounts on deposit in the Equity Cure Account that are applicable to such period pursuant to Section 8.4(c) and (C) any amount previously applied as a Cure Amount and subsequently applied as a prepayment of the Loans pursuant to Section 8.4(c) during the trailing 6-month period ending on such Quarterly Date, divided by (ii) the actual interest due pursuant to the Loans and payable during such period; provided that in the event the Cure Amount is applied as a prepayment of the Loans in accordance with Section 8.4(c), for purposes of calculating this clause (ii) the aggregate principal of outstanding Loans shall be deemed to not be so adjusted for the fiscal quarter in which such Cure Amount was made (but shall be in each following quarter).

“Cash-Sweep Adjusted Available Borrowing Base” has the meaning set forth in Appendix 2.

“Cash-Sweep Concentration” has the meaning set forth in Appendix 2.

“Cash-Sweep Fund Category” has the meaning set forth in Appendix 2.

“Cash-Sweep Event” has the meaning set forth in Appendix 7.

“Cash-Sweep Fund” means, with respect to any Subject Fund, a Subject Fund designated as such on Appendix 4 whose Project Documents reduce, limit, suspend or otherwise restrict distributions to the Managing Member following the occurrence of certain events enumerated in such Project Documents, including (a) the occurrence of a flip date when an internal rate of return has not been achieved, (b) certain indemnity claims, and (c) non –payment of such indemnity claims by the applicable Subject Fund guarantor, as reasonably determined by the Administrative Agent in consultation with the Borrower and the Lenders; provided, however, with the prior written consent of Lenders holding at least 90% of the sum of (x) the aggregate unused amount of the Commitments then in effect and (y) the aggregate unpaid principal amount of the Loans then

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

outstanding, Subject Funds that would otherwise be Cash-Sweep Funds may instead be designated as Non Cash-Sweep Funds for all purposes hereunder.

A “Change of Control” shall be deemed to have occurred if:

(a)Vivint Solar Parent shall cease to directly or indirectly own, beneficially and of record, 100% of the issued and outstanding equity interests in Borrower Member;

(b)Borrower Member shall cease to directly own, beneficially and of record, 100% of the issued and outstanding equity interests in the Borrower;

(c)the Borrower shall cease to directly own, beneficially and of record, 100% of the issued and outstanding equity interests in each Managing Member; or

(d)a Managing Member fails to own 100% of the class of Equity Interests owned as of the date the related Partnership or Lessor, as applicable, becomes a Subject Fund under this Agreement and as set forth in Appendix 4 hereto (as such schedule may be updated prior to the funding of any new Subject Fund after the Closing Date to reflect the interests of a Managing Member in such new Subject Fund);

provided, that any disposition that would otherwise be a Change of Control that complies with terms of Section 2.10(b) or Section 6.4(d) shall be deemed not to be a Change of Control for all purposes hereunder.

“Change of Law” means the occurrence, after the Closing Date, of any of the following: (i) the adoption or taking effect of any Governmental Rule, any change in any Governmental Rule or in the administration, interpretation, implementation or the application or requirements thereof (whether such change occurs in accordance with the terms of such Governmental Rule as enacted, as a result of amendment, or otherwise), any change in the interpretation or administration of any Governmental Rule by any Governmental Authority, or (ii) the making or issuance of any request or directive (whether or not having the force of law) of any Governmental Authority, that, in each such case, makes it unlawful or impossible for any Lender to make or maintain any Loan; for the avoidance of doubt, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change of Law”, regardless of the date enacted, adopted, promulgated or issued, but only to the extent such rules, regulations, or published interpretations or directives are applied to the Borrower and its Subsidiaries by the Administrative Agent or any Lender in substantially the same manner as applied to other similarly situated borrowers under comparable credit facilities after consideration of factors as the Administrative Agent or Lender then reasonably determines to be relevant.

“Charges” has the meaning set forth in Section 10.13.

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

“Closing Date” means the date when each of the conditions precedent listed in Section 3.1 has been satisfied (or waived in writing by the Agents and the applicable Lenders), which date was September 12, 2014.

“Closing Date Commitment” means any Commitment that exists on the Closing Date and the Commitment of National Bank of Arizona that exists on the First Amendment Date.

“Code” means the Internal Revenue Code of 1986.

“Collateral” means all property of, and equity interests in the Loan Parties, now owned or hereafter acquired upon which a Lien is or is purported to be created by any Collateral Document.

“Collateral Agent” has the meaning set forth in the introductory paragraph of this Agreement.

“Collateral Documents” means the CADA, the Member Pledge, the Security Agreement, each consent, each control agreement and any other security documents, financing statements and other documentation filed or recorded in connection with the foregoing.

“Commitment” means, at any time with respect to each Lender, the commitment of such Lender to make Loans hereunder, expressed as a maximum aggregate principal amount of the Loans to be made by such Lender hereunder as such amount may be (a) reduced from time to time pursuant to Sections 2.2(e), increased or modified from time to time pursuant to assignments by or to such Lender pursuant to Section 9.15, and (b) increased or supplemented pursuant to Section 2.9 (it being understood that Incremental Loan Commitments made by such Lender pursuant to Section 2.9 may have different maturity, interest, and fee terms than such Lender’s existing Commitments).  The initial amount of each Lender’s Commitment is set forth on Annex 3 hereto in the column headed “Initial Commitment,” or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Commitment, as applicable.  The amount of each Lender’s Commitment as of the Restatement Date is set forth in Annex 3 hereto in the column headed “Commitment as of Restatement Date.”

“Commitment Fee” has the meaning set forth in the Fee Letters.

“Communications” has the meaning set forth in Section 10.1.

“Continuation Notice” has the meaning set forth in Section 2.1(a)(iii).

“Controlled Group” means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower, are treated as a single employer under Section 414(b), (c), (m) or (o) of the Code.

“Coverage Ratio EOD” has the meaning set forth in Section 8.4.

“Cure Amount” has the meaning set forth in Section 8.4.

“Cure Expiration Date” has the meaning set forth in Section 8.4.

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

“Customer Agreement” means, with respect to any System, the power purchase agreement, lease agreement or other offtake agreement for the purchase and sale of energy or lease of a solar energy system relating to such System signed by (x) a residential customer and (y) a Subject Fund, or with respect to a Modified Inverted Lease Structure or Inverted Lease Structure, one or both of the entities that make up such Subject Fund (in any case, either directly or as assignee of Developer).

“Customer Payments” means, with respect to each System, all payments made by the Host Customer in accordance with its Customer Agreement.

“Daily LIBO Rate” means, on each day during the applicable period, the greater of (x) the fluctuating rate of interest equal to LIBOR, as published on the applicable Reuters screen page (or such other commercially available source providing quotations of LIBOR as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London local time, on each day (or, if such day is not a Business Day, on the immediately preceding Business Day) any such Loan is outstanding, for dollars deposited with a term equivalent to an overnight interest period and (y) 0%.  If such rate under (x) is not available at such time for any reason, then the Daily LIBO Rate shall be the greater of (i) the rate per annum determined by the Administrative Agent to be the rate at which deposits in dollars for delivery in same day funds in the approximate amount of the initial Loan with a term equivalent to a one-month interest period would be offered by Bank of America’s London branch to major banks in the London interbank Eurodollar market at their request at approximately 11:00 a.m. (London local time), on each day (or, if such day is not a Business Day, on the immediately preceding Business Day)  such Loan is outstanding and (ii) 0%.

“Debt” of any Person at any date means, without duplication,

(a)all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments,

(b)the maximum amount (after giving effect to any prior drawings or reductions which may have been reimbursed) of all outstanding letters of credit (including standby and commercial), bankers’ acceptances, bank guarantees, surety bonds, performance bonds and similar instruments issued or created by or for the account of such Person,

(c)net obligations of such Person under any Swap Contract,

(d)all obligations of such Person to pay the deferred purchase price of property or services (other than (i) trade accounts payable in the ordinary course of business, (ii) any earn-out obligation until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP and (iii) liabilities accrued in the ordinary course),

(e)indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements and mortgage, industrial revenue bond, industrial development bond and similar financings), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse,

(f)all Attributable Indebtedness; and,

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

(g)all obligations of such Person in respect of Disqualified Equity Interests;

(h)to the extent not otherwise included above, all Guarantees of such Person in respect of any of the foregoing.

“Default” means any occurrence, circumstance or event, or any combination thereof, which, with the lapse of time, the giving of notice or both, would constitute an Event of Default under this Agreement.

“Default Rate” means, with respect to the Loans, the interest rate per annum equal to the Applicable Interest Rate plus 2.0% per annum.

“Defaulted System” has the meaning set forth in Appendix 2.

“Defaulting Lender” means, subject to Section 2.11(c) any Lender that (a) has failed to (i) fund all or any portion of its Loans within two (2) Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more of the conditions precedent set forth in Sections 3.1 and 3.2 with respect to the relevant Borrowing (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) have not been satisfied, or (ii) pay to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within two (2) Business Days of the date when due, (b) has notified the Borrower or the Administrative Agent in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three (3) Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent  and the Borrower), or (d)  has, or has a direct or indirect parent company that has, at any time following the date of this Agreement, (i) become the subject of a public proceeding under Bankruptcy Law, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect, or (ii) had publicly appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the FDIC or any other state, federal or national regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.  Any

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above, and of the effective date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.11(b)) as of the date established therefor by the Administrative Agent in a written notice of such determination which shall be delivered by the Administrative Agent to the Borrower and each other Lender promptly following such determination.

“Depositary” means Bank of America.

“Designated Jurisdiction” means any country or territory to the extent that such country or territory itself is the subject of any Sanction.

“Developer” means Vivint Solar Developer, LLC.

“Discharge Date” means the date when the outstanding Obligations (other than unasserted contingent payment obligations that by their nature expressly survive the termination of the Financing Documents) have been paid in full in cash and all Commitments have been terminated.

“Discount Rate” has the meaning set forth in Appendix 2.

“Disqualified Equity Interests” means any Equity Interest that, by its terms (or by the terms of any security or other Equity Interests into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition (a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (except as a result of a customarily defined change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full in cash of all outstanding Loans and all other outstanding Obligations that are accrued and payable and the termination of the Commitments), (b) is redeemable at the option of the holder thereof, in whole or in part, (c) provides for the scheduled payments of dividends in cash, or (d) is or becomes convertible into or exchangeable for Debt or any other Equity Interests that are described in the foregoing clauses (a), (b) or (c), in whole or in part, in each case, prior to the date that is ninety-one (91) days after the Latest Maturity Date.

“Dollars” and “$” means United States dollars or such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts in the United States of America.

“Eligibility Representations” means the representations set forth in Appendix 3.

“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, and (c) any other Person (other than the Borrower, Sponsor, a Subject Fund or any of their respective Affiliates or a natural person).

“Eligible Structure” means:

(i)a Partnership Flip Structure that is acceptable to the Administrative Agent in its reasonable discretion following due diligence and with respect to which the Borrower has made the Tax Equity Representations;

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

(ii)subject to Section 3.4(n), an Inverted Lease Structure that is acceptable to the Administrative Agent in its reasonable discretion following due diligence and with respect to which the Borrower has made the Tax Equity Representations;¹

(iii)a Modified Inverted Lease Structure that is acceptable to the Administrative Agent in its reasonable discretion following due diligence and with respect to which the Borrower has made the Tax Equity Representations;

(iv)a Repeat Tax Equity Structure with respect to which the Borrower has made both (x) the Tax Equity Representations in respect of such Repeat Tax Equity Structure and (y) the Tax Equity Representations set forth in clauses (k), (l) and (n)(B) in Part 1 of Appendix 7 in respect of the previously approved Tax Equity Structure to which such Repeat Tax Equity Structure is substantially similar;

(v)an Other Financed Structure that is acceptable to the Administrative Agent and Majority Lenders in their reasonable discretion following due diligence and with respect to which the Borrower has made the Other Structure Representations; or

(vi)an Other Non-Financed Structure with respect to which the Borrower has made the Other Structure Representations.

“Engagement Letter” means the Engagement Letter, dated April 30, 2014, entered into between Borrower Member and Bank of America, as amended.

“Environmental Claim” means any and all obligations, liabilities, losses, administrative, regulatory or judicial actions, suits, demands, decrees, claims, liens, judgments, warning notices, notices of noncompliance or violation, investigations, proceedings, removal or remedial actions or orders, or damages, penalties, fees, out-of-pocket costs, expenses, disbursements, attorneys’ or consultants’ fees, relating in any way to any Environmental Law or any Permit issued under any such Environmental Law (hereafter, “Hazard Claims”), including (a) any and all Hazard Claims by Governmental Authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and (b) any and all Hazard Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from the Release of Hazardous Materials or arising from injury to health, safety or the environment.

“Environmental Law” means any and all federal, State, regional and local statutes, laws (including common law), regulations, ordinances, judgments, orders, codes or injunctions pertaining to the environment, human health or safety (as affected by exposure to Hazardous Materials), or natural resources, including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601 et seq.) (“CERCLA”), and the Superfund Amendments and Reauthorization Act of 1986, the Emergency Planning and Community Right to Know Act (42 U.S.C. §§ 11001 et seq.), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §§ 6901 et seq.), and the Hazardous and Solid Waste Amendments Act of 1984, the Clean Air Act (42 U.S.C. §§ 7401 et seq.), the Federal Water

¹  Further amendments to the Loan Agreement will be necessary upon completion of diligence on new structure.

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

Pollution Control Act (also known as the Clean Water Act) (33 U.S.C. §§ 1251 et seq.), the Toxic Substances Control Act (15 U.S.C. §§ 2601 et seq.), the Safe Drinking Water Act (42 U.S.C. §§ 300f et seq.), the Endangered Species Act (16 U.S.C. §§ 1531 et seq.), the Migratory Bird Treaty Act (16 U.S.C. §§ 703 et seq.), the Bald Eagle Protection Act (16 U.S.C. §§ 668 et seq.), the Oil Pollution Act of 1990 (33 U.S.C. §§ 2701 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. §§ 1801 et seq.), and any similar or analogous state and local statutes or regulations promulgated thereunder, and legally binding decisional law of any Governmental Authority, as each of the foregoing may be amended or supplemented from time to time in the future, in each case to the extent applicable with respect to the property or operation to which application of the term “Environmental Laws” relates.

“Equity Contribution” has the meaning given to such term in the CADA.

“Equity Cure Account” has the meaning set forth in the CADA.

“Equity Interests” means shares of capital stock, partnership interests, limited liability company interests or membership interests in a limited liability company, beneficial interests in a trust or other equity interests in any Person, and any option, warrant, commitment, preemptive rights or agreements of any kind (including any members’ or voting agreements) entitling the holder thereof to purchase or otherwise acquire any such equity interest.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ERISA Event” means (a) a Reportable Event; (b) a withdrawal by the Borrower or any member of its Controlled Group from an ERISA Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any member of its Controlled Group from a Multiemployer Plan or notification that a Multiemployer Plan is in “reorganization” (within the meaning of Section 4241 of ERISA); (d) the filing of a notice of intent to terminate, the treatment of an ERISA Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate an ERISA Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any ERISA Plan or Multiemployer Plan; (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any member of its Controlled Group; (g) the failure by the Borrower or an ERISA Affiliate to meet the minimum funding requirements of Section 412 and 430 of the Code or Sections 302 and 303 of ERISA with respect to any ERISA Plan, whether or not waived; (h) the filing pursuant to Section 412(c) of the Code or Section 303(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any ERISA Plan; or (i) any other event in connection with an ERISA Plan or Multiemployer Plan which, directly or indirectly, could reasonably be expected to subject the Borrower to any material liability under any statute, regulation or governmental order or which could obligate the Borrower or any member of their Controlled Group to indemnify any Person against such liability incurred under any such statute, regulation or order.

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

“ERISA Plan” means any employee pension benefit plan (as defined in Section 3(2) of ERISA) other than a Multiemployer Plan that is both (a) maintained by the Borrower or any member of the Controlled Group, or to which any of them contributes or is obligated to contribute, for its employees or has made, or was so maintained and in respect of which the Borrower or any ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated and (b) covered by Title IV of ERISA or to which Section 412 of the Code applies.

“Event of Default” and “Events of Default” have the meanings given in Section 8.1.

“Excluded Revenues” has the meaning set forth in Appendix 2.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to any recipient or required to be withheld or deducted from a payment to a recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment under Section 2.8(b) or (c)) or (ii) such Lender changes its Lending Office, except in each case to the extent that, pursuant to Section 2.4(d)(i)(B) or (iii), amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its Lending Office, (c) Taxes attributable to such recipient’s failure to comply with Section 2.4(g) and (d) any Taxes imposed pursuant to FATCA.

“Existing Loans” has the meaning set forth in Section 2.13.

“Extended Loans” has the meaning set forth in Section 2.13.

“Extending Lender” has the meaning set forth in Section 2.13.

“Extension Election” has the meaning set forth in Section 2.13.

“Extension Request” has the meaning set forth in Section 2.13.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471 (b)(1) of the Code, and any intergovernmental agreements and related laws, rules or regulations to implement any of the foregoing.

“FDIC” means the Federal Deposit Insurance Corporation and its successors.

“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.

“Federal Reserve Board” means the Board of Governors of the Federal Reserve System of the United States of America.

“Fee Letters” means (i) the Engagement Letter, (ii) each of the fee letters entered into between Borrower or any of its Affiliates and Bank of America, dated on or about the date hereof, and (iii) each other fee letter entered into by the Borrower or any of its Affiliates, on the one hand, and one or more Agents or Lenders in connection with this Agreement (including in connection with an increase in Commitments in accordance with Section 2.9).

“Fees” refers to all fees, costs and expenses payable in accordance with the Financing Documents.

“FICO Score” means a score based on the credit risk rating system established and maintained by the Fair Isaac Corporation from Equifax, TransUnion, Experian or another nationally-recognized consumer rating agency obtained by Developer or an Affiliate in accordance with Developer’s or its Affiliate’s customary sales process or in association with the transfer of a Customer Agreement to a new Host Customer.

“Financing Documents” means this Agreement, the Notes, the Collateral Documents, the Fee Letters, each New Lender Accession Agreement, each New Subject Fund Accession Agreement, and the Tax Equity Required Consents.

“First Amendment” means that certain First Amendment and Joinder Agreement, dated as of February 6, 2015, by and among the Borrower, the Administrative Agent, the Guarantors, and the Lenders.

“First Amendment Date” means the date of the First Amendment.

“Foreign Lender” means a Lender that is not a U.S. Person.

“GAAP” means (a) generally accepted accounting principles in the United States of America consistently applied or (b) upon mutual agreement of the parties, internationally recognized generally accepted accounting principles, consistently applied.

“Governmental Authority” means any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

“Governmental Rule” means any statute, law, regulation, ordinance, rule, judgment, order, decree, permit, concession, grant, franchise, license, agreement, directive, guideline, policy requirement or other governmental restriction or any similar form of decision of or determination by, or any interpretation or administration of any of the foregoing having the force of law by, any Governmental Authority, whether now or hereafter in effect.

“Guarantee” of or by any Person shall mean any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Debt or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Debt or other obligation, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Debt or other obligation of the payment of such Debt or other obligation or (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Debt or other obligation.

“Guarantor” and “Guarantors” each have the respective meaning set forth in the introductory paragraph of this Agreement. For the avoidance of doubt, the Borrower Member shall be a Guarantor without recourse, except to the pledge of its Equity Interest in the Borrower pursuant to the Member Pledge.

“Hazardous Materials” means all materials, pollutants, contaminants, chemicals, compounds, constituents, substances or wastes, in any form, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, mold, electromagnetic radio frequency or microwave emissions, that are regulated pursuant to, or which could give rise to liability under, applicable Environmental Law.

“Hedging Agreement” means (a) any and all interest rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc. or any International Foreign Exchange Master Agreement.

“Host Customer” means a Person contractually obligated to make payments to a Subject Fund under a Customer Agreement.

“Impacted Loans” has the meaning set forth in Section 2.1(b)(vi).

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

“Increasing Incremental Lender Confirmation” has the meaning set forth in Section 2.9(b).

“Incremental Loan” means a Loan resulting from a Borrowing against an Incremental Loan Commitment.

“Incremental Loan Amount” has the meaning set forth in Section 2.9(a).

“Incremental Loan Commitment” has the meaning set forth in Section 2.9(a).

“Incremental Loan Commitment Increase Notice” has the meaning set forth in Section 2.9(a).

“Incremental Loan Increase Date” has the meaning set forth in Section 2.9(a).

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Financing Document and (b) to the extent not otherwise described in (a), Other Taxes.

“Indemnitee” has the meaning set forth in Section 5.10.

“Independent Engineer” means (i) Leidos or (ii) any other reputable, qualified engineering firm with substantial experience in the residential solar industry that is not an Affiliate of the Borrower or the Sponsor.

“Independent Member” means an individual who has not been at any time during the five years preceding such initial designation: (a) a direct or indirect owner of any equity interest in, or member (with the exception of serving as the Independent Member), officer, employee, director, manager or contractor, bankruptcy trustee, attorney or counsel of, any Investor or the Borrower or any of its respective Affiliates; (b) a creditor, customer, supplier (other than a supplier of registered agent or registered office services), or other Person who derives any of its purchases or revenues from its business activities with any Investor or the Borrower or any of its respective Affiliates (other than any fee paid for its services as Independent Member); (c) an Affiliate of the Borrower excluded from serving as Independent Member under clause (a) or (b) of this definition; (d) a member of the immediate family by blood or marriage of any Person excluded from being an Independent Member under clause (a) or (b) of this definition; or (e) a Person who received, or a member or employee of a firm or business that received, fees or other income from any Investor or the Borrower or any of its Affiliates in the aggregate in excess of five percent (5%) of the gross income, for any applicable year, of such Person; provided, however, that notwithstanding the foregoing, for the purposes of clause (a), an equity interest shall be deemed to exclude de minimis or otherwise immaterial holdings of equity interests of an Affiliate of the Borrower which are traded on public stock exchanges.  The initial Independent Member is Michelle Dreyer.

“Information” has the meaning set forth in Section 10.17.

“Initial Loans” means the loans made by the Lenders to the Borrower pursuant to the Closing Date Commitments, excluding any Incremental Loans, Refinancing Loans or Extended Loans (it being understood that the Initial Loans were made on and after the Closing Date as term

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

loans and have been converted to revolving loans as of the Restatement Date pursuant to Article 12).

“Inspected-Only Reserve Account” has the meaning set forth in the CADA.

“Inspected-Only Systems” has the meaning set forth in Appendix 2.

“Inspected-Only Systems Borrowing Base” has the meaning set forth in Appendix 2

“Interest Period” means, with respect to any LIBO Loan, (a)(i) if such LIBO Loan was made on any day other than the 15^th day of a calendar month, initially, the period commencing on the date such Loan is initially made and ending on the next day that is the 15^th day of a calendar month, and (ii) thereafter, the period commencing on the last day of the immediately prior Interest Period and ending one (1), two (2), or three (3) months thereafter (as elected by the Borrower in the Borrowing Notice or Continuation Notice related to such Loan) and (b) if such LIBO Loan was made on the 15^th day of a calendar month, the period commencing (i) initially, on the date such Loan is initially made and (ii) thereafter, on the last day of the immediately prior Interest Period and ending, in each case, one (1), two (2), or three (3) months thereafter (as elected by the Borrower in the Borrowing Notice or Continuation Notice related to such Loan), provided that (A) any Interest Period ending on a day that is not a Business Day shall be deemed to end of the immediately following Business Day unless such immediately following Business Day falls in a subsequent calendar month, in which case such Interest Period shall be deemed to end on the immediately preceding Business Day and (B) any Interest Period that would otherwise end after the Loan Maturity Date of such Loan shall be deemed to end on such Loan Maturity Date.

“Interest Reserve Account” has the meaning set forth in the CADA.

“Inverted Lease Structure” means a tax equity structure that conforms to the characteristics set forth in Part II of Appendix 11, as the same may be updated from time to time in accordance with this Agreement.

“Investor” means (i) each investor in a Tax Equity Structure and (ii) each investor in any Other Financed Structure, in each case, other than the Managing Member.

“Investor Guarantor” has the meaning set forth in Appendix 2.

“ITC” means the energy tax credit under Section 48 of the Code.

“Knowledge” means, with respect to a Loan Party the actual knowledge, after due inquiry, of (a) any Responsible Officer of such Loan Party or, (b) any Person responsible for the management and administration of such Subject Fund and its assets and operations, including any Person set forth in Schedule 1.1(b) (but only with respect to matters relating to the Subject Fund(s) and the assets of the Subject Fund(s) corresponding to such Person), or any Person who assumes the responsibility of such Person with respect to a corresponding Subject Fund.

“Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority.

“Latest Maturity Date” means, at any date of determination, the latest Maturity Date applicable to any Loan or Commitment hereunder at such time, including the latest maturity date of any Refinancing Loan, any Incremental Loan or any Extended Loan, in each case as extended in accordance with this Agreement from time to time.

“Lead Arrangers” has the meaning set forth on the cover page of this Agreement.

“Legal Requirements” means, as to any Person, the articles of incorporation, bylaws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation including any Governmental Rule, any requirement or obligation under a Permit, and any determination of any Governmental Authority in each case applicable to or binding upon such Person or any of its properties or to which such Person or any of its property is subject.

“Lender” has the meaning set forth in the introductory paragraph to this Agreement.

“Lending Office” means the office in the United States of America designated as such beneath the name of such Lender on Annex 2 or such other office of such Lender as such Lender may specify in writing from time to time to the Administrative Agent and the Borrower in accordance with this Agreement.

“Lessor” means a special purpose vehicle and wholly-owned subsidiary of the Borrower, that leases a specific, segregated pool of Systems to an Investor (or a partnership in which the Investor or a subsidiary of the Investor is a member), as lessee.

“LIBO Loan” means any Loan that bears interest at rates based upon the Daily LIBO Rate or the LIBO Rate.

“LIBO Rate” means:

(a)for any Interest Period, other than an Interest Period when the Daily LIBO Rate is being charged, with respect to a LIBO Loan, the greater of (i) the rate per annum equal to the London Interbank Offered Rate set by the ICE Benchmark Administration or any successor thereto (“LIBOR”) or a comparable successor rate, which rate is approved by the Administrative Agent, as published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two (2)  Business Days prior to the commencement of such Interest Period, for dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period and (ii) 0%; and

(i)for purposes of any determination of the Base Rate on any date (other than the initial Interest Period), the rate per annum equal to the greater of (i) LIBOR, at or about 11:00 a.m. London local time, determined two (2) Business Days prior to such date for U.S. Dollar deposits with a term of three months commencing on such date and (ii) 0%;

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

provided that to the extent a comparable or successor rate is approved by the Administrative Agent in connection herewith, the approved rate shall be applied in a manner consistent with market practice; provided, further that to the extent such market practice is not administratively feasible for the Administrative Agent, such approved rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent.

“LIBOR” has the meaning set forth in clause (a) of the definition of LIBO Rate.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any Capital Lease Obligation having substantially the same economic effect as any of the foregoing).

“LLC Agreements” means, collectively, (i) the Limited Liability Company Agreement of the Borrower, dated as of September 12, 2014 and (ii) the limited liability company agreements of each Managing Member.

“Loan” and “Loans” means the loans made by the Lenders under this Agreement, including any Initial Loan, Incremental Loan, Refinancing Loan or Extended Loan, as the context may require.  The outstanding principal amount of each Lender’s Loans as of the Restatement Date (prior to giving effect to any Loans made on such date) is set forth in Annex 3 hereto in the column labeled “Outstanding Loans as of Restatement Date.”

“Loan Extension Amendment” has the meaning set forth in Section 2.13.

“Loan Maturity Date” means, the earlier of (A) (i) with respect to each Initial Loan, March 12, 2018, (ii) with respect to any Extended Loans, the final maturity date applicable thereto as specified in the applicable Extension Request accepted by the respective Lender or Lenders, (iii) with respect to any Refinancing Loans, the final maturity date applicable thereto as specified in the applicable Refinancing Loan Amendment, and (iv) with respect to any Incremental Loans, the final maturity date applicable thereto as specified in the applicable Incremental Loan Commitment, and (B) the date of acceleration of the Loans pursuant to Section 8.2.

“Loan Parties” means the Borrower Member, the Borrower and the Managing Members.

“Majority Lenders” means, at any time, the holders of more than 50% of the sum of (a) the aggregate unused amount of the Commitments then in effect and (b) the aggregate unpaid principal amount of the Loans then outstanding. The Loans and unused Commitments of any Defaulting Lender shall be disregarded in determining the Majority Lenders at any time.

“Managing Member” means a special purpose vehicle and wholly-owned subsidiary of the Borrower that (a) with respect to each Tax Equity Structure (other than an Inverted Lease Structure) and Other Financed Structure, has a direct Equity Interest in the entity that is party to each Customer Agreement related to such Tax Equity Structure or Other Financed Structure and that is entitled to receive the payments to be made by such Host Customer under each such Customer Agreement, (b) with respect to each Inverted Lease Structure, has a direct Equity Interest

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

in the entity that owns each System related to such Inverted Lease Structure and that is the lessor entitled to receive rent payments under the lease agreement from the entity that is party to each Customer Agreement related to such Inverted Lease Structure and (c) with respect to each Other Non-Financed Structure, is Vivint Solar Owner I, LLC or another special purpose vehicle wholly-owned by Borrower related to an Other Non-Financed Structure. The Managing Members are listed on Appendix 4 as the same is adjusted from time to time in accordance with the terms of this Agreement.

“Margin Stock” has the meaning set forth in Regulation U.

“Master Lease” has the meaning set forth in Appendix 11.

“Material Adverse Effect” means a (a) material adverse effect on the business, operations, assets, liabilities (actual or contingent) or financial condition of the Borrower and its Subsidiaries, taken as a whole; (b) material adverse effect on the ability of the Loan Parties (taken as a whole) to fully and timely perform any of their payment obligations under any Financing Document to which the Borrower or any of the Loan Parties is a party; or (c) material adverse effect on the rights and remedies available to the Lenders or the Collateral Agent under any Financing Document.

“Material Project Documents” means, with respect to a Subject Fund, the Project Documents of such Subject Fund set forth in Appendix 5  hereto, and successor, substitute or replacement documents therefor, including any Master EPC Agreement (if applicable, as may be defined in any applicable Subject Fund’s LLC Agreement), Master Lease (if applicable), Equity Capital Contribution Agreement (if applicable, as may be defined in any applicable Subject Fund’s LLC Agreement), any Subject Fund LLC Agreement, maintenance services agreement, administrative services agreement and any Guarantee by Vivint Solar Parent or Borrower Member of the obligations of a Managing Member issued in connection with any applicable Subject Fund.

“Maximum Rate” has the meaning set forth in Section 10.13.

“Member Pledge” means the Pledge and Security Agreement, dated as of the date hereof, among the Borrower Member, the Borrower and the Collateral Agent.

“Merger Agreement” means that certain Agreement and Plan of Merger dated July 20, 2015, pursuant to which Vivint Solar Parent has agreed to merge with SEV Merger Sub Inc., a subsidiary of SunEdison, Inc.

“Modified Inverted Lease Structure” means a tax equity structure that conforms to the characteristics set forth in Part III of Appendix 11, as the same may be updated from time to time in accordance with this Agreement.

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

“Moody’s RiskCalc” means the RiskCalc™ product offered by Moody’s Analytics, Inc.

“Multiemployer Plan” means any ERISA Plan that is a multiemployer plan (as defined in Section 4001(a)(3) of ERISA) to which the Borrower or any member of the Controlled Group is making, or has an obligation to make, contributions, or has made, or has been obligated to make,

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

contributions within any of the preceding five (5) plan years immediately preceding the Closing Date.

“Net Cash Flow” has the meaning set forth in Appendix 2.

“New Lender” has the meaning set forth in Section 2.9(c).

“New Lender Accession Agreement” means an accession agreement substantially in the form of Exhibit F hereto, among a New Lender, the Borrower and the Administrative Agent and delivered pursuant to Section 2.9(c).

“New Subject Fund Accession Agreement” has the meaning set forth in Section 5.18.

“New Systems Notice” has the meaning set forth in Section 2.10(c)(i).

“Non-Cash-Sweep Fund” means any Eligible Structure that is not a Cash-Sweep Fund.

“Non-Consenting Lender” has the meaning set forth in Section 9.12(h).

“Non-Operable System” has the meaning set forth in Appendix 2.

“Nonrecourse Parties” means, collectively, the Sponsor, its Affiliates (other than the Loan Parties), and their respective shareholders, partners, members, officers, directors or employees.

“Note” and “Notes” has the meanings given in Section 2.9(e).

“Notice of Intent to Cure” has the meaning set forth in Section 8.4.

“Obligations” means and includes all loans, advances, debts, obligations, and liabilities howsoever arising (and whether arising or incurred before or after any Bankruptcy Event with respect to the Borrower or any other Person), owed by such Loan Party to the Agents or the Secured Parties of every kind and description (whether or not evidenced by any note or instrument and whether or not for the payment of money), direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, pursuant to the terms of this Agreement or any of the other Financing Documents, including all principal, interest, indemnity or reimbursement obligations, fees, charges, expenses, attorneys’ fees and accountants fees chargeable to such Person in connection with its dealings with such Person and payable by such Person under this Agreement or any of the other Financing Documents.

“OFAC” means the United States Department of the Treasury’s Office of Foreign Assets Control.

“OID” means original issue discount.

“Operative Documents” means the Financing Documents, the LLC Agreements and the Project Documents.

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

“Organizational Documents” means (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

“Other Connection Taxes” means, with respect to any recipient, Taxes imposed as a result of a present or former connection between such recipient and the jurisdiction imposing such Tax (other than connections arising from such recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Financing Document, or sold or assigned an interest in any Loan or Financing Document).

“Other Documents” means, with respect to each Subject Fund, the Customer Agreements, interconnection agreements and all other material contracts relating to Systems in a Subject Fund.

“Other Financed Structure” means a financing structure for investments in Systems other than a Tax Equity Structure or Other Non-Financed Structure (which may include financing structures that include investments in commercial systems).

“Other Non-Financed Structure” means a non-financed structure composed entirely of Systems that are wholly and directly owned by Vivint Solar Owner I, LLC or another special purpose vehicle wholly-owned by Borrower related to an Other Non-Financed Structure.

“Other Structure” means any Other Financed Structure or Other Non-Financed Structure.

“Other Structure Representations” means, with respect to each Other Structure, the representations set forth in Part II of Appendix 7.

“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Financing Document, except that any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.8(b) or (c)).

“Outstanding Principal” means, as of any date of determination, the aggregate amount of principal outstanding under all Loans on such date.

“Participant Register” has the meaning set forth in Section 9.13(a).

“Partnership” means a limited liability company owned by an Investor and a Managing Member that owns a specific pool of Systems.

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

“Partnership Flip Structure” means a tax equity structure that conforms to the characteristics set forth in Part I of Appendix 11, as the same may be updated from time to time in accordance with this Agreement.

“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56 (a/k/a the USA PATRIOT Act).

“PBGC” means the Pension Benefit Guaranty Corporation.

“Permit” means any action, approval, consent, waiver, exemption, variance, franchise, order, permit, authorization, right or license of or from a Governmental Authority.

“Permitted Liens” means (a) Liens imposed by any Governmental Authority for Taxes not yet due or being contested in good faith and by appropriate proceedings and in respect of which (i) appropriate reserves acceptable to the Administrative Agent have been established in accordance with GAAP, (ii) enforcement of the contested Tax is effectively stayed for the entire duration of such contest and (iii) any Tax determined to be due, together with any interest or penalties thereon, is promptly paid after resolution of such conflict; (b) Liens arising out of judgments or awards that do not otherwise constitute an Event of Default so long as an appeal or proceeding for review is being prosecuted in good faith and for the payment of which appropriate reserves have been established in accordance with GAAP, bonds or other security have been provided or are fully covered by insurance, in each case, as acceptable to the Administrative Agent; (c) Liens created under the Financing Documents; (d) Liens arising as a matter of Law and (e) Liens permitted (without requiring any amendment, consent, waiver, or vote by any member of a Subject Fund, including any Investor, under the terms and conditions of such Material Project Documents and Other Documents unless such amendment, consent or waiver is approved in in accordance with the terms hereof) under the Material Project Documents and the Other Documents.

“Permitted Swap Agreements” means any interest rate Hedging Agreement (a) in form, structure, and substance acceptable to the Administrative Agent in its sole discretion, (b) that together with all rights thereunder, has been pledged on a first Lien priority basis as Collateral to the Collateral Agent, for the benefit of the Secured Parties, pursuant to documentation in form and substance reasonably satisfactory to Administrative Agent, (c) that if secured, is secured by either (i) assets other than Collateral, other than assets of any Loan Party, or other than assets of any Subject Fund or (ii) solely if the counterparty is a Lender hereunder at the time such Hedging Agreement is entered into, Collateral on a pari-passu basis with the security interests of the other Secured Parties in such Collateral (or on a subordinated basis with respect to the security interests of the other Secured Parties), (d) pursuant to which such counterparty agrees that if it ceases to be a Lender hereunder during the term of such hedging transaction for any reason, such counterparty shall make commercially reasonable efforts to assign such Hedging Agreement and all of its rights and obligations thereunder to a Lender hereunder for fair market consideration, (e) that shall solely hedge the interest rate exposure of the Borrower under this Agreement, and (f) that provides that all payments to be made under such Hedge Agreement to or for the benefit of any Loan Party will be paid directly to the Revenue Account pursuant to documentation in form and substance reasonably satisfactory to Administrative Agent.

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

“Person” means any natural person, corporation, limited liability company, partnership, firm, association, Governmental Authority or any other entity whether acting in an individual, fiduciary or other capacity.

“Placed-In-Service” means for a System, the definition of “Placed In Service,” or  “Placed-In-Service,” or “Placement in Service” or any substantially similar defined term, as applicable, given in the applicable Project Documents of the applicable Subject Fund.

“Platform” has the meaning set forth in Section 10.1(d).

“Portfolio Report” means the “Quarterly Performance of Portfolio” report or “Monthly Operations Report,” as applicable, delivered under a maintenance services or administrative services agreement in a Subject Fund.

“Potential New Fund” has the meaning set forth in Section 2.10(a)(i).

“Potential New Fund Notice” has the meaning set forth in Section 2.10(a)(ii).

“Prime Rate” means the rate of interest per annum determined from time to time by the Administrative Agent as its prime rate in effect at its principal office in New York City and notified to the Borrower.  The prime rate is a rate set by the Administrative Agent based upon various factors including the Administrative Agent’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such rate.

“Project Documents” means, with respect to a Subject Fund, the Material Project Documents and the Other Documents of such Subject Fund.

“Proportionate Share” means, at any time with respect to each Lender, the percentage obtained by dividing the outstanding principal amount of the Loans and Commitments of such Lender at such time by the aggregate outstanding principal amount of all Loans and Commitments of all Lenders at such time.

“PTO” has the meaning set forth in Appendix 3.

“Public Lender” has the meaning set forth in Section 10.1(d).

“Qualified ECP Guarantor” means, in respect of any Permitted Swap Agreement, each Guarantor that, at the time the relevant Guarantee of such Guarantor (or grant of the relevant security interest, as applicable) becomes or would become effective with respect to such Permitted Swap Agreement, has total assets exceeding $10,000,000 or otherwise constitutes an “eligible contract participant” under the Commodity Exchange Act and which may cause another person to qualify as an “eligible contract participant” with respect to such Permitted Swap Agreement at such time by entering into a keepwell pursuant to § 1a(18)(A)(v)(II) of the Commodity Exchange Act.

“Qualified Insurers” means financially sound and reputable insurance companies rated “A-, X” or better by A.M. Best Company or “A” or better by S&P.

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

“Quarterly Date” means a date occurring on the last day of each calendar quarter, commencing with the quarter in which the initial Borrowing Date occurs.

“Refinanced Debt” has the meaning set forth in Section 2.12.

“Refinancing Effective Date” has the meaning set forth in Section 2.12.

“Refinancing Lender” has the meaning set forth in Section 2.12.

“Refinancing Loan” has the meaning set forth in Section 2.12.

“Refinancing Loan Amendment” has the meaning set forth in Section 2.12.

“Register” has the meaning set forth in Section 9.15(c).

“Regulation T” means Regulation T of the Federal Reserve Board as from time to time in effect, and all official rulings and interpretations thereunder or thereof.

“Regulation U” means Regulation U of the Federal Reserve Board as from time to time in effect, and all official rulings and interpretations thereunder or thereof.

“Regulation X” means Regulation X of the Federal Reserve Board as from time to time in effect, and all official rulings and interpretations thereunder or thereof.

“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, trustees, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

“Release” means any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, dispersing or migrating of Hazardous Materials in, into, onto or through the Environment or from or through any facility, property or equipment.

“Relevant Member Action” means, with respect to any matter relating to a Subject Fund with respect to which the Organizational Documents of such Subject Fund (or any other contract or agreement, or instrument) grant voting, approval or consent rights to the Managing Member, or otherwise provide the Managing Member with the option to cause any Subject Fund to take, or restrict any Subject Fund from taking, any action, the exercise by the Managing Member of such voting, approval, consent or other rights in conformity with the applicable Organizational Documents and the Managing Member’s fiduciary duties, if any, as such exercise may be limited by Law.

“Removal Effective Date” has the meaning set forth in Section 9.6(b).

“Repayment Event” means the occurrence and continuation of the following:

(a)the Outstanding Principal is greater than the Available Borrowing Base as of any date; or

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

(b)the Cash Flow Coverage Ratio is less than 1.40:1.00 as of any Quarterly Date.

“Repeat Tax Equity Structure” means a Partnership Flip Structure, Inverted Lease Structure or Modified Inverted Lease Structure that (a) is substantially similar to a Partnership Flip Structure, Inverted Lease Structure or Modified Inverted Lease Structure, as the case may be, that was previously approved by the Administrative Agent as a Subject Fund and (b) has the same Investor as the previously approved Partnership Flip Structure, Inverted Lease Structure or Modified Inverted Lease Structure or an Affiliate of such Investor.

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived.

“Representatives” has the meaning set forth in Section 10.17.

“Required LLC Provisions” has the meaning set forth in Section 5.13(c).

“Resignation Effective Date” has the meaning set forth in Section 9.6(a).

“Responsible Officer” means (i) the chief executive officer, president, chief legal officer, chief financial officer or executive vice president of any Loan Party, as the case may be, (ii) as to any document delivered on the Closing Date, any secretary or assistant secretary of such any Loan Party, as applicable, and (iii) any other officer or employee of the applicable Loan Party designated in or pursuant to an agreement between the applicable Loan Party and the Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer of any Loan Party, as the case may be, shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party, as applicable, and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party, as applicable.

“Restatement Date” means November 25,  2015.

“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) on or with respect to any Equity Interests in any Loan Party (other than Borrower Member), or any other payment (whether in cash, securities or other property on account of any Equity Interest in any Loan Party (other than Borrower Member)), including any sinking fund or similar deposit or any payment, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interests in such Loan Party or any payments in respect of any management or development fees.

“Revenue Account” has the meaning set forth in the CADA.

“Revenues” means, for any period, with respect to any Person, all income, revenues or other amounts paid (or, with respect to financial forecasts, payable) to such Person.

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto.

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

“Sanction(s)” means any international economic sanction administered or enforced by the United States Government (including without limitation, OFAC), the United Nations Security Council, the European Union or any member state of the European Union.

“Scheduled Payment Date” means each January 15th, April 15th, July 15th, and October 15th.

“Secured Parties” means (i) the Agents, (ii) the Lenders, (iii) the Depositary and (iv) any counterparty to a Permitted Swap Agreement that is a Lender at the time such Permitted Swap Agreement was entered into.

“Security Agreement” means that certain Pledge and Security Agreement, dated as of the date hereof, between the Borrower, Managing Members and the Collateral Agent.

“Sharing Percentage” means, with respect to any Potential New Fund that would be designated as a Cash-Sweep Fund under Section 2.10(a)(i)(C) of this Agreement, the percentage of total distributions by such fund that are payable to the Managing Member following the occurrence of a Cash-Sweep Event pursuant to the terms of the fund’s Project Documents.

“Solvent” and “Solvency” mean, with respect to any Person on any date of determination, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature, (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital, and (e) such Person generally is able to pay its debts and liabilities, contingent obligations and other commitments as they mature.  The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

“Specified Guarantor” means any Guarantor that is not an “eligible contract participant” under the Commodity Exchange Act (determined prior to giving effect to Section 11.11).

“Sponsor” means The Blackstone Group L.P. and its Affiliates.

“SREC” means the definition “SRECs”, “RECs” or “Renewable Energy Credits”, as applicable, given in the applicable Project Documents of the applicable Subject Fund, but in any event, includes credits, credit certificates, green tags or similar environmental or green energy attributes (such as those for greenhouse gas reduction or the generation of green power or renewable energy) created by a Governmental Authority of any state or local jurisdiction and/or independent certification board or group generally recognized in the electric power generation industry, and generated by or associated with any System or electricity produced therefrom.

“Stalled Inspected-Only Systems” has the meaning set forth in Appendix 2

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

“Subject Fund” means, with respect to each Eligible Structure financed pursuant to this Agreement, (i) for each Partnership Flip Structure, the Partnership into which an Investor and Managing Member invests with respect to such Partnership Flip Structure, (ii) for each Inverted Lease Structure, (x) the limited liability company into which a Managing Member invests and (y) the limited liability company into which the Investor invests, (iii) for each Modified Inverted Lease Structure, (x) the limited liability company into which an Investor and Managing Member (for purposes of this definition, “Master Tenant/Lessee”) invests and (y) the limited liability company into which the Managing Member and such Master Tenant/Lessee invests, and (iv) for each Other Structure, the legal entity that directly owns the Systems subject to the Other Structure, as agreed by the Administrative Agent and Borrower at the time such Eligible Structure is financed pursuant to this Agreement. The Subject Funds are listed on Appendix 4 hereto, as the same may be updated from time to time in accordance with this Agreement.

“Subject Fund Borrowing Base” has the meaning set forth in Appendix 2.

“Subject Fund Value” has the meaning set forth in Appendix 2.

“Subsidiary” of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such partnership, joint venture or limited liability company or (c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries.

“Subsidiary Guarantors” has the meaning set forth in the introductory paragraph of this Agreement.

“Supermajority Lenders” means, at any time, both (a) Majority Lenders and (b) Lenders constituting 66.67% of total number of Lenders party to this Agreement at such time.

“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement, including any such obligations or liabilities under any such master agreement.

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

“System” means (i) a residential photovoltaic system including photovoltaic panels, racks, wiring and other electrical devices, conduit, weatherproof housings, hardware, one or more inverters, remote monitoring equipment, connectors, meters, disconnects, over current devices and battery storage, (ii) the applicable Customer Agreement related to such System and (iii) all other related rights applicable thereto.

“System Information” means the information listed on Appendix 6, which shall be in form, substance and content substantially the same as the tranche data file provided by the Loan Parties to the Administrative Agent during due diligence and on the Closing Date.

“Tax Equity Model” has the meaning set forth on Appendix 2.

“Tax Equity Representations” means, with respect to each Tax Equity Structure, representations set forth in Part I of Appendix 7.

“Tax Equity Required Consent” means, with respect to a Subject Fund, a consent executed by the Investor in such Subject Fund and each other party thereto containing, among others, each of the provisions set forth in Exhibit J and otherwise in form and substance acceptable to the Agents.

“Tax Equity Structure” means a Partnership Flip Structure, an Inverted Lease Structure, a Modified Inverted Lease Structure or a Repeat Tax Equity Structure.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“Total Loan Commitment” means the aggregate amount of all Commitments of the Lenders hereunder as such amount may be (a) reduced from time to time pursuant to Section 2.2(c) or (b) increased pursuant to Section 2.9.  The Total Loan Commitment on the Closing Date was Three Hundred Fifty Million Dollars ($350,000,000), as of the First Amendment Date, the Total Loan Commitment was Three Hundred Seventy Five Million Dollars ($375,000,000), and, as of the Restatement Date, the Total Loan Commitment is Three Hundred Seventy Five Million Dollars ($375,000,000).

“True-Up Report” means, with respect to any Subject Fund, that report concerning the as-built state of each System after all such Systems are Placed-In-Service and the Investor’s commitment under such Subject Fund has been fully deployed or is otherwise no longer eligible to be deployed, as delivered by Vivint Solar Parent, Borrower Member, Borrower or the applicable Managing Member pursuant to the terms of the applicable Project Document of the applicable Subject Fund.

“Type” when used in respect of any Loan or Borrowing, shall refer to the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined.  For purposes hereof, the term “Rate” shall mean the LIBO Rate and the Base Rate.

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

“UCC” means the Uniform Commercial Code of the jurisdiction the law of which governs the document in which such term is used or which governs the creation or perfection of the Liens granted thereunder.

“Undrawn Fees” has the meaning set forth in Section 2.3(a).

“U.S. Tax Compliance Certificate” has the meaning set forth in Section 2.4(g)(ii)(B)(3).

“[***]” has the meaning set forth in Section 2.10(a)(iii).

“[***]” has the meaning set forth in Section 2.10(a)(iii).

“[***]” has the meaning set forth in Section 2.10(a)(iii).

“Vivint Solar Parent” means Vivint Solar, Inc., a Delaware corporation (f/k/a V Solar Holdings, Inc.).

“Watched Funds” has the meaning set forth in Appendix 2.

1.2Rules of Interpretation

.  Except as otherwise expressly provided, the rules of interpretation set forth below shall apply to this Agreement and the other Financing Documents:

(a)The singular includes the plural and the plural includes the singular.  The definitions of terms apply equally to the singular and plural forms of the terms defined.

(b)A reference to a Governmental Rule includes any amendment or modification to such Governmental Rule, and all regulations, rulings and other Governmental Rules promulgated under such Governmental Rule.

(c)A reference to a Person includes its permitted successors and assigns.

(d)The words “include,” “includes” and “including” are not limiting.

(e)A reference in a document to an Article, Section, Exhibit, Schedule, Annex or Appendix is to the Article, Section, Exhibit, Schedule, Annex or Appendix of such document unless otherwise indicated.  Exhibits, Schedules, Annexes or Appendices to any document shall be deemed incorporated by reference in such document.  In the event of any conflict between the provisions of this Agreement (exclusive of the Exhibits, Schedules, Annexes and Appendices thereto) and any Exhibit, Schedule, Annex or Appendix thereto, the provisions of this Agreement shall control.

(f)References to any document, instrument or agreement (a) shall include all exhibits, schedules and other attachments thereto, (b) shall include all documents, instruments or agreements issued or executed in replacement thereof, and (c) shall mean such document, instrument or agreement, or replacement or predecessor thereto, as amended, modified and supplemented from time to time and in effect at any given time, provided such amendment, modification or supplement was made in compliance with this Agreement.

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

(g)The words “hereof,” “herein” and “hereunder” and words of similar import when used in any document shall refer to such document as a whole and not to any particular provision of such document.

(h)References to “days” shall mean calendar days, unless the term “Business Days” shall be used.  References to a time of day shall mean such time in New York, New York, unless otherwise specified.

(i)The Financing Documents are the result of negotiations between, and have been reviewed by the Borrower, the Agents, each Lender and their respective counsel.  Accordingly, the Financing Documents shall be deemed to be the product of all parties thereto, and no ambiguity shall be construed in favor of or against the Borrower, the Agents or any Lender.

(j)Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “will” and “shall” shall be construed to have the same meaning and effect.

(k)In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding.”

(l)Accounting terms have the meanings assigned to them by GAAP, as applied by the accounting entity to which they refer.

(m)Unless otherwise specified in this Agreement, whenever a payment or performance of an action is required to be made pursuant to this Agreement on a day that is not a Business Day, such payment or performance shall be made on the next succeeding Business Day.

(n)If, at any time after the Closing Date, Moody’s or S&P or Moody’s RiskCalc shall change its respective system of classifications, then any Moody’s or S&P or Moody’s RiskCalc “rating” referred to herein shall be considered to be at or above a specified level if it is at or above the new rating which most closely corresponds to the specified level under the old rating system.

ARTICLE 2

THE CREDIT FACILITY

2.1Loan Facility.

(a)Loan Facility.

(i)Availability.

(A) Subject to the terms and conditions set forth herein, each Lender agrees, severally and not jointly, to make one or more Loans to the Borrower, from time to time during the Availability Period, in an aggregate principal amount that will not result in such Lender’s Loans exceeding its Commitment.

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(B) Notwithstanding the foregoing, (x) there shall be no more than one (1) Borrowing per calendar month and (y) the total principal amount of all Loans outstanding hereunder shall not exceed the Total Loan Commitment.

(C) Each Loan made by a Lender under this Agreement shall reduce such Lender’s proportionate share of the Total Loan Commitment available hereunder; provided, however, such proportionate share shall be proportionately increased upon repayment of such Loan in whole or in part pursuant to Section 2.1(f).

(D) Amounts borrowed hereunder and repaid pursuant to Section 2.1(f) may be reborrowed under this Section 2.1(a).

(ii)Loan Sizing; Minimum Draw Amount.  Notwithstanding anything to the contrary in Section 2.1(a)(i), the aggregate amount of each Borrowing (A) shall not cause the Outstanding Principal (including the amounts of the requested Borrowing) to exceed the Available Borrowing Base and (B) shall exceed $2,500,000 or such lesser amount as is remaining under the Total Loan Commitment.

(iii)Borrowing Notice.  The Borrower shall request Loans by delivering to the Administrative Agent an irrevocable written notice in the form of Exhibit B-1 (or such other form as may be approved by the Administrative Agent  (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent)), appropriately completed and signed by a Responsible Officer of the Borrower (a “Borrowing Notice”) by no later than 2:00 p.m., New York time, at least five (5) Business Days before the requested date of each Borrowing. Notwithstanding anything to the contrary in this Agreement, the Borrower may submit a Borrowing Notice prior to the Closing Date requesting (i) a Base Rate Loan in the aggregate principal amount of $87,000,000 to be funded on the Closing Date and (ii) that such Base Rate Loan will be converted on September 15, 2014 to a LIBO Rate Loan with an Interest Period of three (3) months, and the Administrative Agent shall be deemed to have approved such Borrowing Notice.

(iv)Borrowing Base Certificate; the Advance Model.  In connection with any Borrowing Notice, the Borrower shall also deliver to the Administrative Agent simultaneously with such Borrowing Notice, the applicable final, complete and executed Borrowing Base Certificate and the Advance Model.

(v)Calculations and Computations. If the Administrative Agent delivers a written notice to the Borrower contesting the Borrower’s calculations in such Borrowing Base Certificate, it shall inform the Borrower and provide an amended Borrowing Base Certificate. Thereafter, Borrower may (A) agree to such amended Borrowing Base Certificate and deliver an amended Borrowing Notice to the Administrative Agent, or (B) by written notice to the Administrative Agent, rescind the Borrowing Notice.  The delivery of an amendment to a Borrowing Notice or a rescission of a Borrowing Notice pursuant to this clause (v) shall not be subject to Section 2.7, provided that the Borrower delivers such

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

amendment or rescission no later than 12:00 p.m. New York time three (3) Business Days before the requested Borrowing Date.

(b)Interest Provisions Relating to Loans.

(i)Interest Rate.  Subject to Section 2.4(c), the Borrower shall pay interest (including interest accruing after the commencement of an insolvency proceeding under applicable Bankruptcy Law) on the unpaid principal amount of each Loan from the date of the funding of such Loan until the Loan Maturity Date at the Applicable Interest Rate.

(ii)Interest Payment Dates.  Interest on the unpaid principal amount of each Loan shall be payable in arrears on (a) with respect to each LIBO Loan, the last day of any Interest Period with respect to such Loan, (b) with respect to each Base Rate Loan, each Scheduled Payment Date with respect to such Loan and (c) upon prepayment of any Loans as and to the extent provided in Section 2.1(f) and at maturity (whether by acceleration or otherwise); provided that interest payable pursuant to Section 2.4(c) shall be payable on demand.

(iii)Interest Computations.  All computations of interest on any LIBO Loan hereunder shall include the first day but exclude the last day of the Interest Period in effect for such Borrowing and shall be based upon a year of 360 days. All computations of interest on any Base Rate Loan hereunder shall be based upon a year of 365/366 days.  The Applicable Interest Rate for each Interest Period or day within an Interest Period, as the case may be, shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

(iv)Interest Account and Interest Computations.  The Administrative Agent shall record in an account or accounts maintained by the Administrative Agent on its books (A) the Applicable Interest Rate for the Loans; (B) the date and amount of each principal and interest payment on each Loan; and (C) such other information as the Administrative Agent may determine is necessary for the computation of interest payable by the Borrower hereunder consistent with the basis hereof.  The Borrower agrees that all computations by the Administrative Agent of interest shall be deemed prima facie to be correct in the absence of manifest error.

(v)Continuation of Loans.  Each Borrowing hereunder shall be automatically continued, at the end of each Interest Period that ends prior to the Loan Maturity Date for the Loans comprising such Borrowing, for an additional Interest Period of the same duration as such ending Interest Period, unless the Borrower delivers a written notice in the form of Exhibit B-2, appropriately completed (a “Continuation Notice”) electing a different Interest Period by no later than 2:00 p.m., New York Time, at least three (3) Business Days prior to the end of such Interest Period.  Each such continuation shall be made pro rata among the Lenders in accordance with the respective principal amounts of the Loans comprising the continued Borrowing.

(vi)Alternate Rate of Interest.  If prior to the commencement of any Interest Period for a Borrowing, (A) the Administrative Agent determines that (i) Dollar deposits

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

are not being offered to banks in the London interbank market for the applicable amount and Interest Period of such LIBO Rate Loan, or (ii) adequate and reasonable means do not exist for determining the LIBO Rate or Daily LIBO Rate for any requested Interest Period with respect to a proposed LIBO Rate Loan  or in connection with an existing or proposed Base Rate Loan (in each case with respect to clause (A) (i) and (ii) above, “Impacted Loans”), or (B) the Administrative Agent determines that for any reason  the LIBO Rate or Daily LIBO Rate for any requested Interest Period with respect to a proposed LIBO Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such LIBO Rate Loan, the Administrative Agent will promptly so notify the Borrower and each Lender.  Thereafter, (x) the obligation of the Lenders to make or maintain LIBO Rate Loans shall be suspended (to the extent of the affected LIBO Rate Loans or Interest Periods) and (y) in the event of a determination described in the preceding sentence with respect to the LIBO Rate component of the Base Rate, the utilization of the LIBO Rate component in determining the Base Rate shall be suspended, in each case until the Administrative Agent upon the instruction of the Majority Lenders revokes such notice.  Upon receipt of such notice, the Borrower may revoke any pending request for a borrowing of, conversion to or continuation of LIBO Rate Loans (to the extent of the affected LIBO Rate Loans or Interest Periods) or, failing that, will be deemed to have converted such request into a request for a borrowing of Base Rate Loans in the amount specified therein.

Notwithstanding the foregoing, if the Administrative Agent has made the determination described in clause (A) (i) of this Section, the Administrative Agent, in consultation with the Borrower and the affected Lenders, may establish an alternative interest rate for the Impacted Loans,  in which case, such alternative rate of interest shall apply with respect to the Impacted Loans until (1) the Administrative Agent revokes the notice delivered with respect to the Impacted Loans under clause (A) of the first sentence of this Section, (2) the Administrative Agent notifies the Borrower that such alternative interest rate does not adequately and fairly reflect the cost to such Lenders of funding the Impacted Loans, or (3) any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for such Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to such alternative rate of interest or to determine or charge interest rates based upon such rate or any Governmental Authority has imposed material restrictions on the authority of such Lender to do any of the foregoing and provides the Administrative Agent and the Borrower written notice thereof.

(vii)After giving effect to the Loans, all conversions of the Loans from one Type to the other, and all continuations of the Loans as the same Type, there shall not be more than five (5) Interest Periods in effect at any one time with respect to the Loans.

(c)Principal Payments of Loans.  All outstanding principal of, and all unpaid interest, fees and costs payable hereunder with respect to each of the Loans shall be due and payable in full on such Loan’s Loan Maturity Date.

(d)Promissory Notes.  If requested by any Lender, the Borrower shall execute and deliver to such Lender a promissory note in the form of Exhibit A (individually, a “Note” and,

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

collectively, the “Notes”), payable to the order of such Lender and in the principal amount of such Lender’s Proportionate Share of the Loans.

(e)Loan Funding.

(i)Notice.  The Borrowing Notice, as well as the applicable Borrowing Base Certificate and the Advance Model, shall be delivered to the Administrative Agent in accordance with Section 2.1(a).  The Administrative Agent shall promptly notify each Lender of the date of each requested Borrowing and such Lender’s Proportionate Share of the requested Borrowing.

(ii)Pro Rata Loans.  All Loans shall be made on a pro rata basis by the Lenders in accordance with their respective Proportionate Share, with the Borrowing of Loans to be comprised of a Loan by each Lender equal to such Lender’s Proportionate Share of the Borrowing.

(iii)Administrative Agent Account.  No later than 12:00 p.m., New York time on the date of the requested Borrowing, if the applicable conditions precedent listed in Sections 3.1 and 3.2 have been satisfied or waived, each Lender shall make available the Loans requested in the Borrowing Notice in Dollars and in immediately available funds to the Administrative Agent at its account in the United States identified in Annex 1.

(f)Prepayments.

(i)Voluntary Prepayment of Loans.  The Borrower may, at its option, prepay, all outstanding Loans in whole or in part.  Any partial prepayment hereunder shall be in a minimum aggregate amount of One Million Dollars ($1,000,000) and in an integral multiple of One Million Dollars ($1,000,000), provided, however, that any prepayment pursuant to this Section 2.1(f)(i) shall not result in any release of Collateral without further action of the Collateral Agent; provided, further, that the foregoing minimum amount requirement shall not apply to a prepayment of the Loans made pursuant to Section 8.4(c).

(ii)Mandatory Prepayments.  In accordance with Section 2.1(f)(iii), (A) during a Repayment Event, on each Scheduled Payment Date, the Borrower shall prepay the Loans as required pursuant to Section 3.3(d)(3) of the CADA; (B) if any Loan Party or any of such Loan Party’s Subsidiaries (x) incurs or issues any Debt after the Closing Date that is not otherwise permitted to be incurred pursuant to Section 6.3 or (y) issues any capital stock, then, in each case, the Borrower shall prepay the Loans, in an aggregate principal amount equal to 100% of all net proceeds received therefrom, on or prior to the date which is two (2) Business Days after the receipt by the Borrower or such Loan Party of such net proceeds; (C) upon receipt of any funds for the prepayment of principal pursuant to Section 2.10(b), the Borrower shall cause such funds to be applied as a prepayment of the outstanding principal of the Loans; (D) if for any reason the aggregate outstanding principal amount of any Lender’s Loans exceeds the Commitment of such Lender during the Availability Period, the Borrower shall immediately prepay such Loans in an amount equal to such excess (and any such prepayment shall be applied to the outstanding principal of such Lender’s Loans); and (E)  upon receipt of any Equity Contributions for the purpose

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of curing a Default under Section 8.1(l), the Borrower shall cause the proceeds of such Equity Contribution to be applied as a prepayment of outstanding principal of the Loans in an amount not less than the amount required to satisfy the Applicable Threshold Test; provided that the Borrower may cure any Default under Section 8.1(l) by, within ten (10) Business Days from the date of the Borrowing Base Certificate referred to in Section 8.1(l), making a request to the Administrative Agent to add additional Systems or Subject Funds to the Available Borrowing Base in accordance with the terms set forth in this Agreement in order to cause the Outstanding Principal to be less than the Available Borrowing Base. In the event that adding such additional Systems or Subject Funds to the Available Base would cause the Available Borrowing Base to exceed the Outstanding Principal, as evidenced by a new Borrowing Base Certificate approved by the Administrative Agent, and such new Systems or Subject Funds are subsequently added to the Available Borrowing Base in accordance with the terms of this Agreement within such ten (10) Business Day period, then any Default under Section 8.1(l) shall be deemed to be cured.  For the avoidance of doubt, no such Default shall be deemed cured if the inclusion of new Systems or Subject Funds does not otherwise reduce the Outstanding Principal to an amount less than the Available Borrowing Base.

(iii)Terms of Prepayments.

(A) All voluntary and mandatory prepayments of Loans under this Section 2.1(f) shall be subject to Section 2.7 but shall otherwise be without premium or penalty and shall be accompanied by accrued and unpaid interest on the principal amount to be prepaid to but excluding the date of payment.

(B) The Borrower shall give the Administrative Agent at least three (3) Business Days’ notice of any voluntary prepayment under Section 2.1(f)(i).  Each notice of voluntary prepayment shall (x) specify the voluntary prepayment date, and (y) be accompanied by a certificate signed by a Responsible Officer of the Borrower setting forth in reasonable detail the calculation of the amount of such voluntary prepayment.

2.2Commitments

.

(a)Generally.  Subject to the terms and conditions set forth herein, each Lender agrees, severally and not jointly, to make one or more Loans to the Borrower, from time to time during the Availability Period, in an aggregate principal amount that will not result in such Lender’s Loans exceeding its Commitment.

(b)Scheduled Commitment Termination Date.  Unless previously terminated, the Commitments shall automatically terminate on the last day of the Availability Period.

(c)Voluntary Termination or Reduction of Commitments.  The Borrower may, at any time, terminate, or from time to time reduce, the Commitments provided that each partial reduction of the Commitments shall be in an amount that is One Million Dollars ($1,000,000) or a larger

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multiple of Five Hundred Thousand Dollars ($500,000); provided that no such reduction shall reduce the Commitments such that the amount of Outstanding Principal exceeds the Total Loan Commitment.

(d)Notice of Voluntary Termination or Reduction.  The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under this Section 2.2 at least three (3) Business Days prior to the effective date of such termination and reduction, specifying such election and the effective date thereof.  Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof.  Each notice delivered by the Borrower pursuant to this Section 2.2 shall be irrevocable.

(e)Effect of Termination or Reduction.  Any termination or reduction of the Commitments shall be permanent. Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments.  Notwithstanding any termination or reduction of the Commitments pursuant to this Section 2.2(e), the Commitment Fee shall not be reduced in any event unless otherwise set forth in the Fee Letters.

2.3Fees

.

(a)Undrawn Fee.  On each Scheduled Payment Date and on and until the earlier of (i) the last day of the Availability Period and (ii) the date on which the Total Loan Commitments are canceled or terminated, the Borrower shall pay to the Administrative Agent, for the account of each applicable Lender, a commitment fee for each such Lender (the “Undrawn Fees”) accruing from the date of execution of this Agreement or the preceding Scheduled Payment Date, as applicable, until the date of such payment (the “Calculation Period”) equal to (A) during the six months following the Restatement Date, [***]% per annum (based upon a year of 365/366 days) on the average daily unutilized portion of the Commitment of such Lender during such Calculation Period and (B) thereafter, (x) subject to the proviso below, if the average daily unutilized portion of the Commitment of such Lender during such Calculation Period exceeds 50% of such Lender’s Commitment, [***]% per annum (based upon a year of 365/366 days) on the average daily unutilized portion of the Commitment of such Lender during such Calculation Period and (y) if the average daily unutilized portion of the Commitment of such Lender during such Calculation Period is 50% or less of such Lender’s Commitment, [***]% per annum (based upon a year of 365/366 days) on the average daily unutilized portion of the Commitment of such Lender during such Calculation Period; provided that in calculating the average daily unutilized portion of a Lender’s Commitment, any amounts repaid hereunder for the purpose of releasing a Subject Fund from the Liens of the Financing Documents (as indicated by written notice from the Borrower to the Administrative Agent in connection with such repayment) shall be deemed to be utilized for a period of three (3) months commencing on the date of such repayment.

(b)Fee Letters.  On the Closing Date and thereafter, the Borrower shall pay to the Lead Arrangers, the Administrative Agent, the Lenders, the Depositary and any other parties thereto (for their respective accounts) such fees in the amount and at the times set forth in the Fee Letters.

2.4Other Payment Terms

.

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(a)Place and Manner.  All payments to be made by the Borrower shall be made free and clear of and without condition or deduction for any counterclaim, defense, recoupment or setoff.  Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and in immediately available funds not later than 2:00 p.m., New York time, on the date specified herein.  The Administrative Agent will promptly distribute to each Lender its Proportionate Share (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office.  All payments received by the Administrative Agent after 2:00 p.m., New York time, shall be deemed received on the next succeeding Business Day (it being understood that the Administrative Agent, in its sole discretion, may deem payments received after such time on any day to be received on the date due) and any applicable interest or fee shall continue to accrue.

(b)Date.  Unless otherwise specified in this Agreement, whenever any payment due hereunder shall fall due on a day other than a Business Day, such payment shall instead be due on the next succeeding Business Day, and such extension of time shall be included in the computation of interest or fees, as the case may be.

(c)Default Interest.  If any amounts required to be paid by the Borrower under this Agreement or any other Financing Document (including principal or interest payable on any Loan, and any fees or other amounts payable to the Agents or any Lender) remain unpaid after such amounts are due, whether by acceleration or otherwise, the Borrower shall pay interest on the aggregate, outstanding balance of such overdue amount from the date due until the amounts are paid in full at a per annum rate equal to the Default Rate.  Such Default Rate shall apply automatically without the need for any notice from the Administrative Agent or any Lender; provided that the foregoing shall not be intended to modify any other notice obligation hereunder including the notice provisions applicable to Events of Default.

(d)Net of Taxes, Etc.

(i) (A)Taxes.  Any and all payments by or on account of any obligation of any Loan Party under any Financing Document shall be made without deduction or withholding for any Taxes, except as required by applicable Laws.  If any applicable Laws (as determined in the good faith discretion of the applicable withholding agent) require the deduction or withholding of any Tax from any such payment by the Administrative Agent or a Loan Party, then the Administrative Agent or such Loan Party shall be entitled to make such deduction or withholding, upon the basis or the information and documentation to be delivered pursuant to subsection (g) below.

(B) If any Loan Party or the Administrative Agent shall be required by the Code to withhold ordeduct any Taxes, including both United States Federal backup withholding and withholding taxes, from any payment, then (A) the Administrative Agent shall withhold or make such deductions as are determined by the Administrative Agent to be required based upon the information and documentation it has

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received pursuant to subsection (g) below, (B) the Administrative Agent shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with the Code, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 2.4(d)) the applicable recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made.

(C) If any Loan Party or the Administrative Agent shall be required by any applicable Laws other than the Code to withhold ordeduct any Taxes from any payment, then (A) such Loan Party or the Administrative Agent, as required by such Laws, shall withhold or make such deductions as are determined by it to be required based upon the information and documentation it has received pursuant to subsection (g) below, (B) such Loan Party or the Administrative Agent, to the extent required by such Laws, shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with such Laws, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 2.4(d)) the applicable recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made.

(ii)Payment of Other Taxes by the Borrower.  Without limiting the provisions of subsection (i) above, the Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable Laws, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.

(iii)Indemnity.

(A) The Borrower shall indemnify each Agent and each Lender for the full amount of Indemnified Taxes (including any Indemnified Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.4(d)) arising from the execution, delivery or performance of its obligations or from receiving a payment hereunder, or enforcing this Agreement or any Financing Document, paid by, or required to be withheld or deducted from a payment to, such Agent or Lender, or any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally asserted;

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provided that the Borrower shall not be obligated to indemnify any Agent or Lender for any penalties, additional interest or expense relating to Indemnified Taxes arising from such Agent’s or Lender’s gross negligence or willful misconduct.  A certificate as to the amount of such payment or liability delivered to the Borrower by an Agent or Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.  Payments by the Borrower pursuant to this indemnification shall be made within ten (10) days from the date such Agent or Lender makes written demand therefor.  The Borrower shall, and does hereby indemnify the Administrative Agent, and shall make in respect thereof within ten (10) days after demand therefor, for any amount which a Lender for any reason fails to pay indefeasibly to the Administrative Agent as required pursuant to Section 2.4(d)(iii)(B) below.

(B) Each Lender shall, and does hereby, severally indemnify, and shall make payment in respect thereof within ten (10) days after demand therefor, (x) the Administrative Agent against any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (y) the Administrative Agent and the Borrower, as applicable, against any Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.13(b) relating to the maintenance of a Participant Register and (z) the Administrative Agent or the Borrower, as applicable, against any Excluded Taxes attributable to such Lender that are payable or paid by the Administrative Agent or the Borrower in connection with any Financing Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error.  Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender, as the case may be, under this Agreement or any other Financing Document against any amount due to the Administrative Agent under this clause (B).

(iv)Evidence of Payments.  Upon request by the Borrower or the Administrative Agent, as the case may be, after any payment of Taxes by any Loan Party or by the Administrative Agent to a Government Authority as provided in this Section 2.4(d), the Borrower shall deliver to the Administrative Agent or the Administrative Agent shall deliver to the Borrower, as the case may be, the original or certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy any return required by

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Laws to report such payment or other evidence of such payment reasonably satisfactory to the Borrower or the Administrative Agent, as the case may be.

(v)Treatment of Certain Refunds.  If any Agent or Lender determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified by the Borrower pursuant to this Section 2.4(d) (including by the payment of additional amounts pursuant to this Section 2.4(d)), it shall pay to the Borrower an amount equal to such refund (but only to the extent of the indemnity payments made under this Section 2.4(d) with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses related thereto (including taxes) of such Agent or Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund).  The Borrower, upon the request of such Lender or Agent, shall repay to such Lender or Agent the amount paid over pursuant to this paragraph (v) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such Lender or Agent is required to repay such refund to such Governmental Authority; provided that the Borrower shall not be obligated to reimburse an Agent or any Lender for any penalties, additional interest or other charges arising from such Agent’s or Lender’s gross negligence or willful misconduct.  Notwithstanding anything to the contrary in this paragraph (v), in no event will Lender or Agent be required to pay any amount to the Borrower pursuant to this paragraph (v) the payment of which could place such Lender or Agent in a less favorable net after-tax position than such Lender or Agent would have been in if the tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such tax had never been paid.  This paragraph shall not be construed to require any Agent or Lender to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.

(vi)Survival of Obligations.  The obligations included in this Section 2.4(d) shall survive the termination of this Agreement and the repayment and discharge of the Obligations of the Loan Parties.

(e)Application of Payments.

(i)Except as otherwise provided herein (including in Section 7.1), payments made under this Agreement and the other Financing Documents shall be applied first, to any fees, costs, charges or expenses payable to the Administrative Agent and the Collateral Agent hereunder; second, to any fees, costs, charges or expenses payable to the Lenders hereunder or under the other Financing Documents; third, to any accrued but unpaid interest on the Loans; and fourth, to the outstanding principal of the Loans.

(ii)The Administrative Agent shall promptly distribute to each Lender its Proportionate Share of each payment of principal, payments, fees and any other amounts received by the Administrative Agent for the account of the Lenders under the Financing Documents.  The payments made for the account of each Lender shall be made, and distributed to it, for the account of such Lender’s Lending Office.

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(f)Failure to Pay Administrative Agent.

(i)Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Loan of LIBO Rate Loans (or, in the case of any Base Rate Loans, prior to 12:00 noon on the date of such proposed Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.1(e)(iii) and may, in reliance upon such assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans.  If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period.  If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Proportionate Share included in such Borrowing.  Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

(ii)Unless the Administrative Agent shall have received notice from the Borrower at least two (2) Business Days prior to the date on which any payment is due to the Lenders hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender.  If and to the extent the Borrower shall not have so made such payment in full to the Administrative Agent, such Lender shall repay to the Administrative Agent forthwith upon demand such amount distributed to such Lender, together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at a rate equal to the Applicable Interest Rate for each day during such period.  A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing by such Lender under this Section 2.4(f) shall be conclusive in the absence of manifest error.

(g)Withholding Exemption Certificates.

(i)Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Financing Document shall

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deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.  Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Sections 2.4(g)(ii)(A), 2.4(g)(ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(ii)Without limiting the generality of the foregoing,

(A) any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;

(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:

(1)in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Financing Document, executed originals of IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Financing Document, IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(2)executed originals of IRS Form W-8ECI;

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(3)in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit I to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed originals of IRS Form W-8BEN; or

(4)to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in the form of Exhibit I, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit I on behalf of each such direct and indirect partner;

(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and

(D) if a payment made to a Lender under any Financing Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such

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Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

(iii)Each Lender agrees that if any form or certification it previously delivered pursuant to this Section 2.4(g) expires or becomes obsolete or inaccurate in any respect, it shall promptly (but in any event on or before the next Scheduled Payment Date; provided that such Scheduled Payment Date is at least ten (10) Business Days after such certificate expires or becomes obsolete) update such form or certification or notify the Borrower and the Administrative Agent in writing of its legal inability to do so.

2.5Pro Rata Treatment.

(a)Except as otherwise provided herein each Borrowing, each payment of principal of any Borrowing, each payment of interest on the Loans, each payment of Commitment Fees, each payment of Undrawn Fees and each reduction of the Commitments shall be made or shared among the Lenders pro rata according to their respective applicable Commitments (or, if such Commitments shall have expired or terminated, other than with respect to payment of Undrawn Fees, in accordance with the respective principal amounts of their outstanding Loans).  Each Lender agrees that in computing each Lender’s portion of any Borrowing to be made hereunder, the Administrative Agent may, in its discretion, round each Lender’s percentage of such Borrowing to the next higher or lower whole Dollar amount.

(b)Sharing of Payments, Etc.  If any Lender (a “Benefited Lender”) shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise) on account of Loans (or interest thereon) owed to it, in excess of its ratable share of payments on account of such Loans obtained by all Lenders entitled to such payments (for the avoidance of doubt, only Lenders holding Refinanced Debt shall be entitled to payment from the proceeds of Refinancing Loans until such Lenders are fully repaid), such Lender shall forthwith purchase from the other Lenders such participations in the Loans, as the case may be, as shall be necessary to cause such Benefited Lender to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such Benefited Lender, such purchase from such Lender shall be rescinded and each other Lender shall repay to the Benefited Lender the purchase price to the extent of such recovery together with an amount equal to such other Lender’s ratable share (according to the proportion of (i) the amount of such other Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the Benefited Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.5(b) may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of setoff) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation; provided, that the provisions of this Section 2.5(b) shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender) or any payment obtained by a Lender as consideration for the assignment of sale of a participation

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in any of its Loans to any assignee or participant, other than to a Loan Party or any of their Affiliates (as to which provisions of this Section 2.5(b) apply).

2.6Change of Circumstances

.

(a)Increased Costs.  If, after the date of this Agreement, any Change of Law:

(i)shall impose, modify or hold applicable any reserve, special deposit or similar requirement (except any reserve requirement reflected in the LIBO Rate) against assets held by, deposits or other liabilities in or for the account of, advances or loans by any Lender;

(ii)shall impose on any Lender any other condition not otherwise contemplated hereunder affecting this Agreement or Loans made by such Lender; or

(iii)shall subject the Lender to any taxes other than Taxes covered by Section 2.4(d) or Excluded Taxes,

and the effect of any of the foregoing is to increase the cost to such Lender of making or maintaining any such Loan or Commitment or to reduce any amount received or receivable by such Lender hereunder (whether of principal, interest or otherwise), then the Borrower shall promptly, but in no event later than ten (10) Business Days’ after receipt of written demand therefor by such Lender (accompanied by a certificate from such Lender setting forth the amount of the incurred costs as determined by such Lender in good faith and which shall be conclusive absent manifest error), pay to such Lender such additional amounts sufficient to reimburse such Lender for such increased costs or to compensate such Lender for such reduced amounts, to the extent actually incurred by or suffered by such Lender.

(b)Capital Requirements.  If any Lender reasonably determines that (i) any Change of Law that affects or would affect the amount of capital or liquidity required or expected to be maintained by such Lender or on the Lender’s holding company (a “Capital Adequacy Requirement”) and (ii) the amount of capital or liquidity maintained by such Lender or such Lender’s holding company which is attributable to or based upon the Loans, the Commitments or this Agreement must be increased as a result of such Capital Adequacy Requirement (taking into account such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), the Borrower shall promptly, but in no event later than ten (10) Business Days’ after receipt of written demand therefor by such Lender (accompanied by a certificate from such Lender setting forth the amount of the incurred costs as determined by such Lender in good faith and which shall be conclusive absent manifest error), pay such amounts as such Lender shall determine are necessary to compensate such Lender for the increased costs to such Lender of such increased capital or liquidity.

(c)Notice.  Each Lender will notify the Borrower of any event occurring after the date of this Agreement that will entitle such Lender to compensation pursuant to this Section 2.6, as promptly as is practicable.  Failure or delay on the part of any Lender to demand compensation pursuant to this Section 2.6 shall not constitute a waiver of such Lender’s right to demand such compensation; provided, that the Borrower shall not be required to compensate a Lender pursuant

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to this Section 2.6 for any increased costs or reductions incurred more than one hundred and eighty (180) days prior to the date that such Lender notifies the Borrower of the Change of Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; providedfurther that, if the Change of Law giving rise to such increased costs or reductions is retroactive, then the one hundred eighty (180) day period referred to above shall be extended to include the period of retroactive effect thereof.  The protection of this Section 2.6 shall be available to each Lender regardless of any possible contention of the invalidity or inapplicability of the Change of Law that shall have occurred or been imposed.

(d)Change in Legality.  Notwithstanding any other provision of this Agreement, if any Change of Law shall make it unlawful for any Lender to make or maintain a LIBO Loan or to give effect to its obligations as contemplated hereby with respect to any LIBO Loan, then, by written notice to the Borrower and to the Administrative Agent:

(i)such Lender may declare that LIBO Loans will not thereafter (for the duration of such unlawfulness) be made by such Lender hereunder (or be continued), whereupon any request for a Borrowing (or any continuation of a Borrowing for an additional Interest Period) shall, as to such Lender only, be deemed a request for a Base Rate Loan (or a continuation of a LIBO Loan as a Base Rate Loan), unless such declaration shall be subsequently withdrawn; and

(ii)such Lender may require that all outstanding LIBO Loans made by it be converted to Base Rate Loans, in which event all such LIBO Loans shall be automatically converted to Base Rate Loans as of the effective date of such notice as provided below.

In the event any Lender shall exercise its rights under clauses (i) or (ii) above, all payments and prepayments of principal that would otherwise have been applied to repay the LIBO Loans that would have been made by such Lender or the converted LIBO Loans of such Lender shall instead be applied to repay the Base Rate Loans made by such Lender in lieu of, or resulting from the conversion of, such LIBO Loans.  For purposes of this clause (d), a notice to the Borrower by any Lender shall be effective as to each LIBO Loan made by such Lender, if lawful, on the last day of the Interest Period then applicable to such LIBO Loan (which shall be a Scheduled Payment Date); in all other cases such notice shall be effective on the date of receipt by the Borrower.

2.7Funding Losses

.  The Borrower shall indemnify each Lender against any loss or expense that such Lender may sustain or incur as a consequence of (a) any event, other than a default by such Lender in the performance of its obligations hereunder, which results in (i) such Lender receiving or being deemed to receive any amount for the prepayment of principal of any Loan (other than a Base Rate Loan) prior to the end of the Interest Period in effect therefor or (ii) any Loan (other than a Base Rate Loan) to be made by such Lender not being made after notice, (b) any default in the making, or failure to make on the date and in the amount notified of any payment or prepayment required to or permitted to be made by or on behalf of the Borrower hereunder on any Loan (other than a Base Rate Loan) (any of the events referred to in this clauses (a) and (b) being called a “Breakage Event”).  In the case of any Breakage Event, such loss shall include an amount equal to the excess, as reasonably determined by such Lender, of (A) its costs of obtaining funds for the Loan that is the subject of such Breakage Event for the period from the date of such Breakage Event to the last day of the Interest Period in effect (or that would have been

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in effect) for such Loan over (B) the amount of interest likely to be realized by such Lender in redeploying the funds released or not utilized by reason of such Breakage Event for such period.  A certificate of any Lender setting forth any amount or amounts which such Lender is entitled to receive pursuant to this Section 2.7 shall be delivered to the Borrower and shall be conclusive absent manifest error.

2.8Alternate Office; Minimization of Costs

.

(a)Any Lender may designate a Lending Office other than that set forth in Annex 2 and may assign all of its interests under the Financing Documents, and  its Notes (if any), to such Lending Office, provided that such designation and assignment do not at the time of such designation and assignment increase the reasonably foreseeable liability of the Borrower under Section 2.4(d), Section 2.6(a) or Section 2.6(b).

(b)If the Borrower is required to pay additional amounts under Section 2.4(d) or any Lender requests compensation under Section 2.6(a) or Section 2.6(b), then such Lender shall, to the extent not inconsistent with the internal policies of such Lender and any applicable legal or regulatory restrictions, use reasonable efforts to (i) file any certificate or document reasonably requested in writing by the Borrower or (y) to assign its rights and delegate and transfer its obligations hereunder to another of its offices, branches or affiliates, if such filing or assignment would avoid or minimize any additional costs, taxes, expense or obligation which would otherwise be imposed on the Borrower pursuant to Section 2.4(d), Section 2.6(a) or Section 2.6(b); provided, however, that no Lender shall be required to take any such action that, as determined by such Lender in its sole discretion, would adversely affect the making, issuing, funding or maintaining of such Loans or the interests of such Lender; provided, further, however, that such efforts shall not cause the imposition on any Lender of any additional costs or expenses, unless the Borrower agrees to pay such additional costs and expenses.

(c)If (i) the Borrower incurs any liability to a Lender under Section 2.4(d), Section 2.6(a) or Section 2.6(b) or (ii) any Lender is a Defaulting Lender, then the Borrower, at its sole expense (including with respect to the processing and recordation fee referred to in Section 10.4) may, upon notice to such Lender and the Administrative Agent require the Lender subject to this Section 2.8(c) to assign and delegate, without recourse, all its interests, rights and obligations under this Agreement and under the Loans and Commitments of the Lender being replaced hereunder to an Eligible Assignee that shall assume all those rights and obligations; provided, however, that (x) such assignment shall not conflict with any law, rule or regulation or order of any court or other governmental authority having valid jurisdiction, (y) the Borrower shall have received the prior written consent of the Administrative Agent, which consent shall not be unreasonably withheld or delayed, and (z) the Borrower or such assignee shall have paid to the replaced Lender in immediately available funds an amount equal to the sum of the principal of and interest accrued to the date of such payment on the outstanding Loans of such Lender plus all fees and other amounts accrued for the account of such Lender hereunder with respect thereto (including any amounts under Sections 2.6 and 2.7).  A Lender subject to this Section 2.8(c) shall not be required to make any such assignment and delegation if  (A) prior to any such assignment and delegation the circumstances entitling the Borrower to require such assignment and delegation have ceased to apply (including as a result of any action taken by such Lender pursuant to clause (b) above), (B) if such Lender shall waive its right to claim compensation or payment under Section 2.4(d), Section

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2.6(a) or Section 2.6(b) or (C) if any Default or Event of Default then exists.  Each Lender hereby grants to the Administrative Agent an irrevocable power of attorney (which power is coupled with an interest) to execute and deliver, on behalf of such Lender, as assignor, any Assignment and Acceptance necessary to effectuate any assignment of such Lender’s interests hereunder in the circumstances contemplated by this Section 2.8(c). Nothing in this Section 2.8 shall be deemed to prejudice any rights that the Borrower may have against any Lender that is a Defaulting Lender. The Administrative Agent and each Lender hereby agree to cooperate with the Borrower to effectuate the assignment of any Defaulting Lender’s interest hereunder.

2.9Increase in Loan Facility

.

(a)Request for Increase.  If the Available Borrowing Base exceeds $200 million at any time following the Closing Date and the Borrower is in compliance with the Borrowing Base Requirement, the Borrower may request an increase in Commitments upon written notice to the Administrative Agent in the form of Exhibit D (each such notice, a “Incremental Loan Commitment Increase Notice”), pursuant to which the Borrower will request the Lenders to provide on a pro rata basis, or, in the event one or more of the Lenders declines to provide its pro rata share of the requested amount of the increase in commitments pursuant to Section 2.9(b), permit other existing Lenders (on a non-pro rata basis) or New Lenders (defined below) to provide, new Commitments to increase the Total Commitment Amount (each such new Commitment, an “Incremental Loan Commitment”); provided, that:

(i)the Incremental Loan Commitment Increase Notice shall set forth (A) the aggregate amount of the Incremental Loan Commitments requested, (B) the date on which such Incremental Loan Commitments are requested to be effective (“Incremental Loan Increase Date”), which shall not be less than sixty (60) days after the date of such notice, (C) the requested maturity date and interest rate of Incremental Loans related to such Incremental Loan Commitments, and (D) the upfront fees the Borrower proposes to pay to participating Lenders in such Incremental Loan Commitment,

(ii)all Incremental Loan Commitments hereunder shall not exceed $175,000,000 (the “Incremental Loan Amount”) in the aggregate,

(iii)any request for an Incremental Loan Commitment shall be in a minimum amount of (x) $50,000,000 or (y) such lesser amount equal to the Incremental Loan Amount minus the Incremental Loan Commitments granted on or prior to the date of such request,

(iv)the terms of each requested Incremental Loan Commitment are identical to those applicable to the original Commitment, other than with respect to (x) maturity (provided that the Loan Maturity Date of any Incremental Loan shall not be earlier than the Loan Maturity Date of the Initial Loans), (y) interest rates, and (z) upfront fees,

(v)if the All-In Yield applicable to such Incremental Loan Commitment shall be greater than the applicable All-In Yield payable with respect to any Loans (other than Incremental Loans made pursuant to such Incremental Loan Commitment) by more than 50 basis points per annum (the amount of such excess, the “Yield Differential”) then the

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interest rate (together with, as provided in the proviso below, the LIBO Rate or Base Rate floor) with respect to such Loans shall be increased by the applicable Yield Differential; provided, that, if any Incremental Loan Commitments include a LIBO Rate or Base Rate floor that is greater than the LIBO Rate or Base Rate floor applicable to any existing Loans, such differential between interest rate floors shall be included in the calculation of All-In Yield for purposes of this clause ‎(v) but only to the extent an increase in the LIBO Rate or Base Rate Floor applicable to the existing Loans would cause an increase in the interest rate then in effect thereunder, and in such case the LIBO Rate and Base Rate floors (but not the Applicable Margin) applicable to the existing Loans shall be increased to the extent of such differential between interest rate floors; providedfurther that any undrawn or commitment fees applicable to such Incremental Loan Commitments shall be included in the foregoing calculation solely to the extent such fees exceed those applicable to the Loans by more than 50 basis points per annum;

(vi)no request for an Incremental Loan Commitment may be made after the end of the Availability Period,

(vii)the Borrower shall provide to the Administrative Agent such information that is reasonably requested by the Administrative Agent on behalf of the Lenders to evaluate the request for an Incremental Loan Commitment,

(viii)on the date of the request by the Borrower for an Incremental Loan Commitments, the conditions set forth in Section 2.9(e)(i) shall have been satisfied, and

(ix)no Lender shall be obligated to provide any new or additional Commitment.

(b)Lender Elections to Increase.  Upon receipt of an Incremental Loan Commitment Increase Notice pursuant to Section 2.9(a), the Lenders shall have thirty (30) days to accept an offer to participate in the requested Incremental Loan Commitments by delivering to the Administrative Agent confirmation substantially in the form attached as Exhibit E (each, an “Increasing Incremental Lender Confirmation”).  Any Lender may accept or decline such offer in any amount up to its pro rata share of the aggregate amount of the Incremental Loan Commitments requested in such Lender’s sole and absolute discretion.  In the event that any one or more Lenders declines to increase its Commitment by its full pro rata share of the Incremental Loan Commitments requested, the Administrative Agent shall offer the other Lenders the opportunity to further increase their Commitments in an aggregate amount equal to the remaining requested increase.

(c)Notification by Administrative Agent; Additional Lenders.  The Administrative Agent shall notify the Borrower and each Lender of the Lenders’ responses to each request made hereunder.  If the Lenders determine not to increase their Commitments in the amount of the requested increase, then in order to achieve the full amount of a requested increase, subject to (other than in the case of Eligible Assignees which are federally regulated banking institutions) the approval of the Administrative Agent (which approval shall not be unreasonably withheld), the Borrower may then invite additional Eligible Assignees to become Lenders on the same terms that were offered to the existing Lenders by executing a New Lender Accession Agreement (each such Eligible Assignee entering into a New Lender Accession Agreement, a “New Lender”). For the

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avoidance of doubt, the Borrower may not invite any additional Eligible Assignee to become a New Lender until all Lenders existing at such time have declined to increase their Commitments in an aggregate amount equal to the requested increase.

(d)Effective Date and Allocations.  On each Incremental Loan Increase Date, upon the fulfillment of the conditions set forth in Section 2.9(e), the Administrative Agent shall notify the Lenders (including any New Lenders) and the Borrower, on or before 11:00 a.m., New York time, of the occurrence of the requested Incremental Loan Commitments to be effected on such Incremental Loan Increase Date and shall record in the Register with the relevant information with respect to each Lender that executes an Incremental Lender Confirmation and each New Lender on such date.

(e)Conditions to Effectiveness of Increase.  Any Incremental Loan Commitments are subject to the occurrence of the Closing Date and the satisfaction of each of the following conditions on such Incremental Loan Increase Date:

(i)no Default or Event of Default shall have occurred and be continuing;

(ii)immediately before and after giving effect to such Incremental Loan Commitments, the Borrower is in pro forma compliance with the Borrowing Base Requirement;

(iii)no Repayment Event has occurred and remains ongoing;

(iv)the Available Borrowing Base exceeds $200 million;

(v)no New Lenders are Investors or Sponsor;

(vi)since the delivery of the most recent financial statements of the Borrower delivered pursuant to Section 5.3, no Material Adverse Effect has occurred or is continuing;

(vii)the representations and warranties set forth in Section 4.1 and in each other Financing Document shall be true and correct in all material respects as of the Incremental Loan Increase Date (unless such representation or warranty relates solely to an earlier date, in which case it shall have been true and correct in all material respects as of such earlier date);

(viii)the Administrative Agent shall have received a duly executed Incremental Loan Commitment Increase Notice and any fee letters entered into in connection with such Incremental Loan Commitments;

(ix)the Administrative Agent shall have received for its own account, and for the account of each Incremental Loan Lender or New Lender entitled thereto, all fees due and payable as of the Incremental Loan Increase Date pursuant to Section 2.3, and all costs and expenses, including costs, fees and expenses of legal counsel, for which invoices have been presented; provided that costs, fees and expenses of legal counsel may be subject to caps as agreed to between the Borrower and the relevant party;

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(x)if requested by an Incremental Loan Lender providing any portion of such Incremental Loan Commitments on such Incremental Loan Increase Date, such Incremental Loans shall be evidence by a Note; and

(xi)the Borrower shall deliver to the Administrative Agent a certificate of the Borrower dated as of the Incremental Loan Increase Date signed by a Responsible Officer of the Borrower (x) certifying and attaching the resolutions adopted by the Borrower approving or consenting to such increase, and (y) certifying that each of the conditions set forth in this Section 2.9(e) have been met as of the Incremental Loan Increase Date.

(f)Upon any Incremental Loan Increase Date on which Incremental Loan Commitments are effected pursuant to this Section 2.9, (a) each of the Lenders as of such Incremental Loan Increase Date shall assign to each of the lenders providing such Incremental Loan Commitments and each of the lenders providing such Incremental Loan Commitments shall purchase from each of the Lenders, at the principal amount thereof plus accrued and unpaid interest as of the date of such assignment, such interests in the Commitments and Loans outstanding on such Incremental Loan Increase Date as shall be necessary in order that, after giving effect to all such assignments and purchases, such Commitments and Loans will be held by existing Lenders and lenders providing such Incremental Loan Commitments ratably in accordance with their Commitments after giving effect to the addition of such Incremental Loan Commitments to the Commitments, (b) each Incremental Loan Commitment shall be deemed for all purposes a Commitment and each Loan made thereunder shall be deemed, for all purposes, a Loan and (c) each lender providing such Incremental Loan Commitments shall become a Lender with respect to the Commitments and all matters relating thereto.  Notwithstanding anything to the contrary herein, no consent of the Borrower shall be required for any of the foregoing assignments and purchases. For the avoidance of doubt, the Administrative Agent and the Lenders hereby agree that the minimum borrowing and prepayment requirements in Section 2.1(a)(ii) and 2.1(f) of this Agreement shall not apply to the transactions effected pursuant to the immediately preceding sentence.

(g)For the avoidance of doubt, no Incremental Loan Commitments (if any) shall result in any adverse change to the Loan Maturity Date, interest rates and/or upfront fees applicable to the Closing Date Commitments of existing Lenders.

(h)Notwithstanding any Incremental Loan Commitments, the Administrative Agent shall retain all of its rights hereunder, including with respect to determining the Available Borrowing Base and approving new Subject Funds.

(i)In the event of any conflict between this Section 2.9 and Section 9.9 of this Agreement, this Section 2.9 shall control and govern.

2.10Eligible Structures; Addition of Subject Funds; Release of Subject Funds

.

(a)To the extent that the Available Borrowing Base is less than the Total Loan Commitment prior to the expiration of the Availability Period, and no Default (other than a Default that the Borrower has certified to the Administrative Agent it intends to cure by the inclusion of such Potential New Fund as a Subject Fund) or Event of Default has occurred and is continuing:

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(i)the Borrower may request the inclusion of additional potential Eligible Structures (each, a “Potential New Fund”); provided that:

(A) the Borrower shall make such request no fewer than (x) with respect to any Eligible Structure other than a Repeat Tax Equity Structure, forty-five (45) days prior to the expiration of the Availability Period and (y) with respect to any Repeat Tax Equity Structure, fifteen (15) Business Days prior to the expiration of the Availability Period, in each case, by delivery of written notice of its request for the inclusion of such Potential New Fund in the form attached hereto as Exhibit K (a “Potential New Fund Notice”);

(B) the Borrower shall not request, and Administrative Agent shall be under no obligation to review, more than one Potential New Fund (excluding Repeat Tax Equity Structures) at any one time;

(C) with respect to any Tax Equity Structure other than a Repeat Tax Equity Structure (which Tax Equity Structure, for the avoidance of doubt, shall conform to the applicable characteristics set forth in Appendix 11), the Administrative Agent shall have forty-five (45) days following the Borrower’s satisfaction of the conditions precedent set forth in Sections 3.4(a) and (b) to conduct due diligence and determine, in its reasonable discretion, (i) whether such Potential New Fund is acceptable and (ii) if so, in consultation with the Borrower and the Lenders whether to designate such Potential New Fund as a Cash-Sweep Fund or a Non-Cash-Sweep Fund in Appendix 4 and for all purposes under this Agreement; and

(D) with respect to Repeat Tax Equity Structures, the Administrative Agent shall have fifteen (15) Business Days following the Borrower’s satisfaction of the conditions precedent set forth in Sections 3.4(a) and (b) to conduct, or cause to be conducted, legal reviews and reviews of underlying Systems and Host Customers related to such Repeat Tax Equity Structure to the extent it deems such reviews appropriate; the Administrative Agent may, but so long as the Borrower makes the Tax Equity Representations shall be under no obligation to, conduct any due diligence with respect to such Potential New Fund and such Potential New Fund shall be included as a Subject Fund for all purposes hereunder following satisfaction of the applicable conditions precedent set forth in Section 3.4; and

(E) with respect to any Other Financed Structure, the Administrative Agent shall conduct due diligence for as long as it deems necessary and together with the Majority Lenders shall determine, in their reasonable discretion, whether such Other Financed Structure is acceptable.

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(ii)If following review of any such Potential New Fund in consultation with the Borrower, the Administrative Agent notifies the Borrower in writing that such Potential New Fund is acceptable for inclusion in the Available Borrowing Base, such Potential New Fund shall become a Subject Fund subject to the terms of the Financing Documents upon the satisfaction by Borrower of each of the conditions precedent set forth in Section 3.4.

(iii)Simultaneously with the satisfaction of the conditions precedent set forth in Section 3.4, the Administrative Agent shall update (A) Appendix 4 to include such new Subject Fund, its related Managing Member, and whether it is a Cash-Sweep Fund or a Non-Cash-Sweep Fund, (B) Appendix 5 to include such new Subject Fund’s Project Documents, (C) Schedule 1.1(b) to include the Responsible Officers of such Subject Fund, (D) Schedule 4.1(x) to reflect the Equity Interests related to such Subject Fund, (E) Schedule 4.1(f) to include any existing Debt of the Managing Member of such Subject Fund, (F) Schedule A of Appendix 7 to include any existing Debt of such Subject Fund, and (G) Schedule 6.7 to include the investments of all the Loan Parties related to such Subject Fund.  Notwithstanding anything to the contrary herein, as a one-time accommodation to the Loan Parties, the Administrative Agent and Lenders have agreed to designate the following Subject Funds as Non-Cash-Sweep Funds: (1) [***] and (2) [***].

(iv)For the avoidance of doubt, each Repeat Tax Equity Structure shall be designated as a Cash-Sweep Fund or a Non-Cash-Sweep Fund in accordance with the designation of the current Subject Fund to which it is substantially similar unless the Administrative Agent determines in its reasonable discretion in consultation with the Borrower and the Lenders that the provision(s) of such current Subject Fund that caused it to be designated a Cash-Sweep Fund or Non-Cash-Sweep Fund have been modified or eliminated so as to change the appropriate designation of such Repeat Tax Equity Structure.  Notwithstanding the foregoing, the Administrative Agent will determine on a de novo basis whether to designate any Repeat Tax Equity Structure that is substantially similar to either of [***] as a Cash-Sweep Fund or a Non-Cash-Sweep Fund and shall not be obligated to apply the same designation that was applied to [***].

(v)The Borrower will reimburse the Agents pursuant to Section 10.4 for their reasonable due diligence and legal expenses in connection with their review of any Potential New Fund (other than Repeat Tax Equity Structures).

(b)Subject to the final sentence of this Section 2.10(b), the Borrower may refinance the Actual Net Cash Flow arising from one or more Subject Funds in whole but not partially.  Upon the prepayment of principal or addition of Subject Funds or Systems by the Borrower in an amount such that Borrower will be in compliance with the Borrowing Base Requirement following the removal of the Net Cash Flow of a Subject Fund from the calculation of the Available Borrowing Base, as evidenced by a Borrowing Base Certificate delivered by Borrower to Administrative Agent giving pro forma effect to such prepayments or additions, such Subject Fund shall no longer be subject to the Financing Documents, and the Borrower shall be entitled to the release of the Collateral with respect to such Subject Fund.  Within five (5) Business Days of the release of such Collateral, Borrower shall cause the Managing Member related to such Subject Fund to no longer be a Subsidiary of Borrower by selling, winding up or otherwise disposing of (including, without

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limitation, transferring Borrower’s Equity Interests in such Managing Member to a third party) such Managing Member.

(c)

(i)To the extent that, the Available Borrowing Base is less than the Total Loan Commitment, and no Default (other than a Default that the Borrower has certified to the Administrative Agent it intends to cure by the addition of such Systems) or Event of Default has occurred and is continuing, the Borrower may request the inclusion of additional potential System(s) to existing Subject Funds by delivery of written notice of its request for the inclusion of such Systems in the form attached hereto as Exhibit L (a “New Systems Notice”) at least fifteen (15) Business Days prior to the requested date of inclusion set forth in such notice; provided that at least ten (10) Business Days shall have passed since delivery of the last New Systems Notice.

(ii)The Administrative Agent shall have fifteen (15) Business Days following the Borrower’s satisfaction of the conditions precedent set forth in Sections 3.3(a) and (b) to conduct due diligence  with respect to such new System(s).

(iii)The Borrower will reimburse the Administrative Agent pursuant to Section 10.4 for its reasonable due diligence and legal expenses in connection with such review of any new Systems.

(iv)If the conditions precedent set forth in Section 3.3 are satisfied with respect to such Systems, then such new Systems will be included in the appropriate Subject Fund.

2.11Defaulting Lenders

.

(a)Adjustments.  Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender, to the extent permitted by applicable Law:

(i)fees shall cease to accrue on the unused portion of the Commitment of such Defaulting Lender pursuant to Section 2.3(a); and

(ii)the Loans and unused Commitments of such Defaulting Lender shall not be included in determining whether the Majority Lenders have taken or may take any action hereunder (including any right to approve or disapprove to any amendment, waiver or consent pursuant to Section 9.12).

(b)Defaulting Lender Waterfall.  Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article 8 or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 10.2 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as

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required by this Agreement, as determined by the Administrative Agent; third, if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order to satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement; fourth, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; fifth, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and sixth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made at a time when the conditions set forth in Section 3.2 were satisfied or waived, such payment shall be applied solely to pay the Loans of all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of such Defaulting Lender until such time as all Loans are held by the Lenders pro rata in accordance with the Commitments hereunder. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender pursuant to this Section 2.11(b) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

(c)Defaulting Lender Cure.  If the Borrower and the Administrative Agent agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans to be held on a pro rata basis by the Lenders in accordance with their Applicable Percentages, whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

2.12Refinancing Loans.

(a)The Borrower may by written notice to Administrative Agent request the establishment of one or more additional tranches of loans under this Agreement (“Refinancing Loans”) to refinance outstanding Loans (such existing Loans being refinanced, the “Refinanced Debt”).  Each such notice shall (1) specify (x) the date (each, a “Refinancing Effective Date”) on which the Borrower proposes that the Refinancing Loans shall be made, which shall be a date not less than sixty (60) days after the date on which such notice is delivered to the Administrative Agent, (y) the type and amount of outstanding Loans the Borrower is requesting to refinance, and (z) the other proposed terms of the Refinancing Loans and (2) certify that the Borrower in compliance with the Borrowing Base Requirement; provided that:

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(i)before and after giving effect to the borrowing of such Refinancing Loans on the Refinancing Effective Date each of the conditions set forth in Section 3.1 and Section 3.2 shall be satisfied;

(ii)any request for Refinancing Loans shall be in an aggregate amount not less than $25,000,000;

(iii)the terms and conditions applicable to such Refinancing Loans shall be identical in all respects to the terms and conditions set forth in Appendix 1, Appendix 2 and Appendix 3 of this Agreement (and any related provision or definition under this Agreement or any other Financing Document) with respect to the subject matter thereof;

(iv)such Refinancing Loans have a maturity no earlier than the Refinanced Debt;

(v)such Refinancing Loans shall not have a greater principal amount than the principal amount of the Refinanced Debt;

(vi)except as described in clauses (iii), (iv) and (v) above, all other terms applicable to such Refinancing Loans as set forth in the Refinancing Amendment (other than provisions relating to original issue discount, upfront fees and interest rates which shall be as agreed between the Borrower and the lenders providing such Refinancing Loans) shall be substantially identical to, or less favorable to the lenders providing such Refinancing Loans than, those applicable to the then outstanding Loans except to the extent such covenants and other terms apply solely to any period after the Latest Maturity Date of the Loans in effect on the Refinancing Effective Date immediately prior to the borrowing of such Refinancing Loans;

(vii)the Loan Parties and the Collateral Agent shall enter into such amendments to the Collateral Documents as may be requested by the Collateral Agent (which shall not require any consent from any Lender) in order to ensure that the Refinancing Loans are provided with the benefit of the applicable Collateral Documents and shall deliver such other documents, certificates and opinions of counsel in connection therewith as may be requested by the Collateral Agent; and

(viii)On the Refinancing Effective Date, the net proceeds of the Refinancing Loans shall be applied to the repayment of the then outstanding Loans.

(b)In connection with each Refinancing Request, the Lenders shall have thirty (30) days to accept an offer to provide the requested Refinancing Loans in an amount up to its pro rata share of the outstanding Loans under this Agreement by delivering written confirmation to the Administrative Agent, and in the event that any one or more Lenders declines to provide Refinancing Loans in an amount equal to its full pro rata share of the Refinancing Loans requested, the Administrative Agent shall offer the other Lenders the opportunity to provide further Refinancing Loans in an aggregate amount equal to the remaining requested amount; during the foregoing period, the Borrower shall not approach any other Person in connection with its Refinancing Request. Thereafter, the Borrower may approach any Lender or any other Person that

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would be a permitted Assignee pursuant to Section 9.15 (without consideration of any Borrower approval required by Section 9.15) to provide all or a portion of the requested Refinancing Loans (each, together with any Lender who delivers a confirmation pursuant to the first sentence of this clause (b), a “Refinancing Lender”); provided that any Lender offered or approached to provide all or a portion of the Refinancing Loans may elect or decline, in its sole discretion, to provide a Refinancing Loan. Each Refinancing Loan incurred on a Refinancing Effective Date shall have identical terms and conditions to each other Refinancing Loan incurred on such Refinancing Effective Date. Any Refinancing Loan made on any Refinancing Effective Date shall be designated Refinancing Loans for all purposes of this Agreement.

(c)The Refinancing Loans shall be established pursuant to an amendment to this Agreement among the Borrower, the Administrative Agent and the Refinancing Lenders providing such Refinancing Loans (a “Refinancing Loan Amendment”), which shall be consistent in all respects with the provisions set forth in paragraph (a) above. Each of the parties hereto hereby agrees that this Agreement and the other Financing Documents may be amended pursuant to a Refinancing Amendment, without the consent of any other Lenders, to the extent (but only to the extent) necessary to (i) reflect the existence and terms of the Refinancing Loans incurred pursuant thereto and (ii) effect such other amendments to this Agreement and the other Financing Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Borrower, to effect the provisions of this Section 2.12, and the Required Lenders hereby expressly authorize the Administrative Agent to enter into any such Refinancing Amendment. Each Refinancing Loan Amendment shall be binding on the Lenders, the Loan Parties and the other parties hereto.

(d)Notwithstanding anything to the contrary herein, the Borrower shall not prepay any Refinancing Loans until all Initial Loans have been indefeasibly paid in full in cash.

2.13Extended Loans

.

(a)The Borrower may by written notice to Administrative Agent request that all or a portion of the Loans (an “Existing Loans”) be amended to extend the scheduled maturity date(s) of any payment of principal with respect to all or a portion of any principal amount of such Loans (any such Loans which have been so amended, “Extended Loans”).  In order to establish any Extended Loans, the Borrower shall provide a notice to the Administrative Agent (who shall provide a copy of such notice to each of the Lenders) (an “Extension Request”) setting forth the proposed terms of the Extended Loans to be established which shall be identical to the Existing Loans except that:

(i)the terms and conditions applicable to such Extended Loans shall be identical in all respects to the terms and conditions set forth in Appendix 1, Appendix 2 and Appendix 3 of this Agreement (and any related provision or definition under this Agreement or any other Financing Document) with respect to the subject matter thereof;

(ii)the interest margins with respect to the Extended Loans may be different than the interest margins for the Existing Loans being converted and upfront fees may be paid to the Extending Lenders, in each case, to the extent provided in the applicable Loan Extension Amendment;

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(iii)the Loan Extension Amendment may provide for other covenants and terms that apply solely to any period after the Latest Maturity Date of all Loans in effect on the effective date of the Loan Extension Amendment immediately prior to the establishment of such Extended Loans; and

(iv)no Extended Loans may be optionally prepaid prior to the date on which the Loans from which they were converted are repaid in full unless such optional prepayment is accompanied by a pro rata optional prepayment of the Loans that were not converted.

Any Extended Loans converted pursuant to any Extension Request shall be designated Extended Loans for all purposes of this Agreement; provided that any Extended Loans converted may, to the extent provided in the applicable Loan Extension Amendment, be designated as an increase in any previously established Extended Loans.

(b)The Borrower shall provide the applicable Extension Request to all Lenders of the Loans that are subject to the Extension Request at least thirty (30) days prior to the date on which Lenders with such Loans being converted are requested to respond.  No Lender shall have any obligation to agree to have any of its Loans of such class converted into Extended Loans pursuant to any Extension Request.  Any Lender (an “Extending Lender”) wishing to have all or a portion of its Loans converted into Extended Loans shall notify the Administrative Agent (an “Extension Election”) on or prior to the date specified in such Extension Request of the amount of its Loans which it has elected to request be converted into Extended Loans (subject to any minimum denomination requirements reasonably imposed by the Administrative Agent).  In the event that the aggregate amount of Loans being converted exceeds the amount of Extended Loans requested pursuant to the Extension Request, Loans subject to Extension Elections shall be converted to Extended Loans on a pro rata basis based on the amount of Loans included in each such Extension Election.

(c)Extended Loans shall be established pursuant to an amendment (a “Loan Extension Amendment”) to this Agreement among the Borrower, the Administrative Agent and each Extending Lender providing an Extended Loan thereunder which shall be consistent with the provisions set forth in paragraph (a) above (but which shall not require the consent of any other Lender).  Each Loan Extension Amendment shall be binding on the Lenders, the Loan Parties and the other parties hereto. In connection with any Loan Extension Amendment, the Loan Parties and the Collateral Agent shall enter into such amendments to the Collateral Documents as may be reasonably requested by the Collateral Agent (which shall not require any consent from any Lender) in order to ensure that the Extended Loans are provided with the benefit of the applicable Collateral Documents and shall deliver such other documents, certificates and opinions of counsel in connection therewith as may be requested by the Collateral Agent.

ARTICLE 3

CONDITIONS PRECEDENT

3.1Conditions Precedent to the Closing Date

.  The obligation of each Lender to make Loans and the effectiveness of this Agreement are subject to the prior satisfaction of each of the

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following conditions, in each case to the satisfaction of the Administrative Agent and each of the Lenders (unless waived pursuant to Section 9.12(a)) on or prior to the Closing Date:

(a)Delivery to the Agents of each of the following Financing Documents, each duly executed and delivered by the parties thereto:

(i)the Original Loan Agreement;

(ii)the Original CADA;

(iii)the Member Pledge;

(iv)the Security Agreement;

(v)the Fee Letters;

(vi)the Tax Equity Required Consents (if any);

(vii)the LLC Agreements (amended and restated to comply with the provisions of this Agreement, as necessary); and

(viii)the Notes (if requested by a Lender).

(b)Each representation and warranty set forth in Section 4.1 is true and correct in all material respects as of the Closing Date, other than those representations and warranties which are modified by materiality by their own terms, which shall be true and correct in all respects as of the Closing Date (unless such representation or warranty relates solely to an earlier date, in which case it shall have been true and correct in all material respects as of such earlier date).

(c)As of the Closing Date, no event shall have occurred and be continuing or would result from the consummation of the transactions contemplated by this Agreement on the Closing Date that would constitute a Default or an Event of Default under this Agreement.

(d)Delivery to the Administrative Agent and each Lender of the following:

(i)an omnibus secretary’s certificate, satisfactory in form and substance to the Administrative Agent, from Borrower Member, signed by an authorized Responsible Officer and dated as of the Closing Date, attaching and certifying as to the Organizational Documents of each Loan Party (which, to the extent filed with a Governmental Authority, shall be certified as of a recent date by such Governmental Authority), and attaching and certifying as to the resolutions of the governing body of each Loan Party, the good standing, existence or its equivalent of each Loan Party and of the incumbency of one or more Responsible Officers of each Loan Party;

(ii)a certificate executed by a Responsible Officer of the Borrower certifying to (A) the representations and warranties made by each Loan Party in each Financing Document to which it is a party being true and correct in all material respects as of the Closing Date (unless such representation or warranty relates solely to an earlier date, in

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which case it shall have been true and correct in all material respects as of such earlier date), (B) the absence of a Default or an Event of Default, (C) the absence of any (x) material breach by any Loan Party of any Material Project Documents to which it is a party or (y) breach of any Other Documents that could have a Material Adverse Effect, (D) the absence of any Bankruptcy Event with respect to anyLoan Party and any Subject Fund in which such Loan Party owns an interest, and (E) the satisfaction (or waiver by the Administrative Agent and each Lender) of all conditions precedent to the Closing Date in accordance with the terms and conditions hereof;

(iii)a certificate executed by a Responsible Officer of the Borrower certifying to (A) the absence of a Default or an Event of Default with respect to Borrower Member or Vivint Solar Parent, (B) the absence of any Bankruptcy Event with respect to Borrower Member or Vivint Solar Parent;

(iv)an opinion, dated as of the Closing Date, of Simpson Thacher & Bartlett LLP, counsel to the Loan Parties, in form and substance reasonably acceptable to the Agents and each Lender; and

(v)an opinion, dated as of the Closing Date, of Simpson Thacher & Bartlett LLP, special bankruptcy counsel to the Loan Parties, in form and substance reasonably acceptable to the Agents and each Lender.

(e)The Collateral Documents shall have been duly executed and delivered by each Loan Party that is to be a party thereto, together with (x) certificates representing the Equity Interests of the Borrower, the Equity Interests of each Managing Member and each Equity Interest owned by any Managing Member in another Person accompanied, in each case,  by undated stock powers executed in blank and (y) documents and instruments to be recorded or filed that the Administrative Agent may deem reasonably necessary to perfect, record and file in the appropriate jurisdictions.

(f)The Administrative Agent and the Collateral Agent shall have received (A) searches of UCC filings in the jurisdiction of incorporation or formation, as applicable, of each Loan Party and each jurisdiction where a filing would need to be made in order to perfect the security interest of the Collateral Agent (for the benefit of the Secured Parties) in the Collateral, (B) copies of the financing statements on file in such jurisdictions and evidence that no Liens exist other than Permitted Liens and (C) copies of tax lien, judgment and bankruptcy searches in such jurisdictions.

(g)The UCC financing statements relating to the Collateral being secured as of the Closing Date shall have been duly filed in each office and in each jurisdiction where required in order to create and perfect the first Lien and security interest set forth in the Collateral Documents.  The Borrower shall have properly delivered or caused to be delivered to the Collateral Agent all Collateral that requires perfection of the Lien and security interest described above by possession or control, including delivery of original certificates representing all issued and outstanding Equity Interests in the Borrower, each Managing Member and each Equity Interest owned by any Managing Member in another Person along with blank transfer powers and proxies.

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(h)All amounts required to be paid to or deposited with the Administrative Agent, the Collateral Agent, the Depositary or any Lender under this Agreement, the Fee Letters, or any other Financing Document, or under any separate agreement with such parties, and all taxes, fees and other costs payable in connection with the execution, delivery and filing of the documents and instruments required to be filed pursuant to this Section 3.1, shall have been paid in full (or in connection with such taxes, fees (other than fees payable to the Lenders or the Agents) and costs, the Borrower shall have made other arrangements acceptable to the Agents, the Depositary or such Lender(s), as the case may be, in their sole discretion).

(i)The Agents and Lenders shall have received all such documentation and information requested by the Agents and the Lenders that is necessary (including the names and addresses of the Borrower, taxpayer identification forms, name of officers/board members, documents and copies of government-issued identification of the Borrower and each other Loan Party (or owners thereof) for the Agents and the Lenders to identify the Borrower and each other Loan Party (or owners thereof)  in accordance with the requirements of the Patriot Act (including the “know your customer” and similar regulations thereunder).

(j)All Accounts required to be open as of the Closing Date under the CADA (including the Interest Reserve Account) shall have been opened in the name of the Borrower and each Managing Member.

(k)The expenses incurred and invoiced as of or prior to the Closing Date shall have been paid by the Borrower or its Affiliates in accordance with Section 10.4.

(l)The Borrower shall have delivered an unaudited financial statement in form and substance satisfactory to the Administrative Agent.

(m)The Borrower shall have obtained all approvals (to the extent required to have been obtained by such time) and all consents, including any applicable Tax Equity Required Consents, modifications to Project Documents or Organizational Documents of any Subject Fund, in each case that are necessary for its entry into the Financing Documents to which it is a party and implementation of the transactions contemplated in the Financing Documents, each of which is listed on Schedule 3.1(m).

(n)All outstanding obligations under the Bridge Loan Credit Facility have been indefeasibly paid in full in cash on the Closing Date.

(o)The Administrative Agent shall have received the Tax Equity Model for each Subject Fund.

3.2Conditions Precedent to Each Borrowing

.  The obligation of each Lender to make any Loans is subject to the prior satisfaction of the following conditions (unless waived pursuant to Section 9.12(a)); provided, however, that there shall be no duplication with respect to the satisfaction of conditions precedent under Sections 3.1 and 3.2 if the Closing Date and the initial Borrowing Date occur on the same Business Day:

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(a)Delivery of an Officer’s Certificate executed by a Responsible Officer of the Borrower in the form of Exhibit N, dated as of the Borrowing Date (a “Borrowing Date Certificate”):

(i)certifying that all representations and warranties made by each Loan Party under the Financing Documents are true and correct in all material respects as of such Borrowing Date, other than those representations and warranties which are modified by materiality by their own terms, which shall be true and correct in all respects as of such Borrowing Date (unless such representation or warranty relates solely to an earlier date, in which case it shall have been true and correct in all material  respects as of such earlier date); provided, however, that with respect to each System, the Borrower shall only be required to make the Eligibility Representations for such System as of the first Borrowing Date on or after the date such System becomes subject to the Financing Documents;

(ii)certifying that no Default or Event of Default has occurred and is continuing or will result from the Borrowing of such Loan;

(iii)certifying that the Borrower is in compliance with Section 6.1 as of the most recent Quarterly Date;

(iv)either (x) certifying that no Watched Funds exist or (y) setting forth a true, complete and correct list identifying each Subject Fund that is a Watched Fund and the condition or conditions that resulted in such Subject Fund being a Watched Fund;

(v)either (x) certifying that the Borrower is in compliance with the Borrowing Base Requirement or (y) setting forth details of the Borrower’s non-compliance with the Borrowing Base Requirement;

(vi)certifying that no Material Adverse Effect has occurred and is continuing since the Closing Date, and, to the Borrower’s Knowledge, no event or circumstance exists that could reasonably be expected to result in a Material Adverse Effect has occurred; and

(vii)certifying to the absence of any Bankruptcy Event with respect to Borrower Member or Vivint Solar Parent;

(b)Delivery to the Administrative Agent of a Borrowing Notice in accordance with Section 2.1(a)(iii) and a Borrowing Base Certificate and the Advance Model in accordance with Section 2.1(a)(iv) that are subsequently reviewed, accepted and approved by the Administrative Agent.

(c)The conditions precedent set forth in Sections 3.3 and 3.4, respectively, with respect to any new Systems or any new Subject Funds added to the Available Borrowing Base for the purpose of making such Borrowing have been satisfied in all respects as of the Borrowing Date (as determined by the Administrative Agent in its reasonable discretion);

(d)All Liens contemplated to be created and perfected in favor of the Collateral Agent pursuant to the Collateral Documents shall have been so created, perfected and filed in the

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applicable jurisdictions, including in respect of any Subject Fund that becomes subject to this Agreement on or prior to the making of such Loan.

(e)All amounts required to be paid to or deposited with any Secured Party hereunder or under any other Financing Document, and all taxes, fees and other costs payable in connection with the execution, delivery, recordation and filing of the documents and instruments required to be filed as a condition precedent to Section 3.1 and this Section 3.2, shall have been paid in full (or shall be paid concurrently with the occurrence of such Borrowing) or arrangements for the payment thereof from the Loans shall have been made, which arrangements shall be acceptable to the Agents and the Lenders.

(f)After giving effect to such proposed Borrowing and any Watched Fund identified in the Borrowing Base Certificate, the Borrower shall be in compliance with the Borrowing Base Requirement.

(g)After giving effect to such proposed Borrowing, the Interest Reserve Account shall be funded in an amount greater than or equal to the Interest Reserve Required Amount (as defined in the CADA).

(h)After giving effect to such proposed Borrowing, the Inspected-Only Reserve Account shall be funded in an amount greater than or equal to the Inspected-Only Reserve Required Amount (as defined in the CADA).

(i)The Administrative Agent shall have received a duly executed funds flow memorandum in form and substance acceptable to the Administrative Agent.

3.3Conditions Precedent to Addition of New Systems to Existing Subject Fund

.

The inclusion of either (i) any new System in an existing Subject Fund or (ii) any System as part of a new Subject Fund is subject to the satisfaction of the following conditions precedent:

(a)The Borrower has delivered to the Administrative Agent a New Systems Notice in accordance with Section 2.10(c)(i), together with the revised Advance Model with respect to the applicable Subject Fund;

(b)The Borrower has delivered to the Administrative Agent (or provided the Administrative Agent access to an online data room that contains true, complete and correct copies of the following) (i) a complete set of Customer Agreements for each such System,(ii) System Information for each such System and (iii) any other data, documentation, analysis or report reasonably requested by the Administrative Agent with respect to such Systems or the associated Host Customers and commercially available to the Borrower.

(c)Solely with respect to any new System in an existing Subject Fund, the Borrower has delivered to the Administrative Agent a certificate executed by a Responsible Officer of the Borrower (i) making the Eligibility Representations with respect to such Systems and (ii) making the Tax Equity Representations or Other Structure Representations, as applicable, with respect to the Subject Fund to which such Systems will be subject after giving effect to the inclusion of such Systems;

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(d)Each such System (i) is subject to and owned by an existing Subject Fund pursuant to the applicable Project Documents and (ii) (A) is an Inspected-Only System that is not a Stalled Inspected-Only System (as evidenced by satisfactory documentary evidence Borrower has made available, or caused to be made available, to the Administrative Agent), or (B) has received permission to operate from the local utility as evidenced by Borrower’s delivery or other notification to the Administrative Agent of such utility’s permission to operate either in writing or in such other form as is customarily given by such local utility and in the case of clause (B) has commenced operation;

(e)Such System would not be a Defaulted System if included in the Available Borrowing Base;

(f)After giving effect to the inclusion of any such System, the average FICO Score for all Host Customers in all Subject Funds subject to this Agreement is at least 720; and

(g)The Administrative Agent has updated Appendix 4 and/or Appendix 5, as appropriate to reflect the inclusion of the new Systems.

3.4Conditions Precedent to Inclusion of New Subject Fund

.

The inclusion of any Potential New Fund as a Subject Fund is subject to the satisfaction of the following conditions precedent:

(a)The Borrower has delivered a Potential New Fund Notice to the Administrative Agent in accordance with Section 2.10(b), together with the Tax Equity Model for the Potential New Fund and the revised Advance Model with respect to the Potential New Fund;

(b)The Borrower has delivered to the Administrative Agent (or provided the Administrative Agent (1) access to an online data room that contains true, complete and correct copies of the following) (i) a complete set of transaction documents for the Potential New Fund at least thirty (30) days prior to the requested date of inclusion set forth in the Potential New Fund Notice, (ii) if such Potential New Fund is a Repeat Tax Equity Structure, redline comparisons of the transactions documents for the potential new fund marked against the transaction documents of the current Subject Fund to which it is substantially similar, (iii) the information set forth in Section 3.3(b) with respect to each System included in such Potential New Fund and Host Customers and (iv) any other data, documentation, analysis or report reasonably requested by the Administrative Agent with respect to such Potential New Fund and (2) either (A) written confirmation that the transaction documents of such Potential New Fund do not contain any “cash sweep” provision (including, for example, any provision that would have the effect of (i) reducing the Managing Member’s cash distribution percentage, (ii) increasing the Investor’s cash distribution percentage or (iii) limiting, suspending or otherwise diverting cash distributions (whether temporarily, pursuant to an escrow or similar arrangement, or permanently) that would otherwise be payable to the Managing Member) or (B) written notice of the existence of such “cash sweep” provision and a written explanation of the events or circumstances that would give rise to a cash sweep;

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(c)If the Potential New Fund is not a Repeat Tax Equity Structure, or if the Potential New Fund is a Repeat Tax Equity Structure with respect to which the Administrative Agent has decided to conduct due diligence, in each case, the Administrative Agent has conducted due diligence with respect to such Potential New Fund in consultation with the Borrower and the Administrative Agent has given the Borrower written notice that the Administrative Agent has accepted such Potential New Fund and designated such Potential New Fund as a Cash-Sweep Fund, a Non-Cash-Sweep Fund or an Other Structure;

(d)The Administrative Agent has updated Appendix 4, Appendix 5, Schedule A to Appendix 7, Schedule 1.1(b), Schedule 3.1(m), Schedule 4.1(f), Schedule 4.1(x), and Schedule 6.7 pursuant to Section 2.10(a)(iii).

(e)The Borrower has delivered an Officer’s Certificate duly executed by a Responsible Officer of the Borrower making the Eligibility Representations with respect to each System in such Potential New Fund;

(f)Each System then subject to such Potential New Fund is included in such Potential New Fund pursuant to the Material Project Documents;

(g)The Borrower has made the Tax Equity Representations or Other Structure Representations, as the case may be, required to be made pursuant to Section 2.10(a);

(h)Such Potential New Fund would not be a Watched Fund if it were included in the Available Borrowing Base and no System subject to such Subject Fund would be a Defaulted System if included in the Available Borrowing Base;

(i)Borrower shall have delivered or caused to be delivered (A) with respect to any Tax Equity Structure, a Tax Equity Required Consent for such Subject Fund if required by the Agents and (B) with respect to any Other Structure, all consents required by the Agents; provided, however,  that the Tax Equity Required Consent for the USB 5 Fund may be delivered after the inclusion of the USB 5 Fund as a Subject Fund so long as it is delivered to the Administrative Agent promptly thereafter (it being understood that the Subject Fund Borrowing Base of the USB 5 Fund shall not be included in the Available Borrowing Base until such time as a satisfactory Tax Equity Required Consent is delivered);

(j)No Default or Event of Default has occurred and is continuing or will result from the inclusion of the Potential New Fund as a Subject Fund;

(k)The Managing Member of the Subject Fund is a wholly-owned direct subsidiary of Borrower;

(l)Each of the conditions set forth in Section 5.18 have been satisfied; and

(m)(1) Each of the conditions set forth in Sections 3.1(d), (e), (f), (g), (h), (i), (m) and (o), including matters related to corporate authority, perfection of the Secured Parties’ security interests in the Collateral, etc., shall have been satisfied with respect to such Subject Fund and (2) each of the conditions set forth in Sections 3.3(d), (e), (f) and (g) shall have been satisfied with respect to each System subject to such Subject Fund.

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(n)Notwithstanding anything to the contrary set forth herein, the parties hereto acknowledge and agree that no Inverted Lease Structure may be included as a Subject Fund  until such time as this Agreement and the other Financing Documents are amended to reflect terms and conditions relating to such Inverted Lease Structure that are mutually agreeable to the Borrower and all Lenders.

3.5Conditions Precedent to the Restatement Date

.  The obligation of each Lender to make Loans and the effectiveness of this Agreement are subject to the prior satisfaction of each of the following conditions, in each case to the satisfaction of the Administrative Agent and each of the Lenders (unless waived pursuant to Section 9.12(a)) on or prior to the Restatement Date:

(a)Delivery to the Agents of each of the following Financing Documents, each duly executed and delivered by the parties thereto:

(i)this Agreement;

(ii)the CADA; and

(iii)New Subject Fund Accession Agreements for Vivint Solar Fund XI Manager, LLC and Vivint Solar Fund XIII Manager, LLC.

(b)Each representation and warranty set forth in Section 4.1 is true and correct in all material respects as of the Restatement Date, other than those representations and warranties which are modified by materiality by their own terms, which shall be true and correct in all respects as of the Restatement Date (unless such representation or warranty relates solely to an earlier date, in which case it shall have been true and correct in all material respects as of such earlier date).

(c)As of the Restatement Date, no event shall have occurred and be continuing or would result from the consummation of the transactions contemplated by this Agreement on the Restatement Date that would constitute a Repayment Event, a Default or an Event of Default under this Agreement.

(d)Delivery to the Administrative Agent and each Lender of the following:

(i)a certificate executed by a Responsible Officer of the Borrower certifying to (A) the representations and warranties made by each Loan Party in each Financing Document to which it is a party being true and correct in all material respects as of the Restatement Date (unless such representation or warranty relates solely to an earlier date, in which case it shall have been true and correct in all material respects as of such earlier date), (B) the absence of a Repayment Event, a Default or an Event of Default, (C) the absence of any (x) material breach by any Loan Party of any Material Project Documents to which it is a party or (y) breach of any Other Documents that could reasonably be expected to have a Material Adverse Effect, (D) the absence of any Bankruptcy Event with respect to any of the following entities: (i) Borrower Member, (ii) Vivint Solar Parent, (iii) any Loan Party and (iv) any Subject Fund in which such Loan Party owns an interest, (E) that no Repayment Event, Default or Event of Default will result from transactions contemplated by this Agreement on the Restatement Date, and (F) the satisfaction (or

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waiver by the Administrative Agent) of all conditions precedent to the Restatement Date in accordance with the terms and conditions hereof;

(ii)a fully executed and complete Borrowing Base Certificate dated as of the Restatement Date; and

(iii)an opinion, dated as of the Restatement Date, Wilson Sonsini Goodrich & Rosati P.C., Skadden, Arps, Slate, Meagher & Flom LLP or another counsel reasonably acceptable to the Administrative Agent, as counsel to the Loan Parties, in form and substance reasonably acceptable to the Agents and each Lender.

(e)The UCC financing statements relating to the Collateral being secured as of the Restatement Date shall have been duly filed in each office and in each jurisdiction where required in order to create and perfect the first Lien and security interest set forth in the Collateral Documents.  The Borrower shall have properly delivered or caused to be delivered to the Collateral Agent all Collateral that requires perfection of the Lien and security interest described above by possession or control, including delivery of original certificates representing all issued and outstanding Equity Interests in the Borrower, each Managing Member and each Equity Interest owned by any Managing Member in another Person along with blank transfer powers and proxies.

(f)All amounts required to be paid to or deposited with the Administrative Agent, the Collateral Agent, the Depositary or any Lender under this Agreement, the Fee Letters, or any other Financing Document, or under any separate agreement with such parties, and all taxes, fees and other costs payable in connection with the execution, delivery and filing of the documents and instruments required to be filed pursuant to this Section 3.5, shall have been paid in full (or in connection with such taxes, fees (other than fees payable to the Lenders or the Agents) and costs, the Borrower shall have made other arrangements acceptable to the Agents, the Depositary or such Lender(s), as the case may be, in their sole discretion).

(g)All accrued and unpaid fees due under the Original Loan Agreement immediately prior to the Restatement Date, including Undrawn Fees, shall have been paid.

(h)All Accounts required to be open as of the Restatement Date under the CADA (including the Inspected-Only Reserve Account) shall have been opened in the name of the Borrower and each Managing Member.

(i)The expenses incurred and invoiced as of or prior to the Restatement Date shall have been paid by the Borrower or its Affiliates in accordance with Section 10.4.

(j)The Borrower shall have obtained all approvals (to the extent required to have been obtained by such time) and all consents, including any applicable Tax Equity Required Consents, modifications to Project Documents or Organizational Documents of any Subject Fund, in each case that are necessary for its entry into the Financing Documents to which it is a party and implementation of the transactions contemplated in the Financing Documents, each of which is listed on Schedule 3.1(m); provided, however,  that the Tax Equity Required Consent for the USB 5 Fund may be delivered after the Restatement Date so long as it is delivered to the Administrative Agent promptly thereafter (it being understood that the Subject Fund Borrowing Base of the USB

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5 Fund shall not be included in the Available Borrowing Base until such time as a satisfactory Tax Equity Required Consent is delivered).

(k)The Administrative Agent shall have received an updated Tax Equity Model for each Subject Fund.

(l)Each of the preconditions set forth in the CADA and the Accession Agreements described in Section 3.5(a)(iii), in each case, has been satisfied or otherwise waived.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES

4.1Representations and Warranties

.  (1) Each of the Loan Parties represents, solely as to itself (except that (A) Borrower shall make the representations as to Developer set forth in clause (q) of this Section 4.1, (B) the Managing Member related to a Subject Fund shall, individually and not collectively, make the representations as to each Subject Fund set forth in clauses (a)(v), (w), (x) and (y) of this Section 4.1) as to each Subject Fund to each Agent and the Lenders as of the date such representations are given, including each Borrowing Date and the Restatement Date, and (2) the Borrower, solely as to itself, each of the other Loan Parties and Vivint Solar Parent, shall make the representation set forth in clause (z) of this Section 4.1:

(a)Organization.

(i)Such Loan Party (other than the Borrower Member) (A) is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware; (B) is duly qualified, authorized to do business and in good standing in each other jurisdiction where the character of its properties or the nature of its activities makes such qualification necessary; (C) has all requisite limited liability company power and authority to own or lease the property it purports to own or lease and to carry on its business as now being conducted and as proposed to be conducted under the Operative Documents to which it is a party; and (D) has all requisite limited liability company power and authority to execute and perform its obligations under each of the Financing Documents and each other agreement or instrument contemplated thereby to which it is a party and to borrow hereunder.

(ii)The Borrower Member (A) is a corporation duly formed, validly existing and in good standing under the laws of the State of Delaware; (B) is duly qualified, authorized to do business and in good standing in each other jurisdiction where the character of its properties or the nature of its activities makes such qualification necessary; (C) has all requisite corporate power and authority to own or hold its interest in the Borrower and to carry on its business as now being conducted and as proposed to be conducted by it under the Operative Documents in respect of the Systems; and (D) has all requisite corporate power and authority to execute and perform its obligations under each of the Financing Documents and each other agreement or instrument contemplated thereby to which it is a party.

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(iii)The only holder of Equity Interests in the Borrower is the Borrower Member and (A) there are no outstanding Equity Interests with respect to the Borrower and (B) there are no outstanding obligations of the Borrower to repurchase, redeem, or otherwise acquire any membership or other equity interests in the Borrower or to make payments to any Person, such as “phantom stock” payments, where the amount thereof is calculated with reference to the fair market value or equity value of the Borrower.  The Borrower is authorized to issue and has issued only one class of membership interests.

(iv)The only holder of Equity Interests in each Managing Member is the Borrower and (A) there are no outstanding Equity Interests with respect to each Managing Member and (B) there are no outstanding obligations of any Managing Member to repurchase, redeem, or otherwise acquire any membership or other equity interests in such Managing Member or to make payments to any Person, such as “phantom stock” payments, where the amount thereof is calculated with reference to the fair market value or equity value of such Managing Member.  Each Managing Member is authorized to issue and has issued only one class of membership interests.

(v)The only holders of Equity Interests in each Subject Fund are (1) the applicable Managing Member and (2) either an Investor or another Subject Fund and, except as expressly set forth in each Subject Fund’s operating agreement, (A) there are no outstanding Equity Interests with respect to such Subject Fund and (B) there are no outstanding obligations of any Subject Fund to repurchase, redeem, or otherwise acquire any membership or other equity interests in such Subject Fund or to make payments to any Person, such as “phantom stock” payments, where the amount thereof is calculated with reference to the fair market value or equity value of such Subject Fund.  The class or classes of membership interests that each Subject Fund is authorized to issue and has issued are expressly set forth in its operating agreement (except as otherwise agreed with the Administrative Agent and noted on Appendix 4).

(b)Authorization; No Conflict.  Each Loan Party has duly authorized, executed and delivered each Financing Document to which it is a party, and neither such entity’s execution and delivery thereof nor the performance thereof (i) will be in conflict with or result in a breach of such entity’s Organizational Documents or the Merger Agreement as amended, supplemented or modified (including Paragraph XV.2 of Section 4.01 of the Company Disclosure Letter (as defined in the Merger Agreement)); (ii) will violate any other material Legal Requirement applicable to or binding on such Loan Party or any of its respective properties; (iii) will result in any breach of or constitute any default under, or result in or require the creation of any Lien (other than Permitted Liens) upon any of the Collateral under any agreement or instrument to which it is a party or by which it or any of the Collateral may be bound or affected; or (iv) will require the consent or approval of any Person, which has not already been obtained.

(c)Enforceability.  Each Financing Document to which a Loan Party is a party is a legal, valid and binding obligation of such Person, enforceable against such Person in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and subject to general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law).

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(d)ERISA.  Neither the Borrower nor any member of the Controlled Group sponsors, maintains, administers, contributes to, participates in, or has any obligation to contribute to or any liability under, any ERISA Plan.  Neither the Borrower nor any Managing Member has any employees.  Without limiting the generality of the foregoing, there has been no and there is not reasonably expected to be any ERISA Event.

(e)Taxes.  Except as would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, each of the Loan Parties has filed, and the Borrower and applicable Managing Member have caused each Subject Fund to file, all tax returns required to be filed, and have paid all Taxes levied or imposed upon them or their properties, that are due and payable (including in their capacity as a withholding agent) and taking into account applicable extensions, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP and enforcement of the contested tax is effectively stayed for the entire duration of such contest. There is no action, suit, proceeding, investigation, audit or claim now pending by a taxing authority regarding any taxes relating to the Loan Parties or Subject Funds that could, if made, individually or in the aggregate, have a Material Adverse Effect.

(f)Business. The Borrower and Managing Members have not conducted and have not permitted any Subject Fund to conduct any business other than acquisition, construction, installation, lease, ownership of, and sale of energy from, and the operation, management, maintenance and financing of, the Systems and activities related or incident thereto (including those contemplated by the Operative Documents).  The Borrower and each of the Managing Members do not have any outstanding Debt or other material liabilities other than as permitted pursuant to Section 6.3 and as scheduled on Schedule 4.1(f). Each of Borrower and the Managing Members is not a party to or bound by any material contract other than, with respect to the Managing Members, the Operative Documents to which it is a party and, with respect to the Borrower, this Agreement, the LLC Agreements and the other Financing Documents.

(g)Collateral.  Each Collateral Document will, upon execution and delivery thereof, be effective to create in favor of the Collateral Agent for the benefit of the Secured Parties, legal, valid and enforceable Liens on, and security interests in, the Collateral described therein to the extent intended to be created thereby and (i) when financing statements in appropriate form are filed in the appropriate offices and (ii) upon the taking of possession or control by the Collateral Agent of such Collateral with respect to which a security interest may be perfected only by possession or control (which possession or control shall be given to the Collateral Agent to the extent possession or control by the Collateral Agent is required hereunder), the Liens created by the Collateral Documents shall constitute fully perfected Liens on, and security interests in (to the extent intended to be created thereby), all right, title and interest of the grantors in such Collateral to the extent perfection can be obtained by filing financing statements or taking control, in each case subject to no Liens other than Permitted Liens.

(h)Investment Company, Holding Company Act.  No Loan Party is an “investment company” within the meaning of, or is regulated as an “investment company” under, the Investment Company Act of 1940.

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(i)Federal Reserve Regulations.  No Loan Party is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock, and no part of the proceeds of the Loans will be used by any Loan Party to purchase Margin Stock, or to extend credit to others for the purpose of purchasing or carrying Margin Stock or otherwise in violation of Regulations T, U or X.

(j)Financial Statements.  The Borrower represents that (x) the most recent financial statements (including the notes thereto) delivered in respect of the Borrower pursuant to Section 5.3 fairly present in all material respects the financial condition of the Borrower as of the date thereof and have been prepared in accordance with GAAP applied on a consistent basis, subject to the audit and normal year-end adjustments and the absence of footnotes and associated disclosures, (y) such financial statements and notes thereto disclose all direct or contingent material liabilities of the Borrower as of the dates thereof and (z) except as disclosed to the Administrative Agent in writing, there has occurred no Material Adverse Effect since the date of the most recent financial statements delivered pursuant to Section 5.3.

(k)Project Documents.  Each Managing Member represents that (w) each of the Project Documents related to a Subject Fund to which such Managing Member is a party is listed on Appendix 5, as the same may be updated from time to time, (x) true, complete and correct copies of all Project Documents as currently in effect have been delivered via electronic data room to the Administrative Agent by the Borrower, (y) each Project Document to which a Managing Member or Subject Fund is a party is a legal, valid and binding obligation of such Person, enforceable against such Person in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and subject to general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law) and (z) none of the Project Documents to which a Managing Member or Subject Fund is a party has been materially amended or modified since the effective date of such Project Document other than as set forth in Appendix 5 or permitted by Section 6.10 and copies of all such amendments and modifications have been delivered to the Administrative Agent.

(l)Litigation.  There are no instituted, pending or, to the Loan Parties’ Knowledge, threatened actions, suits or proceedings of any kind, including actions, suits or proceedings by or before any Governmental Authority, against a Loan Party or Subject Fund or any business, property or rights of a Loan Party or Subject Fund as to which, if adversely determined against such Loan Party or Subject Fund, could reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

(m)Disclosure.  To the Borrower’s Knowledge, all written information that has been made available by any of the Loan Parties to any Secured Party in connection with the transactions contemplated by this Agreement and the other Operative Documents (such information to be taken as a whole, including, without limitation, updated or supplemented information), or that has been furnished by any of the Loan Parties to any third party in connection with the preparation and delivery by such third party of a report or certificate to any Secured Party, is complete and correct in all material respects, and does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading under the circumstances in which they are made; provided, however, that in each case

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no representation or warranty is made with respect to projections, assumptions or other forward-looking statements provided by or on behalf of the Loan Parties with respect to the Advance Model other than as provided in clause (s) of this Section 4.1.

(n)Tax Status.  For United States federal and state income tax purposes the Borrower and each Managing Member (other than (i) Vivint Solar Hannah Manager, LLC, which is a limited liability company that elects to be treated as a corporation for federal income tax purposes and a part of the Borrower’s consolidated tax group and (ii) as otherwise agreed with the Administrative Agent and noted in Appendix 4) will be treated as a disregarded entity of Borrower Member.  Neither the execution and delivery of the Financing Documents nor the consummation of any of the transactions contemplated by such Financing Documents will affect such status.

(o)No Other Subsidiaries.  The Borrower has no subsidiaries other than the Managing Members existing on the Restatement Date as set forth in Appendix 4 and other subsidiaries that become a party to this Agreement pursuant to Section 2.10.

(p)Capital Structure.  The Equity Interests of Borrower, each Managing Member and each Subject Fund has been duly authorized and validly issued and, except as otherwise provided for in such Loan Party’s or Subject Fund’s operating agreements, as the case may be, are fully paid and non-assessable.  Except as expressly set forth in any Subject Fund’s operating agreements, in each case, there is no existing option, warrant, call, right, commitment or other agreement to which Borrower, any Managing Member, or any Subject Fund is a party requiring, and there is no membership interest, partnership interest, or other Equity Interests of Borrower, any Managing Member, or any Subject Fund outstanding which upon conversion or exchange would require, the issuance by such Borrower, Managing Member of any additional membership interests, partnership interests or other Equity Interests of such Borrower, Managing Member or other securities convertible into, exchangeable for or evidencing the right to subscribe for or purchase, a membership interest, a partnership interest or other Equity Interest of such Borrower, Managing Member, or Subject Fund.

(q)Compliance with Law.  Each Loan Party, and, solely with respect to Systems included in any Subject Fund, each of Borrower Member and Developer, has complied in all material respects with all applicable Legal Requirements, including consumer protection laws, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

(r)No Other Bank Accounts.  The Borrower and Managing Members do not have any deposit or securities accounts other than the Accounts.

(s)Projections.  The Borrower has disclosed to the Administrative Agent the assumptions that the Advance Model is based on (other than the Assumptions) and the forecasts and other projections in the Advance Model submitted to the Administrative Agent (i) are based on good faith estimates and commercially reasonable assumptions as to all factual matters material thereto and (ii) are generally consistent with the Project Documents, the Tax Equity Model, and other adjustments as approved by the Administrative Agent; provided, however, that (A) none of the Advance Model, nor the assumptions set forth therein are to be viewed as facts and that actual results during the term of the Loans may differ from the Advance Model, and that the differences

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may be material, and (B) the Borrower believed in good faith that the Advance Model as of the relevant date of delivery was reasonable and attainable.

(t)Solvency. Immediately after the consummation of the transactions to occur on the Restatement Date and immediately following the making of each Loan and after giving effect to the application of the proceeds thereof, the Borrower and its Subsidiaries, on a consolidated basis, are Solvent.

(u)Sanctioned Persons.  No Loan Party, (i) is currently the target of any Sanctions, (ii) is located, organized or residing in any Designated Jurisdiction, or (iii) is or has been (within the previous five (5) years) engaged in any transaction with any Person who is now or was then the target of Sanctions or who is located, organized or residing in any Designated Jurisdiction.  No Loan, nor any part of the proceeds from any Loan, has been used or will be used, directly or indirectly, to lend, contribute, provide or otherwise make funds available (i) in violation of the United States Foreign Corrupt Practices Act of 1977, as amended, or (ii) to fund any activity or business in any Designated Jurisdiction or to fund any activity or business of any Person located, organized or residing in any Designated Jurisdiction or who is the subject of any Sanctions, or in any other manner that will result in any violation by any Person (including any Lender, the Lead Arranger, or any Agent) of Sanctions.

(v)Environmental Compliance.  To the Borrower’s and Managing Members’ Knowledge (solely with respect to each Managing Member’s applicable Subject Fund) there is no: (i) past or existing material violation of any applicable Environmental Law by the Borrower or any Managing Member, or any Affiliate thereof relating in any way to any System subject to the Financing Documents; (ii) Environmental Claim pending or, to any such party’s Knowledge, threatened against any Subject Fund or Potential New Fund, Borrower or any Managing Member; and (iii) to the Borrower’s and Managing Member’s Knowledge, events, conditions or circumstances that could reasonably be expected to form a basis for an Environmental Claim against any Subject Fund, Potential New Fund, Borrower or Managing Member with respect thereto.

(w)Knowledge Individuals.  Each of the individuals listed on Schedule 1.1(b) with respect to a Subject Fund is a Responsible Officer of such Subject Fund, who is responsible for the management and administration of such Subject Fund and its assets and operations.

(x)Subsidiaries; Equity Interests.  As of the Restatement Date, no Loan Party has any Subsidiaries or other Equity Interests other than those specifically disclosed in Schedule 4.1(x), and all of the outstanding Equity Interests owned by the Loan Parties (or a Subsidiary of any Loan Party) in such Subsidiaries or other Equity Interests have been validly issued and are fully paid and all Equity Interests owned by a Loan Party (or a Subsidiary of any Loan Party) in such Subsidiaries or other Equity Interests are owned free and clear of all Liens except those created under the Operative Documents.  As of the Restatement Date, Schedule 4.1(x) sets forth (a) the name and jurisdiction of each direct and indirect Subsidiary of Borrower, (b) the ownership interest of Borrower Member, the Borrower and any other Subsidiary of a Loan Party in each such Subsidiary, including the percentage of such ownership, (c) the ownership interest of each Managing Member in each Subject Fund, including the percentage of such ownership, (d) the ownership interest of each Investor in each Subject Fund, including the percentage of such

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ownership, (e) the ownership interest of each Subject Fund in any other Subject Fund, including the percentage of such ownership and (f) to the extent applicable, the management role of each Subject Fund in any other Subject Fund.

(y)Tax Equity and Other Structure Representations.  As of the Restatement Date, (i) with respect to each Subject Fund that is a Tax Equity Structure, each of the Tax Equity Representations is true, complete and correct and (ii) with respect to each Subject Fund that is an Other Structure (if any), each of the Other Structure Representations is true, complete and correct. Each Tax Equity Structure substantially conforms with the applicable characteristics set forth in Appendix 11.

(z)Merger Agreement. As of the Restatement Date, the Borrower represents that (x) a true, complete and correct copy of the Merger Agreement as currently in effect has been delivered to the Administrative Agent by the Borrower and (y) true, complete and correct copies of any amendments, supplement or modifications, including any amendments, supplements or modifications made by side letter, to the Merger Agreement (if any) as currently in effect have been delivered to the Administrative Agent.

ARTICLE 5

AFFIRMATIVE COVENANTS OF BORROWER AND MANAGING MEMBERS

The Borrower and each Managing Member covenants and agrees that until the Discharge Date, it shall and each Managing Member covenants and agrees that it shall take all applicable Relevant Member Action to cause the Subject Funds to:

5.1Use of Proceeds

.  Use the proceeds of the Loans solely (a) to make Restricted Payments to the Borrower’s direct or indirect owners for any purposes, (b) to pay fees (including the Commitment Fees), costs and expenses as required under this Agreement, and (c) to pay all outstanding obligations under the Bridge Loan Credit Facility as required pursuant to Section 3.1(n).

5.2Notices

.  Promptly, upon acquiring notice or giving notice, as the case may be, or obtaining Knowledge thereof, give written notice to the Administrative Agent and each Lender of:

(a)the filing or commencement of, or any threat or notice of intention of any person to file or commence, any action, suit, litigation, Environmental Claim, investigation or proceeding, whether at law or in equity by or before any Governmental Authority or any other material written notice from a Governmental Authority with respect to any Loan Party, any Financing Document, any Project Document or any Guarantee, except to the extent that such action, suit, litigation, investigation, proceeding or notice could not reasonably be expected to have a Material Adverse Effect;

(b)any dispute or disputes between the Borrower, Managing Member or a Subject Fund, on the one hand, and any Person, on the other hand, which could reasonably be expected to have a Material Adverse Effect and that involve (i) claims against the Borrower, Managing Member or a Subject Fund, (ii) injunctive or declaratory relief, or (iii) revocation, material

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modification, or suspension of any applicable Permit or imposition of additional material conditions with respect thereto;

(c)the occurrence of a Default or Event of Default (and any notice thereof shall be entitled, respectively, “Notice of Default” or “Notice of Event of Default”);

(d)any matter which has, or could reasonably be expected to have, a Material Adverse Effect;

(e)(i) the occurrence of, or notice given or received by a Loan Party or a Subject Fund in respect of, any breach, default or claim under a Material Project Document, (ii) notice of any event of default or termination given to or received by a Managing Member, Borrower or Subject Fund under any Material Project Document, together with a copy of any such notice, and (iii) the occurrence of, or notice given or received by a Loan Party or a Subject fund in respect of any breach, default or claim under any Other Document that could have a Material Adverse Effect;

(f)The adoption of or participation in any ERISA Plan, or intention to adopt or participate in any ERISA Plan, by the Borrower or a Managing Member or a Subject Fund, or the occurrence of any ERISA Event; and

(g)any material change to the Developer’s, the Subject Funds or their respective Affiliates’ underwriting, appraisal or System development policies or processes, solely to the extent that such change renders invalid the assumptions used in the preparation of the previous report of the Independent Engineer provided to the Administrative Agent.

5.3Portfolio Reports; Financial Statements

(a).  Deliver to the Administrative Agent (or cause to be delivered to the Administrative Agent) for further distribution to each Lender:

(a)No later than ten (10) days following the date of delivery of such reports, for each Subject Fund, any performance, financial or status reports, including any Portfolio Report, delivered or required to be delivered to each Investor under a Subject Fund’s Project Documents.

(b)Within thirty (30) days of the end of each fiscal quarter, to the extent not included in the reports delivered pursuant to Section 5.3(a), for each Subject Fund, each of the following:

(i)detailed accounts receivable aging taken directly from the source system including that maintained by any third party servicer;

(ii)financing deployment status by Subject Fund;

(iii)aggregated portfolio profile by credit composition, market composition and customer location;

(iv)the cumulative amount of billed Customer Payments delinquent for 120 days or more with respect to each Subject Fund;

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(v)a summary and commentary with respect to the status of Customer Agreements that are greater than 120 days past due, to the extent not provided elsewhere within any other item delivered pursuant to Section 5.3(a);

(vi)a list of Inspected-Only Systems; and

(vii)a list of Defaulted Systems.

(c)No later than ten (10) Business Days following the date of delivery to any Investor, duplicate copies of any annual reporting package required to be delivered to any Investor with respect to a Subject Fund pursuant to the Subject Fund’s Project Documents.

(d)As soon as available but no later than sixty (60) days after the close of each quarterly fiscal period, quarterly (and year-to-date) unaudited consolidated financial statements of (A) the Borrower and (B) Vivint Solar Parent (if such financial statements are not otherwise publicly available) and (C) each Subject Fund, in each case prepared by the issuing entity in accordance with GAAP and certified by the chief financial officer of the issuing entity as of the end of such period, including a balance sheet and the related statement of income, stockholders’ or member’s equity and cash flows, in each case setting forth comparative figures for the corresponding periods from the prior year, to the extent available; provided, no quarterly financial statements shall be due with respect to the fourth quarter of the fiscal year; provided, further, that no quarterly financial statements of the Borrower shall be due with respect the third quarter of 2014.

(e)As soon as available but no later than one hundred fifty (150) days after the close of each applicable fiscal year, the audited financial statements, including a balance sheet and the related statement of income, stockholders’ or member’s equity and cash flows, and any footnotes thereto, in each case setting forth comparative figures for the prior year, to the extent available, of (A) the Borrower, as certified by Ernst & Young LLP or another nationally-recognized independent certified public accountant selected by Borrower and reasonably acceptable to the Administrative Agent, (B) Vivint Solar Parent (if such financial statements are not otherwise publicly available as of such date), and as certified by a nationally-recognized independent certified public accountant, as certified by Ernst & Young LLP or another nationally-recognized independent certified public accountant selected by Borrower and reasonably acceptable to the Administrative Agent and (C) each Subject Fund, as certified by Ernst & Young LLP or another nationally-recognized independent certified public accountant selected by the applicable Subject Fund pursuant to its operating agreement; provided, the accountant certifications accompanying such audited financial statements shall not be qualified, or limited because of restricted or limited examination by such accountant of any material portion of the records of any entity. Such audited financial statements shall be certified by the chief financial officer of the issuing entity as of the end of such period.

(f)Concurrently with any delivery of a Draft Withdrawal/Transfer Certificate (as defined in the CADA) which specifies a distribution to be made to Borrower Member in accordance with Section 3.3(d) of the CADA or otherwise on each Scheduled Payment Date, a certificate signed by an authorized Responsible Officer of the Borrower (i) certifying that such Responsible Officer has made or caused to be made a review of the transactions and financial

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condition of the Borrower during the relevant fiscal period and that, to the knowledge of such Responsible Officer, no Default or Event of Default exists or if any such event or condition existed or exists, the nature thereof and the corrective actions that the Borrower has taken or proposes to take with respect thereto and (ii) setting forth whether or not Borrower was in compliance with the requirements of Section 6.1 as of the end of the applicable quarter, including computations in reasonable detail satisfactory to the Administrative Agent demonstrating such compliance.

(g)Documents required to be delivered pursuant to Section 5.3(d) or (e) (to the extent any such documents are included in materials otherwise filed with the U.S. Securities and Exchange Commission) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which Vivint Solar Parent posts such documents, or provides a link thereto on Vivint Solar Parent’s website on the Internet at the following website address: www.vivintsolar.com; or (ii) on which such documents are posted on Vivint Solar Parent’s behalf on an Internet or intranet website, if any, to which each Lender and Administrative Agent have access (whether a commercial, third-party website or whether sponsored by Administrative Agent); provided that: (i) Borrower shall deliver paper copies of such documents to Administrative Agent on behalf of any Lender that reasonably requests delivery of such paper copies until a written request to cease delivering paper copies is given by Administrative Agent or such Lender and (ii) Borrower shall notify Administrative Agent and each Lender (by telecopier or electronic mail) of the posting of any such documents. Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by Borrower with any request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining copies of such documents.

5.4Reports; Other Information

.

(a)Deliver to the Administrative Agent copies of any material documents and reports related to the Subject Funds furnished to the Borrower or a Managing Member by a Governmental Authority or by any counterparty to a Material Project Document (other than reports already delivered pursuant to Section 5.3(a)), or furnished by the Borrower to such Governmental Authority or such counterparty.

(b)Deliver to the Administrative Agent promptly after receipt thereof a copy of any “management letter” received by the Borrower, any Managing Member or any Subject Fund from its independent accounts and management’s response thereto.

(c)Deliver to the Administrative Agent no later than three (3) Business Days of delivery to the applicable Investor, any True-Up Reports and models in connection therewith delivered to an Investor in a Subject Fund.

(d)Promptly, from time to time, deliver such other information regarding the operations, business affairs and financial condition of the Borrower or any other Loan Party, or compliance with the terms of any Operative Document, as the Administrative Agent or any Lender may reasonably request through the Administrative Agent.

(e)Within sixty (60) days after any notice is delivered pursuant to Section 5.2(g), upon the request of the Administrative Agent, the Borrower shall deliver an Independent Engineer’s

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report in the same form, and regarding the same substance, as the Independent Engineer’s report provided to the Administrative Agent in connection with the structuring of this Agreement and covering any other matters that the Administrative Agent may reasonably request.

5.5Maintenance of Existence

.  Except as otherwise expressly permitted under this Agreement: (i) do or cause to be done all things required to maintain and preserve and keep in full force its existence as a Delaware limited liability company; (ii) take all reasonable action required to maintain all material rights, privileges (including its good standing where applicable in the relevant jurisdiction), permits, licenses and franchises necessary or desirable in the normal conduct of its business, (iii) perform all of its material obligations under the Material Project Documents; (iv) perform all of its obligations under the Other Documents and (v) to engage only in the activities permitted by the Operative Documents, and activities related or incident thereto, except, in the cases of clauses (ii) and (iv) above, where the failure to take such actions could not reasonably be expected to have a Material Adverse Effect.

5.6Books, Records, Access

.

(a)The Borrower shall maintain, in respect of itself, each Managing Member and each Subject Fund, books, accounts and records in accordance with GAAP and in material compliance with applicable law and the regulations of any Governmental Authority having jurisdiction thereof.

(b)At any time during normal business hours and upon reasonable written notice to the Borrower, but so long as no Event of Default has occurred and is continuing, no more frequently than twice per calendar year, subject to Section 10.17, and to the extent permitted by applicable Laws, permit any representatives and independent contractors of the Administrative Agent and (and, during the continuance of an Event of Default, any Lender) to visit the premises of the Borrower, Borrower Member or Vivint Solar Parent, inspect all of the Borrower’s and each Managing Member’s, and (to the extent permitted by the Subject Fund Project Documents) each Subject Fund’s books, accounts, records and properties and make copies thereof and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants (subject to such accountants’ customary policies and procedures). Notwithstanding anything to the contrary in this Section 5.6(b), none of the Borrower, Borrower Member, Vivint Solar Parent or Managing Members shall be required to disclose, permit the inspection, examination or making copies or abstracts of, or discussion of, any document, information or other matter that (x) constitutes non-financial trade secrets or non-financial proprietary information, (y) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives or contractors) is prohibited by Law or (z) is subject to attorney client or similar privilege or constitutes attorney work-product.

(c)The Borrower shall reimburse the Administrative Agent and Lenders for reasonable out-of-pocket expenses incurred in connection with Section 5.6(b) by the Administrative Agent and Lenders and their respective Representatives limited to, so long as no Event of Default has occurred, one inspection per year; provided, that such expenses shall be agreed to by the Borrower and the Administrative Agent in advance on commercially reasonably terms, and provided, further, that notwithstanding anything to contrary herein, any expenses incurred pursuant to Section 5.6(b) by the Administrative Agent or any Lender during the continuance of an Event of Default shall be for the account of the Borrower and not subject to any limitations set forth herein or elsewhere.

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5.7Preservation of Rights; Further Assurance

.

(a)(i) Maintain in full force and effect, preserve, protect and defend the material rights of each Loan Party and Subject Fund and (ii) take all actions necessary to prevent termination or cancellation (except as required by the Operative Documents) by, and enforce against, other parties the material terms of each Project Document of the applicable Subject Fund, including enforcement of any claims with respect thereto, except in each case to the extent the failure to do so could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(b)Preserve and maintain the security interests granted under the Collateral Documents and undertake all actions that are necessary or appropriate to (a) maintain the Collateral Agent’s security interest in the Collateral in full force and effect at all times (including the priority thereof), (b) preserve and protect the Collateral and (c) protect and enforce the Borrower’s rights and title and the rights of the Collateral Agent and the other Secured Parties to the Collateral, including the making or delivery of all filings and recordations, the payment of all fees and other charges and the issuance of supplemental documentation.

(c)From time to time as reasonably requested by the Administrative Agent, execute, acknowledge, record, register, deliver and/or file all such notices, statements, instruments and other documents (including any financing statement, continuation statement, certificate of title or estoppel certificate) as are necessary or appropriate to carry out the interest and purposes of the Financing Documents or necessary to maintain the Collateral Agent’s perfected security interest in the Collateral to the extent and in the priority required pursuant to the Collateral Documents.

5.8Taxes and Other Government Changes

.

(a)Pay, or cause to be paid, as and when due and prior to delinquency, all taxes, assessments and governmental charges of any kind that may at any time be lawfully assessed or levied against or with respect to the Borrower, each Managing Member and each Subject Fund, except, in each case, to the extent any such amount is being contested in good faith and by appropriate proceedings, the enforcement of such contested taxes, assessments and governmental charges is effectively stayed for the entire duration of such proceedings, and appropriate reserves for such  contested taxes, assessments and governmental charges have been established in accordance with GAAP.

(b)The Borrower and each Managing Member (other than (i) Vivint Solar Hannah Manager, LLC, which is a limited liability company that elects to be treated as a corporation for federal income tax purposes and is a member of the Borrower’s consolidated tax group and (ii) as otherwise agreed with the Administrative Agent and noted in Appendix 4) shall at all times be classified as disregarded entities for U.S. federal income tax purposes.

5.9Compliance With Laws; Instruments, Etc.

Comply, or cause compliance by each Managing Member and Subject Fund, in all respects, with all Laws, including consumer protection laws, and all orders, writs, injunctions and decrees applicable to it or to its business or property, except (i) if the failure to comply therewith could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and (ii) that the Borrower, Managing Member or

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Subject Fund may contest by appropriate proceedings conducted in good faith the validity or application of any such Laws.

5.10Indemnification

.

(a)Without duplication of the Borrower’s obligations under Section 2.4(d) or Section 2.6, the Borrower agrees to indemnify each Secured Party (other than the Depositary, who is indemnified under Section 6.2 of the CADA) and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees, charges and disbursements of one counsel to the Agents (and one local counsel in each applicable jurisdiction and, in the event of any actual conflict of interest, one additional counsel of each type to the affected parties), incurred by or asserted against any Indemnitee arising out of, connected with, or as a result of (i) (x) the execution or delivery of this Agreement or any other Financing Document or any agreement or instrument contemplated thereby, the performance by the parties thereto of their respective obligations thereunder or the consummation of the transactions contemplated hereby and thereby or (y) the Merger Agreement or any amendment, supplement or modification thereto and any agreement entered into by Vivint Solar Parent or any Loan Party in connection therewith, (ii) the use of the proceeds of the Loans, (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto (and regardless of whether such matter is initiated by a third party or by the Borrower, any other Loan Party or any of their respective Affiliates), or (iv) any actual or alleged presence or Release of Hazardous Materials on any property currently or formerly owned, leased or occupied by the Borrower, any Managing Member or any Subject Fund or, or any Environmental Claim related in any way to the Borrower, any Managing Member or any Subject Fund, in all cases, whether or not caused by or arising, in whole or in part, out of the comparative, contributory or sole negligence of the Indemnitee; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from such Indemnitee’s gross negligence, bad faith or willful misconduct of such Indemnitee or (y) result from a claim brought by the Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Financing Document, if the Borrower or such Loan Party has obtained a final or nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction. Notwithstanding the foregoing, any indemnification relating to Taxes, other than Taxes resulting from any non-Tax claim, shall be covered by Sections 2.4(d) and 2.6 and shall not be covered by this Section 5.10.

(b)To the extent that the Borrower fails to pay any amount required to be paid by them to the Administrative Agent or the Collateral Agent under Section 5.10(a) or Section 10.4(a), each Lender severally agrees to pay to the Administrative Agent and the Collateral Agent, as the case may be, such Lender’s Proportionate Share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent or the Collateral Agent in its capacity as such.

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(c)To the extent permitted by applicable law, the Borrowers and Lenders shall not assert and hereby waive any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, any transaction contemplate hereby or by the other Financing Documents, any Loan or the use of the proceeds thereof.

(d)The provisions of this Section 5.10 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the resignation of any Agent, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the expiration of the Commitments, the invalidity or unenforceability of any term or provision of this Agreement or any other Financing Document, or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent or any Lender.  Any amounts due and payable by the Borrower under this Section 5.10 shall be payable on demand by the applicable Indemnitee, but in no event later than ten (10) Business Days after receipt of an invoice for such amounts from such Indemnitee; provided, however, that such Indemnitee shall promptly refund such amount to the extent that there is a final judicial or arbitral determination that such Indemnitee was not entitled to indemnification rights with respect to such payment pursuant to the express terms of this Section 5.10.

5.11Revenue Account

.  Each Managing Member shall, and the Borrower shall cause each Managing Member to, deposit all income, fees, revenue and other funds payable or distributable to such Managing Member into such Managing Member’s related Account. In the event that, notwithstanding the foregoing, the Borrower receives any such amounts, the Borrower will hold such amounts in trust and promptly (and in any event within five (5) Business Days) after receipt thereof deposit such amounts in the Revenue Account.

5.12[Intentionally omitted.]

5.13Separateness Provisions; Required Provisions in LLC Agreements

.

(a)The LLC Agreement of the Borrower shall include, and the Borrower shall comply with, (i) the provisions set forth in Appendix 8 and (ii) Independent Member provisions in conformity with the requirements of Section 5.13(c) below.

(b)The LLC Agreement of each Managing Member shall provide that the Managing Member’s only purposes are to (i) hold its Equity Interests in the applicable Subject Fund, (ii) enter into and perform the Project Documents applicable to its Subject Fund and documents ancillary thereto and (iii) enter into and perform the Financing Documents and any documents ancillary thereto.

(c)The LLC Agreement of each Managing Member shall include each of the following terms (collectively, the “Required LLC Provisions”):  requires unanimous written approval of all members, partners or managers of such Managing Member, as the case may be, (which approval, pursuant to the terms of the Borrower’s LLC Agreement requires the consent of the Independent Member of the Borrower), in order to authorize the filing of any insolvency or reorganization case or proceeding, instituting proceedings to have such Managing Member adjudicated bankrupt or

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insolvent, instituting proceedings under any applicable insolvency law, seeking any relief under any law relating to relief from debts or the protection of debtors, consenting to the filing or institution of bankruptcy or insolvency proceedings against such Managing Member, filing a petition seeking or consenting to reorganization, liquidation or relief with respect to such Managing Member under any applicable federal or state law relating to bankruptcy, reorganization or insolvency, seeking or consenting to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian, or any similar official for such Managing Member or a substantial part of its respective property, making any assignment for the benefit of creditors, admitting in writing the inability of such Managing Member to pay its debts as they become due, or taking action in furtherance of any of the foregoing.

5.14Distributions by Certain Subsidiaries

.  The Borrower shall cause each Managing Member to promptly distribute cash flows as per the requirements, and in accordance with and subject to any limitations in, the distribution allocation of the Subject Fund and to pay all such cash flows paid or distributed to such Managing Member into its related Account.

5.15Borrowing Base Certificate

.  The Borrower shall deliver a fully executed and complete Borrowing Base Certificate to the Administrative Agent, (a) once per month for every month during the term hereof on the fifteenth (15^th) day of such month, (b) on each Borrowing Date, (c) on each date interest is payable pursuant to Section 2.1(b)(ii), (d) on any other date on which the Borrower first obtains Knowledge that a Subject Fund has become a Watched Fund and (e) as otherwise expressly required herein; provided, that if a date specified in the foregoing clauses (b) or (c) occurs on the fifteenth (15^th) day of a month, only one Borrowing Base Certificate will be required to be delivered on such day; provided further, that the Advance Rate shall be updated only in each Borrowing Base Certificate delivered in the first month of each calendar quarter pursuant to clause (a) and in the Borrowing Base Certificate delivered pursuant to clause (e), and in all other Borrowing Base Certificates the Advance Rate from the prior Borrowing Base Certificate shall be used without being updated. Each Borrowing Base Certificate will include all the items specified in Appendix 2.

5.16Amendments; Other Agreements

.  Promptly after the execution and delivery thereof, the Borrower shall furnish the Administrative Agent with copies of (i) all material waivers, amendments, supplements or modifications of (x) any Material Project Document or Approved Form Agreement and (y) the Merger Agreement and, subject to any applicable Laws and within four (4) Business Days of the execution and delivery thereof, any amendment, supplement or modification thereto and (ii) all waivers, amendments, supplements or modifications of any Other Documents and any additional material contracts or agreements to which the Borrower becomes a party after the Closing Date, in the case of this clause (ii), to the extent such waivers, amendments, supplements or modifications could reasonably be expected to have a Material Adverse Effect.

5.17Insurance

.

(a)Maintain with Qualified Insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business as the Borrower and Managing Members, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons, which types and amounts shall be adjusted annually pursuant to Section 5.17(b). In addition, Borrower and the

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Managing Members shall take all Relevant Member Action to cause each of the Subject Funds to maintain any insurance that such Subject Fund is required to maintain pursuant to the terms and conditions of the Project Documents. The following terms and conditions apply with respect to property and liability insurance maintained by or on behalf of the Borrower or Subject Funds:

(i)All-Risk Property Insurance (Including Excess Policies):

(A) Borrower, Borrower Member and each Managing Member shall be included as an additional “named insured”;

(B) Borrower, Borrower Member and each Managing Member hereby waives any rights of subrogation against the Secured Parties and shall cause any such property insurance policies to include or be endorsed to include a waiver of subrogation in their favor;

(C) General Liability / Excess Liability Insurance:

(D) Borrower, Borrower Member and each Managing Member shall be included as an additional “named insured”;

(E) Secured Parties shall be included as additional insureds on a primary and non-contributory basis;

(F) Borrower, Borrower Member and each Managing Member hereby waives any rights of subrogation against the Secured Parties and shall cause any such liability insurance policies to include or be endorsed to include a waiver of subrogation in their favor

(ii)To the extent commercially available, the policies shall be endorsed to provide the Administrative Agent with thirty (30) days’ written notice of cancellation, except ten (10) days for non-payment of premium at the following address:

Bank of America, N.A.,

as Administrative Agent

Agency Management

900 W Trade Street

Charlotte NC 28255

Attention: Darleen R DiGrazia

Telephone: 980.388.5001

Telecopier: 704.409.0645

Electronic Mail: darleen.r.digrazia@baml.com

(iii)General Terms and Conditions

(A) Borrower and/or Borrower Member shall be obligated to provide written notice of material change to the Administrative Agent unless such notice is otherwise provided by endorsement of the required

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policies. For the purposes of this Section 5.17(a)(iii), “materially changed” means any reduction of more than twenty-five percent (25%) of any policy aggregate limit for earthquake (or earth movement as the case may be), flood, windstorm (if applicable) or excess liability or a change that would cause the Subject Fund to be in non-compliance with the insurance requirements of the Project Documents;

(B) Prior to Closing Date and annually thereafter, the Borrower and/or Borrower Member shall provide detailed evidence of insurance (in a form acceptable to the Administrative Agent) including certificates of insurance and copies of applicable insurance binders and policies (if requested), as well as a statement from the Borrower and/or its authorized insurance representative confirming that such insurance is in compliance with the terms and conditions of this Section 5.17, is in full force and effect and all premiums then due have been paid or are not in arrears; and

(C) No provision of this Agreement shall impose on the Administrative Agent or any Secured Party any duty or obligation to verify the existence or adequacy of the insurance coverage maintained by or on behalf of the Borrower, Borrower Member, Managing Member or Subject Fund, nor shall the Administrative Agent or any Secured Party be responsible for any representations or warranties made by or on behalf of the Borrower, Borrower Member, Managing Member or Subject Fund, or any other party to any insurance agent or broker, insurance company or underwriter.

(b)On an annual basis, not later than sixty (60) days before the end of the Borrower’s fiscal year, the Borrower shall cause a nationally recognized insurance or other applicable expert to perform and deliver, with a copy to the Administrative Agent, a probable maximum loss analysis with respect to the properties of the Borrower and the Managing Members. The Administrative Agent, the Borrower and each Managing Member shall review such probable maximum loss analysis and, the Borrower and Managing Members shall make appropriate adjustments (in consultation with, and with the prior written approval of, the Administrative Agent) to the types and amounts of insurance it maintains pursuant to Section 5.17(a) to reflect the results of such probable maximum loss analysis.

5.18New Subject Funds

. In connection with the inclusion of any Potential New Fund as a Subject Fund, the Loan Parties shall simultaneously with such Potential New Fund becoming a Subject Fund:

(a)deliver to the Administrative Agent such modifications to the terms of the Financing Documents (or, to the extent applicable as determined by the Administrative Agent, such other documents), in each case in form and substance reasonably satisfactory to the Administrative Agent and as the Administrative Agent deems necessary or advisable in order to ensure the following:

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(i)the Managing Member of such Potential New Fund (but, for the avoidance of doubt, not any Subject Fund itself) shall guaranty, as primary obligor and not as surety, the payment of the Obligations; and

(ii)the Managing Member of such Potential New Fund shall effectively grant to the Administrative Agent, for the benefit of the Secured Parties, a valid and enforceable security interest in all of its property, including all of the Equity Interests it owns, as security for the Obligations;

(b)deliver to the Administrative Agent all documents representing all Equity Interests pledged pursuant to the documents delivered pursuant to clause (a) above, together with undated powers or endorsements duly executed in blank;

(c)the Loan Parties shall take any actions reasonably required by the Administrative Agent to ensure and/or demonstrate that the Liens and security interests granted by the applicable Financing Documents continue to be perfected under applicable law after giving effect to the Potential New Fund becoming a Subject Fund hereunder and thereunder;

(d)to take all other actions necessary or advisable to ensure the validity or continuing validity of any guaranty for any Obligation or any Lien securing any Obligation, to perfect, maintain, evidence or enforce any Lien securing any Obligation or to ensure such Liens have the same priority as that of the Liens on similar Collateral set forth in the Financing Documents executed on the Closing Date (or, for Collateral located outside the United States, a similar priority acceptable to the Administrative Agent), including the filing of UCC financing statements in such jurisdictions as may be required by the Financing Documents or applicable law or as the Administrative Agent or Collateral Agent may otherwise reasonably request;

(e)without duplication of documents delivered pursuant to Section 3.4(b), deliver all Project Documents for such Subject Fund to the Administrative Agent;

(f)in connection with any Other Structure, execute agreements and other documents indicating their consent to the incorporation of supplemental or modified terms and conditions to the Financing Documents regarding such Other Structure reasonably requested by the Agents and Majority Lenders, including supplemental representations, warranties, covenants and defaults and amendments to the existing terms of this Agreement and the other Financing Documents;

(g)subject to Section 5.21, in accordance with Section 5.17 provide evidence of insurance with respect to such new Subject Fund in form and substance acceptable to the Administrative Agent, including copies of policies of such insurance upon the Administrative Agent’s request; and

(h)the Managing Member for such Subject Fund has duly executed and delivered an agreement in the form of Exhibit M (a “New Subject Fund Accession Agreement”).

5.19Backup Servicer

. Within 90 days following the Closing Date, the Borrower shall appoint a backup servicer with respect to the management, administration and servicing of all the Systems in the Available Borrowing Base on terms and conditions reasonably acceptable to the Administrative Agent.

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5.20Hedging Agreement

.  No later than 180 days prior to the end of the Availability Period, the Borrower shall enter into a Permitted Swap Agreement that is in form and substance reasonably acceptable to the Borrower, Administrative Agent and Lenders holding at least 75% of the sum of (i) the aggregate unused amount of the Commitments then in effect and (ii) the aggregate unpaid principal amount of the Loans then outstanding.

5.21On or before December 4, 2015, the Borrower shall deliver evidence of insurance in form and substance acceptable to the Administrative Agent with respect to each of USB Fund 5 and USB Fund 6.

ARTICLE 6

NEGATIVE COVENANTS OF BORROWER AND MANAGING MEMBERS

Borrower and, other than with respect to Section 6.1, each of the Managing Members covenants and agrees that until the Discharge Date it shall not, and each Managing Member covenants and agrees that it shall take all applicable Relevant Member Action to cause the Subject Funds not to:

6.1Cash Flow Coverage Ratio

. Permit the Cash Flow Coverage Ratio as of a Quarterly Date to be less than 1.40:1.00.

6.2Limitations on Liens

.  (a) Create or assume any Lien on any of its property assets or revenue, whether now owned or hereafter acquired, except for Permitted Liens or (b) suffer to exist any Lien on any of its property assets or revenues, whether now owned or hereafter acquired, except for Permitted Liens.

6.3Indebtedness

.  Incur, create, assume or permit to exist any Debt except for (i) Debt created under the Financing Documents, (ii) Debt in respect of Permitted Swap Agreements, and (iii) Debt permitted (without requiring any amendment, consent, waiver, or vote by any member of a Subject Fund, including any Investor, under the terms and conditions of such Material Project Documents and Other Documents unless such amendment, consent or waiver is approved in accordance with the terms hereof) to be incurred by a Subject Fund under any Material Project Document or Other Document;

6.4Sale or Lease of Assets

.  Directly or indirectly sell, lease, assign, transfer or otherwise dispose of any of its Property (including any portion of any Equity Interest owned by the Borrower or a Managing Member), whether now owned or hereafter acquired except:

(a)the granting of Liens to the Collateral Agent;

(b)with respect to the property of a Subject Fund, to the extent permitted (without requiring any amendment, consent, waiver, or vote by any member of a Subject Fund, including any Investor, under the terms and conditions of such Material Project Documents and Other Documents unless such amendment, consent or waiver is approved in accordance with the terms hereof) pursuant to any Material Project Document or Other Document;

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(c)any Restricted Payment by a Subject Fund to a Managing Member or from the Managing Member to the Borrower; and

(d)so long as no Default or Event of Default has occurred and is continuing or would result therefrom, the sale by Borrower of a Subject Fund (including, without limitation, the sale of the Equity Interests in a Managing Member or Equity Interests in such Subject Fund or the applicable Managing Member) in an arm’s length transaction; provided that (i) the consideration for such sale is paid entirely in cash, (ii) as evidenced by a Borrowing Base Certificate delivered by Borrower to Administrative Agent giving pro forma effect to such sale, the Available Borrowing Base exceeds the Outstanding Principal, and (iii) such sale will be non-recourse to the Borrower, any Loan Party not fully disposed as part of such sale, or any other Subject Fund and Borrower and the remaining Loan Parties will cease to have any obligation, liability or responsibility in respect of any disposed Subject Fund and any disposed Loan Party.

6.5Changes

.  Conduct any business other than the acquisition and ownership of subsidiaries which engage in the acquisition, ownership, leasing and financing of the Systems and activities related or incident thereto (including those contemplated by the Operative Documents but excluding the engineering, development, construction or creation of Systems), hire or become an employer of an employee or assume or incur any obligation under or in connection with any ERISA Plan.

6.6Distributions

.  Directly or indirectly, make or declare any Restricted Payment or incur any obligation (contingent or otherwise) to do so, except for Restricted Payments:

(a)from proceeds of the Loans in accordance with Section 5.1;

(b)from a Subject Fund to its Managing Member;

(c)from a Managing Member to Borrower;

(d)to the extent required under the Project Documents of a Subject Fund to each direct owner of Equity Interests in such Subject Fund (other than to the Managing Member, which payments are permitted pursuant to clause (b) of this Section 6.6); and

(e)on any Scheduled Payment Date, so long as (i) no Default or Event of Default has occurred and is continuing or would be caused thereby, (ii) no Repayment Event has occurred and is continuing, (iii) the Borrower, after giving effect to any prepayments made pursuant to Section 2.1(f)(ii), is in compliance with the Borrowing Base Requirement, and (iv) each of the Interest Reserve Account and the Inspected-Only Reserve Account has been fully funded in an amount at least equal to the required reserve amount under the CADA, from Borrower to Borrower Member from any monies remaining in the Revenue Account after giving effect to the withdrawals and transfers specified in clauses (1) through (5) of Section 3.3(d) of the CADA.

6.7Investments

.  Make or permit to remain outstanding any advances or loans or extensions of credit to, or purchase, redeem or own any Equity Interests in, or any assets constituting an ongoing business from, or make or permit any other investment in, any Person, except for:

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(a)investments by each Managing Member in a Subject Fund in which it holds an Equity Interest and investments by Borrower in each Managing Member (including, for the avoidance of doubt, investments made using equity contributions to Borrower or any Managing Member by Borrower Member or Vivint Solar Parent), in each case, with respect to Equity Interests existing as of the Closing Date (and in the case of Subject Funds and Managing Members added after the Closing Date, existing as of the date of such addition) and as set forth in Schedule 6.7. For the avoidance of doubt, each Managing Member may exercise, subject to compliance with the other terms and conditions of the Financing Documents, any call option, purchase option or other similar right to purchase the Equity Interests of an Investor in its Subject Fund, without the consent of any Agent or Lender; and

(b)investments in the form of loans and advances by each Managing Member to the Subject Fund or any Potential New Fund in which it holds an Equity Interest and capital contributions by the Borrower and each Managing Member to or in the Subject Fund or any Potential New Fund in which it holds an Equity Interest made on or after the Closing Date to the extent permitted (without requiring any amendment, consent, waiver, or vote by any member of a Subject Fund, including any Investor, under the terms and conditions of such Material Project Documents and Other Documents unless such amendment, consent or waiver is approved in accordance with the terms hereof) by the terms of the applicable Project Documents of the Subject Funds or Potential New Fund (in each case, as reflected in an updated Schedule 6.7 with the prior written approval of the Administrative Agent);

provided, however, that if a Potential New Fund is not approved to become a Subject Fund, then upon the written request of the Majority Lenders, the Borrower shall within five (5) Business Days cause the Managing Member related to such Potential New Fund to no longer be a Subsidiary of Borrower by selling, winding up or otherwise disposing of (including, without limitation, transferring Borrower’s Equity Interests in such Managing Member to a third party) such Managing Member.

6.8Federal Reserve Regulations

.  Apply any part of the proceeds of any Loan to the purchasing or carrying of any Margin Stock.

6.9Fundamental Changes

.  Liquidate or dissolve, or sell or lease or otherwise transfer or dispose of, all or any substantial part of its property, assets or business, or combine, merge or consolidate with or into any other entity (in each case, whether in one transaction or a series of transactions) other than the sale of assets as permitted by Section 6.4.

6.10Amendments; Other Agreements

.

(a)Without the prior written consent of the Majority Lenders, (i) terminate or cancel, exercise any right or remedy under or pursuant to any breach or default of, (ii) materially amend, modify, supplement or consent to any change in any provision of or (iii) materially waive any material default under, material breach of, material condition, closing deliverable or other required item under, or the performance of a material obligation by any Person, in each case, under any (x) Other Documents, except to the extent that such actions could not reasonably be expected to have a Material Adverse Effect or (y) Material Project Documents unless such amendment, consent or waiver is either approved in writing by the Administrative Agent or immaterial; provided,

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however, that no prior written consent by the Majority Lenders shall be required in the case of any amendment, modification or supplement to or waiver under Other Documents or Material Project Documents to (A) correct a manifest error therein that is not material or (B) to increase the aggregate amount of an Investor’s commitment.

(b)Amend, modify, supplement or consent to any change in any provision of the LLC Agreements, except to the extent that such actions could not reasonably be expected to materially and adversely affect the Administrative Agent or the Lenders.

(c)Amend, modify, supplement or consent to any change in any Approved Form Agreement unless (i) such amendments, modifications, supplements or changes do not (w) reallocate risk from the Host Customer to the Subject Fund, Managing Member or any of its Affiliates, or (x) reduce any payment obligations of the Host Customer, (y) reduces the creditworthiness standards with which the Host Customer must comply, or (z) otherwise materially increase the risk profile of the Lenders and (ii) the Borrower has promptly (and in any event within five (5) Business Days) provided copies of such amendments, modifications, supplements or changes to the Administrative Agent.

(d)Notwithstanding the foregoing, Borrower may permit any Subject Fund to enter into an agreement for the sale of SRECs, including any such agreement that, notwithstanding anything to the contrary herein, contains any provisions for liquidated damages, contingent liabilities or other damages, or the posting of collateral or other security, so long as such agreements are entered into in the ordinary course of business at prices and on terms and conditions not less favorable than could be obtained on an arm’s-length basis from unrelated third parties; provided, further, that all Revenues from such sale of SRECs shall be paid directly to the Borrower by deposit by the purchaser of such SRECs directly into the Revenue Account.

(e)The Lenders hereby approve and consent to Amendment No. 3 to Limited Liability Company Agreement of Vivint Solar Elyse Project Company, LLC, dated May 11, 2015, and Amendment No. 4 to Limited Liability Company Agreement of Vivint Solar Elyse Project Company, LLC, dated June 30, 2015.

6.11Name and Location; Fiscal Year

.  Change its name, its state of business, accounting policies (except as permitted by GAAP) or its fiscal year without the Administrative Agent’s prior written consent.

6.12Assignment

.  Assign its rights hereunder or under any other Operative Document.

6.13Transfer of Equity Interest

.  Except to the extent permitted pursuant to Section 2.10(b) or Section 6.4, cause, make, suffer, permit or consent to any creation, sale, assignment or transfer of any Equity Interest in the Managing Members or Subject Funds except for the Liens in favor of the Collateral Agent under the Collateral Documents.

6.14Accounts

.  Establish or maintain any deposit, securities or other account in its own name other than the Accounts.

6.15Transaction with Affiliates

.  Engage in any transactions with any of its Affiliates except (i) transactions among the Loan Parties (other than the Borrower Member) and the Subject

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Funds or any entity that becomes a Loan Party or a Subject Fund as a result of such transaction, including, without limitation, transactions among such Persons pursuant to the Project Documents, in each case, subject to compliance with the other terms and conditions of the Financing Documents, (ii) transactions in the ordinary course of business at prices and on terms and conditions not less favorable to the Loan Party or the applicable Subject Fund than could be obtained on arm’s-length basis from unrelated third parties and (iii) transactions pursuant to agreements in existence on the Closing Date and set forth on Schedule 6.15 or any amendment thereto to the extent such an amendment is not adverse to the Lenders in any material respect.

6.16Limitation on Dividends and Other Payment Restrictions Affecting Certain Subsidiaries

.  Enter into, or allow a Borrower, any Managing Member or any Subject Fund to enter into, any agreement, instrument or other undertaking that (i) restricts or limits the ability of any Managing Member or any Subject Fund to make any dividend or other distribution of Revenues with respect to its Equity Interests or (ii) restricts or limits the ability of any Loan Party to create, incur, assume or suffer to exist Liens on the property of such Person for the benefit of the Agents and Lender with respect to the Obligations of the Loan Parties or the Financing Documents, except, in each case, the Operative Documents in existence on the Closing Date as well as any other Operative Documents entered into by a Potential New Fund after the Closing Date, to the extent reviewed and approved by the Administrative Agent.

6.17Hedging Agreement.  Enter into any Hedging Agreement other than a Permitted Swap Agreement.

6.18Operations and Maintenance in Partnership

.  Vote to terminate or to appoint a new operations and maintenance provider, or consent to the appointment of a new operations and maintenance provider; provided, that if any vote or appointment is required within a certain time period under the applicable Project Document, if Administrative Agent does not consent (unless such consent was reasonably withheld) within such time period, then the Borrower may, or cause any Managing Member of a Subject Fund to, vote or appoint or consent to a new operations and maintenance provider or administrative services provider in order to comply with the terms of the applicable Project Documents; provided, further, that the consent of the Administrative Agent may not be unreasonably withheld if the new operations and maintenance provider or administrative services provider meets the standards set forth in the applicable Project Documents.

ARTICLE 7

ACCOUNTS; APPLICATION OF FUNDS

7.1Accounts; Application of Funds in Accounts

.

(a)On or prior to the Closing Date, the Borrower shall cause the Accounts to be established at Depositary.  Each Loan Party shall, or shall take Relevant Member Action to cause, all Revenues, income and other amounts paid, payable or distributable to any Managing Member or the Borrower, when actually paid, to be deposited in the sub-account of the Revenue Account (as defined in the CADA) that is related to such Managing Member.

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(b)Funds on deposit in the Accounts shall be applied in the manner, at the times and in the order of priority as set forth in the CADA.

ARTICLE 8

EVENTS OF DEFAULT; REMEDIES

8.1Events of Default

.  The occurrence of any of the following events shall constitute an event of default (individually, an “Event of Default,” and collectively, “Events of Default”) hereunder:

(a)Failure to Make Payments.  Any Loan Party shall fail to pay, in accordance with the terms of this Agreement, (i) any principal with respect to any Loan on the date that such principal is due or (ii) any interest on any Loan or other amount payable hereunder or with respect to any other Loan within five (5) Business Days after the date that such payment is due.

(b)Judgments.  There is entered against any Loan Party any one or more final judgments or orders for the payment of money and the aggregate amount of all such judgments or orders for all such parties equals or exceeds $2,000,000 (to the extent not covered by a valid and binding policy of insurance issued by an independent third party as to which the insurer has been notified of such judgment or order and has not denied coverage) and such judgments or orders shall not have been satisfied, vacated, discharged or stayed or bonded to the reasonable satisfaction of the Administrative Agent pending an appeal for a period of sixty (60) consecutive days;

(c)Misstatements.  Any representation, warranty, certification or statement of trust made or deemed made by a Loan Party in the Financing Documents, any amendment or modification thereof or waiver thereto, or in any certificate or financial statement furnished pursuant thereto to any Agent or Secured Party pursuant to this Agreement or any other Financing Document, shall prove to have been inaccurate or misleading in any material respect as of the date made or deemed made, as applicable.

(d)Bankruptcy.  Vivint Solar Parent, Borrower Member, or Borrower shall become subject to a Bankruptcy Event.

(e)ERISA.  (i) The Borrower shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any ERISA Plan (that is not excepted under Section 408 of ERISA and regulatory guidance thereunder) resulting in a Material Adverse Effect to the Borrower; (ii) an ERISA Event shall occur with respect to any ERISA Plan which results in an aggregate amount which could reasonably be expected to result in a Material Adverse Effect; or (iii) the Borrower or any member of its Controlled Group fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount which could reasonably be expected to result in a Material Adverse Effect.

(f)Breach of Terms of Financing Agreements.

(i)Any Loan Party shall fail to perform or observe any covenant set forth in Section 5.2, Section 5.5(i), Section 5.20, Article 6, or Section 8.4 of this Agreement.

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(ii)Any Loan Party shall fail to perform or observe any other covenant (not specified in Section 8.1(a) or clause (i) of this Section 8.1(f)) to be performed or observed by it hereunder or under any Financing Document and not otherwise specifically provided for elsewhere in this Section 8.1, and such failure shall continue unremedied for a period of thirty (30) days after the Borrower becomes aware of such failure; provided, that if (x) such failure can be remedied, (y) such failure cannot reasonably be remedied within such 30 day period, and (z) the Borrower commences cure of such failure within such 30 day period and thereafter diligently seeks to remedy the failure, then an “Event of Default” shall not be deemed to have occurred until the earlier of (A) such time as Borrower ceases reasonable efforts to cure such failure and (B) 90 calendar days following such failure.

(g)Security.  Any of the Collateral Documents, once executed and delivered, (i) shall fail to provide the Collateral Agent (on behalf of the Secured Parties) a first priority perfected security interest (subject only to Permitted Liens) in all of the Collateral (except to the extent that any such perfection or priority results from the failure of the Collateral Agent to maintain possession of certificates actually delivered to it representing securities pledged under the Collateral Documents or the failure of the Collateral Agent to uniform commercial code continuation statements), (ii) shall cease to be in full force and effect, or (iii) the validity or the applicability thereof to the Obligations to be secured or guaranteed thereby or any part thereof shall be disaffirmed by or on behalf of any Loan Party.

(h)Change of Control.  A Change of Control shall have occurred.

(i)Invalidity of Financing Documents.  Any material provision of any Financing Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or as a result of acts or omissions by the Administrative Agent or Collateral Agent or any Lender or the satisfaction in full in cash of all the Obligations, shall cease to be in full force and effect, or any Loan Party shall contest in writing the validity or enforceability of any provision of any Financing Document, or any Loan Party shall deny in writing that it has any or further liability or obligation under any Financing Document (other than as a result of repayment in full of the Obligations and termination of the Commitments), or any Loan Party shall purport in writing to revoke or rescind any Financing Document.

(j)Tax Equity Transaction Documents. Any Loan Party shall fail to observe or perform any of its obligations under or otherwise breaches (i) any representation, warranty, term or condition of the Material Project Documents applicable to it which is not immaterial or (ii) any representation, warranty, term or condition of the Other Documents applicable to it the effect of which could reasonably be expected to have a Material Adverse Effect.

(k)Cross-Default.  Any Loan Party (A) fails to make any payment beyond the applicable grace period with respect thereto, if any, (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Debt (other than the Loans) and such Debt, either individually or in the aggregate for all such Loan Parties, has an outstanding aggregate principal amount or notional amount, as applicable, equal to or greater than $2,000,000 or (B) fails to observe or perform any other agreement or condition relating to any such Debt, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Debt (or a trustee or agent on behalf of such holder or holders or beneficiary or

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beneficiaries) to cause, with the giving of notice if required, such Debt to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Debt to be made, prior to its stated maturity; provided that this clause (k)(B) shall not apply to secured Debt that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Debt, if such sale or transfer is permitted hereunder and under the documents providing for such Debt.

(l)Borrowing Base.  As of any date that a Borrowing Base Certificate is delivered, the Outstanding Principal does not satisfy the Applicable Threshold Test and such Default is not cured within ten (10) Business Days by the Borrower adding new Subject Funds to the Available Borrowing Base or by any Person making an Equity Contribution to Borrower in an amount sufficient to cure the Default, after giving effect to the prepayment of principal, in each case, as provided in Section 2.1(f).

8.2Remedies

.

(a)If any Event of Default (other than any event described in Section 8.1(d) shall have occurred and be continuing, the Administrative Agent may, and upon the request of the Majority Lenders shall, by notice to the Borrower:

(i)immediately terminate the Commitments of each Lender and the obligation of each Lender to make Loans; and

(ii)declare the Loans then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and any unpaid accrued fees and all other liabilities of the Borrower accrued hereunder and under any other Financing Document, shall become forthwith due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower, anything contained herein or in any other Financing Document to the contrary notwithstanding.

(b)If any Event of Default described in Section 8.1(d) shall have occurred and be continuing:

(i)the Commitments of each Lender and the obligation of each Lender to make Loans shall automatically terminate (if not previously terminated or expired);

(ii)the principal of the Loans then outstanding, together with accrued interest thereon and any unpaid accrued fees and all other liabilities of the Borrower accrued hereunder and under any other Financing Document, shall automatically become due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower, anything contained herein or in any other Financing Document to the contrary notwithstanding.

(c)Upon the occurrence and during the continuance of any Event of Default, in addition to the exercise of remedies set forth in clauses (a) and (b) above, (i) the Agents may immediately exercise exclusive control of or over any or all of the Accounts, including taking any and all actions necessary or advisable in pursuance of the foregoing, such as issuing any notice of

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exclusive control contemplated by the applicable control agreements and (ii) each Secured Party shall be, subject to the terms of the Financing Documents, entitled to exercise the rights and remedies available to such Secured Party under and in accordance with the provisions of the other Financing Documents to which it is a party or any applicable law.

(d)Notwithstanding the foregoing, if an Event of Default with respect to Section 6.1 has occurred and the Borrower has delivered an irrevocable Notice of Intent to Cure, then, prior to the Cure Expiration Date, none of the actions in Section 8.2 may be taken on account of such Event of Default until the Cure Expiration Date (but it being understood that unless a Cure Amount in an amount sufficient to cure such Event of Default has been provided in accordance with Section 8.4, such actions under this Section 8.2 may then be taken on and following the Cure Expiration Date and that, notwithstanding anything contained herein, no Lender shall be required to make any Loans while an Event of Default with respect to Section 6.1 is continuing even if a Notice of Intent to Cure has been delivered).

8.3Remedies Under Consents

. Each of the Agents or Lenders may exercise a cure right that vests in its favor under any of the Tax Equity Required Consents at the time of such vesting whether or not an Event of Default has occurred at such time, except to the extent that relevant Loan Party is diligently pursuing its cure rights under the Tax Equity Required Consents.

8.4Borrower’s Right to Cure.

(a)When an Event of Default under Section 6.1 has occurred (a “Coverage Ratio EOD”), the Borrower may provide an irrevocable notice (the “Notice of Intent to Cure”) to the Administrative Agent committing to cure such Coverage Ratio EOD by depositing an amount in the Equity Cure Account sufficient to cause the Cash Flow Coverage Ratio to be greater than or equal to 1:40:1.00 (the “Cure Amount”). The Borrower shall specify the Cure Amount in its Notice of Intent to Cure.

(b)Within ten (10) days of the Quarterly Date when the Coverage Ratio EOD occurred (the “Cure Expiration Date”), the Borrower shall in accordance with its Notice of Intent to Cure, deposit Equity Contributions in an amount equal to the Cure Amount in the Equity Cure Account.

(c)Solely for purposes of calculating the Cash Flow Coverage Ratio for any period that includes the fiscal quarter prior the Quarterly Date when the applicable Coverage Ratio EOD occurred, the Cure Amount shall be added to the Actual Net Cash Flow of the Borrower to the extent such Cure Amount remains on deposit in the Equity Cure Account (except to the extent applied to prepay the Loans in accordance with the following sentence). The Borrower may at any time apply amounts on deposit in the Equity Cure Account to prepay the Loans pursuant to Section 2.1(f).

(d)In furtherance of clause (b) above, (A) upon actual deposit of the full Cure Amount in the Equity Cure Account, the covenant under Section 6.1 shall be deemed satisfied and complied with as of Quarterly Date when the applicable Coverage Ratio EOD occurred with the same effect as though there had been no failure to comply with such covenant and the applicable Coverage Ratio EOD shall be deemed not to have occurred for purposes of the Financing Documents, and (B) upon receipt by the Administrative Agent of a Notice of Intent to Cure prior the Cure Expiration Date, neither the Administrative Agent nor any Lender may exercise any rights or remedies under Section 8.2 (or under any other Financing Document) on the basis of any actual or

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purported Event of Default under Section 6.1 until and unless the Cure Expiration Date has occurred without the Cure Amount having been deposited pursuant to Section 8.4(b).

(e)There shall be no more than (i) two (2) consecutive fiscal quarters and (ii) four (4) total fiscal quarters in which the cure rights set forth in this Section 8.4 are exercised during the term of this Agreement.

ARTICLE 9

THE AGENTS; AMENDMENTS; ASSIGNMENTS

9.1Appointment and Authority

.  Each of the Lenders and hereby irrevocably appoints Bank of America to act on its behalf as the Administrative Agent and Collateral Agent hereunder and under the other Financing Documents and authorizes the Administrative Agent and Collateral Agent, respectively, to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent and Collateral Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.  The provisions of this Article are solely for the benefit of the Administrative Agent, Collateral Agent, and the Lenders and the Borrower shall not have rights as a third party beneficiary of any of such provisions.  It is understood and agreed that the use of the term “agent” herein or in any other Financing Documents (or any other similar term) with reference to the Administrative Agent or Collateral Agent is not intended to denote or connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.

9.2Rights as a Lender

.  The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity.  Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

9.3Exculpatory Provisions

(a).  The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Financing Documents, and its duties hereunder shall be administrative in nature.  Without limiting the generality of the foregoing, the Administrative Agent:

(b)shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

(c)shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Financing Documents that the Administrative Agent is required to exercise as directed in writing by the Majority Lenders (or such other number or percentage of the Lenders as shall be

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expressly provided for herein or in the other Financing Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Financing Document or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Bankruptcy Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Bankruptcy Law; and

(d)shall not, except as expressly set forth herein and in the other Financing Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Majority Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.1 and 8.2) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment.  The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given in writing to the Administrative Agent by the Borrower or a Lender.

The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Financing Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Financing Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article 3 or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

9.4Reliance by Administrative Agent

.  The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person.  The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon.  In determining compliance with any condition hereunder to the making of a Loan that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan.  The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

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9.5Delegation of Duties

.  The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Financing Document by or through any one or more sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties.  The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.  The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.

9.6Resignation of Administrative Agent

.

(a)The Administrative Agent may at any time give notice of its resignation to the Lenders and the Borrower.  Upon receipt of any such notice of resignation, the Majority Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States.  If no such successor shall have been so appointed by the Majority Lenders or shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Majority Lenders) (the “Resignation Effective Date”), then the retiring Administrative Agent may (but shall not be obligated to) on behalf of the Lenders, appoint a successor Administrative Agent meeting the qualifications set forth above.  Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.

(b)If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Majority Lenders may, to the extent permitted by applicable law, by notice in writing to the Borrower and such Person remove such Person as Administrative Agent and, in consultation with the Borrower, appoint a successor. If no such successor shall have been so appointed by the Majority Lenders and shall have accepted such appointment within thirty (30) days (or such earlier day as shall be agreed by the Majority Lenders) (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.

(c)With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Financing Documents and (2) except for any indemnity payments or other amounts then owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time, if any, as the Majority Lenders appoint a successor Administrative Agent as provided for above.  Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Administrative Agent (other than as provided in Section 2.4(d)(vi) and other than any rights to indemnity payments or other amounts owed to the retiring or removed

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Administrative Agent as of the Resignation Effective Date or the Removal Effective Date, as applicable), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Financing Documents (if not already discharged therefrom as provided above in this Section).  The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Financing Documents, the provisions of this Article and Sections 10.4 and 5.10 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative Agent.

9.7Non-Reliance on Administrative Agent and Other Lenders

.  Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Financing Document or any related agreement or any document furnished hereunder or thereunder.

9.8Administrative Agent May File Proofs of Claim

.  In case of the pendency of any proceeding under any Bankruptcy Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:

(a)to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations of the Loan Parties that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 2.3 and 10.4) allowed in such judicial proceeding; and

(b)to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.3 and 10.4.

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Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.

9.9Collateral Matters

.  Without limiting the provisions of Section 9.8, the Lenders irrevocably authorize the Administrative Agent, at its option and in its discretion,

(a)to release any Lien on any property granted to or held by the Administrative Agent under any Financing Document (i) upon termination of the Commitments and payment in full of all Obligations (other than contingent indemnification obligations), (ii) that is sold or otherwise disposed of or to be sold or otherwise disposed of  as part of or in connection with any sale or other disposition permitted hereunder or under any other Financing Document, or (iii) subject to Section 9.12, if approved, authorized or ratified in writing by the Majority Lenders; and

(b)to subordinate any Lien on any property granted to or held by the Administrative Agent under any Financing Document to the holder of any Lien on such property that is permitted by Section 6.2.

9.10Indemnification

.  Without limiting the obligations (including, but not limited to, the Obligations) of the Borrower hereunder, each Lender agrees to indemnify each of the Agents, ratably in accordance with its Proportionate Share for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may at any time be imposed on, incurred by or asserted against such Agent in any way relating to or arising out of this Agreement or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or the enforcement of any of the terms hereof or thereof or of any such other documents; provided, however, that no Lender shall be liable for any of the foregoing to the extent they arise solely from the relevant Agent’s gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction.  The Agents shall be fully justified in refusing to take or to continue to take any action hereunder unless it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action.  Without limitation of the foregoing, each Lender agrees to reimburse the relevant Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including counsel fees) incurred by such Agent in connection with the preparation, execution, administration or enforcement of, or legal advice in respect of rights or responsibilities under, the Operative Documents, to the extent that such Agent is not reimbursed promptly for such expenses by the Borrower.

9.11No Advisory or Fiduciary Responsibility

.  In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Financing Document), the Borrower acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent and the Lenders are arm’s-length commercial transactions between the Borrower and its Affiliates, on the one hand, and the Administrative Agent and the Lenders, on the other hand, (B) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the

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Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Financing Documents; (ii) (A) the Administrative Agent and each Lender is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borroweror any of itsAffiliates, or any other Person and (B) neither the Administrative Agent nor any Lender has any obligation to the Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Financing Documents; and (iii) the Administrative Agent and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and neither the Administrative Agent nor any Lender has any obligation to disclose any of such interests to the Borrower or its Affiliates.  To the fullest extent permitted by law, the Borrower hereby waives and releases any claims that it may have against the Administrative Agent or any Lender with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

9.12Amendments

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(a)Generally. Subject to Sections 2.12 and 2.13, no amendment or waiver of any provision of this Agreement or any other Financing Document, and no consent to any departure by the Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Majority Lenders and the Borrower or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall effect any of the changes described in clauses(b), (c), and/or (d) of this Section 9.12 without the additional consent(s) required therein.

(b)Consent of Affected Lenders. Subject to Sections 2.12 and 2.13, no amendment, waiver or consent described in clause (a) of this Section 9.12 shall, without the written consent of each Lender affected thereby:

(i)extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.2);

(ii)postpone any date fixed by this Agreement or any other Financing Document for or reduce or forgive the amount of any payment or mandatory prepayment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Financing Document;

(iii)reduce or forgive the principal of, or the rate of interest specified herein on, any Loan, or any fees or other amounts payable hereunder or under any other Financing Document to the Lenders  (it being understood that the waiver of (or amendment to the terms of) any mandatory prepayment of a Loan (other than pursuant to Section 2.1(f)(ii)(A)) shall not constitute a postponement of any date scheduled for the payment of principal or interest) (or change the timing of payment of such fees or other amounts), or change the manner of computation of any financial ratio (including any change in any applicable defined term) used in determining the Applicable Interest Rate that would result

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in a reduction of any interest rate on any Loan or any fee payable hereunder; provided, however, that only the consent of the Majority Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of the Borrower to pay interest at the Default Rate; or

(iv)amend, waive or otherwise modify any term or provision (including the availability and conditions to funding under Section 2.9 with respect to Incremental Loans, under Section 2.12 with respect to Refinancing Loans, and under Section 2.13 with respect to Extended Loans and, in each case, the rate of interest applicable thereto) which directly affects Lenders of one or more Incremental Loans, Refinancing Loans or Extended Loans and does not directly affect Lenders of any other Loans, in each case, without the written consent of the directly affected Lenders under such Incremental Loans, Refinancing Loans or Extended Loans; provided, however, that the waivers described in this clause (iv) shall not require the consent of any Lenders other than the affected Lenders under such Incremental Loans, Refinancing Loans or Extended Loans, as the case may be.

(c)Borrowing Base Amendments. No amendment, waiver or consent described in clause (a) of this Section 9.12  shall, without the written consent of Lenders holding at least 90% of the sum of (i) the aggregate unused amount of the Commitments then in effect and (ii) the aggregate unpaid principal amount of the Loans then outstanding, affect the Available Borrowing Base, Appendix 1, Appendix 2, Appendix 3, any provision relating to the Available Borrowing Base, Appendix 1, Appendix 2 or Appendix 3, or any related definition under this Agreement or any other Financing Document; provided, however, that the proviso to the definition of “Available Borrowing Base” in Appendix 2 may be amended with the written consent of the Supermajority Lenders.

(d)Consent of All Lenders. Subject to Sections 2.12 and 2.13, no amendment, waiver or consent described in clause (a) of this Section 9.12  shall, without the written consent of each Lender:

(i)waive any condition set forth in Sections 3.1 or 3.2;

(ii)change any provision of this Section or the definition of “Majority Lenders,” “Supermajority Lenders,” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder;

(iii)change the definition of “Eligible Assignee”;

(iv)amend the definition of “Eligible Structure” or permit a fund that is not an Eligible Structure to be included in the Available Borrowing Base; or

(v)release all or substantially all the Collateral, or release any Loan Party from such Person’s obligations under this Agreement or any Collateral Document, or permit the release of any funds from the Revenue Account, in each case, unless in accordance with the Financing Documents.

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(e)Consent of Administrative Agent. No amendment, waiver or consent described in clause (a) of this Section 9.12 shall, without the written consent of the Administrative Agent (in addition to the Lenders required above):

(i)affect the rights or duties of the Administrative Agent or Collateral Agent under this Agreement or any other Financing Document; or

(ii)affect the Available Borrowing Base, Appendix 1, Appendix 2, Appendix 3, any provision relating to the Available Borrowing Base, Appendix 1, Appendix 2 or Appendix 3, or any related definition under this Agreement or any other Financing Document.

(f)Fee Letters.  The Fee Letters may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto.

(g)Defaulting Lenders.  Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender, (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender disproportionately adversely relative to other affected Lenders shall require the consent of such Defaulting Lender, and (z) the interest, principal and maturity of Loans made by such Defaulting Lender may not be modified without the Defaulting Lender’s consent.

(h)Errors and Omissions.  The Administrative Agent and the Borrower may amend any Financing Document to correct administrative errors or omissions, or to effect administrative changes that are not adverse to any Lender.  Notwithstanding anything to the contrary contained herein, such amendments shall become effective without any further consent of any other party to such Financing Document.

(i)Non-Consenting Lenders.  In the event that (i) the Borrower or the Administrative Agent has requested that the Lenders consent to a departure or waiver of any provisions of the Financing Documents or agree to any amendment thereto, (ii) the consent, waiver or amendment in question requires the agreement of all affected Lenders in accordance with the terms of Section 9.12(b) or all Lenders in accordance with the terms of Section 9.12(d) and (iii) the Majority Lenders have agreed to such consent, waiver or amendment, then any Lender who does not agree to such consent, waiver or amendment shall be deemed to be a “Non-Consenting Lender.” If any Lender becomes a Non-Consenting Lender, then the Borrower may, on ten (10) Business Days’ prior written notice to the Administrative Agent and such Lender, replace such Lender by causing such Lender to (and such Lender shall be obligated to) assign pursuant to Section 9.15 (with the assignment fee to be paid by the Borrower in such instance) its Commitment and its outstanding Loans, if any, to one or more Eligible Assignees approved by the Administrative Agent in its sole and absolute discretion; provided that (i) neither the Administrative Agent nor any Lender shall have any obligation to the Borrower to find a replacement Lender or other such Person, (ii) on the date of such assignment, the replacement Lender shall pay to the Non-Consenting Lender an

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amount equal to the sum of (A) an amount equal to the principal of, and all accrued interest on, all outstanding Loans of such Non-Consenting Lender and (B) an amount equal to all accrued, but theretofore unpaid fees, if any, owing to such Non-Consenting Lender pursuant to Section 2.3 and (iii) on the date of such assignment, the Borrower shall pay any amounts payable to such Non-Consenting Lender pursuant to Sections 2.6 or 2.7.

9.13Withholding Tax

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(a)If the forms or other documentation required by Section 2.4(g) are not delivered to the Administrative Agent, then the Administrative Agent may withhold from any interest payment to any Lender not providing such forms or other documentation, an amount equivalent to the applicable withholding tax.

(b)If the Internal Revenue Service or any authority of the United States of America or other jurisdiction asserts a claim that the Administrative Agent did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify the Administrative Agent or any other Person of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Lender shall indemnify promptly the Administrative Agent fully for all amounts paid, directly or indirectly, by such Person as tax or otherwise, including penalties and interest, together with all expenses incurred, including legal expenses, allocated staff costs, and any out-of-pocket expenses.

9.14Participations

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(a)Each Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more banks or other Persons in all or a portion of its rights and obligations under this Agreement and the other Financing Documents (including all or a portion of its Commitment and the Loans owing to it); provided, however, that (i) such Lender’s obligations under this Agreement and the other Financing Documents shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the participating banks or other Persons shall be entitled to the benefit of the cost protection provisions contained in Sections 2.4(d), 2.6, and 2.7 to the same extent as if they were Lenders and (iv) the Borrower, the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement, and such Lender shall retain the sole right to enforce the obligations of the Borrower relating to the Loans and to approve any amendment, modification or waiver of any provision of this Agreement (other than amendments, modifications or waivers with respect to matters requiring consent of all Lenders pursuant to Section 9.9).  To the extent permitted by law, each participating bank or other Person shall also be entitled to the benefits of Section 10.2 as though it were a Lender, provided such participating bank or other Person agrees to be subject to Section 2.5(b) as though it were a Lender.  Other than as otherwise specified in this clause (a), no participating bank or other Person shall have any other rights under this Agreement, including direct rights against any Loan Party nor any rights to any remedies and shall not be considered for any purpose to be a party to this Agreement.  In no event shall a Loan Party be responsible for any costs or expenses of any counsel engaged by a participating bank or other Person that has acquired a participation from a Lender.

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(b)Any Lender that sells a participation, acting solely for this purpose as an agent of the Borrower, shall maintain a register in which it enters the name and address of each participant, and the principal amount (and stated interest) of each participant’s interest in the Loans under the Financing Documents (the “Participant Register”); provided, that no Lender shall have an obligation to disclose the Participant Register (including the identity of any participant or any information relating to a participant’s interest in any commitments, loans, letters of credit or its other obligations under any Financing Document) to any Person except to the extent that such disclosure is necessary to establish that the Loans or other obligations under this Agreement are in registered form for tax purposes under Section 5f.103-1(c) of the United States Treasury Regulation.  The entries in the Participant Register shall be conclusive absent manifest error, and the Lender maintaining the Participant Register shall treat each person whose name is recorded in the register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.  For the avoidance of doubt, the Administrative Agent, in its capacity as such, shall have no responsibility for maintaining a Participant Register.

(c)Any Lender or participant may, in connection with any participation or proposed participation pursuant to this Section 9.14, disclose to the participant or proposed participant any information relating to the Loan Parties or their respective Affiliates furnished to such Lender by or on behalf of the Loan Parties; provided, that, prior to any such disclosure of information designated by the Borrower as confidential, each such participant or proposed participant shall execute an agreement whereby such participant shall agree (subject to customary exceptions) to preserve the confidentiality of such confidential information on terms no less restrictive than those applicable to the Lenders pursuant to Section 10.17.

9.15Assignments

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(a)Each Lender may assign to one or more Eligible Assignees all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent of the Administrative Agent (such consent not to be unreasonably withheld, conditioned or delayed) and, unless an Event of Default pursuant to Sections 8.1(a) or (d) has occurred and is continuing, the Borrower (such consent not to be unreasonably withheld, conditioned or delayed); provided, however, that if such assignment is to a Lender or an Affiliate of a Lender whose credit- worthiness is reasonably comparable to that of the transferring Lender, no consent of the Borrower or the Administrative Agent shall be required; provided, further,  that (i) the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall be in an integral multiple of, and not less than One Million Dollars ($1,000,000) (or, if less, the entire remaining amount of such Lender’s Commitment or Loans), except for any assignments made to National Bank of Arizona by Lenders on the First Amendment Date pursuant to the “Rebalancing Transactions” (as defined in the First Amendment), in which case, the amount of the Loans assigned by each assigning Lender may be less than One Million Dollars ($1,000,000) provided that (i) the parties to each assignment shall (A) execute and deliver to the Administrative Agent an Assignment and Acceptance via an electronic settlement system acceptable to the Administrative Agent or (B) if previously agreed with the Administrative Agent, manually execute and deliver to the Administrative Agent an Assignment and Acceptance, and, in each case, shall pay to the Administrative Agent a processing and recordation fee of Three Thousand Five Hundred Dollars

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($3,500) (which fee may be waived or reduced in the sole discretion of the Administrative Agent), and (ii) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire (in which the assignee shall designate one or more credit contacts to whom all syndicate-level information (which may contain material non-public information about the Loan Parties and their Affiliates or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws) and all applicable tax forms.  Upon acceptance and recording pursuant to clause (a) of this Section 9.15, from and after the effective date specified in each Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.4(d), 2.6, 2.7, 5.9, 5.10 and 10.4, as well as to any Fees accrued for its account and not yet paid).

(b)By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows:  (i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any Lien or adverse claim and that its Commitment, and the outstanding balances of its Loans, in each case without giving effect to assignments thereof which have not become effective, are as set forth in such Assignment and Acceptance, (ii) except as set forth in subclause (i) above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the other Financing Documents, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any other Financing Document or any other instrument or document furnished pursuant hereto, or the financial condition of the Borrower or any other Loan Party or the performance or observance by the Borrower or any other Person of any of its obligations under this Agreement, any other Financing Document or any other instrument or document furnished pursuant hereto, or thereto, or in connection therewith; (iii) such assignee represents and warrants that it is an Eligible Assignee legally authorized to enter into such Assignment and Acceptance; (iv) such assignee confirms that it has received a copy of this Agreement and the other Financing Documents (other than the Fee Letters), together with copies of the most recent financial statements delivered pursuant to Section 5.3 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (v) such assignee will independently and without reliance upon the Administrative Agent, the Collateral Agent, such assigning Lender or any other Secured Party and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (vi) such assignee appoints and authorizes the Administrative Agent and the Collateral Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent and the Collateral Agent, respectively, by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Agreement are required to be performed by it as a Lender; provided, that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

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(c)The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices in the City of New York a copy of each Assignment and Agreement referred delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment thereof, and principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive absent manifest error and the Borrower, each Lender and the Agents may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Borrower, the Collateral Agent and any Lender at any reasonable time and from time to time upon reasonable prior notice.

(d)Upon its receipt of, and consent to, a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, an Administrative Questionnaire completed in respect of the assignee (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in clause (a) above, if applicable, and the written consent of the Administrative Agent and, if required, the Borrower, to such assignment and any applicable tax forms, the Administrative Agent shall (i) accept such Assignment and Acceptance and (ii) record the information contained therein in the Register.  No assignment shall be effective unless it has been recorded in the Register as provided in this clause (d).

(e)At the assigning Lender’s option, the Borrower shall execute and deliver to such new lender a new Note in the form attached hereto as Exhibit A, in a principal amount equal to the Loans being assigned, and the Borrower shall execute and exchange with the assigning Lender a replacement note for any Note in an amount equal to amount of the Loans retained by the Lender, if any.

(f)Any Lender may, in connection with any assignment or proposed assignment pursuant to this Section 9.15, disclose to the assignee or proposed assignee any information relating to the Loan Parties or their respective Affiliates furnished to such Lender by or on behalf of the Loan Parties; provided, that, prior to any such disclosure of information designated by the Borrower as confidential, each such assignee or proposed assignee shall execute an agreement whereby such assignee shall agree (subject to customary exceptions) to preserve the confidentiality of such confidential information on terms no less restrictive than those applicable to the Lenders pursuant to Section 10.17.

9.16Assignability to Federal Reserve Bank or Central Bank

.

(a)Any Lender may at any time assign all or any portion of its rights under this Agreement to secure extensions of credit to such Lender or in support of obligations owed by such Lender; provided that no such assignment shall release a Lender from any of its obligations hereunder or substitute any such assignee for such Lender as a party hereto.

(b)Any Lender or its direct or indirect parent may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any such pledge or assignment to a Federal Reserve Bank or any other central bank in the jurisdiction of such Lender or its direct or indirect parent, and this Section 9.16 shall not apply to any such pledge or assignment of a security interest; provided that no such pledge

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or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto; and provided further that any payment in respect of such pledge or assignment made by the Borrower to or for the account of the pledging or assigning Lender in accordance with the terms of this Agreement shall satisfy the Borrower’s obligations hereunder in respect of such pledged or assigned Loans to the extent of such payment.

9.17No Other Duties, Etc

.  Notwithstanding anything to the contrary herein, none of the Lead Arrangers listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Financing Documents, except in its capacity, as applicable, as the Administrative Agent, Collateral Agent, a Lender, or the Depositary hereunder.

ARTICLE 10

MISCELLANEOUS

10.1Addresses; Notices

.

(a)Any communications between the parties hereto or notices provided herein to be given may be given to the following addresses:

To the Borrower:

Vivint Solar Financing I, LLC
c/o Vivint Solar, Inc.

3301 N Thanksgiving Way, Suite 500

Lehi, UT 84043

Attention:  Thomas Plagemann, EVP, Capital Markets

E-Mail:  thomas.plagemann@vivintsolar.com

Facsimile: (801) 229-7727

with a copy to:

Vivint Solar Inc.

3301 N Thanksgiving Way, Suite 500

Lehi, UT 84043

Attention:  Vivint Solar Legal Department

E-Mail: solarlegal@vivintsolar.com

Facsimile: 801.765.5746

To the Administrative Agent or Collateral Agent:

Administrative Agent/Collateral Agent Office:

(For financial/loan activity – advances, pay down, interest/fee billing and payments, rollovers, rate-settings):

Bank of America Plaza

901 Main Street

Mail Code:  TX1-492-14-11

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Dallas, TX  75202-3714

Attention: Diana Lopez

Phone:  972-338-3774

Fax:  214-290-8384

Electronic Mail:    diana.r.lopez@baml.com

Other Notices as Administrative Agent/Collateral Agent:

(For financial statements, compliance certificates, maturity extension and commitment change notices, amendments, consents, vote taking, etc.)

Agency Management

900 W Trade Street

Mail Code: NC1-026-06-03

Charlotte NC 28255

Attention: Darleen R DiGrazia

Telephone: 980.388.5001

Telecopier: 704.409.0645

Electronic Mail: darleen.r.digrazia@baml.com

To the Lenders:  At such address and fax number as set forth in Annex 2 or as each Lender may provide in writing to the Borrower and the Administrative Agent.

(b)All notices or other communications required or permitted to be given hereunder shall be in writing and shall be considered as properly given (i) if delivered in person; (ii) if sent by a nationally recognized overnight delivery service; (iii) in the event overnight delivery services are not readily available, if mailed by first class mail, postage prepaid, registered or certified with return receipt requested; or (iv) if sent by telecopy or electronic mail with a confirmation of receipt.  Notice so given shall be effective upon receipt by the addressee, except that communication or notice so transmitted by telecopy or other direct written electronic means shall be deemed to have been validly and effectively given on the day (if a Business Day and, if not, on the next following Business Day) on which it is transmitted if transmitted before 4:00 p.m., recipient’s time, and if transmitted after that time, on the next following Business Day; provided, however, that if any notice is tendered to an addressee and the delivery thereof is refused by such addressee, such notice shall be effective upon such tender.  Any party shall have the right to change its address for notice hereunder to any other location by giving of thirty (30) days’ written notice to the other parties in the manner set forth hereinabove.

(c)The Borrower hereby agrees, unless directed otherwise by the Administrative Agent or unless the electronic mail address referred to below has not been provided by the Administrative Agent to the Borrower, that notwithstanding anything to the contrary in clause (b) above, it will provide to the Administrative Agent all information, documents and other materials that it is obligated to furnish to the Administrative Agent pursuant to the Financing Documents or to the Lenders under Article 5, including all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding any such communication that (i) is or relates to a Borrowing Notice or a notice pursuant to Section 2.1(a)(iii), (ii) relates to the payment of any principal or other amount due under this Agreement prior to the scheduled date therefor, (iii) provides a Notice of Default or Notice of Event of Default under this Agreement or any other Financing Document or (iv) is required to be delivered to satisfy any condition precedent

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to the effectiveness of this Agreement and/or any Borrowing or other extension of credit hereunder (all such non-excluded communications being referred to herein collectively as “Communications”), by transmitting the Communications in an electronic/soft medium that is properly identified in a format acceptable to the Administrative Agent to an electronic mail address as directed by the Administrative Agent.  In addition, the Borrower agrees to continue to provide the Communications to the Administrative Agent or the Lenders, as the case may be, in the manner specified in the Financing Documents but only to the extent requested by the Administrative Agent.

(d)The Borrower hereby acknowledges that (i) the Administrative Agent will make available to the Lenders materials and/or information provided by or on behalf of the Borrower hereunder (collectively, the “Borrower Materials”) by posting the Borrower Materials on Intralinks or another similar electronic system (the “Platform”) and (ii) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to the Borrower or its securities) (each, a “Public Lender”).  The Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Borrower or its securities for purposes of United States federal and state securities laws ; (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated as “Public Investor;” and (z) the Administrative Agent shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not marked as “Public Investor.” The following Borrower Materials shall be marked “PUBLIC”, unless the Borrower notifies the Administrative Agent promptly that any such document contains material non-public information: (1) the Financing Documents and (2) notification of changes in the terms of the Financing Documents; provided, however, that the parties acknowledge and agree that the Fee Letters contain sensitive proprietary information and shall not be marked, treated as, or considered “PUBLIC” in any respect.  Notwithstanding anything herein to the contrary, any and all Borrower Materials are subject to the confidentiality provisions of Section 10.17.

(e)Each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable law, including United States Federal and state securities laws, to make reference to Communications that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrower or its securities for purposes of United States Federal or state securities laws.

(f)THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”.  NEITHER THE ADMINISTRATIVE AGENT NOR ANY OF ITS RELATED PARTIES WARRANTS THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS OR THE ADEQUACY OF THE PLATFORM AND EACH EXPRESSLY DISCLAIMS LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS.  NO WARRANTY OF ANY KIND, EXPRESS,

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IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS IS MADE BY THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM.  IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES HAVE ANY LIABILITY TO THE MEMBER, THE BORROWER, ANY LENDER OR ANY OTHER PERSON FOR DAMAGES OF ANY KIND, WHETHER OR NOT BASED ON STRICT LIABILITY AND INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF THE MEMBER’S, THE BORROWER’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE PLATFORM, ANY OTHER ELECTRONIC PLATFORM OR ELECTRONIC MESSAGING SERVICE OR THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY SUCH PERSON IS FOUND IN A FINAL RULING BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH PERSON’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

(g)The Administrative Agent agrees that the receipt of the Communications by the Administrative Agent at its e-mail address set forth above shall constitute effective delivery of the Communications to the Administrative Agent for purposes of the Financing Documents.  Each Lender agrees that receipt of notice to it (as provided in the next sentence) specifying that the Communications have been posted to the Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Financing Documents.  Each Lender agrees to notify the Administrative Agent in writing (including by electronic communication) from time to time of such Lender’s e-mail address to which the foregoing notice may be sent by electronic transmission and that the foregoing notice may be sent to such e-mail address.

(h)Nothing herein shall prejudice the right of the Administrative Agent or any Lender to give notice or other communications pursuant to any Financing Document in any other manner specified in such Financing Document.

10.2Right to Set-Off

.  If an Event of Default shall have occurred and be continuing, each Lender is hereby authorized at any time and from time to time, except to the extent prohibited by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the account of any Loan Party against any of and all the obligations of any Loan Party now or hereafter existing under this Agreement and other Financing Documents held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or such other Financing Document and although such obligations may be unmatured; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender under this Section 10.2 are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.

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10.3Delay and Waiver

.  No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Financing Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder or under any other Financing Document preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided, and provided under each other Financing Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

Notwithstanding anything to the contrary contained herein or in any other Financing Document, the authority to enforce rights and remedies hereunder and under the other Financing Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.2 for the benefit of all the Lenders; provided, however, that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Financing Documents, (b) any Lender from exercising setoff rights in accordance with Section 10.2 (subject to the terms of Section 2.5), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Bankruptcy Law; and provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and under the other Financing Documents, then (i) the Majority Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.2 and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 2.5, any Lender may, with the consent of the Majority Lenders, enforce any rights and remedies available to it and as authorized by the Majority Lenders.

10.4Costs, Expenses and Attorney’s Fees

.  The Borrower shall pay all reasonable costs and out-of-pocket expenses (a) incurred by the Agents and their Affiliates, Depositary and any Lender in connection with the preparation, negotiation, closing and costs of administering this Agreement and the other Financing Documents (whether or not the transactions contemplated hereby or thereby shall be consummated and regardless of whether any Borrowing Date occurs) or in connection with any amendments, modifications or waivers of the provisions hereof and thereof, including the reasonable fees, out-of-pocket expenses and disbursements of any single counsel for the Agents and one local counsel in each applicable jurisdiction (and, in the event of any conflict of interest, one additional counsel of each type to the affected parties) or (b) incurred by the Agents and their Affiliates, Depositary  or any Lender in connection with the enforcement or protection of its rights under this Agreement and the other Financing Documents or in connection with the Loans or the performance of this Agreement (including, for the avoidance of doubt, any expenses related to an Incremental Loan Commitment, review of a Potential New Fund, or review of potential new Systems); provided, however, that the reimbursement provided by the Borrower for the benefit of the Administrative Agent pursuant to clause (a) of this Section 10.4 for legal expenses incurred prior to the Closing Date shall be subject to the limitation set forth in Section 4 of the Engagement Letter.

10.5Entire Agreement

.  This Agreement, the Fee Letters and the other Financing Documents constitute the entire contract between the parties relative to the subject matter hereof

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and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the Parties. There are no unwritten oral agreements among the parties. Any other previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement and the other Financing Documents.  Nothing in this Agreement or in the other Financing Documents, expressed or implied, is intended to confer upon any Person (other than the parties hereto and thereto, their respective successors and assigns permitted hereunder and, to the extent expressly contemplated hereby, the Related Parties of each of the Agents and the Lenders) any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Financing Documents.

10.6Governing Law

.  THIS AGREEMENT, THE OTHER FINANCING DOCUMENTS, AND ANY INSTRUMENT OR AGREEMENT REQUIRED HEREUNDER (TO THE EXTENT NOT EXPRESSLY PROVIDED FOR THEREIN) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

10.7Severability

.  In case any one or more of the provisions contained in this Agreement or any other Financing Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction).  The parties hereto shall enter into good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

10.8Headings

.  Article, Section and paragraph headings and the table of contents used herein have been inserted in this Agreement as a matter of convenience for reference only and are not a part of this Agreement and shall not be used in the interpretation of any provision of this Agreement.

10.9Accounting Terms

.  All accounting terms not specifically defined herein shall be construed in accordance with GAAP and practices consistent with those applied in the preparation of the financial statements submitted by the Borrower to the Administrative Agent and Lenders pursuant to this Agreement, and (unless otherwise indicated) all financial data submitted pursuant to this Agreement shall be prepared in accordance with such principles and practices consistently applied.

10.10No Partnership, Etc.

The Agents, the Lenders and the Borrower intend that the relationship between them shall be solely that of creditor and debtor.  Nothing contained in this Agreement, the Notes or in any of the other Financing Documents shall be deemed or construed to create a partnership, tenancy-in-common, joint tenancy, joint venture or co-ownership by or between or among the Agents, the Lenders and the Borrower or any other Person.  Neither the Agents nor the Lenders shall be in any way responsible or liable for the debts, losses, obligations or duties of the Borrower or any other Person with respect to the Systems or otherwise.  All obligations to pay real property or other taxes, assessments, insurance premiums, and all other fees and charges arising from the ownership, operation or occupancy of the Systems and to perform all

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obligations under other agreements and contracts relating to the Systems shall be the sole responsibility of the Borrower.

10.11Waiver of Jury Trial

.  EACH PARTY HERETO HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT.  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER FINANCING DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.11.

10.12Consent to Jurisdiction; Service of Process

.

(a)Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the courts of the State of New York, sitting in the Borough of Manhattan, The City of New York, New York, United States of America, or of the United States of America for the Southern District of New York sitting in the Borough of Manhattan, The City of New York, New York, United States of America, any appellate court from any thereof, in any legal action or proceeding arising out of or relating to this Agreement or the other Financing Documents, or for the recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such courts of the State of New York or, to the extent permitted by law, such Federal court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Agreement shall affect any right that the Administrative Agent, the Collateral Agent, or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or the other Financing Documents against the Loan Parties or their respective properties in the courts of any jurisdiction.

(b)Each of the parties hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Financing Documents in any courts of the State of New York or Federal court, each sitting in the Borough of Manhattan, The City of New York, New York, United States of America.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.  Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 10.1.  Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

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10.13Interest Rate Limitation

.  Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section 10.13 shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Rate to the date of repayment, shall have been received by such Lender.

10.14Successors and Assigns

.

(a)Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and agreements by or on behalf of any Loan Party, the Agents or the Lenders that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.

(b)No Loan Party shall assign or delegate any of its rights or duties under this Agreement or any Financing Document without the prior written consent of the Administrative Agent and each Lender, and any attempted assignment shall be null and void.

10.15Patriot Act Compliance

.  The Administrative Agent hereby notifies the Borrower that, pursuant to the requirements of the Patriot Act, it and any other Agent and any Lender shall be required to obtain, verify and record information that identifies the Borrower and the Borrower Member, which information includes the names and addresses and other information that will allow it, any other Agent or any Lender to identify the Borrower and the Borrower Member in accordance with the requirements of the Patriot Act.  The Borrower shall promptly deliver information described in the immediately preceding sentence when requested by the Administrative Agent, any other Agent or any Lender in writing pursuant to the requirements of the Patriot Act, and shall promptly deliver such other information when requested by the Administrative Agent, any other Agent or any Lender in writing pursuant to such Person’s ongoing obligations under “know your customer” and anti-money laundering rules and regulations.

10.16Binding Effect; Counterparts

.

(a)This Agreement shall become effective when it shall have been executed by the Borrower and each of the Agents and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto.

(b)This Agreement may be executed in one or more duplicate counterparts and by facsimile or other electronic transmission, each of which shall constitute an original but all of which shall become effective as provided in clause (a) above.  Delivery of an executed signature

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page to this Agreement by facsimile transmission shall be as effective as delivery of a manually signed counterparty of this Agreement.

10.17Confidentiality

.  Each of the Agents and the Lenders agree to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ officers, directors, employees, agents, advisors, counsel and representatives (collectively, its “Representatives”) who have the need to know the Information to evaluate or engage in transactions contemplated by the Financing Documents (it being understood that, prior to any such disclosure, the Representative has signed a non-use and non-disclosure agreement in content similar to the provisions of this Section 10.17 or have otherwise been instructed by the Agent or Lender, as applicable, not to disclose such Information and to treat such Information confidentially in accordance with the terms of this Section 10.17), (b) to the extent requested or required by any governmental agency or other regulatory authority (including any self-regulatory organization having or claiming to have jurisdiction) or in connection with any legal proceedings to make any disclosure that is prohibited or otherwise constrained by this Section 10.17, the Agent or Lender, as applicable, will (other than in connection with any regulatory inquiry or proceeding), to the extent reasonably practicable and permitted by law, judicial or regulatory authority, provide the Borrower and Borrower Member with prompt written notice of such requirement so that the Borrower or Borrower Member, as the case may be, may seek a protective order or other appropriate relief (at the Borrower’s sole expense), and subject to the foregoing, such Agent or Lender, as applicable, may furnish that portion (and only that portion) of the Information that the Agent or Lender, as applicable, is legally compelled or is otherwise required to disclose without liability hereunder, (c) subject to an agreement containing provisions substantially the same as those of this Section 10.17, to (i) any actual or prospective assignee of or participant in any of its rights or obligations under this Agreement and the other Financing Documents or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower or any of its obligations, (d) with the consent of the Borrower or (e) to the extent such Information becomes publicly known or generally made available other than as a result of a breach of this Section 10.17.  For the purposes of this Section 10.17, “Information” shall mean (A) any information disclosed by the Borrower, Borrower Member or its Affiliates, either directly or indirectly, in writing, orally or by inspection of tangible objects, including without limitation, algorithms, business plans, customer data, customer lists, customer names, designs documents, drawing, engineering information, financial analysis, forecasts, formulas, hardware configuration information, know-how, ideas, inventions, market information, marketing plans, processes, products, product plans, research, specifications, software, data tags and content, source code, trade secrets or any other information which is designated as “confidential,” “proprietary” or some similar designation or should be reasonably be understood by the receiving party as being confidential, (B) any information otherwise obtained, directly or indirectly, by a receiving party through inspection, review or analysis of the disclosed information and (C) this Agreement, the terms hereof and the transactions contemplated hereby.  Information that is disclosed orally shall be “Information” for purposes of this Section 10.17 if it is (x) designated as confidential at the time of disclosure or within a reasonable time after disclosure; or (y) should be reasonably understood to be confidential.  Information may also include information of a third party that is in the possession of the Borrower, Borrower Member or its Affiliate and is disclosed to the Agents and the Lenders in connection with this Agreement.  Clause (a) and (b) of the definition of Information shall not, however, include any information that (1) was publicly known and made generally available in the public domain prior to the time of disclosure, (2)

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becomes publicly known and made generally available after disclosure other than as a result of a breach of this Section 10.17, (3) is already in the possession of the Agent or Lender at the time of disclosure as shown by the Agent’s or Lender’s files and records immediately prior to the time of disclosure, (4) is obtained by the Agent or Lender from a third party lawfully in possession of such information and without a breach of such third party’s obligations of confidentiality, or (5) is independently developed by the Agent or Lender without use or reference to the Borrower’s, Borrower Member’s or their Affiliates’ Information, as shown by documents and other competent evidence in the Agent’s or Lender’s possession.  Any Person required to maintain the confidentiality of Information as provided in this Section 10.17 shall be considered to have complied with its obligation to do so if such Person has taken at least those measures that it take to protect its own confidential information of a similar nature, but in no case less than reasonable care (including, without limitation, all precautions the Agent or Lender employs with respect to its confidential materials).  For the avoidance of doubt, any and all Borrower Materials are subject to the confidentiality provisions of this Section 10.17.

10.18Survival of Agreements

.  All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Financing Document shall be considered to have been relied upon by the Lenders and shall survive the making by the Lenders of the Loans, regardless of any investigation made by the Lenders or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any Fees or any other amount payable under this Agreement or any other Financing Document is outstanding and unpaid and so long as the Commitments have not been terminated.  The provisions of Sections 2.4(d), 2.6, 2.7, 5.9, 5.10, 10.4 and 10.18 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the expiration of the Commitments, the invalidity or unenforceability of any term or provision of this Agreement or any other Financing Document, or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent or any Lender.

10.19Electronic Execution of Assignments and Certain Other Documents

.  The words “execute,” “execution,” “signed,” “signature,” and words of like import in any document to be signed in connection with this Agreement and the transactions contemplated hereby (including assignment agreements, amendments or other modifications, Borrowing Notices, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Administrative Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that notwithstanding anything contained herein to the contrary, solely with respect to the Administrative Agent’s “Cash Pro” electronic platform and the Platform, the Administrative Agent is under no obligation to agree to accept electronic signatures in any form or in any format unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it.

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

ARTICLE 11
GUARANTY

11.1The Guarantee

.

Each Guarantor hereby jointly and severally with the other Guarantors guarantees, as a primary obligor and not as a surety to each Secured Party and their respective successors and assigns, the prompt payment in full when due (whether at stated maturity, by required prepayment, declaration, demand, by acceleration or otherwise) of the principal of and interest (including any interest, fees, costs or charges that would accrue but for the provisions of (i) the Title 11 of the United States Code after any bankruptcy or insolvency petition under Title 11 of the United States Code and (ii) any other Bankruptcy Laws) on the Loans made by the Lenders to, and the Notes, if any, held by each Lender of, the Borrower (other than such Guarantor), in each case strictly in accordance with the terms thereof (such obligations being herein collectively called the “Guaranteed Obligations”).  The Guarantors hereby jointly and severally agree that if the Borrower or other Guarantor(s) shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise) any of the Guaranteed Obligations, the Guarantors will promptly pay the same in cash, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or renewal.

11.2Obligations Unconditional

.

The obligations of the Guarantors under Section 11.1 shall constitute a guarantee of payment and to the fullest extent permitted by applicable Law, are absolute, irrevocable and unconditional, joint and several, irrespective of the value, genuineness, validity, regularity or enforceability of the Guaranteed Obligations of the Borrower under this Agreement, the Notes, if any, or any other agreement or instrument referred to herein or therein, or any substitution, release or exchange of any other guarantee of or security for any of the Guaranteed Obligations, and, irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or Guarantor (except for payment in full).  Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of the Guarantors hereunder which shall remain absolute, irrevocable and unconditional under any and all circumstances as described above:

(A) at any time or from time to time, without notice to the Guarantors, to the extent permitted by Law, the time for any performance of or compliance with any of the Guaranteed Obligations shall be extended, or such performance or compliance shall be waived;

(B) any of the acts mentioned in any of the provisions of this Agreement or the Notes, if any, or any other agreement or instrument referred to herein or therein shall be done or omitted;

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(C) the maturity of any of the Guaranteed Obligations shall be accelerated, or any of the Guaranteed Obligations shall be amended in any respect, or any right under the Financing Documents or any other agreement or instrument referred to herein or therein shall be amended or waived in any respect or any other guarantee of any of the Guaranteed Obligations or except as permitted pursuant to Section 11.9, any security therefor shall be released or exchanged in whole or in part or otherwise dealt with;

(D) any Lien or security interest granted to, or in favor of any Lender or Agent as security for any of the Guaranteed Obligations shall fail to be perfected; or

(E) the release of any other Guarantor pursuant to Section 11.9 or otherwise.

The Guarantors hereby expressly waive diligence, presentment, demand of payment, protest and, to the extent permitted by Law, all notices whatsoever, and any requirement that any Secured Party exhaust any right, power or remedy or proceed against the Borrower under this Agreement or the Notes, if any, or any other agreement or instrument referred to herein or therein, or against any other person under any other guarantee of, or security for, any of the Guaranteed Obligations.  The Guarantors waive, to the extent permitted by Law, any and all notice of the creation, renewal, extension, waiver, termination or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by any Secured Party upon this Guarantee or acceptance of this Guarantee, and the Guaranteed Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Guarantee, and all dealings between the Borrower and the Secured Parties shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee.  This Guarantee shall be construed as a continuing, absolute, irrevocable and unconditional guarantee of payment without regard to any right of offset with respect to the Guaranteed Obligations at any time or from time to time held by Secured Parties, and the obligations and liabilities of the Guarantors hereunder shall not be conditioned or contingent upon the pursuit by the Secured Parties or any other person at any time of any right or remedy against the Borrower or against any other person which may be or become liable in respect of all or any part of the Guaranteed Obligations or against any collateral security or guarantee therefor or right of offset with respect thereto.  This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantors and the successors and assigns thereof, and shall inure to the benefit of the Lenders, and their respective successors and assigns, notwithstanding that from time to time during the term of this Agreement there may be no Guaranteed Obligations outstanding.

11.3Reinstatement

.

The obligations of the Guarantors under this Article 11 shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of the Borrower or other Loan Party in respect of the Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise.

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

11.4Subrogation; Subordination

.

Each Guarantor hereby agrees that until the payment and satisfaction in full in cash of all Guaranteed Obligations and the expiration and termination of the Commitments of the Lenders under this Agreement it shall waive any claim and shall not exercise any right or remedy, direct or indirect, arising by reason of any performance by it of its guarantee in Section 11.1, whether by subrogation or otherwise, against the Borrower or any other Guarantor of any of the Guaranteed Obligations or any security for any of the Guaranteed Obligations.  Any Indebtedness of any Loan Party permitted pursuant to this Agreement shall be subordinated to such Loan Party’s Obligations in the manner set forth in documentation acceptable in form and substance to the Administrative Agent.

11.5Remedies

.

The Guarantors jointly and severally agree that, as between the Guarantors and the Lenders, the obligations of the Borrower under this Agreement and the Notes, if any, may be declared to be forthwith due and payable as provided in Section 8.2 (and shall be deemed to have become automatically due and payable in the circumstances provided in Section 8.2) for purposes of Section 11.1, notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against the Borrower and that, in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether or not due and payable by the Borrower) shall forthwith become due and payable by the Guarantors for purposes of Section 11.1.

11.6Instrument for the Payment of Money

.

Each Guarantor hereby acknowledges that the guarantee in this Article 11 constitutes an instrument for the payment of money, and consents and agrees that any Lender or Agent, at its sole option, in the event of a dispute by such Guarantor in the payment of any moneys due hereunder, shall have the right to bring a motion-action under New York CPLR Section 3213.

11.7Continuing Guarantee

.

The guarantee in this Article 11 is a continuing guarantee of payment, and shall apply to all Guaranteed Obligations whenever arising.

11.8General Limitation on Guarantee Obligations

.

In any action or proceeding involving any state corporate limited partnership or limited liability company law, or any applicable state, federal or foreign bankruptcy, insolvency, reorganization or other Law affecting the rights of creditors generally, if the obligations of any Guarantor under Section 11.1 would otherwise be held or determined to be void, voidable, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under Section 11.1, then, notwithstanding any other provision to the contrary, the amount of such liability shall, without any further action by such Guarantor, any Loan Party or any other person, be automatically limited and reduced to the highest amount (after giving effect to the right of contribution established in Section 11.10) that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

11.9Release of Guarantors

.

When all of the Loans and any other Obligations of the Loan Parties hereunder which are accrued and payable have been indefeasibly paid in full or satisfied in full, this Agreement and the Guarantees made herein shall terminate with respect to all Obligations, except with respect to Obligations that expressly survive such repayment pursuant to the terms of this Agreement.

11.10Right of Contribution

.

Each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor hereunder which has not paid its proportionate share of such payment.  Each Guarantor’s right of contribution shall be subject to the terms and conditions of Section 11.4.  The provisions of this Section 11.10 shall in no respect limit the obligations and liabilities of any Guarantor to the Administrative Agent and the Lenders, and each Guarantor shall remain liable to the Administrative Agent and the Lenders for the full amount guaranteed by such Guarantor hereunder.

11.11Keepwell

.

Each Qualified ECP Guarantor hereby jointly and severally, absolutely, unconditionally and irrevocably undertakes to provide such funds or other support to each Specified Guarantor as may be needed by such Specified Guarantor from time to time to honor all of its obligations under its Guarantee of the Guaranteed Obligations and the other Financing Documents in respect of any Swap Obligation (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section for up to the maximum amount of such liability that can be hereby incurred without rendering such Qualified ECP Guarantor’s obligations and undertakings under this Article 11 voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations and undertakings of each Qualified ECP Guarantor under this Section shall remain in full force and effect until the date upon which all Commitments under this Agreement have been terminated and all Obligations have been indefeasibly paid and performed in full. Each Qualified ECP Guarantor intends that this Section constitute, and this Section shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each Specified Guarantor for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

11.12Limited Recourse.

Notwithstanding anything to the contrary in this Agreement, (i) the obligations of the Loan Parties under this Agreement and the other Financing Documents, and any certificate, notice, instrument or document delivered pursuant hereto or thereto are obligations of the Loan Parties and do not constitute a debt or obligation of (and no recourse shall be had with respect thereto to) the Nonrecourse Parties except to the extent of the obligations of any such Nonrecourse Parties expressly provided for in any of the Financing Documents and (ii) the Secured Parties’ shall not have recourse to the assets of Borrower Member other than the Equity Interests in the Borrower owned by Borrower Member (and any proceeds thereof and any contractual rights or claims with respect thereto) for payment and/or satisfaction of the Guarantee set forth in this Article 11. Except as provided in the Financing Documents to which they are a party, no claim of deficiency with respect to the obligations of the Loan Parties under this Agreement and the other

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

Financing Documents shall be brought against the Nonrecourse Parties by any Secured Party; provided, that nothing contained in this Section 11.12 shall be deemed to release any Nonrecourse Party from liability for its own breach, fraudulent actions or willful misconduct. For the avoidance of doubt, the Secured Parties shall have full recourse to each Guarantor other than Borrower Member in respect of the Guarantee set forth in this Article 11.

11.13Amendments with respect to a Permitted Swap Agreement.

The parties hereby acknowledge and agree that amendments and modifications to this Agreement and the other Financing Documents will be required in connection with the execution and delivery of a Permitted Swap Agreement and that such amendments and modifications must be in form, structure and substance acceptable to the Administrative Agent and Majority Lenders.

ARTICLE 12

CONVERSION TO REVOLVING LOANS

12.1Conversion to Revolving Loans.  The parties acknowledge and agree that all outstanding Loans are hereby converted from term loans to revolving loans, effective on the Restatement Date.

12.2Conversion to Revolving Commitments. The Loan Parties hereby represent, warrant and agree that the amount of each Lender’s Commitment and the outstanding principal amount of each Lender’s Loans, in each case as of the Restatement Date,  is accurately set forth on Annex 3 hereto. The parties acknowledge and agree that, on and after the Restatement Date until the end of the Availability Period, amounts borrowed and repaid hereunder may be reborrowed on the terms and subject to the conditions hereof.

12.3Effect of Amendment and Restatement. The parties hereto agree that, upon the Restatement Date and the satisfaction of the conditions precedent set forth in Section 3.5, the following transactions shall be deemed to occur automatically, without further action by any party hereto:

(i)the Original Loan Agreement shall be deemed to be amended and restated in its entirety in the form of this Agreement;

(ii)all Obligations outstanding on the Restatement Date (the “Existing Obligations”) shall, to the extent not paid on the Restatement Date, in all respects be continuing and shall be deemed to be Obligations outstanding hereunder;

(iii)the Liens and security interests in favor of Agents for the benefit of the Secured Parties securing payment of the Existing Obligations are in all respects continuing and in full force and effect with respect to all Obligations and are hereby reaffirmed; and

(iv)all references in the other Financing Documents to the Original Loan Agreement shall be deemed to refer without further amendment to this Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their officers thereunto duly authorized as of the Restatement Date.

VIVINT SOLAR FINANCING I, LLC,
a Delaware limited liability company

By: /s/ Thomas PlagemannName: Thomas Plagemann
Title:   Executive Vice President, Capital Markets

VIVINT SOLAR HOLDINGS, INC.,
a Delaware limited liability company

By: /s/ Thomas PlagemannName: Thomas Plagemann
Title:   Executive Vice President, Capital Markets

[Managing Member and Borrower Member signature pages to be added]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

Subsidiary Guarantors:

VIVINT SOLAR LIBERTY MANAGER, LLC

VIVINT SOLAR MARGAUX MANAGER, LLC

VIVINT SOLAR FUND III MANAGER, LLC

VIVINT SOLAR MIA MANAGER, LLC

VIVINT SOLAR AALIYAH MANAGER, LLC

VIVINT SOLAR REBECCA MANAGER, LLC

VIVINT SOLAR HANNAH MANAGER, LLC

VIVINT SOLAR NICOLE MANAGER, LLC

VIVINT SOLAR ELYSE MANAGER, LLC

VIVINT SOLAR OWNER I, LLC

VIVINT SOLAR FUND X MANAGER, LLC

VIVINT SOLAR FUND XI MANAGER, LLC

VIVINT SOLAR FUND XIII MANAGER, LLC and

VIVINT SOLAR FUND XIV MANAGER, LLC, as Subsidiary Guarantors

By: /s/ Thomas PlagemannName: Thomas Plagemann
Title:   Executive Vice President, Capital Markets

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

BANK OF AMERICA, N.A., as
Administrative Agent and as Collateral
Agent

By: /s/ Mollie S. CanupName: Mollie S. Canup
Title: Vice President

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

BANK OF AMERICA, N.A., as a Lender

By: /s/ Sheikh Omer-FarooqName: Sheikh Omer-Farooq
Title: Director

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

CIT FINANCE LLC, as a Lender

By: /s/ Rhys MarshName: Rhys Marsh
Title: Director

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

DEUTSCHE BANK AG, NEW YORK BRANCH, as a Lender

By: /s/ Vinod MukaniName: Vinod Mukani
Title: Director

By: /s/ Vanessa Lamort de GailName: Vanessa Lamort de Gail
Title: Director

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

NATIONAL BANK OF ARIZONA, as a Lender

By: /s/ Kate SmithName: Kate Smith
Title: Vice President

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

SOCIÉTÉ GÉNÉRALE, as a Lender

By: /s/ Roberto S SimonName: Roberto S Simon
Title: Managing Director

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

SILICON VALLEY BANK, as a Lender

By: /s/ Vince O’HaraName: Vince O’Hara
Title: Vice President

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

ING CAPITAL LLC, as a Lender

By: /s/ Erwin ThometName: Erwin Thomet
Title: Managing Director

By: /s/ Thomas CantelloName: Thomas Cantello
Title: Director

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

EXHIBIT A

to Loan Agreement

FORM OF NOTE

[See Attached]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

FORM OF NOTE

FOR VALUE RECEIVED, the undersigned (the “Borrower”), hereby promises to pay to _____________________ or registered assigns (the “Lender”), in accordance with the provisions of the Agreement (as hereinafter defined), the principal amount of each Loan from time to time made by the Lender to the Borrower under that certain Credit Agreement, dated as of September 12, 2014 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among the Borrower, the Guarantors from time to time party thereto, the Lenders from time to time party thereto, and Bank of America, N.A., as Lead Arranger, Administrative Agent and Collateral Agent.

The Borrower promises to pay interest on the unpaid principal amount of each Loan from the date of such Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Agreement. All payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent’s office.  If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Agreement.

This Note is one of the Notes referred to in the Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein.  Upon the occurrence and continuation of one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this Note may be declared to be, or may automatically become, immediately due and payable all as provided in the Agreement.  Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.

The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note.

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

VIVINT SOLAR FINANCING I, LLC

By:  

Name:  

Title:

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

LOANS AND PAYMENTS with respect thereto

Date Type of Loan Made Amount of Loan Made End of Interest Period Amount of Principal or Interest Paid This Date Outstanding Principal Balance This Date Notation Made By

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

EXHIBIT B-1

to Loan Agreement

FORM OF BORROWING NOTICE

[See Attached]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

FORM OF BORROWING NOTICE

Date:____________

Requested Borrowing Date:______________

Bank of America, N.A.

Administrative Agent
901 Main Street

Dallas, TX 75202-3714

Telephone:  (972) 338-3774

Telecopy:  (214) 290-8384

diana.r.lopez@baml.com

Gateway Village

900 W Trade Street

Charlotte NC 28255

Attention: Darleen R Parmelee

Telephone: 980.388.5001

Telecopier: 704.409.0645

Electronic Mail: darleen.r.parmelee@baml.com

Re:Project Spotlight Master Credit Facility

This Borrowing Notice is delivered to you pursuant to Section 2.1(a)(iii) of the Loan Agreement dated as of September 12, 2014, (as amended, modified or supplemented and in effect from time to time, the “Loan Agreement”) by and among Vivint Solar Financing I, LLC, a Delaware limited liability company (the “Borrower”), Vivint Solar Holdings, Inc., a Delaware corporation (the “Member”) and each guarantor from time to time party thereto (collectively and together with the Member, the “Guarantors” and individually, a “Guarantor”), each lender from time to time party thereto (collectively, the “Lenders” and individually, a “Lender”), and Bank of America, N.A., as Collateral Agent, and as Administrative Agent (together with its successors and permitted assigns in such capacity, the “Administrative Agent”), pursuant to which the Lenders have agreed to make Loans to the Borrower. Each capitalized term used and not otherwise defined herein shall have the meaning assigned thereto in Section 1.1 of the Loan Agreement.  

This Borrowing Notice constitutes a request for a Loan as set forth below:

1.The aggregate principal amount of the Loan requested is $_____________ (the “Requested Amount”).²

2.The Borrowing Date of the Loan requested is ____________ (the “Requested Borrowing Date”), which is a Business Day.

²  The Requested Amount must exceed $2,500,000 or such lesser amount as is remaining under the Total Loan Commitment. The total aggregate principal amount advanced to date under the Loan Agreement, when aggregated with the Requested Amount, must not exceed the Total Loan Commitment.

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

3.The Interest Period of the Loan requested is [one (1) month]/[two (2) months]/[three (3) months].

4.Proceeds of the Loan requested should be directed to the following account[s]:

[_______]

The undersigned further confirms and certifies to Administrative Agent and each Lender that, as of the date hereof:

(a)The Requested Amount, when aggregated with the Outstanding Principal, is no greater than the Available Borrowing Base;

(b)Attached hereto as  Schedule 1 is a Borrowing Base Certificate, dated as of the date hereof;

(c)Attached hereto as Schedule 2 is the proposed updated Advance Model for each Subject Fund; and

(d)Attached hereto as Schedule 3 is a Borrowing Date Certificate, delivered pursuant to Section 3.2(a) of the Loan Agreement.

[Remainder of page intentionally left blank]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

IN WITNESS WHEREOF, the undersigned has caused this Borrowing Notice to be executed as of the date first written above.

VIVINT SOLAR FINANCING I, LLC,
a Delaware limited liability company, as Borrower

By: _____________________________________
Name:
Title:

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

Schedule 1

Borrowing Base Certificate

[See Attached.]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

Schedule 2

Advance Model

[See Attached.]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

Schedule 3

Borrowing Date Certificate

[See Attached.]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

EXHIBIT B-2

to Loan Agreement

FORM OF CONTINUATION NOTICE

[See Attached]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

FORM OF CONTINUATION NOTICE

Date:____________

Bank of America, N.A.

Administrative Agent
901 Main Street

Dallas, TX 75202-3714

Telephone:  (972) 338-3774

Telecopy:  (214) 290-8384

diana.r.lopez@baml.com

Gateway Village

900 W Trade Street

Charlotte NC 28255

Attention: Darleen R Parmelee

Telephone: 980.388.5001

Telecopier: 704.409.0645

Electronic Mail: darleen.r.parmelee@baml.com

Re:Project Spotlight Master Credit Facility

This Continuation Notice is delivered to you pursuant to Section 2.1(a)(iii) of the Loan Agreement dated as of September 12, 2014, (as amended, modified or supplemented and in effect from time to time, the “Loan Agreement”) by and among Vivint Solar Financing I, LLC, a Delaware limited liability company (the “Borrower”), Vivint Solar Holdings, Inc., a Delaware corporation (the “Member”) and each guarantor from time to time party thereto (collectively and together with the Member, the “Guarantors” and individually, a “Guarantor”), each lender from time to time party thereto (collectively, the “Lenders” and individually, a “Lender”), and Bank of America, N.A., as Collateral Agent, and as Administrative Agent (together with its successors and permitted assigns in such capacity, the “Administrative Agent”), pursuant to which the Lenders have agreed to make Loans to the Borrower. Each capitalized term used and not otherwise defined herein shall have the meaning assigned thereto in Section 1.1 of the Loan Agreement.  

This Continuation Notice constitutes a request to continue a LIBO Rate Loan as set forth below:

1.The aggregate principal amount of the Loan was originally $__________ and is currently $_____________.

2.The Borrowing Date of the Loan was ____________.

3.The Interest Period of the Loan is currently [one (1) month]/[two (2) months]/[three (3) months] and is requested to be continued as [one (1) month]/[two (2) months]/[three (3) months].

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

IN WITNESS WHEREOF, the undersigned has caused this Continuation Notice to be executed as of the date first written above.

VIVINT SOLAR FINANCING I, LLC,
a Delaware limited liability company, as Borrower

By: _____________________________________
Name:
Title:

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

EXHIBIT C

to Loan Agreement

FORM OF ASSIGNMENT AND ACCEPTANCE

[See Attached]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

FORM OF ASSIGNMENT AND ACCEPTANCE

This Assignment and Acceptance (this “Assignment and Acceptance”) is dated as of the Effective Date set forth below and is entered into by and between [the][each]³ Assignor identified in item 1 below ([the][each, an] “Assignor”) and [the][each]⁴ Assignee identified in item 2 below ([the][each, an] “Assignee”).  [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees]⁵ hereunder are several and not joint.]⁶  Capitalized terms used but not defined herein shall have the meanings given to them in the Loan Agreement identified below (as amended, the “Loan Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto (the “Standard Terms”) are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Acceptance as if set forth herein in full.

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and the Loan Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Loan Agreement and any other documents or instruments delivered pursuant thereto in the amount[s] and equal to the percentage interest[s] identified below of all the outstanding rights and obligations under the respective facilities identified below, and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with the Loan Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as [the][an] “Assigned Interest”).  Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly provided in this Assignment and Acceptance, without representation or warranty by [the][any] Assignor.

1.Assignor[s]:______________________________

______________________________

[Assignor [is] [is not] a Defaulting Lender]

³  For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language.  If the assignment is from multiple Assignors, choose the second bracketed language.

⁴  For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language.  If the assignment is to multiple Assignees, choose the second bracketed language.

⁵  Select as appropriate.

⁶  Include bracketed language if there are either multiple Assignors or multiple Assignees.

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

2. Assignee[s]:______________________________

______________________________

[for each Assignee, indicate [Lender], [Affiliate] of [identify Lender], or [other Person (other than the Borrower, Sponsor, a Subject Fund or any of their respective Affiliates)]]

3.Borrower(s):______________________________

4. Administrative Agent: Bank of America, N.A., as the administrative agent under the Loan Agreement

5. Loan Agreement:Loan Agreement, dated as of September 12, 2014 among Vivint Solar Financing I, LLC, the Guarantors from time to time party thereto, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent and Collateral Agent

6.Assigned Interest[s]:

Assignor[s]7	Assignee[s]8	Facility Assigned9	Aggregate Amount of Commitment/Loans for all Lenders10	Amount of Commitment/Loans Assigned	Percentage Assigned of Commitment/ Loans11	CUSIP Number
		____________	$________________	$_________	____________%
		____________	$________________	$_________	____________%
		____________	$________________	$_________	____________%

[7.Trade Date:__________________]¹²

⁷  List each Assignor, as appropriate.

⁸  List each Assignee and, if available, its market entity identifier, as appropriate.

⁹  Fill in the appropriate terminology for the types of facilities under the Loan Agreement that are being assigned under this Assignment (e.g., “Term Loan Commitment”, etc.).

¹⁰  Amounts in this column and in the column immediately to the right to be adjusted to take into account any payments or prepayments made between the Trade Date and the Effective Date.

¹¹  Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

¹²  To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date.

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

Effective Date: __________________, 20__ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Acceptance are hereby agreed to:

ASSIGNOR[S]¹³

[NAME OF ASSIGNOR]

By: _____________________________

[NAME OF ASSIGNOR]

By: _____________________________

Title:

ASSIGNEE[S]¹⁴

[NAME OF ASSIGNEE]

By: _____________________________

Title:

[NAME OF ASSIGNEE]

By: _____________________________

Title:

¹³  Add additional signature blocks as needed. Include both Fund/Pension Plan and manager making the trade (if applicable).

¹⁴  Add additional signature blocks as needed. Include both Fund/Pension Plan and manager making the trade (if applicable).

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

Consented to and Accepted:

BANK OF AMERICA, N.A., as

  Administrative Agent

By: _________________________________

      Title:

[VIVINT SOLAR FINANCING I LLC, as

Borrower

By: _________________________________

      Title:]¹⁵

¹⁵  To be included to the extent Borrower consent is required.

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

ANNEX 1 TO ASSIGNMENT AND ACCEPTANCE

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ACCEPTANCE

1.Representations and Warranties.

1.1.Assignor.  [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][[the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby and (iv) it is [not] a Defaulting Lender; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Loan Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

1.2.Assignee.  [The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby and to become a Lender under the Loan Agreement, (ii) it is an Eligible Assignee pursuant to the Loan Agreement, (iii) from and after the Effective Date, it shall be bound by the provisions of the Loan Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by [the][such] Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire [the][such] Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Loan Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 5.3 thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance and to purchase [the][such] Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Acceptance and to purchase [the][such] Assigned Interest, and (vii) if it is a Foreign Lender, attached hereto is any documentation required to be delivered by it pursuant to the terms of the Loan Agreement, duly completed and executed by [the][such] Assignee; and (b) agrees that (i) it will, independently and without reliance upon the Administrative Agent, [the][any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

2.Payments.  From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignor for amounts which have accrued

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

to but excluding the Effective Date and to [the][the relevant] Assignee for amounts which have accrued from and after the Effective Date.  Notwithstanding the foregoing, the Administrative Agent shall make all payments of interest, fees or other amounts paid or payable in kind from and after the Effective Date to [the][the relevant] Assignee. 

3.General Provisions.  This Assignment and Acceptance shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment and Acceptance may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Acceptance by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance.  This Assignment and Acceptance shall be governed by, and construed in accordance with, the law of the State of New York.

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

EXHIBIT D

to Loan Agreement

FORM OF INCREMENTAL LOAN COMMITMENT INCREASE NOTICE

[See Attached]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

INCREMENTAL LOAN COMMITMENT INCREASE NOTICE

Bank of America, N.A.
901 Main Street
Dallas, TX 75202-3714
Attention:Diana Lopez
Telephone:(972) 338-3774
Telecopy: (214) 290-8384
Email:diana.r.lopez@baml.com

Gateway Village

900 W Trade Street

Charlotte NC 28255

Attention: Darleen R Parmelee

Telephone: 980.388.5001

Telecopier: 704.409.0645

Electronic Mail: darleen.r.parmelee@baml.com

[DATE]

Re:Vivint Solar Financing I, LLC

Incremental Loan Commitment Increase Notice

Ladies and Gentlemen:

The undersigned, Vivint Solar Financing I, LLC, a Delaware limited liability company (the “Borrower”), refers to the Loan Agreement, dated as of September 12, 2014, as amended from time to time, restated, supplemented or otherwise modified (the “Loan Agreement”) by and among the Borrower, the Guarantors from time to time party thereto, the Lenders from time to time party thereto, Bank of America, N.A., as Lead Arranger, as administrative agent (in such capacity, including any successor thereto, the “Administrative Agent”) for the Lenders and as collateral agent (in such capacity, including any successor thereto, the “Collateral Agent”) for the Secured Parties, and the other Persons party thereto.  Capitalized terms used herein but not otherwise defined herein shall have the respective meanings set forth in the Loan Agreement.

The Borrower hereby requests an Incremental Loan Commitment Increase under Section 2.9 of the Loan Agreement (the “Proposed Incremental Loan Commitment Increase”) and in connection therewith certifies as follows:

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

(a)The requested effective date of the Proposed Incremental Loan Commitment Increase is _________, 20__.¹⁶ 

(b)The aggregate amount of the Proposed Incremental Loan Commitment Increase is ____________ Dollars ($_____).¹⁷

(c)The maturity date and interest rate of Incremental Loans related to such Proposed Incremental Loan Commitment Increase are _________ and _________.¹⁸

(d)The upfront fees the Borrower proposes to pay to participating Lenders in such Proposed Incremental Loan Commitment Increase are ____________.

(e)The Available Borrowing Base exceeds $175 million.

(f)Immediately before and after giving effect to the Proposed Incremental Loan Commitment Increase, the Borrower is in compliance, and will be in pro forma compliance, with the Borrowing Base Requirements.

(g)no Default, Event of Default or Repayment Event has occurred and is continuing.

[The remainder of this page is intentionally blank.  The next page is the signature page.]

¹⁶  Such date must be no less than sixty (60) days after the date of such notice.

¹⁷  Request must comply with the applicable provisions of the Loan Agreement, including Section 2.9(a)(ii)-(viii).

¹⁸  The proposed maturity date must be no earlier than the Loan Maturity Date of the Initial Loans.

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

IN WITNESS WHEREOF, the undersigned has executed this Incremental Loan Increase Notice as of the date first written above.

VIVINT SOLAR FINANCING I, LLC,

a Delaware limited liability company, as Borrower

By:Name:
Title:

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

EXHIBIT E

to Loan Agreement

FORM OF INCREASING INCREMENTAL LENDER CONFIRMATION

[See Attached]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

FORM OF INCREASING INCREMENTAL LENDER CONFIRMATION

Reference is made to the Loan Agreement, dated as of September 12, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”), among Vivint Solar Financing I, LLC, a Delaware limited liability company (the “Borrower”), the Guarantors from time to time party thereto, the Lenders from time to time party thereto, Bank of America, N.A., as Lead Arranger, as administrative agent for the Lenders (in such capacity, including any successor thereto, the “Administrative Agent”) and as collateral agent for the Secured Parties (in such capacity, including any successor thereto, the “Collateral Agent”), and the other Persons party thereto.  Capitalized terms used herein but not otherwise defined herein shall have the respective meanings set forth in the Loan Agreement.

The undersigned Lender hereby certifies that in accordance with Section 2.9(b) of the Loan Agreement and the Incremental Loan Increase Notice dated as of [•], 201[•], such Lender has agreed to increase its Incremental Loan Commitment under the Loan Agreement as of [•], 201[•] (the “Incremental Loan Increase Date”).  Such Incremental Loan Commitment Increase is subject to the satisfaction (or waiver) of the conditions set forth in Section 2.9(e) of the Loan Agreement on or prior to the Incremental Loan Commitment Increase Date.  After giving effect to such Incremental Loan Commitment Increase, the Commitments of such Lender shall be in the amounts set forth on Annex 1 hereto.  The Incremental Loan Commitments of such Lender shall have the Loan Maturity Date and Applicable Interest Rate set forth on Annex I hereto.

[The remainder of this page is intentionally blank.  The next page is the signature page.]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

IN WITNESS WHEREOF, the undersigned have caused this Increasing Incremental Lender Confirmation to be duly executed as of the date first above written.

[NAME OF INCREASING INCREMENTAL LENDER]

By:  

Name:

Title:

Date:

For acceptance and recordation in the register:

BANK OF AMERICA, N.A.,as Administrative Agent

By:
Name:  
Title:

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

Annex I
to Increasing Incremental Lender Confirmation

Lender's Undisbursed Commitment Pre- Commitment Increase	Lender's Outstanding Loans Pre-Commitment Increase	Lender's Undisbursed Commitment Post- Commitment Increase	Lender's Outstanding Loans Post-Commitment Increase
$	$	$	$

Incremental Loan Commitment Terms:

Loan Maturity Date	_________, 20__
Applicable Interest Rate	_______%
Upfront Fees

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

EXHIBIT F

to Loan Agreement

FORM OF NEW LENDER ACCESSION AGREEMENT

[See Attached]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

FORM OF NEW LENDER ACCESSION AGREEMENT

This ACCESSION AGREEMENT (this “Accession Agreement”), dated as of _________, is entered into by and among ____________ (the “New Lender”) Vivint Solar Financing I, LLC, a Delaware limited liability company (the “Borrower”) and Bank of America, N.A., administrative agent for the Lenders (the “Administrative Agent”).

RECITALS

WHEREAS, reference is made to the Loan Agreement, dated as of September 12, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”), among Vivint Solar Financing I, LLC, a Delaware limited liability company (the “Borrower”), the Guarantors from time to time party thereto, the Lenders from time to time party thereto, Bank of America, N.A., as the Administrative Agent and as collateral agent for the Secured Parties (in such capacity, including any successor thereto, the “Collateral Agent”), and the other Persons party thereto; and

WHEREAS, the New Lender has accepted an offer to provide an Incremental Loan Commitment to the Borrower on the terms set forth on Annex I attached hereto subject to the terms and conditions of the Loan Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1.  Definitions.  All capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Loan Agreement.

SECTION 2.  Assumption.  As of the effective date set forth on the signature page to this Accession Agreement (the “Effective Date”), subject to and in accordance with the Loan Agreement, the New Lender irrevocably agrees to provide the Incremental Loan Commitment on the terms set forth on Annex I subject to the terms and conditions of the Loan Agreement, including Section 2.9(f) of the Loan Agreement and the additional purchases of Commitments and Loans the New Lender is required to make thereunder.  The New Lender shall have all of the rights and be subject to all of the obligations in its capacity as a Lender under the Loan Agreement, each other Financing Document, and any other documents or instruments delivered pursuant thereto or in connection therewith and shall have all rights to all claims, suits, causes of action and any other right of a Lender against any Person, that arise from transactions, events or occurrences on or after the Effective Date, whether known or unknown, arising under or in connection with the Loan Agreement, each other Financing Document, and any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, statutory claims and all other claims at law or in equity.

Upon acceptance and recording of the assumption made pursuant to this Accession Agreement by the Administrative Agent, from and after the Effective Date, the Administrative Agent shall make all payments in respect of the Incremental Loan Commitment and any Incremental Loans made by

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

the New Lender (including all payments of principal, interest, fees and other amounts) to the New Lender for amounts that have accrued from and including the Effective Date.  

SECTION 3.  Representations, Warranties and Undertakings.  The New Lender: (i) represents and warrants that (A) it has full power and authority, and has taken all action necessary, to execute and deliver this Accession Agreement and to consummate the transactions contemplated hereby and to become a Lender under the Loan Agreement and the other Financing Documents and (B) it is not an Investor or the Sponsor, (ii) acknowledges and confirms that it has received a copy of the Loan Agreement, each other Financing Document and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Accession Agreement and to provide the Incremental Loan Commitment and any Incremental Loans made by the New Lender, on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Secured Party, (iii) agrees that it will, independently and without reliance upon the Administrative Agent, the Borrower, or any other Secured Party and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Agreement or any other Financing Document, (iv) appoints and authorizes each Agent and the Depositary to take such action as agent on its behalf and to exercise such powers under the Loan Agreement or the other Financing Documents as are delegated to such Agent or the Depositary, as applicable, by the terms thereof, together with such powers as are reasonably incidental thereto and (v) will perform in accordance with their terms all of the obligations that by the terms of the Financing Documents are required to be performed by it as a Lender.  The New Lender further confirms and agrees that in becoming a Lender and in making Loans under the Loan Agreement, such actions have and will be made without recourse to, or representation or warranty, by any Secured Party.

The New Lender further agrees to furnish to the Administrative Agent and, to the extent required by the Loan Agreement, the Borrower, no later than the Effective Date, an Administrative Questionnaire and any tax forms required under the Loan Agreement.

SECTION 4.  Effectiveness.  The effectiveness of the making of the Commitment hereunder is subject to (i) the due execution and delivery of this Accession Agreement by the New Lender, (ii) consent, not to be unreasonably withheld, by the Administrative Agent and the Borrower to this Accession Agreement, (iii) the registration of such Incremental Loan Commitment by the Administrative Agent in the Register and (iv) the satisfaction (or waiver) of each of the conditions set forth in Section 2.9(e) of the Loan Agreement.

Simultaneously with the execution and delivery by the parties hereto of this Accession Agreement to the Administrative Agent for its recording in the Register, the New Lender may request that Notes be executed and delivered to the New Lender reflecting the amounts of the Commitment of the New Lender.  

Except as otherwise provided in the Loan Agreement, effective as of the Effective Date, the New Lender shall be deemed automatically to have become a party to, and the New Lender agrees that it will be bound by the terms and conditions set forth in, the Loan Agreement, and shall have all

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

the rights and obligations of a “Lender” under the Loan Agreement and the other Financing Documents for the Loans and/or Commitments held by it as if it were an original signatory thereto or an original Lender thereunder.

SECTION 5. Governing Law. THIS ACCESSION AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

SECTION 6. Counterparts.  This Accession Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of this Accession Agreement by telecopy or portable document format (“pdf”) shall be effective as delivery of a manually executed counterpart of this Accession Agreement.

SECTION 7.  Further Assurances. The New Lender hereby agrees to execute and deliver such other instruments, and take such other action, as either the Borrower or the Administrative Agent may reasonably request in connection with the transactions contemplated by this Accession Agreement including, without limitation, the delivery of any notices to the Borrower or the Agents that may be required in connection herewith.

SECTION 8.  Binding Effect; Amendment.  This Accession Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, subject, however, to the provisions of the Loan Agreement.  No provision of this Accession Agreement may be amended, waived or otherwise modified except by an instrument in writing signed by the New Lender and the Administrative Agent.

SECTION 9.  Administrative Agent Enforcement.  The Administrative Agent shall be entitled to rely upon and enforce this Accession Agreement against the New Lender in all respects.

[The remainder of this page is intentionally blank.  The next page is the signature page.]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

IN WITNESS WHEREOF, the undersigned have caused this Accession Agreement to be duly executed by a Responsible Officer as of the date first above written.

The effective date for this Accession Agreement is the date this Accession Agreement is acknowledged and accepted by the Administrative Agent and the Borrower ____________, 20_____ (the “Effective Date”).

[NEW LENDER]

By: Name:
Title:

BANK OF AMERICA, N.A.
as Administrative Agent

By:
Name:  
Title:

VIVINT SOLAR FINANCING I, LLC,
as Borrower

By:
Name:  
Title:

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

Annex I
to New Lender Accession Agreement

Incremental Loan Commitment Terms:

New Lender’s Incremental Loan Commitment19
Loan Maturity Date	_________, 20__
Applicable Interest Rate	_______%
Upfront Fees

¹⁹  Does not include additional purchases of Commitments and Loans that New Lender is required to make pursuant to Section 2.9(f) of the Loan Agreement.

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

EXHIBIT G

to Loan Agreement

FORM OF BORROWING BASE CERTIFICATE

[See Attached]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

BORROWING BASE CERTIFICATE

This Borrowing Base Certificate (this “Borrowing Base Certificate”) dated as of ________ __, 20__, in respect of the period ending on ________ __, 20__ (the “Computation Date”) is delivered to you pursuant to Section 5.15 of the Loan Agreement dated as of September 12, 2014, (as amended, modified or supplemented and in effect from time to time, the “Loan Agreement”) by and among Vivint Solar Financing I, LLC, a Delaware limited liability company (the “Borrower”), the Guarantors from time to time party thereto, the Lenders from time to time party thereto, Bank of America, N.A., as Lead Arranger, as administrative agent for the Lenders (in such capacity, including any successor thereto, the “Administrative Agent”) and as collateral agent for the Secured Parties (in such capacity, including any successor thereto, the “Collateral Agent”), and the other Persons party thereto, pursuant to which the Lenders have agreed to make Loans to the Borrower. Each capitalized term used and not otherwise defined herein shall have the meaning assigned thereto in Section 1.1 of the Loan Agreement.

The undersigned Responsible Officer of Borrower hereby certifies, represents and warrants as of the date hereof that he/she is the __________ of Borrower, and that, as such, he/she is authorized to execute and deliver this Borrowing Base Certificate to the Administrative Agent on behalf of the Borrower, and that:

4.all information contained herein and attached hereto is true and complete, and calculations contained herein and attached hereto as Schedule 1 (the “Borrowing Base Certificate Calculations”) are true and complete.

5.to the extent not provided concurrently in connection with a Borrowing Notice dated of even date herewith, Schedule 2 hereto contains the Advance Models, Net Cash Flows and Revised Net Cash Flows for each Subject Fund used to calculate the Subject Fund Value for each such Subject Fund;

6.as of the date hereof, the Subject Fund Value, Subject Fund Borrowing Base and Advance Rate for each Subject Fund are as follows:

Subject Fund Subject Fund Value Advance Rate Subject Fund Borrowing Base

7.as of the date hereof, the Available Borrowing Base is $___________, and Outstanding Principal is $____________________;

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

8.as of the date hereof, no Subject Fund is a Watched Fund [other than the following:

Watched Fund Conditions/Circumstances causing Watched Fund

];

9.as of the date hereof, no System is a Defaulted System or a Non-Operable System  [other than the following: •];

10.as of the date hereof, the Borrower [is] [is not] in compliance with the Borrowing Base Requirement;

11.the Borrower is in compliance with Section 6.1 of the Loan Agreement as of the Quarterly Date for the calendar quarter that ended immediately prior to the date hereof; and

12.no Default or Event of Default has occurred and is continuing pursuant to the Loan Agreement.

[Remainder of page intentionally left blank]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

IN WITNESS WHEREOF, the undersigned has caused this Borrowing Base Certificate to be executed and delivered, and the certifications and warranties contained herein to be made on behalf of the Borrower, by a Responsible Officer of the Borrower as of the date first written above.

VIVINT SOLAR FINANCING I, LLC,
a Delaware limited liability company

By:
Name:
Title:

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

Schedule 1

Borrowing Base Calculations

[To be provided by the Borrower on each Borrowing Base Certificate Date]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

Schedule 2

Advance Models and Net Cash Flows

[see attached.]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

EXHIBIT H

to Loan Agreement

FORM OF ADVANCE MODEL

[See attached]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

EXHIBIT I

to Loan Agreement

FORM OF US TAX COMPLIANCE CERTIFICATE

[See Attached]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

Form of

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Loan Agreement dated as of September 12, 2014 (as amended, supplemented or otherwise modified from time to time, the “Loan Agreement”), among Vivint Solar Financing I, LLC, Bank of America, N.A., as lead arranger, collateral agent and administrative agent, each guarantor and each lender from time to time party thereto.  

Pursuant to the provisions of Section 2.4(g) of the Loan Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower (or its regarded parent) within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a controlled foreign corporation related to the Borrower (or its regarded parent) as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Loan Agreement and used herein shall have the meanings given to them in the Loan Agreement.

[NAME OF LENDER]
By:  _______________________
	Name:  ________________________
	Title:  ________________________

Date: ________ __, 20[  ]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

Form of

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Loan Agreement dated as of September 12, 2014 (as amended, supplemented or otherwise modified from time to time, the “Loan Agreement”), among Vivint Solar Financing I, LLC, Bank of America, N.A., as lead arranger, collateral agent and administrative agent, each guarantor and each lender from time to time party thereto.  

Pursuant to the provisions of Section 2.4(g) of the Loan Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower (or its regarded parent) within the meaning of Section 871(h)(3)(B) of the Code, and (iv) it is not a controlled foreign corporation related to the Borrower (or its regarded parent) as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Loan Agreement and used herein shall have the meanings given to them in the Loan Agreement.

[NAME OF PARTICIPANT]
By:  _______________________
	Name:  ________________________
	Title:  ________________________

Date: ________ __, 20[  ]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

Form of

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Loan Agreement dated as of September 12, 2014 (as amended, supplemented or otherwise modified from time to time, the “Loan Agreement”), among Vivint Solar Financing I, LLC, Bank of America, N.A., as collateral agent and administrative agent, each guarantor and each lender from time to time party thereto.  

Pursuant to the provisions of Section 2.4(g) of the Loan Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower (or its regarded parent) within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower (or its regarded parent) as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Loan Agreement and used herein shall have the meanings given to them in the Loan Agreement.

[NAME OF PARTICIPANT]
By:  _______________________
	Name:  ________________________
	Title:  ________________________

Date: ________ __, 20[  ]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

FORM OF

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Loan Agreement dated as of September 12, 2014 (as amended, supplemented or otherwise modified from time to time, the “Loan Agreement”), among Vivint Solar Financing I, LLC, Bank of America, N.A., as lead arranger, collateral agent and administrative agent, each guarantor and each lender from time to time party thereto.  

Pursuant to the provisions of Section 2.4(g) of the Loan Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) with respect to the extension of credit pursuant to this Loan Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower (or its regarded parent) within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower (or its regarded parent) as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Loan Agreement and used herein shall have the meanings given to them in the Loan Agreement.

[NAME OF LENDER]
By:  _______________________
	Name:  ________________________
	Title:  ________________________

Date: ________ __, 20[  ]

I-1

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

EXHIBIT J

REQUIRED PERMISSIVE TRANSFER PROVISIONS

Part I – Partnership Flip Structures

Pursuant to a Subject Fund LLC Agreement (“LLCA”) or a valid, enforceable and irrevocable consent of the Investor or another Subject Fund that owns a direct Equity Interest in such Subject Fund (such party, the “Class A Member”):

(a) The Managing Member (the “Class B Member”) is permitted to freely encumber  all of its Class B Units in favor of a lender (or an agent acting on behalf of such lender) of such Class B Member (or an affiliate of such Class B Member) (“Lender”) without the further consent of the Class A Member;

(b) each Lender (or its transferee or an agent acting on behalf of such lender) is permitted to foreclose (or transfer in lieu thereof) on the Class B Units under the Financing Documents without the consent of the Class A Member and such lender is entitled to enforce such foreclosure rights so long as (I) any exercise of remedies in respect of such foreclosure (or transfer in lieu thereof) does not cause either a (x) recapture event for the Class A Member or (y) termination of the LLC for income tax purposes unless the transferee or another Person reasonably acceptable to the Class A Member has agreed to indemnify the Class A Member for any losses associated with such termination and (II) the transferee is not a tax-exempt entity (collectively, clauses (I) and (II), “Tax Transfer Preconditions”);

(c) subject to the Tax Transfer Preconditions and any other conditions acceptable to the Administrative Agent and specifically set forth in a consent otherwise meeting the requirements of Part I of this Exhibit J,  Lender (or an agent acting on behalf of such Lender) is permitted, without the consent of the Class A Member after foreclosure (or transfer in lieu thereof) on the Class B Units by Lender (or an agent acting on behalf of such Lender), to transfer all of the Class B Units to any Person; provided that the LLCA may require that such Person be a “Qualified Transferee” (or such other term as may be used in the applicable LLCA) meeting certain ownership, management and/or operating experience criteria, which Class A Member has expressly agreed may be met by appointment of a third party satisfying such criteria;  (for the avoidance of doubt, each Lender shall not be subject to such Qualified Transferee criteria unless such Lender is the transferee of the Class B Units transferred as contemplated by this clause (c)); and

(d) each Lender (or its transferee or an agent acting on behalf of such Lender) after foreclosure (or transfer in lieu thereof) on the Class B Units shall not be responsible

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

for any obligations and liabilities of the Class B Member incurred or arising prior to such foreclosure (or transfer in lieu thereof) or any obligations and liabilities incurred or arising after the date of such foreclosure (or transfer in lieu thereof), in either case resulting from the Class B Member’s acts or omissions, misrepresentations or default under any LLCA.  

In addition to the foregoing:

(e) The LLCA shall not grant or provide a right of first refusal or offer in favor of a Class A Member in respect of any transfer of the Class B Units;

(f) Either (i) pursuant to the express terms of the LLCA, (A) the parent of the Class B Member (the “Borrower”) is permitted to freely encumber all of the equity interests it holds in the Class B Member and (B) the parent of the Borrower is permitted to freely encumber all of the equity interests it holds in the Borrower, in each case, without the further consent of the Class A Member or (ii) there is no provision of the LLCA that prohibits the encumbrances or requires the consent described in the foregoing subclause (i); and

(g) Either (i) pursuant to the express terms of the LLCA, (A) each Lender (or its transferee or an agent acting on behalf of such Lender) is permitted to foreclose (or transfer in lieu thereof) on the equity interests described in clause (f) above without the consent of the Class A Member or satisfaction of any further conditions under any LLCA and such Lender is entitled to enforce such foreclosure rights and (B) any such exercise by a Lender shall not constitute a change of control of the Class B Member or (ii) there is no provision of the LLCA that prohibits the actions or requires the consent described in the foregoing subclause (i).

Part II – Inverted Lease Structures²⁰

Pursuant to the Master Lease, a Subject Fund Material Project Document to which Investor or Lessee is a party, or a valid, enforceable and irrevocable agreement or consent of the Investor or Lessee:

(a) The Manager is permitted to freely encumber all of the membership interests that it holds in the Lessor (collectively, the “Equity Interests”) in favor of a lender (or an agent acting on behalf of such lender) of such Manager (or an affiliate of such Manager) (“Lender”) without the further consent of the Lessee or Investor;

(b) each Lender (or its transferee or an agent acting on behalf of such lender) is permitted to foreclose (or transfer in lieu thereof) on the Equity Interests under the

²⁰  Subject to modification pursuant to Section 3.4(n).

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

Financing Documents without the consent of the Lessee or Investor and such lender is entitled to enforce such foreclosure rights so long as (I) any exercise of remedies in respect of such foreclosure (or transfer in lieu thereof) does not cause a recapture event for the Lessee or Investor, (II) such foreclosure or transfer does not violate any applicable Law or cause the Lessor to be required to be register as an “investment company” under the Investment Company Act of 1940, as amended, (III) the transferee is not a tax-exempt entity or described or designated in the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control (collectively, clauses (I) through (III), “Tax Transfer Preconditions”); 

(c) subject to the Tax Transfer Preconditions and any other conditions acceptable to the Administrative Agent and specifically set forth in a consent otherwise meeting the requirements of Part II of this Exhibit J, Lender (or an agent acting on behalf of such Lender) is permitted, without the consent of Investor or Lessee after foreclosure (or transfer in lieu thereof) on any Equity Interest by Lender (or an agent acting on behalf of such Lender), to transfer any or all of the Equity Interests to any Person, subject to any management or operational experience requirements specifically set forth in a consent otherwise meeting the requirements of Part II of this Exhibit J;

(d) No Lender (or its transferee or an agent acting on behalf of such Lender) after foreclosure (or transfer in lieu thereof) on any or all of the Equity Interest shall be responsible for any obligations and liabilities of Manager incurred or arising prior to such foreclosure (or transfer in lieu thereof) or any obligations and liabilities incurred or arising after the date of such foreclosure (or transfer in lieu thereof), in either case resulting from the Manager’s acts or omissions or misrepresentations;

(e) (A) the parent of the Manager (the “Borrower”) is permitted to freely encumber all of the equity interests it holds in the Manager and (B) the parent of the Borrower is permitted to freely encumber all of the equity interests it holds in the Borrower, in each case, without the further consent of the Investor or Lessee; and

(f) each Lender (or its transferee or an agent acting on behalf of such Lender) is permitted to foreclose (or transfer in lieu thereof) on the equity interests described in clause (e) without the consent of the Investor or Lessee, or satisfaction of any further conditions under the operating agreement of Lessor and any such Lender is entitled to enforce such foreclosure rights.

In addition to the foregoing, neither the Investor nor Lessee shall have been granted or provided a right of first refusal or offer in respect of any transfer of any Equity Interests.

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

Part III – Modified Inverted Lease Structures

Pursuant to the operating agreement of the Master Tenant and the operating agreement of the Owner (each individually, an “LLCA” and collectively, the “LLCAs”) or valid, enforceable and irrevocable consents of the Investor, Owner and the Master Tenant, as applicable:

(a) The Managing Member under each LLCA is permitted to freely encumber all of the membership interests that it holds in the Master Tenant as well as all of the membership interest that it holds in the Owner (collectively, the “Equity Interests”) in favor of a lender (or an agent acting on behalf of such lender) of such Managing Member (or an affiliate of such Managing Member) (“Lender”) without the further consent of the Owner, Master Tenant or Investor;

(b) each Lender (or its transferee or an agent acting on behalf of such lender) is permitted to foreclose (or transfer in lieu thereof) on the Equity Interests under the Financing Documents without the consent of the Owner, Master Tenant or Investor and such lender is entitled to enforce such foreclosure rights so long as (I) any exercise of remedies in respect of such foreclosure (or transfer in lieu thereof) does not cause either a (x) recapture event for Investor or (y) termination of an LLCA for income tax purposes and (II) the transferee is not a tax-exempt entity (collectively, clauses (I) and (II), “Tax Transfer Preconditions”);

(c) subject to the Tax Transfer Preconditions and any other conditions acceptable to the Administrative Agent and specifically set forth in a consent otherwise meeting the requirements of Part III of this Exhibit J, Lender (or an agent acting on behalf of such Lender) is permitted, without the consent of Investor, Master Tenant or Owner after foreclosure (or transfer in lieu thereof) on any Equity Interest by Lender (or an agent acting on behalf of such Lender), to transfer any or all of the Equity Interests to any Person, subject to any management or operational experience requirements specifically set forth in a consent otherwise meeting the requirements of Part III of this Exhibit J;

(d) No Lender (or its transferee or an agent acting on behalf of such Lender) after foreclosure (or transfer in lieu thereof) on any or all of the Equity Interest shall be responsible for any obligations and liabilities of Managing Member incurred or arising prior to such foreclosure (or transfer in lieu thereof) or any obligations and liabilities incurred or arising after the date of such foreclosure (or transfer in lieu thereof), in either case resulting from the Managing Member’s acts or omissions, misrepresentations or default under any LLCA or its failure to make a Capital Contribution;

In addition to the foregoing:

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

(e) No LLCA shall grant or provide a right of first refusal or offer in favor of Investor, Master Tenant or Owner in respect of any transfer of any Equity Interests.  

(f) Either (i) pursuant to the express terms of the LLCA or (ii) a consent otherwise meeting the requirements of Part II of this Exhibit J, (A) the parent of the Managing Member (the “Borrower”) is permitted to freely encumber all of the equity interests it holds in the Managing Member and (B) the parent of the Borrower is permitted to freely encumber all of the equity interests it holds in the Borrower, in each case, without the further consent of the Investor, Master Tenant or Owner; and

(g) Either (i) pursuant to the express terms of the LLCA or (ii) a consent otherwise meeting the requirements of Part II of this Exhibit J, (A) each Lender (or its transferee or an agent acting on behalf of such Lender) is permitted to foreclose (or transfer in lieu thereof) on the equity interests described in clause (f) without the consent of the Investor, Master Tenant or Owner, or satisfaction of any further conditions under any LLCA and any such Lender is entitled to enforce such foreclosure rights and (B) any such exercise by a Lender shall not constitute a change of control of the Owner or Master Tenant as the case may be.

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

EXHIBIT K

to Loan Agreement

FORM OF POTENTIAL NEW FUND NOTICE

[See Attached]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

POTENTIAL NEW FUND NOTICE

Bank of America, N.A.
901 Main Street
Dallas, TX 75202-3714
Attention:Diana Lopez
Telephone:(972) 338-3774
Telecopy: (214) 290-8384
Email:diana.r.lopez@baml.com

Gateway Village

900 W Trade Street

Charlotte NC 28255

Attention: Darleen R Parmelee

Telephone: 980.388.5001

Telecopier: 704.409.0645

Electronic Mail: darleen.r.parmelee@baml.com

[DATE²¹]

Re:Vivint Solar Financing I, LLC

Potential New Fund Notice

Ladies and Gentlemen:

The undersigned, Vivint Solar Financing I, LLC, a Delaware limited liability company (the “Borrower”), refers to the Loan Agreement, dated as of September 12, 2014, as amended from time to time, restated, supplemented or otherwise modified (the “Loan Agreement”) by and among the Borrower, the Guarantors from time to time party thereto, the Lenders from time to time party thereto, Bank of America, N.A., as Lead Arranger, as administrative agent (in such capacity, including any successor thereto, the “Administrative Agent”) for the Lenders and as collateral agent (in such capacity, including any successor thereto, the “Collateral Agent”) for the Secured Parties, and the other Persons party thereto.  Capitalized terms used herein but not otherwise defined herein shall have the respective meanings set forth in the Loan Agreement.

The Borrower hereby requests the inclusion of the Potential New Fund identified below under Section 2.10(a) of the Loan Agreement and in connection therewith certifies as follows:

(A) The requested date of inclusion of the Potential New Fund is: __________.

²¹  Date of request must be no fewer than (x) with respect to any Eligible Structure other than a Repeat Tax Equity Structure, forty-five (45) days prior to the expiration of the Availability Period and (y) with respect to any Repeat Tax Equity Structure, fifteen (15) Business Days prior to the expiration of the Availability Period.

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

(B)The details of the Potential New Fund are set forth in the following table:  

Type of Eligible Structure (check one):	__ Repeat Tax Equity Structure __ Tax Equity Structure (non-repeat) __ Other Financed Structure __ Other Non-Financed Structure
Managing Member (if applicable, insert entity name, type of legal entity and jurisdiction of organization):
Subject Fund(s) (if applicable, insert entity name(s), type(s) of legal entity and jurisdiction(s) of organization):
Investor (if applicable, insert entity name):
Recommended Designation (check one, in accordance with certification in (F) below)	__ Non-Cash-Sweep Fund __ Cash-Sweep Fund Category I __ Cash-Sweep Fund Category II __ (not applicable)

(C)The Borrower has delivered to the Administrative Agent the Tax Equity Model for the Potential New Fund.

(D)The Borrower has delivered to the Administrative Agent (or provided the Administrative Agent access to an online data room that contains true, complete and correct copies of the following) (i) a complete set of transaction documents for the Potential New Fund, [(ii) redline comparisons of the transaction documents for the Potential New Fund marked against the transaction documents of the current Subject Fund to which it is substantially similar,]²² and [(ii)][(iii)] the information set forth in Section 3.3(b) of the Loan Agreement with respect to each System included in the Potential New Fund or the associated Host Customers.

(E)The Borrower will deliver to the Administrative Agent (or provide the Administrative Agent access to an online data room that contains true, complete and correct copies of the following) any other data, documentation, analysis or report reasonably requested by the Administrative Agent with respect to the Potential New Fund.

²²  To be included if the Potential New Fund is a Repeat Tax Equity Structure.

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

(F)The Borrower [hereby confirms that the transaction documents of the Potential New Fund do not contain any provision that cause such Potential New Fund to be a Cash-Sweep Fund Category I or a Cash-Sweep Fund Category II] [hereby gives notice of the existence of a provision in the transaction documents of the Potential New Fund that result in the Potential New Fund being designated as a [Cash-Sweep Fund Category I][Cash-Sweep Fund Category II]; the following events or circumstances would give rise to a cash sweep with respect to the Potential New Fund: ___________________].²³ 

[The remainder of this page is intentionally blank.  The next page is the signature page.]

²³  Pick and complete the applicable certification. For Other Non-Financed Structures, delete this clause (F) entirely and check “not applicable” where indicated in the table above.

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

IN WITNESS WHEREOF, the undersigned has executed this Potential New Fund Notice as of the date first written above.

VIVINT SOLAR FINANCING I, LLC,

a Delaware limited liability company, as Borrower

By:Name:
Title:

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

EXHIBIT L

to Loan Agreement

FORM OF NEW SYSTEMS NOTICE

[See Attached]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

NEW SYSTEMS NOTICE

Bank of America, N.A.
901 Main Street
Dallas, TX 75202-3714
Attention:Diana Lopez
Telephone:(972) 338-3774
Telecopy: (214) 290-8384
Email:diana.r.lopez@baml.com

Gateway Village

900 W Trade Street

Charlotte NC 28255

Attention: Darleen R Parmelee

Telephone: 980.388.5001

Telecopier: 704.409.0645

Electronic Mail: darleen.r.parmelee@baml.com

[DATE²⁴]

Re:Vivint Solar Financing I, LLC

New Systems Notice

Ladies and Gentlemen:

The undersigned, Vivint Solar Financing I, LLC, a Delaware limited liability company (the “Borrower”), refers to the Loan Agreement, dated as of September 12, 2014, as amended from time to time, restated, supplemented or otherwise modified (the “Loan Agreement”) by and among the Borrower, the Guarantors from time to time party thereto, the Lenders from time to time party thereto, Bank of America, N.A., as Lead Arranger, as administrative agent (in such capacity, including any successor thereto, the “Administrative Agent”) for the Lenders and as collateral agent (in such capacity, including any successor thereto, the “Collateral Agent”) for the Secured Parties, and the other Persons party thereto. Capitalized terms used herein but not otherwise defined herein shall have the respective meanings set forth in the Loan Agreement.

The Borrower hereby requests the inclusion of new Systems identified below under Section 2.10(c) of the Loan Agreement and in connection therewith certifies as follows:

(A) The requested date of inclusion of the new Systems is:____________.

(B)Each of new Systems that are the subject of this request are identified on Annex I attached hereto, along with the Subject Fund into which each such System is requested to be included.

²⁴  Date of request must be at least 15 Business Days prior to the requested date of inclusion [and at least 10 Business Days after the date of the most recent prior New Systems Notice (if any)].

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

(C)The Borrower has delivered a revised Advance Model to the Administrative Agent reflecting the pro forma inclusion of the new Systems. 

(D)The Borrower has delivered to the Administrative Agent (or provided the Administrative Agent access to an online data room that contains true, complete and correct copies of the following) (i) a complete set of Customer Agreements for each such System and (ii) System Information for each such System.

(E)The Borrower will deliver to the Administrative Agent (or provide the Administrative Agent access to an online data room that contains true, complete and correct copies of the following) any other data, documentation, analysis or report reasonably requested by the Administrative Agent with respect to such Systems or the associated Host Customers and commercially available to the Borrower.

[The remainder of this page is intentionally blank.  The next page is the signature page.]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

IN WITNESS WHEREOF, the undersigned has executed this New Systems Notice as of the date first written above.

VIVINT SOLAR FINANCING I, LLC,

a Delaware limited liability company, as Borrower

By:Name:
Title:

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

Annex I

New Systems

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

EXHIBIT M

to Loan Agreement

FORM OF NEW SUBJECT FUND ACCESSION AGREEMENT

[See Attached]

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

FORM OF NEW SUBJECT FUND ACCESSION AGREEMENT

This ACCESSION AGREEMENT (this “Accession Agreement”), dated as of _________, is entered into by and among ____________, a Delaware limited liability company (the “New Managing Member”), Vivint Solar Financing I, LLC, a Delaware limited liability company (the “Borrower”) and Bank of America, N.A., as administrative agent for the Lenders (in such capacity, including any successor thereto, the “Administrative Agent”) and as collateral agent for the Secured Parties (in such capacity, including any successor thereto, the “Collateral Agent”).

RECITALS

WHEREAS, reference is made to the Loan Agreement, dated as of September 12, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”), among the Borrower, the Guarantors from time to time party thereto, the Lenders from time to time party thereto, Bank of America, N.A., as Administrative Agent and Collateral Agent, and the other Persons party thereto; and

WHEREAS, pursuant to Section 2.10(a) of the Loan Agreement, the Borrower has requested the inclusion of a Potential New Fund of which the New Managing Member is managing member (the “New Subject Fund”) and the Administrative Agent has notified the Borrower that such Potential New Fund is acceptable for inclusion in the Available Borrowing Base.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1. Definitions.  All capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Loan Agreement.

SECTION 2. Joinder.  

(A)Pursuant to Sections 2.10(a), 3.4 and 5.18 of the Credit Agreement, the New Managing Member hereby:

12.4 agrees that this Accession Agreement may be attached to the Loan Agreement and that by execution and delivery hereof, the New Managing Member hereby accepts the duties and responsibilities of a Managing Member under the Loan Agreement and the other Financing Documents, including without limitation the CADA and the Security Agreement;

12.5 makes, solely as to itself (except that the New Mananging Member shall make the representations as to its related Subject Fund or Subject Funds, as the case may be, pursuant to Sections 4.1(a)(v), 4.1(w), 4.1(x) and 4.1(y) of the Loan Agreement), each of the representations and warranties made by the Managing Members under the Loan Agreement and each other Financing Document, as if each such representation or warranty was set forth herein, mutatis mutandis;

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12.6 agrees to and makes, solely with respect to itself, each of the covenants and agreements made by the Managing Members under the Loan Agreement and each other Financing Document, as if each such covenant was set forth herein, mutatis mutandis; 

12.7 certifies that no event has occurred and is continuing as of the date hereof, or will result from the transactions contemplated hereby, that would constitute a Default or Event of Default;

12.8 agrees to comply with all the terms and conditions of the Loan Agreement as if it were an original signatory thereto;

12.9 agrees to provide the Administrative Agent, the Collateral Agent and each Lender all documents, instruments, agreements and certificates required by such Lender in connection with such New Managing Members’ execution of this Accession Agreement;

12.10 agrees to complete a Perfection Certificate pursuant to the terms of the Security Agreement and deliver the same to the Collateral Agent on or before the date hereof;

12.11 agrees to deliver to the Collateral Agent, simultaneously with its execution hereof, an original certificate evidencing the Pledged Equity (as defined in the Security Agreement) in the New Subject Fund, together with an undated limited liability company interest power, and such other instruments and documents as the Collateral Agent may reasonably request, in accordance with the terms and conditions of the Security Agreement; and

12.12 authorizes the filing of all financing statements deemed reasonably necessary or advisable by the Collateral Agent in connection with the Collateral Agent’s perfection of the Liens created against the assets of the New Managing Member pursuant to the terms of the Financing Documents.

ARTICLE 13Effective as of the date hereof, the Administrative Agent and the Collateral Agent, on behalf of each Lender, hereby consent to this Accession Agreement and the New Managing Member becoming a Managing Member under the Loan Agreement and the other  Financing Documents.

SECTION 3.  Representations, Warranties and Undertakings.  The New Managing Member: (i) represents and warrants that it has full power and authority, and has taken all action necessary, to execute and deliver this Accession Agreement and to consummate the transactions contemplated hereby and to become a Managing Member under the Loan Agreement and the other Financing Documents and (ii) acknowledges and confirms that it has received a copy of the Loan Agreement, each other Financing Document and such other documents and information as it has deemed appropriate to make its own decision to enter into this Accession Agreement.  

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SECTION 4.  New Account. The Borrower, Administrative Agent, Depositary, and Collateral Agent acknowledge and agree that, (i) the New Managing Members have established the respective bank accounts set forth in Schedule 1 hereto (each a “New Account”, with each of the accounts listed under “Revenue Account Sub Accounts” a “Revenue Account Sub Account”, and the accounts listed under “Capital Contribution Accounts” a “Capital Contribution Account”), (ii) pursuant to Sections 2.3(b) and 2.3(c) of the CADA, each such New Account is an Account (as such term is defined in the CADA) for all purposes under the CADA, and (iii) pursuant to Sections 2.3(b) and 2.3(c) of the CADA, the parties hereto agree to replace Schedule II to the CADA with Schedule 2 hereto and to replace Schedule III to the CADA with Schedule 3 hereto.  

SECTION 5.  Effectiveness.  The effectiveness of this Accession Agreement is subject to (i) the satisfaction (or waiver) of each of the conditions set forth in Sections 3.3 and 5.18 of the Loan Agreement, (ii) the due execution and delivery of this Accession Agreement by the New Managing Member, and (iii) consent, not to be unreasonably withheld, conditioned or delayed by the Administrative Agent, the Collateral Agent and the Borrower to this Accession Agreement; provided, that such consent of the Administrative Agent or the Collateral Agent shall not be withheld if the New Subject Fund is a Repeat Tax Equity Structure with respect to which the Administrative Agent has decided not to conduct due diligence.

Except as otherwise provided in the Loan Agreement, effective as of the Effective Date, the New Managing Member shall be deemed automatically to have become a party to, and the New Managing Member agrees that it will be bound by the terms and conditions set forth in, the Loan Agreement, the CADA and the Security Agreement, and shall have all the rights and obligations of a “Managing Member” under the Loan Agreement and the other Financing Documents as if it were an original signatory thereto.

SECTION 6. Governing Law. THIS ACCESSION AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

SECTION 7. Counterparts.  This Accession Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of this Accession Agreement by telecopy or portable document format (“pdf”) shall be effective as delivery of a manually executed counterpart of this Accession Agreement.

SECTION 8.  Further Assurances. The New Managing Member hereby agrees to execute and deliver such other instruments, amendments, agreements and authorizations, and take such other action, as the Administrative Agent, the Collateral Agent or any Lender may reasonably request in connection with the transactions contemplated by this Accession Agreement.

SECTION 9.  Binding Effect; Amendment.  This Accession Agreement shall be binding upon and inure to the benefit of the parties hereto, the Secured Parties, and their respective

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successors and assigns, subject, however, to the provisions of the Loan Agreement.  No provision of this Accession Agreement may be amended, waived or otherwise modified except by an instrument in writing signed by the New Managing Member, the Administrative Agent and the Collateral Agent.

SECTION 10. Borrower Undertaking. The Borrower agrees to deliver to the Collateral Agent, simultaneously with its execution hereof, an original certificate evidencing the Pledged Equity (as defined in the Security Agreement) in the New Managing Member, together with an undated limited liability company interest power, and such other instruments and documents as the Collateral Agent may reasonably request, in accordance with the terms and conditions of the Security Agreement.

SECTION 11.  Administrative Agent Enforcement.  The Administrative Agent, the Collateral Agent and each Lender shall be entitled to rely upon and enforce this Accession Agreement against the New Managing Member and the Borrower in all respects.

[The remainder of this page is intentionally blank.  The next page is the signature page.]

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

IN WITNESS WHEREOF, the undersigned have caused this Accession Agreement to be duly executed by a Responsible Officer as of the date first above written.

The effective date for this Accession Agreement is the date this Accession Agreement is acknowledged and accepted by the Administrative Agent, the Collateral Agent and the Borrower ____________, 20_____ (the “Effective Date”).

[NEW MANAGING MEMBER]

By: Name:
Title:

BANK OF AMERICA, N.A.
as Administrative Agent, Depositary and Collateral Agent

By:
Name:  
Title:

VIVINT SOLAR FINANCING I, LLC,
as Borrower

By:
Name:  
Title:

M-22

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

SCHEDULE 1

Revenue Account Sub Accounts

Bank Account # Account Owner

Capital Contribution Accounts

Bank Account # Account Owner

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SCHEDULE 2

REVENUE ACCOUNT SUB-ACCOUNTS

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SCHEDULE 3

CAPITAL CONTRIBUTION ACCOUNTS

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EXHIBIT N

to Loan Agreement

FORM OF BORROWING DATE CERTIFICATE

[See Attached]

M-26

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

BORROWING DATE CERTIFICATE

This Borrowing Date Certificate (this “Borrowing Date Certificate”) dated as of ________ __, 20__, is delivered to you pursuant to Section 3.2(a) of the Loan Agreement dated as of September 12, 2014, (as amended, modified or supplemented and in effect from time to time, the “Loan Agreement”) by and among Vivint Solar Financing I, LLC, a Delaware limited liability company (the “Borrower”), the Guarantors from time to time party thereto, the Lenders from time to time party thereto, Bank of America, N.A., as Lead Arranger, as administrative agent for the Lenders (in such capacity, including any successor thereto, the “Administrative Agent”) and as collateral agent for the Secured Parties (in such capacity, including any successor thereto, the “Collateral Agent”), and the other Persons party thereto, pursuant to which the Lenders have agreed to make Loans to the Borrower. Each capitalized term used and not otherwise defined herein shall have the meaning assigned thereto in Section 1.1 of the Loan Agreement.

The undersigned Responsible Officer of Borrower hereby certifies, represents and warrants as of the date hereof that he/she is the __________ of Borrower, and that, as such, he/she is authorized to execute and deliver this Borrowing Date Certificate to the Administrative Agent on behalf of the Borrower, and that:

13.Each of the representations and warranties made by each Loan Party under the Financing Documents are true and correct in all material respects as of such Requested Borrowing Date (as defined in the Borrowing Notice to which this Borrowing Date Certificate is attached), other than those representations and warranties which are modified by materiality by their own terms, which are true and correct in all respects as of such Requested Borrowing Date (unless such representation or warranty relates solely to an earlier date, in which case it is true and correct in all material respects as of such earlier date);

14.The Eligibility Representations set forth in Appendix 3 of the Loan Agreement are true, complete, and correct with respect to each System for which the Requested Borrowing Date is the first Borrowing Date after such System became subject to the Financing Documents;

15.No Default of Event of Default has occurred and is continuing pursuant to the Loan Agreement or will result from the Borrowing of the requested Loan;

16.The Borrower is in compliance with Section 6.1 of the Loan Agreement as of the most recent Quarterly Date;

17.As of the date hereof, no Subject Fund is a Watched Fund [other than the following:

ARTICLE 14Watched Fund	ARTICLE 15Conditions/Circumstances causing Watched Fund
ARTICLE 16	ARTICLE 17

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

ARTICLE 18	ARTICLE 19
ARTICLE 20	ARTICLE 21

ARTICLE 22];

18.the Borrower [is][is not] in compliance with the Borrowing Base Requirement [and the details of such non-compliance are as follows: ____];

19.No Material Adverse Effect has occurred or is continuing since the Closing Date, and, to Borrower’s knowledge, no event or circumstance exists that could reasonably be expected to result in a Material Adverse Effect has occurred; and

20.No Bankruptcy Event has occurred with respect to either Borrower Member or Vivint Solar Parent.

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

IN WITNESS WHEREOF, the undersigned has caused this Borrowing Date Certificate to be executed and delivered, and the certifications and warranties contained herein to be made on behalf of the Borrower, by a Responsible Officer of the Borrower as of the date first written above.

VIVINT SOLAR FINANCING I, LLC,
a Delaware limited liability company

By:
Name:
Title:

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EXHIBIT N

to Loan Agreement

FORM OF BORROWING DATE CERTIFICATE

[See Attached]

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[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

BORROWING DATE CERTIFICATE

This Borrowing Date Certificate (this “Borrowing Date Certificate”) dated as of ________ __, 20__, is delivered to you pursuant to Section 3.2(a) of the Loan Agreement dated as of September 12, 2014, (as amended, modified or supplemented and in effect from time to time, the “Loan Agreement”) by and among Vivint Solar Financing I, LLC, a Delaware limited liability company (the “Borrower”), the Guarantors from time to time party thereto, the Lenders from time to time party thereto, Bank of America, N.A., as Lead Arranger, as administrative agent for the Lenders (in such capacity, including any successor thereto, the “Administrative Agent”) and as collateral agent for the Secured Parties (in such capacity, including any successor thereto, the “Collateral Agent”), and the other Persons party thereto, pursuant to which the Lenders have agreed to make Loans to the Borrower. Each capitalized term used and not otherwise defined herein shall have the meaning assigned thereto in Section 1.1 of the Loan Agreement.

The undersigned Responsible Officer of Borrower hereby certifies, represents and warrants as of the date hereof that he/she is the __________ of Borrower, and that, as such, he/she is authorized to execute and deliver this Borrowing Date Certificate to the Administrative Agent on behalf of the Borrower, and that:

21.Each of the representations and warranties made by each Loan Party under the Financing Documents are true and correct in all material respects as of such Requested Borrowing Date (as defined in the Borrowing Notice to which this Borrowing Date Certificate is attached), other than those representations and warranties which are modified by materiality by their own terms, which are true and correct in all respects as of such Requested Borrowing Date (unless such representation or warranty relates solely to an earlier date, in which case it is true and correct in all material respects as of such earlier date);

22.The Eligibility Representations set forth in Appendix 3 of the Loan Agreement are true, complete, and correct with respect to each System for which the Requested Borrowing Date is the first Borrowing Date after such System became subject to the Financing Documents;

23.No Default of Event of Default has occurred and is continuing pursuant to the Loan Agreement or will result from the Borrowing of the requested Loan;

24.The Borrower is in compliance with Section 6.1 of the Loan Agreement as of the most recent Quarterly Date;

25.As of the date hereof, no Subject Fund is a Watched Fund [other than the following:

ARTICLE 23Watched Fund	ARTICLE 24Conditions/Circumstances causing Watched Fund
ARTICLE 25	ARTICLE 26

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ARTICLE 27	ARTICLE 28
ARTICLE 29	ARTICLE 30

ARTICLE 31];

26.the Borrower [is][is not] in compliance with the Borrowing Base Requirement [and the details of such non-compliance are as follows: ____];

27.No Material Adverse Effect has occurred or is continuing since the Closing Date, and, to Borrower’s knowledge, no event or circumstance exists that could reasonably be expected to result in a Material Adverse Effect has occurred; and

28.No Bankruptcy Event has occurred with respect to either Borrower Member or Vivint Solar Parent.

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IN WITNESS WHEREOF, the undersigned has caused this Borrowing Date Certificate to be executed and delivered, and the certifications and warranties contained herein to be made on behalf of the Borrower, by a Responsible Officer of the Borrower as of the date first written above.

VIVINT SOLAR FINANCING I, LLC,
a Delaware limited liability company

By:
Name:
Title:

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SCHEDULE 1.1(b)

Knowledge Individuals

For each Loan Party, unless otherwise indicated on this Schedule 1.1(b):

1. Greg Butterfield – Chief Executive Officer; President

2. Shawn Lindquist – Chief Legal Officer; Secretary

3. Dana Russell – Chief Financial Officer

4. Thomas Plagemann – Executive Vice President of Capital Markets

5. Dan Black – Associate General Counsel; Assistant Secretary

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SCHEDULE 3.1(m)

Consents

1. Consent Agreement by and among Vivint Solar Financing I, LLC, Vivint Solar Liberty Manager, LLC, Bank of America, N.A., Vivint Solar Liberty Master Tenant, LLC and the Investor named therein, dated September 12, 2014

2. Consent Agreement by and among Vivint Solar Financing I, LLC, Vivint Solar Liberty Manager, LLC, Bank of America, N.A., and the Investor named therein, dated September 12, 2014

3. Consent Agreement by and among Vivint Solar Financing I, LLC, Vivint Solar Margaux Manager, LLC, Bank of America, N.A., Vivint Solar Margaux Master Tenant, LLC and the Investor named therein, dated September 12, 2014

4. Consent Agreement by and among Vivint Solar Financing I, LLC, Vivint Solar Margaux Manager, LLC, Bank of America, N.A., and the Investor named therein, dated September 12, 2014

5. Consent Agreement by and among Vivint Solar Financing I, LLC, Vivint Solar Fund III Manager, LLC, Bank of America, N.A., Vivint Solar Fund III Master Tenant, LLC and the Investor named therein, dated September 12, 2014

6. Consent Agreement by and among Vivint Solar Financing I, LLC, Vivint Solar Fund III Manager, LLC, Bank of America, N.A., and the Investor named therein, dated September 12, 2014

7. Consent Agreement by and among Vivint Solar Financing I, LLC, Vivint Solar Nicole Manager, LLC, Bank of America, N.A., Vivint Solar Nicole Master Tenant, LLC and the Investor named therein, dated September 12, 2014

8. Consent Agreement by and among Vivint Solar Financing I, LLC, Vivint Solar Nicole Manager, LLC, Bank of America, N.A., and the Investor named therein, dated September 12, 2014

9. Consent and Agreement by and among Vivint Solar Financing I, LLC, Vivint Solar Mia Manager, LLC, Bank of America, N.A., and the Investor named therein, dated September 12, 2014

10. Consent and Agreement by and among Vivint Solar Financing I, LLC, Vivint Solar Aaliyah Manager, LLC, Bank of America, N.A., and the Investor named therein, dated September 12, 2014

11. Consent and Agreement by and among Vivint Solar Financing I, LLC, Vivint Solar Rebecca Manager, LLC, Bank of America, N.A., and the Investor named therein, dated September 12, 2014

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12. Consent and Agreement by and among Vivint Solar Financing I, LLC, Vivint Solar Elyse Manager, LLC, Bank of America, N.A., and the Investor named therein, dated September 12, 2014 

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SCHEDULE 4.1(f)

Outstanding Debt

Vivint Solar Financing I, LLC

1. None

Vivint Solar Liberty Manager, LLC

1. None

Vivint Solar Margaux Manager, LLC

1. None

Vivint Solar Fund III Manager, LLC

1. None

Vivint Solar Nicole Manager, LLC

1. None

Vivint Solar Mia Manager, LLC

1. None

Vivint Solar Aaliyah Manager, LLC

1. None

Vivint Solar Rebecca Manager, LLC

1. None

Vivint Solar Hannah Manager, LLC

1. None

Vivint Solar Elyse Manager, LLC

1. None

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SCHEDULE 4.1(x)

Subsidiaries; Equity Interests

Current Legal Entities Owned	Loan Party     Record Owner	Jurisdiction	Interest
Vivint Solar Financing I, LLC (BORROWER)	Vivint Solar Holdings, Inc.	Delaware	100%
Vivint Solar Liberty Manager, LLC (GUARANTOR)	Vivint Solar Financing I, LLC	Delaware	100%
Vivint Solar Margaux Manager, LLC (GUARANTOR)	Vivint Solar Financing I, LLC	Delaware	100%
Vivint Solar Fund III Manager, LLC (GUARANTOR)	Vivint Solar Financing I, LLC	Delaware	100%
Vivint Solar Nicole Manager, LLC (GUARANTOR)	Vivint Solar Financing I, LLC	Delaware	100%
Vivint Solar Mia Manager, LLC (GUARANTOR)	Vivint Solar Financing I, LLC	Delaware	100%
Vivint Solar Aaliyah Manager, LLC (GUARANTOR)	Vivint Solar Financing I, LLC	Delaware	100%
Vivint Solar Rebecca Manager, LLC (GUARANTOR)	Vivint Solar Financing I, LLC	Delaware	100%
Vivint Solar Hannah Manager, LLC (GUARANTOR)	Vivint Solar Financing I, LLC	Delaware	100%

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Current Legal Entities Owned	Loan Party     Record Owner	Jurisdiction	Interest
Vivint Solar Elyse Manager, LLC (GUARANTOR)	Vivint Solar Financing I, LLC	Delaware	100%
Vivint Solar Owner I, LLC (GUARANTOR)	Vivint Solar Financing I, LLC	Delaware	100%
Vivint Solar Liberty Master Tenant, LLC	Vivint Solar Liberty Manager, LLC	Delaware	[***]% (pre-flip), [***]% (post-flip)
Vivint Solar Liberty Master Tenant, LLC	[n/a; Investor]	Delaware	[***]% (pre-flip), [***]% (post-flip)
Vivint Solar Liberty Owner, LLC	Vivint Solar Liberty Manager, LLC	Delaware	[***]%
Vivint Solar Liberty Owner, LLC	Vivint Solar Liberty Master Tenant, LLC	Delaware	[***]%
Vivint Solar Margaux Master Tenant, LLC	Vivint Solar Margaux Manager, LLC	Delaware	[***]% (pre-flip), [***]% (post-flip)
Vivint Solar Margaux Master Tenant, LLC	[n/a; Investor]	Delaware	[***]% (pre-flip), [***]% (post-flip)
Vivint Solar Margaux Owner, LLC	Vivint Solar Margaux Manager, LLC	Delaware	[***]%
Vivint Solar Margaux Owner, LLC	Vivint Solar Margaux Master Tenant, LLC	Delaware	[***]%
Vivint Solar Fund III Master Tenant, LLC	Vivint Solar Fund III Manager, LLC	Delaware	[***]% (pre-flip), [***]% (post-flip)
Vivint Solar Fund III Master Tenant, LLC	[n/a; Investor]	Delaware	[***]% (pre-flip), [***]% (post-flip)

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Current Legal Entities Owned	Loan Party     Record Owner	Jurisdiction	Interest
Vivint Solar Fund III Owner, LLC	Vivint Solar Fund III Manager, LLC	Delaware	[***]%
Vivint Solar Fund III Owner, LLC	Vivint Solar Fund III Master Tenant, LLC	Delaware	[***]%
Vivint Solar Nicole Master Tenant, LLC	Vivint Solar Nicole Manager, LLC	Delaware	[***]% (pre-flip), [***]% (post-flip)
Vivint Solar Nicole Master Tenant, LLC	[n/a; Investor]	Delaware	[***]% (pre-flip), [***]% (post-flip)
Vivint Solar Nicole Owner, LLC	Vivint Solar Nicole Manager, LLC	Delaware	[***]%
Vivint Solar Nicole Owner, LLC	Vivint Solar Nicole Master Tenant, LLC	Delaware	[***]%
Vivint Solar Mia Project Company, LLC	Vivint Solar Mia Manager, LLC	Delaware	100% of Class B/ [***]% of Mia Project Co.
Vivint Solar Mia Project Company, LLC	[n/a; Investor]	Delaware	100% of Class A/ [***]% of Mia Project Co.
Vivint Solar Aaliyah Project Company, LLC	Vivint Solar Aaliyah Manager, LLC	Delaware	100% of Class B/ [***]% of Aaliyah Project Co.
Vivint Solar Aaliyah Project Company, LLC	[n/a; Investor]	Delaware	100% of Class A/ [***]% of Aaliyah Project Co.
Vivint Solar Rebecca Project Company, LLC	Vivint Solar Rebecca Manager, LLC	Delaware	100% of Class B/ [***]% of Rebecca Project Co.
Vivint Solar Rebecca Project Company, LLC	[n/a; Investor]	Delaware	100% of Class A/ [***]% of Rebecca Project Co.
Vivint Solar Hannah Project Company, LLC	Vivint Solar Hannah Manager, LLC	Delaware	100% of Class B/ [***]% of Hannah Project Co.

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Current Legal Entities Owned	Loan Party     Record Owner	Jurisdiction	Interest
Vivint Solar Hannah Project Company, LLC	[n/a; Investor]	Delaware	100% of Class A/ [***]% of Hannah Project Co.
Vivint Solar Elyse Project Company, LLC	Vivint Solar Elyse Manager, LLC	Delaware	100% of Class B/ [***]% of Elyse Project Co.
Vivint Solar Elyse Project Company, LLC	[n/a; Investor]	Delaware	100% of Class A/ [***]% of Elyse Project Co.

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SCHEDULE 6.7

Investments

Vivint Solar Financing I, LLC

1. Investments made from time-to-time in Vivint Solar Liberty Manager, LLC

2. Investments made from time-to-time in Vivint Solar Margaux Manager, LLC

3. Investments made from time-to-time in Vivint Solar Fund III Manager, LLC

4. Investments made from time-to-time in Vivint Solar Nicole Manager, LLC

5. Investments made from time-to-time in Vivint Solar Mia Manager, LLC

6. Investments made from time-to-time in Vivint Solar Aaliyah Manager, LLC

7. Investments made from time-to-time in Vivint Solar Rebecca Manager, LLC

8. Investments made from time-to-time in Vivint Solar Hannah Manager, LLC

9. Investments made from time-to-time in Vivint Solar Elyse Manager, LLC

10. Investments made from time-to-time in Vivint Solar Owner I, LLC

Vivint Solar Liberty Manager, LLC

1. Investments made from time-to-time in Vivint Solar Liberty Owner, LLC

2. Investments made from time-to-time in Vivint Solar Liberty Master Tenant, LLC

Vivint Solar Margaux Manager, LLC

1. Investments made from time-to-time in Vivint Solar Margaux Owner, LLC

2. Investments made from time-to-time in Vivint Solar Margaux Master Tenant, LLC

Vivint Solar Fund III Manager, LLC

1. Investments made from time-to-time in Vivint Solar Fund III Owner, LLC

2. Investments made from time-to-time in Vivint Solar Fund III Master Tenant, LLC

Vivint Solar Nicole Manager, LLC

1. Investments made from time-to-time in Vivint Solar Nicole Owner, LLC

2. Investments made from time-to-time in Vivint Solar Nicole Master Tenant, LLC

Vivint Solar Mia Manager, LLC

1. Investments made from time-to-time in Vivint Solar Mia Project Company, LLC

Vivint Solar Aaliyah Manager, LLC

1. Investments made from time-to-time in Vivint Solar Aaliyah Project Company, LLC

Vivint Solar Rebecca Manager, LLC

1. Investments made from time-to-time in Vivint Solar Rebecca Project Company, LLC

Vivint Solar Hannah Manager, LLC

1. Investments made from time-to-time in Vivint Solar Hannah Project Company, LLC

Vivint Solar Elyse Manager, LLC

1. Investments made from time-to-time in Vivint Solar Elyse Project Company, LLC

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SCHEDULE 6.15

Transactions With Affiliates

None

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APPENDIX 1

ADVANCE RATE CALCULATIONS

“Advance Rate” means, as of any date of determination, the lesser of (x) [***]% and (y) the percentage obtained by dividing (i) the maximum amount of debt as projected by the Advance Model that can be fully supported as of such date of determination assuming (1) interest accrues an Applicable Interest Rate equal to the Assumed Interest Rate as of such date of determination, (2) the Loans are required to be paid in full in [***] ([***]) years from such date of determination, (3) application of the ITC Downside Case to each applicable Subject Fund and (4) all Net Cash Flows distributable to the Managing Members are applied to the repayment of Outstanding Principal by (ii) the aggregate Subject Fund Values as of such date of determination of all Subject Funds. The Advance Rate shall be calculated quarterly on each Scheduled Payment Date (and upon the addition of any new Subject Fund) and set forth in the Borrowing Base Certificate approved by the Administrative Agent. For the avoidance of doubt, each Subject Fund shall have the same Advance Rate.

“Assumed Interest Rate” means the Projected LIBO Rate, plus the Applicable Margin, plus 2%.

“ITC Downside Case” means a scenario in which the following are assumed to occur (i) [***] and (ii) any affiliate of Vivint Solar Parent that owes an indemnity payment to the Investor(s) in such Subject Fund relating to such reduction defaults on such payment, and the Advance Model is adjusted to calculate the Net Cash Flows distributable to the Managing Member of such Subject Fund in light of such assumptions and any applicable Cash-Sweep Event; provided that in the event Borrower has obtained ITC Insurance, then the Advance Model prepared for the ITC Downside Case shall assume that the expected insurance proceeds from such policy are paid to Borrower.

“ITC Insurance” means an insurance policy from an investment grade carrier to protect against a reduction in the fair market value of the Systems in any Subject Fund, which insurance policy has been approved in writing by the Administrative Agent and 90% of the Lenders, each in their sole discretion.

“Projected LIBO Rate” means, as of any date of determination, the rate as determined by the Administrative Agent utilizing the 3-month forward LIBO Rate curve quoted by Bloomberg L.P (or such other commercially available source providing quotations of the 3-month forward LIBO Rate curve as designated by the Administrative Agent from time to time).

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APPENDIX 2

BORROWING BASE CERTIFICATE COMPONENTS AND CALCULATIONS

I. Borrowing Base Certificate Components

Borrower will submit a certificate (the “Borrowing Base Certificate”) setting forth:

a. the Subject Fund Value of all Systems presented for financing to date, including Systems being submitted in connection with the contemplated draw, if any, including details of:

(i) the Advance Models and Net Cash Flows used to calculate such Subject Fund Value,

(ii) Revised Net Cash Flows; and

(iii) a list identifying each Defaulted System and Non-Operable System.

b. the Subject Fund Borrowing Base for each Subject Fund;

c. the Available Borrowing Base (including the components of the calculation thereof);

d. a representation that the Borrower is in compliance with Section 6.1 as of the previous Quarterly Date;

e. the Advance Rate;

f. Either (x) certification that no Watched Funds exist or (y) a list identifying each Subject Fund that is a Watched Fund and the condition or conditions that resulted in such Subject Fund being a Watched Fund; and

g. Either (x) certification of compliance with the Borrowing Base Requirement or (y) notice of non-compliance with the Borrowing Base Requirement.

II. Defined terms.

“Advance Model” means a model in respect of all Subject Funds in the form of Exhibit H (which Exhibit H may be updated from time to time with the addition of new Subject Funds or Systems pursuant to Section 2.10, 3.3(a), or in accordance with Section 9.12(a)), forecasting the Net Cash Flows to each Managing Member under each Subject Fund (including in the case of a Partnership Flip Structure, before and after the expected “Flip Date,” and in the case of an Inverted Lease Structure or Modified Inverted Lease Structure, before and after the expiration of the master lease), in each case: (i) calculated in accordance with and adjusted for the Assumptions, (ii) adjusted to exclude Excluded Revenues, (iii) accounting for the applicable System Information and (iv) with respect to each Subject Fund financed pursuant to the Loan Agreement after the Closing Date, in form and substance reasonably satisfactory to the Administrative Agent as determined in consultation with the Lenders and the Borrower.  In addition, each Advance Model will be updated as of the date such model is delivered to reflect any modifications required due to changes in System Information or Revised Net Cash Flow.  Each Advance Model shall identify Systems that have become Defaulted Systems and Subject Funds that have become Watched Funds.

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“Assumptions” means the assumptions set forth in the following table:

Characteristic	Assumption
[***]	[***]
[***]	[***] [***]
[***]	[***]
[***]	[***]	[***]
	[***]	[***]
	[***]	[***]
	[***]	[***]
[***]	[***] [***]
[***]	[***] [***]

“Available Borrowing Base” means [***]. Notwithstanding anything herein to the contrary, the parties hereby agree that the Subject Fund Borrowing Base for the USB 5 Fund shall not be included in the calculation of the Available Borrowing Base unless and until the Administrative Agent has received a satisfactory Tax Equity Required Consent for the USB 5 Fund.

“Cash-Sweep Adjustment Percentage” means (1) with respect to each Cash-Sweep Fund, the percentage obtained by dividing (a) its Cash-Sweep Adjusted Subject Fund Borrowing Base by (b) its Subject Fund Borrowing Base prior to the application of clause (I) of the proviso of the definition of “Available Borrowing Base” and (2) with respect to each Non-Cash-Sweep Fund, 100%.

“Cash-Sweep Concentration” means, with respect to a Cash-Sweep Fund Category, the quotient obtained by dividing (x) the sum of the Subject Fund Borrowing Bases of each Subject Fund in such Cash-Sweep Fund Category by (y) the Initially Calculated Available Borrowing Base.

“Cash-Sweep Event” has the meaning set forth in Appendix 7.

“Cash-Sweep Fund Category” means each of the following categories, as designated for each Cash-Sweep Fund on Appendix 4:  Cash-Sweep Funds whose Project Documents reduce, limit, suspend or otherwise restrict distributions (i) more than [***]% (“Cash-Sweep Fund Category I”) and (ii) more than [***]% (“Cash-Sweep Fund Category II”), in each case, of the cash otherwise distributable to the Managing Member following the occurrence of certain events enumerated in such Project Documents after taking into account the expected insurance proceeds from any applicable ITC Insurance, in each case as reasonably determined by the Administrative Agent in consultation with the Borrower and Lenders; provided, however, with the prior written

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consent of Lenders holding at least 90% of the sum of (x) the aggregate unused amount of the Commitments then in effect and (y) the aggregate unpaid principal amount of the Loans then outstanding, Cash-Sweep Funds that would otherwise be included in Cash-Sweep Fund Category I may instead be designated as, and included in, Cash-Sweep Fund Category II for all purposes hereunder, provided further that, notwithstanding the foregoing definition of Cash-Sweep Fund Category I, the Borrower and Lenders hereby agree that [***] shall be designated as Cash-Sweep Fund Category II and shall not be included in Cash-Sweep Fund Category I.

“Concentration Limit” means in respect of (i) Cash-Sweep Fund Category I, [***]%, and (ii) Cash-Sweep Fund Category II, [***]%.  

“Defaulted System” means any System (i) that has not been in service for 180 days or more (subject to force majeure exceptions), (ii) with respect to which the Host Customer has failed to make any payment that is due and payable under a Customer Agreement for 120 days or more (including, without limitation, any recurring payments and shut-down payments), or (iii) with respect to which a Host Customer has failed to make a transfer payment or buy-out payment that is due and payable under a Customer Agreement.

“Discount Rate” means, with respect to any Net Cash Flows, the last rate quoted by Bloomberg L.P. as of 12:00 p.m. New York City time on the Borrowing Base Certificate Date using the following keystrokes: IRSB <go>, or any successor quotation, in each case, corresponding to the weighted average life of such Net Cash Flows plus 3.25%.

“Excluded Revenues” means [***].

“HECO Systems” means any System located in Oahu, Hawaii.

“Inspected-Only Systems” means Systems (other than HECO Systems) that have been installed and have passed all inspections that are required by any Governmental Authority but that have not yet received PTO.

“Inspected-Only Systems Borrowing Base” means an amount equal to the aggregate Inspected-Only System Adjusted Values of all Inspected-Only Systems that are not Stalled Inspected-Only Systems.

“Inspected-Only System Adjusted Value” means, for each Inspected-Only System that is not a Stalled Inspected-Only System, an amount equal to (A)(i) the net present value of Net Cash Flow, calculated using a discount rate equal to the Discount Rate, from such Inspected-Only System multiplied by (ii) the Advance Rate multiplied by (B) the Cash-Sweep Adjustment Percentage for the Subject Fund in which such Inspected-Only System is included.

“Investor Guarantor” means, with respect to any Subject Fund, the guarantor under any Guarantee issued by Vivint Parent and/or any of its Affiliates for the benefit of the Investor in connection with such Subject Fund.

“Net Cash Flow” means an amount equal to the aggregate forecasted distributions paid or payable to each Managing Member on account of its respective interest in a Subject Fund as set forth in the Advance Model (provided, the forecasted distributions shall only include contracted cash flows

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attributable to the initial term (excluding any renewal period) of the applicable Customer Agreement).

“Non-Operable System” means a System that is damaged or destroyed by fire, theft or other casualty (an “Event of Loss”) and such System has become inoperable because of such event and is not repaired, restored, replaced or rebuilt to substantially the same condition as it existed immediately prior to such Event of Loss within one hundred eighty (180) days of such Event of Loss.

“Revised Net Cash Flow” means, as of each date a Borrowing Base Certificate is delivered, a revised calculation of Net Cash Flows that includes the effect of:

1. Any transfer payment or buy-out payment that has been received in accordance with the applicable Customer Agreement;

2. Host Customer transfers in accordance with the applicable Customer Agreement, with respect to which the transferee of a Host Customer’s interest in a System fails to meet the transfer requirements, including any credit requirements, as set forth in the Material Project Documents. For the avoidance of doubt, the FICO score associated with the System will be updated to reflect the transferee as part of such transfer;

3. Removal of cash flows associated with Non-Operable Systems and Defaulted Systems;

4. Updates (solely on a forward-looking basis) to [***] based on the results of [***] required to be delivered pursuant to [***]; and

5. Changes to Managing Member cash distribution allocations or Flip Dates (as defined in each Subject Fund’s applicable Material Project Documents) as reflected in any True-Up Models (as defined in each Subject Fund’s applicable Material Project Documents) or updated Tax Equity Models, as applicable, delivered with respect to a Subject Fund.

“Stalled Inspected-Only Systems” means Inspected-Only Systems that have not received PTO within [***] days of becoming Inspected-Only Systems.

“Subject Fund Borrowing Base” means, for each Subject Fund, an amount equal to the Subject Fund Value of Systems in such Subject Fund multiplied by the Advance Rate.

“Subject Fund Value” means for each Subject Fund, an amount equal to the net present value of Net Cash Flow calculated using a discount rate equal to the Discount Rate; provided, however, that with respect to any Subject Fund, Net Cash Flow from Stalled Inspected-Only Systems shall not be included in the calculation of Subject Fund Value.

“Tax Equity Model” means for each Subject Fund, the financial model delivered to the Administrative Agent as of the Closing Date or the date such Subject Fund was included in the Available Borrowing Base pursuant to Section 3.4, as agreed upon by the respective Investor and

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Managing Member with respect to a Subject Fund and as updated in accordance with the terms of the Project Documents and the terms hereof.

“Watched Funds” means (a) any Subject Funds where:

(i) a Lessor, Partnership or Managing Member is subject to a Bankruptcy Event, dissolution event or liquidation event;

(ii) Investor Guarantor has failed to pay any tax or other indemnity amounts over $[***] in the aggregate due and owing to the Investor (including amounts owed by any Managing Member, whether or not such amounts are guaranteed by Investor Guarantor), unless such amounts are being contested by Managing Member or the Lessor or Partnership in good faith; provided [***]; and provided, further,that neither the Lessor or Partnership nor Managing Member shall make any such tax or other indemnity payments out of Managing Member cash flows;

(iii) the number of Defaulted Systems equals or exceeds [***]% of the total number of Systems included in such Subject Fund (including, for the avoidance of doubt, any removed Systems);

(iv) the Managing Member is removed or a notice of the removal of the Managing Member is given and not rescinded or withdrawn within thirty (30) days following the date such notice is given;

(v) the occurrence of any default under any Material Project Documents that has a Material Adverse Effect or a material adverse effect on the aggregate value of the Collateral; or

(vi) Eligibility Representations with respect to Systems constituting [***]% or more of the Subject Fund Value of the Subject Fund (as reasonably determined by the Administrative Agent with prior written notice to the Borrower) were not true and correct as of any date such Eligibility Representations were made; and

(b) any Subject Fund meeting such other criteria as may be reasonably determined by the Administrative Agent in consultation with the Lenders and the Borrower in respect of any Potential New Funds that are added as Subject Funds.

(a)

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APPENDIX 3

ELIGIBILITY REPRESENTATIONS

As of the date that each System is added to a Subject Fund pursuant to Section 3.3, 3.4 or otherwise is added to the Available Borrowing Base, the Borrower will make the following Eligibility Representations:

1. Accuracy of System Information: The System Information for the System is complete, accurate, true and correct in all material respects and does not omit any necessary information that makes such entry misleading.

2. Customer Agreement:  The Customer Agreement signed by a residential obligor relating to such System (x) is substantially in the form of (A) with respect to the Subject Funds as of the Closing Date, one of the forms of Customer Agreements as delivered by or on behalf of Borrower to Administrative Agent prior to the Closing Date and (B) with respect to a Subject Fund added after the Closing Date, one of the Approved Form Agreements and (y) complies with and satisfies the following conditions:

a. Customer Agreement: The related Customer Agreement provides that an affiliate of Borrower agrees to design, procure and install and maintain and repair Systems (subject to force majeure exceptions) at the property specified in such Customer Agreement for no charge (other than any fees related to activation, removal and reinstallation of the system, or other fees as set forth in the form of Customer Agreements as delivered by or on behalf of Borrower to Administrative Agent or the Approved Form Agreements, as applicable) over the term of the contract other than for power purchases or lease payments, and the Host Customer agrees to purchase electric energy produced by such Systems or lease such Systems.

b. Host Customer Payments in U.S. Dollars: The related Host Customer is obligated per the terms of the related Customer Agreement to make payments in U.S. dollars to the counterparty of the related Customer Agreement.

c. Absolute and Unconditional Obligation: The related Customer Agreement is by its terms an absolute and unconditional obligation of the Host Customer to pay for electricity generated and delivered, or that will be generated and delivered, by the related System to such Host Customer after the related System has received permission to operate from the local utility in writing or in such other form as is customarily given by such local utility (“PTO”), and such payment obligations under the related Customer Agreement do not provide for offset for any reason.

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d. Non-cancelable; Prepayable: The related Customer Agreement is non-cancelable by its terms after the start of installation of the System and, other than with respect to Customer Agreements that have been fully prepaid or partially prepaid prior to the Borrowing Date, prepayable only in connection with (i) a Customer default or (ii) a Host Customer selling their home to a transferee that is not approved by the applicable Subject Fund, in either case in an amount determined by a stated formula (including, with respect to all of the Approved Form Agreements and certain other Customer Agreements, the discounting of a pre-determined $/Watt System value at a pre-determined discount rate as specified in such Customer Agreement). 

e. Governing Law of Customer Agreement: The related Customer Agreement is governed by the laws of a state of the United States and was not originated in, nor is it subject to the laws of, any jurisdiction, the laws of which would make unlawful the sale, transfer or assignment of the related Customer Agreement under the applicable Material Project Document.

f. Assignments: All related Customer Agreements have all been assigned to a special purpose entity (whether a Lessor, Partnership, Vivint Solar Owner I, LLC or another special purpose vehicle wholly-owned by Borrower related to an Other Non-Financed Structure) (i) that is the seller of electricity produced by, or lessor of, the related System under such Customer Agreement, (ii) that is entitled to receive the payments to be made by the applicable Host Customer under such Customer Agreement, and (iii) with respect to Partnerships and Lessors, in which the applicable Managing Member has a direct Equity Interest.

3. Legal Compliance: The Customer Agreement and the origination thereof and the installation of the related System, in each case, was in compliance in all material respects with applicable federal, state and local laws and regulations (including without limitation, all consumer protection laws) at the time such Customer Agreement was originated and executed and such System was installed.

4. Legal, Valid and Binding Agreement: To Borrower’s Knowledge, the related Customer Agreement is legal, valid and binding on the related Host Customer, enforceable against such related Host Customer in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors’ rights generally, and except as such enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity).

5. Full Force and Effect: With respect to the applicable Subject Fund counterparty, the related Customer Agreement is in full force and effect in accordance with its respective terms and such Subject Fund is not in material breach or default under such Customer

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Agreement, and, to the Borrower’s Knowledge, with respect to the Host Customer, the related Customer Agreement is in full force and effect in accordance with its respective terms, and no material breach or default by such Host Customer has occurred and is continuing thereunder, and such Customer Agreement has not been rescinded, cancelled or otherwise terminated by such Host Customer. 

6. Ordinary Course of Business: The related Customer Agreement relates to the sale of power from or the leasing of a System originated in the ordinary course of business of an affiliate of Borrower.

7. System:  The System is an Inspected-Only System (as evidenced by satisfactory documentary evidence Borrower has made available, or caused to be made available, to the Administrative Agent), or has received PTO.  The solar photovoltaic panels and inverters used in the related System were obtained from, and are a product of, an Approved Manufacturer. After giving effect to the inclusion of the System, no more than [***] percent ([***]%) of the Systems subject to the Financing Documents are products of [***].

8. Project States:  The System is located in a state or locality that is approved in the applicable Subject Fund.

9. No Condemnation:  To Borrower’s Knowledge, no condemnation is pending or threatened with respect to the System, or any portion thereof material to the ownership or operation of the System, and no unrepaired casualty exists with respect to the System or any portion thereof material to the ownership or operation of the System or the sale of electricity therefrom.

10. Warranties: All manufacturer warranties relating to the related Customer Agreement and the related System are in full force and effect and can be enforced by the owner or lessee of such System, as applicable (other than with respect to those manufacturer warranties that are no longer being honored by the relevant manufacturer with respect to all customers generally).

11. Covered Assets: An affiliate of Borrower, which is an experienced operator licensed, or using licensed personnel (including, without limitation, by subcontracting certain maintenance and administrative services), as applicable, as required by applicable law, is obligated to provide certain maintenance and administrative services associated with such Systems in accordance with the applicable servicing arrangement for such Subject Fund and the standards set forth in the Material Project Documents.

12. Ownership and Liens: Such System and the related Customer Agreement have been assigned (i) to and are owned by the Lessor or Partnership (or such other ownership

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arrangement acceptable to the Administrative Agent) within the Subject Fund, to which the Managing Member has an Equity Interest, or (ii) to Vivint Solar Owner I, LLC or another special purpose vehicle wholly-owned by Borrower related to an Other Non-Financed Structure, in each case of clause (i) and (ii) hereof, free and clear of all liens and encumbrances, except for Permitted Liens. 

13. Notices of Ownership:  An affiliate of Borrower has filed a precautionary fixture filing in respect of the related System or such other similar filing as may be required by applicable law including, without limitation, pursuant to Cal. Pub. Util. Code §§ 2868-2869; provided, however, that (i) certain of such filings may be released from time-to-time in order to assist the applicable Host Customer in a pending refinancing of such Host Customer’s mortgage loan or sale of home and (ii) such filings may not have been filed or maintained in a manner that would provide priority under applicable law over an encumbrance or owner of the real property subject to the filing.

14. Insurance:  (i) If the applicable Subject Fund is a Partnership Flip Structure, the System is insured as specified under the Material Project Documents of such Subject Fund, or (ii) if the applicable Subject Fund is an Inverted Lease Structure or a Modified Inverted Lease Structure, Lessor is not aware of a breach of Lessee’s covenant to insure the System pursuant to the terms of the applicable tax equity documents.

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APPENDIX 4

LIST OF MANAGING MEMBERS, SUBJECT FUNDS, CASH-SWEEP FUND DESIGNATIONS AND INVESTORS

Managing Member	Subject Fund(s)	Cash-Sweep Fund Category or Non-Cash-Sweep Fund	Investor
Vivint Solar Liberty Manager, LLC	Vivint Solar Liberty Master Tenant, LLC Vivint Solar Liberty Owner, LLC	[***]	[***]
Vivint Solar Margaux Manager, LLC	Vivint Solar Margaux Master Tenant, LLC Vivint Solar Margaux Owner, LLC	[***]	[***]
Vivint Solar Fund III Manager, LLC	Vivint Solar Fund III Master Tenant, LLC Vivint Solar Fund III Owner, LLC	[***]	[***]
Vivint Solar Nicole Manager, LLC	Vivint Solar Nicole Master Tenant, LLC Vivint Solar Nicole Owner, LLC	[***]	[***]
Vivint Solar Mia Manager, LLC	Vivint Solar Mia Project Company, LLC	[***]	[***]
Vivint Solar Aaliyah Manager, LLC	Vivint Solar Aaliyah Project Company, LLC	[***]	[***]
Vivint Solar Rebecca Manager, LLC	Vivint Solar Rebecca Project Company, LLC	[***]	[***]
Vivint Solar Hannah Manager, LLC25	Vivint Solar Hannah Project Company, LLC	[***]	[***]
Vivint Solar Elyse Manager, LLC	Vivint Solar Elyse Project Company, LLC	[***]	[***]
Vivint Solar Fund X Manager, LLC26	Vivint Solar Fund X Project Company, LLC	[***]	[***]

²⁵  Vivint Solar Hannah Manager, LLC is (x) a limited liability company that elects to be treated as a corporation for federal income tax purposes and (y) part of the consolidated tax group of Vivint Solar, Inc.

²⁶  Vivint Solar Fund X Manager, LLC is (x) a limited liability company that elects to be treated as a corporation for federal income tax purposes and (y) part of the consolidated tax group of Vivint Solar, Inc.

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Vivint Solar Fund XIV Manager, LLC27	Vivint Solar Fund XIV Project Company, LLC	[***]	[***]
Vivint Solar Fund XI Manager, LLC	Vivint Solar Fund XI Project Company, LLC	[***]	[***]
Vivint Solar Fund XIII Manager, LLC	Vivint Solar Fund XIII Project Company, LLC	[***]	[***]

²⁷  Vivint Solar Fund XIV Manager, LLC is (x) a limited liability company that elects to be treated as a corporation for federal income tax purposes and (y) part of the consolidated tax group of Vivint Solar, Inc.

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

APPENDIX 5

MATERIAL PROJECT DOCUMENTS

Liberty Fund

1. Amended and Restated Operating Agreement of Vivint Solar Liberty Master Tenant, LLC, between the Investor named therein and Vivint Solar Liberty Manager, LLC, dated September 14, 2012

2. Operating Agreement of Vivint Solar Liberty Owner, LLC, between Vivint Solar Liberty Master Tenant, LLC and Vivint Solar Liberty Manager, LLC, dated October 5, 2011

3. Amended and Restated Equity Capital Contribution Agreement among Vivint Solar Developer, LLC, Vivint Solar Liberty Owner, LLC and Vivint Solar Liberty Manager, LLC, dated September 14, 2012

4. Master Lease between Vivint Solar Liberty Owner, LLC and Vivint Solar Liberty Master Tenant, LLC, dated October 5, 2011, as amended by Amendment No. 1 to Master Lease dated June 20, 2012

5. Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Liberty Owner, LLC, dated October 5, 2011, as amended by the First Amendment to Maintenance Services Agreement dated October 2, 2013

6. Guaranty between the Investor named therein and Vivint Solar, Inc., dated October 5, 2011 and Extension of Deadline To Deliver Subordination Agreement Under Guaranty dated November 23, 2011

Margaux Fund

1. Operating Agreement of Vivint Solar Margaux Master Tenant, LLC, between the Investor named therein and Vivint Solar Margaux Manager, LLC, dated October 3, 2012

2. Operating Agreement of Vivint Solar Margaux Owner, LLC, between Vivint Solar Margaux Master Tenant, LLC and Vivint Solar Margaux Manager, LLC, dated October 3, 2012

3. Equity Capital Contribution Agreement among Vivint Solar Developer, LLC, Vivint Solar Margaux Owner, LLC and Vivint Solar Margaux Manager, LLC, dated October 3, 2012

4. Master Lease between Vivint Solar Margaux Owner, LLC and Vivint Solar Margaux Master Tenant, LLC, dated October 3, 2012

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

5. Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Margaux Owner, LLC, dated October 3, 2012, as amended by the First Amendment to Maintenance Services Agreement dated October 2, 2013 

6. Guaranty between the Investor named therein and Vivint Solar, Inc., dated October 3, 2012

Caitlin Fund

2. Operating Agreement of Vivint Solar Fund III Master Tenant, LLC, between the Investor named therein and Vivint Solar Fund III Manager, LLC, dated June 28, 2013, as amended by the First Amendment to Vivint Solar Fund III Master Tenant, LLC Operating Agreement, dated October 2, 2013

3. Operating Agreement of Vivint Solar Fund III Owner, LLC, between Vivint Solar Fund III Master Tenant, LLC and Vivint Solar Fund III Manager, LLC, dated June 28, 2013, as amended by the First Amendment to Vivint Solar Fund III Owner, LLC Operating Agreement, dated October 2, 2013

4. Equity Capital Contribution Agreement among Vivint Solar Developer, LLC, Vivint Solar Fund III Owner, LLC and Vivint Solar Fund III Manager, LLC, dated June 28, 2013, as amended by the First Amendment to Equity Capital Contribution Agreement, dated October 2, 2013

5. Master Lease between Vivint Solar Fund III Owner, LLC and Vivint Solar Fund III Master Tenant, LLC, dated June 28, 2013, as amended by the First Amendment to Master Lease, dated October 2, 2013

6. Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Fund III Owner, LLC, dated June 28, 2013

7. Guaranty among the Investor named therein, Vivint Solar Fund III Master Tenant, LLC, Vivint Solar Developer, LLC, and Vivint Solar, Inc., dated June 28, 2013 and the Reaffirmation Agreement by Vivint Solar, Inc. and Vivint Solar Developer, LLC to the Investor named therein and Vivint Solar Fund III Master Tenant, LLC, dated October 2, 2013

Nicole Fund

1. Operating Agreement of Vivint Solar Nicole Master Tenant, LLC, between the Investor named therein and Vivint Solar Nicole Manager, LLC, dated April 29, 2014

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

2. Operating Agreement of Vivint Solar Nicole Owner, LLC, between Vivint Solar Nicole Master Tenant, LLC and Vivint Solar Nicole Manager, LLC, dated April 29, 2014 

3. Equity Capital Contribution Agreement among Vivint Solar Developer, LLC, Vivint Solar Nicole Owner, LLC and Vivint Solar Nicole Manager, LLC, dated April 29, 2014

4. Master Lease between Vivint Solar Nicole Owner, LLC and Vivint Solar Nicole Master Tenant, LLC, dated April 29, 2014

5. Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Nicole Owner, LLC, dated April 29, 2014

6. Guaranty among the Investor named therein, Vivint Solar Nicole Master Tenant, LLC, Vivint Solar Developer, LLC, and Vivint Solar Holdings, Inc., dated April 29, 2014

Mia Fund

2. Limited Liability Company Agreement of Vivint Solar Mia Project Company, LLC, between Vivint Solar Mia Manager, LLC and the original investor named therein, dated July 16, 2013, as assigned to the Investor named therein pursuant to the Assignment and Assumption Agreement among the original investor named therein as assignor, the Investor named therein as assignee, and Vivint Solar Mia Manager, LLC, dated September 30, 2013, and as amended by the First Amendment to Limited Liability Company Agreement dated September 12, 2013 and effective as of August 5, 2013, the Second Amendment to Limited Liability Company Agreement dated August 31, 2013 and the Third Amendment to Limited Liability Company Agreement dated April 15, 2015

3. Development, EPC and Purchase Agreement among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Mia Project Company, LLC, dated July 16, 2013, as amended by the First Amendment to Development, EPC and Purchase Agreement dated January 13, 2014, the Second Amendment to Development, EPC and Purchase Agreement dated April 25, 2014 and the Third Amendment to Development, EPC and Purchase Agreement dated April 15, 2015

4. Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Mia Project Company, LLC, dated July 16, 2013, as amended by the First Amendment to Maintenance Services Agreement, dated April 15, 2015

5. Guaranty by Vivint Solar, Inc. in favor of the original investor named therein and Vivint Solar Mia Project Company, LLC, dated July 16, 2013, as assigned to the current Investor automatically by operation of Section 9 of the Guaranty

Aaliyah Fund

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

1. Limited Liability Company Agreement of Vivint Solar Aaliyah Project Company, LLC, between Vivint Solar Aaliyah Manager, LLC and the Investor named therein, dated November 5, 2013, as amended by the First Amendment to Limited Liability Company Agreement of Vivint Solar Aaliyah Project Company, LLC dated January 13, 2014 and the Written Consent of the Members of Vivint Solar Aaliyah Project Company, LLC, dated February 13, 2014 and the Second Amendment to Limited Liability Company Agreement of Vivint Solar Aaliyah Project Company, LLC dated April 15, 2015 

2. Development, EPC and Purchase Agreement among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Aaliyah Project Company, LLC, dated November 5, 2013, as amended by the First Amendment to Development, EPC and Purchase Agreement dated January 13, 2014 and the Second Amendment to Development, EPC and Purchase Agreement dated February 13, 2014 and the Third Amendment to Development, EPC and Purchase Agreement dated April 15, 2015

3. Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Aaliyah Project Company, LLC, dated November 5, 2013, as amended by the First Amendment to Maintenance Services Agreement, dated April 15, 2015

4. Guaranty by Vivint Solar, Inc. in favor of the Investor named therein and Vivint Solar Aaliyah Project Company, LLC, dated November 5, 2013 and the Reaffirmation Agreement by Vivint Solar, Inc. in favor of the Investor named therein and Vivint Solar Aaliyah Project Company, LLC, dated January 15, 2014

Rebecca Fund

1. Limited Liability Company Agreement of Vivint Solar Rebecca Project Company, LLC, between Vivint Solar Rebecca Manager, LLC and the Investor named therein, dated February 13, 2014, as amended by the First Amendment to Limited Liability Company Agreement of Vivint Solar Rebecca Project Company, LLC dated April 15, 2015

2. Development, EPC and Purchase Agreement among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Rebecca Project Company, LLC, dated February 13, 2014, as amended by the First Amendment to Development, EPC and Purchase Agreement dated April 15, 2015

3. Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Rebecca Project Company, LLC, dated February 13, 2014, as amended by the First Amendment to Maintenance Services Agreement, dated April 15, 2015

4. Guaranty by Vivint Solar, Inc. in favor of the Investor named therein and Vivint Solar Rebecca Project Company, LLC, dated February 13, 2014

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

Hannah Fund

1. Limited Liability Company Agreement of Vivint Solar Hannah Project Company, LLC, between Vivint Solar Hannah Manager, LLC and the Investor named therein, dated February 14, 2014, as amended by Amendment No. 1 to Limited Liability Company Agreement, dated March 28, 2014, Amendment No. 2 to Limited Liability Company Agreement dated June 30, 2014 and Amendment No. 3 to Limited Liability Company Agreement, dated June 16, 2015 but effective as of May 31, 2015

2. Master EPC Agreement between Vivint Solar Developer, LLC and Vivint Solar Hannah Project Company, LLC, dated February 14, 2014, as amended by Amendment No. 1 to Master EPC Agreement, dated June 17, 2015 but effective as of May 31, 2015

3. Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Hannah Project Company, LLC, dated February 14, 2014

4. Guaranty by Vivint Solar, Inc. in favor of the Investor named therein, dated February 14, 2014

Elyse Fund

1. Limited Liability Company Agreement of Vivint Solar Elyse Project Company, LLC, between Vivint Solar Elyse Manager, LLC and the Investor named therein, dated July 3, 2014, as amended by Amendment No. 1 to Limited Liability Company Agreement, dated July 22, 2014, Amendment No. 2 to Limited Liability Company Agreement, December 30, 2014, Amendment No. 3 to Limited Liability Company Agreement, dated May 11, 2015 and Amendment No. 4 to Limited Liability Company Agreement, dated June 30, 2015

2. Master Engineering, Procurement and Construction Agreement between Vivint Solar Developer, LLC and Vivint Solar Elyse Project Company, LLC, dated July 3, 2014, as amended by Amendment No. 1 to Master Engineering, Procurement and Construction Agreement, dated July 22, 2014, Amendment No. 2 to Master Engineering, Procurement and Construction Agreement, dated December 30, 2014, Amendment No. 3 to Master Engineering, Procurement and Construction Agreement, dated May 11, 2015 and Amendment No. 4 to Master Engineering, Procurement and Construction Agreement, dated June 30, 2015

3. Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Elyse Project Company, LLC, dated July 3, 2014

4. Administrative Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Elyse Project Company, LLC, dated July 3, 2014, as amended by Amendment No. 1 to the Administrative Services Agreement, dated June 30, 2015

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

5. Guaranty by Vivint Solar, Inc. in favor of the Investor named therein, dated July 3, 2014 

Fund X Fund

1. Limited Liability Company Agreement of Vivint Solar Fund X Project Company, LLC, between Vivint Solar Fund X Manager, LLC and the Investor named therein, dated September 17, 2014

2. Master Engineering, Procurement and Construction Agreement, between Vivint Solar Developer, LLC and Vivint Solar Fund X Project Company, LLC, dated September 17, 2014

3. Maintenance Services Agreement, between Vivint Solar Provider, LLC and Vivint Solar Fund X Project Company, LLC, dated September 17, 2014

4. Administrative Services Agreement, between Vivint Solar Provider, LLC and Vivint Solar Fund X Project Company, LLC, dated September 17, 2014

5. Guaranty, by Vivint Solar, Inc. in favor of the Investor named therein, dated September 17, 2014

Fund XI Fund

1. Limited Liability Company Agreement of Vivint Solar Fund XI Project Company, LLC, between Vivint Solar Fund XI Manager, LLC and the Investors named therein, dated February 13, 2015, as amended by the First Amendment to Limited Liability Company Agreement, dated May 7, 2015

2. Master Engineering, Procurement and Construction Agreement, between Vivint Solar Developer, LLC and Vivint Solar Fund XI Project Company, LLC, dated February 13, 2015

3. Maintenance Services Agreement, between Vivint Solar Provider, LLC and Vivint Solar Fund XI Project Company, LLC, dated February 13, 2015

4. Administrative Services Agreement, between Vivint Solar Provider, LLC and Vivint Solar Fund XI Project Company, LLC, dated February 13, 2015

5. Guaranty, by Vivint Solar, Inc. in favor of the Investors named therein, dated February 13, 2015

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

ARTICLE 32Fund XIII Fund

1. Limited Liability Company Agreement of Vivint Solar Fund XIII Project Company, LLC, between Vivint Solar Fund XIII Manager, LLC and the Investor named therein, dated March 26, 2015, as amended by the First Amendment thereto, dated March 31, 2015, and as further amended by the Second Amendment thereto, dated June 24, 2015

2. Master Engineering, Procurement and Construction Agreement, between Vivint Solar Developer, LLC and Vivint Solar Fund XIII Project Company, LLC, dated March 26, 2015, as amended by the First Amendment thereto, dated June 24, 2015

3. Maintenance Services Agreement, between Vivint Solar Provider, LLC and Vivint Solar Fund XIII Project Company, LLC, dated March 26, 2015

4. Administrative Services Agreement, between Vivint Solar Provider, LLC and Vivint Solar Fund XIII Project Company, LLC, dated March 26, 2015

5. Guaranty, by Vivint Solar, Inc. in favor of the Investor named therein, dated March 26, 2015

Fund XIV Fund

1. Limited Liability Company Agreement of Vivint Solar Fund XIV Project Company, LLC, between Vivint Solar Fund XIV Manager, LLC and the Investor named therein, dated December 18, 2014, as amended by Amendment No. 1 to Limited Liability Company Agreement, dated April 28, 2015

2. Master EPC Agreement, between Vivint Solar Developer, LLC and Vivint Solar Fund XIV Project Company, LLC, dated December 18, 2014

3. Maintenance Services Agreement, between Vivint Solar Provider, LLC and Vivint Solar Fund XIV Project Company, LLC, dated December 18, 2014

4. Administrative Services Agreement, between Vivint Solar Provider, LLC and Vivint Solar Fund XIV Project Company, LLC, dated December 18, 2014

5. Guaranty, by Vivint Solar, Inc. in favor of the Investor named therein, dated December 18, 2014

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

APPENDIX 6

SYSTEM INFORMATION

The following information with respect to each applicable System is the “System Information”:

(a) the applicable Subject Fund;

(b) Host Customer (i) account reference numbers, and (ii) city, state and ZIP code;

(c) type of agreement (i.e., power purchase agreement or lease agreement);

(d) Host Customer FICO score;

(e) Date(s) inspected by any Governmental Authority whose inspection is required (if applicable) and the outcome of such inspection;

(f) PTO dates (as such dates become available);

(g) Substantial Completion dates (as such dates become available);

(h) Tranche presentation dates (as such dates become available);

(i) The projected annual insolation with respect to the System for the first full year of operation of such System;

(j) System size;

(k) the length of the remaining term of the applicable Customer Agreement;

(l) the model, make and manufacturer (as available after the Closing Date) of the solar panels and inverters used in the System;

(m) if requested by the Administrative Agent from time to time:

· the CAD design of such System;

· the Solmetric PV Designer report and any available associated data with respect to such System;

· the billing history of such System; and

· the operational history of such System.

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

APPENDIX 7

TAX EQUITY REPRESENTATIONS AND OTHER REPRESENTATIONS

Part I – Tax Equity Representations

As of the date that a Subject Fund is added to the Available Borrowing Base or pursuant to Section 3.3 or 3.4, with respect to such Subject Fund, the Borrower will make the following Eligibility Representations:

(a)the Managing Member (i) has entered into only one tax equity transaction, namely the applicable Tax Equity Structure, and (ii) owns no assets other than (x) its Equity Interests in the Subject Fund or Subject Funds related to such Tax Equity Structure as set forth on Schedule 4.1(x) and (y) its contractual rights arising from the Project Documents related to such Tax Equity Structure. All of the Material Project Documents for the Subject Fund that are in effect on such date are set forth on Appendix 5, and true, complete and correct copies of all such Material Project Documents have been delivered to the Administrative Agent.

(b)To the actual Knowledge of the Managing Member that is party to such agreement, the Subject Fund operating agreement(s) is (or are) in full force and effect and no material breach, default or event of default has occurred and is continuing under or in connection with (x) such Subject Fund operating agreement(s) or (y) the Subject Fund Guaranty (if any), except in either case to the extent that such breach, default or event of default could not reasonably be expected to have a Material Adverse Effect.

(c)Neither the Managing Member nor the Subject Fund has incurred any Debt or other obligations or liabilities, direct or contingent other than (i) with respect to the Managing Member, (x) the Debt and other obligations and liabilities arising under the Financing Documents and (y) contingent indemnification obligations and loans required to be made to the Subject Fund, in each case under clause (y), under the Subject Fund operating agreements, (ii) with respect to the Subject Fund, the Debt and other obligations and liabilities (including for Taxes) arising under or in relation to the Project Documents or (iii) Debt in accordance with Section 6.3 of the Loan Agreement and otherwise in connection with Permitted Liens. No claim with respect to the contingent indemnification obligations of the Managing Member under the Subject Fund operating agreement(s) has been asserted on or prior to the date hereof against the Managing Member and remains outstanding.

(d)No loan to the Subject Fund required or permitted to be made under the Subject Fund operating agreement(s) has been made and remains outstanding, except loans required to be made under a Subject Fund operating agreement that are set forth on Schedule A or that otherwise constitute Debt in accordance with Section 6.3 of the Loan Agreement. All preferred return payments required to be made on or prior to such date pursuant to the Subject Fund operating agreement(s) have been made.

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

(e)Except as otherwise listed on Appendix 4, each of the Managing Members is a limited liability company that is disregarded for federal income tax purposes. 

(f)Neither the Managing Member nor the Subject Fund is in breach or default under or with respect to any contractual obligation for or with respect to any outstanding amount or amounts payable under such contractual obligation that equals or exceeds $[***] individually or $[***] in the aggregate.

(g)Neither the Managing Member nor the Subject Fund has conducted any business other than the business contemplated by the Project Documents applicable to such Managing Member and the Subject Fund.

(h)The Managing Member has not been removed as Managing Member under the Subject Fund operating agreement(s) nor has the Managing Member given or received notice of an action, claim or threat of removal.

(i)No event has occurred under the Subject Fund operating agreement(s) that would allow the Investor or another member to remove, or give notice of removal, of the Managing Member.

(j)No event or circumstance occurred and is continuing that has resulted or could reasonably be expected to result in or trigger any limitation, reduction, suspension or other restriction on distributions to the Managing Member, which limitation, reduction, suspension or other restriction is set forth in the applicable Subject Fund operating agreement(s) (any such event or circumstance, a “Cash-Sweep Event”). For the avoidance of doubt, “Cash-Sweep Event” shall not include any insolation-, customer default-, or serial defect-related events or circumstances, or other events or circumstances, that are not addressed in the applicable Subject Fund operating agreement(s) as modifying the cash flow distributions under such operating agreement(s).

(k)There are no actions, suits, proceedings, claims or disputes pending or, to the Knowledge of the Borrower, threatened in writing or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against the Subject Fund, the Managing Member or against either of their properties or revenues that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

(l)No notice or action challenging the tax structure, tax basis validity, tax characterization or tax-related legal compliance of the Subject Fund or the tax benefits associated with the Subject Fund is ongoing or has been resolved in a manner materially adverse to the Subject Fund or Managing Member or, the Borrower’s Knowledge, any other member.

(m)The Subject Fund’s initial tax basis in its respective Systems was equal to

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

the total purchase price paid by such Subject Fund for such Systems. 

(n)Solely with respect to a Repeat Tax Equity Structure, (A) the Subject Fund uses a Tax Equity Structure that is on substantially similar terms as those previously approved by the Administrative Agent with respect to the same Investor (or an Affiliate of such Investor) and the Managing Member has provided the Administrative Agent with a written explanation of those terms that are not substantially similar to those of the previously approved transaction, (B) no change in law has occurred that would reasonably be expect to have a material adverse effect on the tax benefits associated with such Subject Fund and (C) any priority return payable to the Investor has not materially and adversely changed relative to that of the Subject Fund previously approved by the Administrative Agent.

Part II – Other Non-Financed Structure Representations

(a)The Subject Fund owns no assets other than the Systems and the contractual rights related thereto and has engaged in no other business (other than owning and managing the Systems).

(b)The Subject Fund operating agreement is in full force and effect and no material breach, default or event of default has occurred and is continuing under the Subject Fund operating agreement.

(c)The Subject Fund has not incurred any Debt or other obligations or liabilities, direct or contingent other than the Debt and other obligations and liabilities arising under the Financing Documents.

(d)No Debt has been or will be created, incurred, assumed or permitted under the Subject Fund operating agreement, other than the Debt arising under the Financing Documents.

(e)The Subject Fund is a limited liability company that is disregarded for federal income tax purposes and wholly owned by the Borrower.

(f)The Subject Fund is not in breach or default under or with respect to any contractual obligation for or with respect to any outstanding amount or amounts payable under such contractual obligation that equals or exceeds $[***] individually or $[***] in the aggregate.

(g)All revenue received by the Subject Fund shall at all times be distributed to the Borrower.

(h)There are no actions, suits, proceedings, claims or disputes pending or, to the Knowledge of the Borrower, threatened in writing or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against the Subject Fund or its

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

properties or revenues that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. 

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

Schedule A

Subject Fund Required Loans

1. Vivint Solar Nicole Master Tenant, LLC: outstanding operating deficit loan in an amount equal to $[***]

2. Vivint Solar Fund XI Project Company, LLC: outstanding operating deficit loan in an amount equal to $[***]

3. Vivint Solar Fund XIII Project Company, LLC: outstanding operating deficit loan in an amount equal to $[***]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

APPENDIX 8

SEPARATENESS PROVISIONS

The Borrower shall maintain its existence separate and distinct from any other Person, including taking the following actions:

(i)maintaining in full effect its existence, rights and franchises as a limited liability company under the laws of the formation state and obtaining and preserving its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement and each other instrument or agreement necessary or appropriate to properly administer this Agreement and permit and effectuate the transactions contemplated hereby and thereby;

(ii)maintaining its own deposit accounts, separate from those of any other Person, any of its officers and their respective Affiliates;

(iii)conducting all material transactions between the Borrower and any of its Affiliates on an arm’s length basis and on a commercially reasonable basis;

(iv)conducting its affairs separately from those of any other Person, any of its officers or any of their respective Affiliates and maintaining accurate and separate books, records and accounts and financial statements;

(v)acting solely in its own limited liability company name and not that of any other Person, any of its officers or any of their respective Affiliates, and at all times using its own stationery, invoices and checks separate from those of any other Person, any of its officers or any of their respective Affiliates;

(vi)not holding itself out as having agreed to pay, or as being liable for, the, obligations of the Member or any of its respective Affiliates;

(vii)other than in connection with the Financing Documents, not pledging its assets or securing its liabilities for the benefit of any other Person or guarantee or becoming obligated for the debts of any other Person;

(viii)not acquiring any securities of any Member;

(ix)other than in connection with the Financing Documents and as expressly permitted by the Loan Agreement, not incurring, creating or assuming any indebtedness, and not making or granting liens on, or security interests in, any assets of the Company;

(x)maintaining all of its assets in its own name and not commingling its assets with those of any other Person;

(xi)paying its own operating expenses and other liabilities out of its own funds;

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

(xii)observing all limited liability company formalities, including maintaining meeting minutes or records of meetings and acting on behalf of itself only pursuant to due authorization, required hereby and by the Certificate; 

(xiii)maintaining adequate capital for the normal obligations reasonably foreseeable in light of its contemplated business operations;

(xiv)paying its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its own assets;

(xv)prior to the Independent Member Termination Date, at all times having an Independent Member;

(xvi) holding itself out to the public as a legal entity separate and distinct from any other Person; and

(xvii) correcting any known misunderstanding regarding its separate identity.

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

APPENDIX 9

APPROVED MANUFACTURERS

Panels

· First Solar

· Yingli

· Trina

· Canadian Solar

· ReneSola

· REC Solar

· Sharp

· Kyocera

· Solarworld

· SunPower

· LG Solar USA

· Suniva Inc.

Inverters

· Enphase

· SolarEdge

· SMA

· Fronius

· Kaco

· Schneider

· Xantrex

· PowerOne

· Advanced Energy

· Solectria

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

APPENDIX 10

APPROVED FORM AGREEMENTS

[To come]

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

APPENDIX 11

TAX EQUITY STRUCTURE CHARACTERISTICS

Part I – Partnership Flip Structure.

The following are characteristics of a “Partnership Flip Structure” for purposes of the Agreement:

2.Borrower or an affiliate shall have formed a limited liability company (the “Subject Fund”) that has been formed for the sole purpose of owning solar photovoltaic systems that have been leased to or are producing power for sale to host customers (the “Systems”).

3.The Subject Fund operating agreement provides that the Subject Fund will make no election to be treated other than as a partnership for federal tax purposes.

4.The Limited Liability Company Agreement of the Subject Fund (the “LLCA”) provides for two classes of limited liability company interests – for purposes of this Part I, “Class A Units” and “Class B Units.”

5.The tax equity investor (the “Investor”) owns the Class A Units (as holder thereof, the “Class A Member”) and a wholly owned subsidiary of the Borrower owns the Class B Units (as holder thereof, the “Class B Member”).  The Class A Member and the Class B Member are collectively referred to herein as the “Members.”

6.Class B Member has been appointed as the initial managing member of the Subject Fund (in such capacity, the “Manager”).

7.Manager is solely responsible for the management of the Systems and the Subject Fund subject to certain customary approval rights of the Class A Member.  The Subject Fund shall be prohibited from incurring any indebtedness above a limit specified in the Subject Fund operating agreement without the Class A Member’s consent and from incurring or granting or suffering to exist any liens on its assets other than such liens in the ordinary course of such business that are customarily permitted without the Class A Member’s consent.

8.The LLCA provides a standard of care that requires the Manager to manage the Subject Fund in accordance with prudent industry standards or to at all times act in good faith and in the best interests of the Subject Fund.

9.The Subject Fund has acquired each System pursuant to an agreement (the “EPC Contract”) with an affiliate of the Borrower (the “Seller”).  Each System was acquired prior to it receiving permission to operate from the applicable interconnecting utility.

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

10.Cash available for distribution to the Members will be distributed at least quarterly (or annually with respect to certain items) in accordance with an agreed upon priority, subject to customary exceptions (including, without limitation, end of year true-up and curative flip allocations). 

11.After certain criteria have been satisfied, the Class B Member will have the option to purchase all of the Class A Units from the Class A Member for a stated amount or pursuant to an agreed methodology (which may include a purchase price equal to the greater of (x) the fair market value of the Class A Units or (y) an amount necessary to cause the Class A Member to reach its Target IRR).

12.Pursuant to the LLCA or a valid, enforceable and irrevocable consent of the Class A Member, each of the Required Permissive Transfer Provisions set forth in Exhibit J is satisfied.

13.The LLCA may not be amended without the written consent of each Member.

14.Class B Member’s obligation to indemnify the Class A Member, if any, will be limited to customary indemnities for breach of the LLCA or bad acts, standard tax indemnities (but not structure or tax ownership) and environmental indemnities. Any such obligation to indemnify the Class A Member is guaranteed by Borrower Member or Vivint Solar Parent.

15.No provision in the LLCA would require or cause the Class B Member to forfeit, transfer or otherwise divest itself of such Member’s economic interest in the Subject Fund.

16.The Project Documents require the Subject Fund to appoint and maintain an operations and maintenance provider for each System, and the Subject Fund is in compliance with such requirements of the Project Documents.

17.The LLCA identifies fixed tax assumptions regarding the treatment of the Subject Fund as a partnership, tax ownership of the Systems, depreciation, allocations of income and loss, and economic substance and requires that the investor’s return be calculated in accordance with the fixed tax assumptions and that tax returns be prepared in accordance with the fixed tax assumptions.

18.Solely for a Partnership Flip Structure submitted after the Closing Date, any priority return payable to the Investor has not materially and adversely changed relative to that of any Partnership Flip Structure previously approved by the Administrative Agent.

Part II – Inverted Lease Structure

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

The following are characteristics of an “Inverted Lease Structure” for purposes of the Agreement:

1.Borrower or an Affiliate has formed a limited liability company solely for the purpose of owning solar photovoltaic systems that have been leased to or are producing power for sale to host customers (the “Systems”) (such entity, the “Lessor”).

2.One or more tax equity investors (the “Investor”) or an Affiliate has formed a limited liability company solely for the purpose of leasing the Systems from the Lessor and managing the Systems (the “Lessee”).

3.The operating agreement of the Lessor provides that such entity will be disregarded from Manager for tax purposes and that such entity will not make a “check the box” election.

4.The Investor owns all of the equity interests in the member(s) of the Lessee (the “Lessee Member”).

5.A wholly-owned subsidiary of the Borrower (the “Manager”) owns all of the equity interests of the Lessor.

6.Manager has been appointed as the initial managing member of the Lessor and is solely responsible for the management of the Lessor.

7.Manager has been appointed as the initial manager of the Lessee.

8.Manager is solely responsible for the management of the Systems and the Lessee subject to certain customary approval rights of the Lessee Member.  The Lessor and the Lessee are prohibited from incurring any indebtedness above a limit specified in the Lessor’s operating agreement or the Lessee’s operating agreement, as applicable, without the Lessee Member’s consent and from incurring or granting or suffering to exist any liens on its assets other than ordinary course liens that are customarily permitted.

9.Both the Lessor’s operating agreement and the Lessee’s operating agreement provide a standard of care that requires the Manager to manage the Lessor and Lessee, respectively, in accordance with prudent industry standards or to at all times act in good faith and in the best interests of the Lessor and Lessee, as applicable.

10.The Lessor has acquired each System pursuant to an agreement (the “ECCA”) with an Affiliate of the Borrower (the “Seller”).  Each System was acquired prior to it receiving permission to operate from the applicable interconnecting utility.  Lessee has leased each System from Lessor pursuant to a lease agreement (the “Master Lease”).  A portion of the

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

rent or power payments paid to the Lessee by the host customers is used to pay rent to the Lessor under the Master Lease. 

11.The ECCA and Master Lease may not be amended without the written consent of Lessor.

12.Cash available for distribution from the Lessor to the Manager will be distributed at least quarterly (or annually with respect to certain items) in accordance with the agreed upon priority.  The Lessor has elected to pass through the ITC benefits to the Lessee.

13.At least a portion of rent will be paid by the Lessee to the Lessor as an operating expense ahead of any distributions to Lessee Member.

14.Pursuant to an agreement with the Investor, Lessee Member and/or Lessee (as applicable), or a valid, enforceable and irrevocable consent of such Person, each of the applicable Required Permissive Transfer Provisions set forth in Exhibit J is satisfied.

15.Neither Manager nor an Affiliate of Manager has assumed any structural or tax ownership risk in respect of any Subject Fund under any Project Document other than as a result of Manager’s or its Affiliate’s breach or default.

16.Manager’s obligation to indemnify the Lessee Member will be limited to customary indemnities for breach or bad acts, standard tax indemnities (but not structure or tax ownership) and environmental indemnities. Any such obligation to indemnify the Lessee Member is guaranteed by Borrower Member or Vivint Solar Parent.

Part III – Modified Inverted Lease Structure

The following are characteristics of a “Modified Inverted Lease Structure” for purposes of the Agreement:

1. Borrower or an affiliate has formed two limited liability companies, one for the sole purpose of owning solar photovoltaic systems that have been leased to or are producing power for sale to host customers (the “Systems”) (such entity, the “Owner”) and one for the sole purpose of leasing the Systems from the Owner and managing the Systems (the “Master Tenant”).

2. Each of the Master Tenant operating agreement and the Owner operating agreement provides that such entity will not elect to be treated other than as a partnership for federal tax purposes.

3. The Limited Liability Company Agreement of the Owner (the “Owner LLCA”) and the Limited Liability Company Agreement of the Master Tenant (the “Master Tenant

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

LLCA”), as modified by a consent that has been accepted by the Administrative Agent, provides for two classes of limited liability company interests – for purposes of this Part II.A, the “Class A Units” and “Class B Units.” 

4. The tax equity investor (the “Investor”) owns the Class A Units of the Master Tenant (as holder thereof, the “Master Tenant Class A Member”) and a wholly owned subsidiary of the Borrower owns the Class B Units of the Master Tenant (as holder thereof, the “Master Tenant Class B Member”).  The Master Tenant Class A Member and the Master Tenant Class B Member are collectively referred to herein as the “Master Tenant Members.”

5. Master Tenant Class B Member has been appointed as the initial managing member of the Master Tenant (in such capacity, the “Master Tenant Manager”).

6. The Master Tenant owns the Class A Units of the Owner (as holder thereof, the “Owner Class A Member” and together with the Master Tenant Class A Member, collectively, the “Class A Members” and each a “Class A Member”) and the same entity that owns the Class B Units of the Master Tenant owns the Class B Units of the Owner (as holder thereof, the “Owner Class B Member” and together with the Master Tenant Class B Member, collectively, the “Class B Members” and each a “Class B Member”).  The Owner Class A Member and the Owner Class B Member are collectively referred to herein as the “Owner Members.”

7. Owner Class B Member has been appointed as the initial managing member of the Owner (in such capacity, the “Owner Manager”).  The Master Tenant Manager and the Owner Manager are collectively referred to herein as the “Managers” and each, a “Manager.”

8. Master Tenant Manager is solely responsible for the management of the Systems and the Master Tenant subject to certain customary approval rights of the Master Tenant Class A Member.  Owner Manager is solely responsible for the management of the Owner subject to certain customary approval rights of the Owner Class A Member, which also requires the approval of the Master Tenant Class A Member.  Both the Owner and the Master Tenant are prohibited from incurring any indebtedness above a limit specified in the Owner LLCA or the Master Tenant LLCA, as applicable, without the applicable Class A Member’s consent and from incurring or granting or suffering to exist any liens on its assets other than ordinary course liens that are customarily permitted.

9. Profits, losses and deductions are generally allocated between the Members in proportion to their respective percentages interests as set forth in the applicable LLCA.

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

10. Both the Owner LLCA and the Master Tenant LLCA provide a standard of care that requires the applicable Manager to manage the Subject Fund in accordance with prudent industry standards or to at all times act in good faith and in the best interests of the Owner or Master Tenant, as applicable. 

11. The Owner has acquired each System pursuant to an agreement (the “ECCA”) with an affiliate of the Borrower (the “Seller”).  Each System was acquired prior to it receiving permission to operate from the applicable interconnecting utility.  Master Tenant has leased each System from Owner pursuant to a lease agreement (the “Master Lease”).  A portion of the rent or power payments paid to the Master Tenant by the host customers is used to pay rent to the Owner under the Master Lease.

12. Cash available for distribution to the Owner Members will be distributed at least quarterly (or annually with respect to certain items) in accordance with the agreed upon priority in the Owner LLCA.  Owner has elected to pass through the ITC benefits to Master Tenant.

13. Cash distributions in the form of rent will be paid by the Master Tenant to the Owner as an operating expense.  Cash available for distribution to the Master Tenant Members will be distributed at least quarterly in accordance with the agreed upon priority in the Master Tenant LLCA.

14. After the end of the recapture period, the Master Tenant Class B Member will have the option to purchase all of the Class A Units in the Master Tenant from the Master Tenant Class A Member for an amount equal to the sum of (x) a stated price equal to the projected fair market value of the Class A Units and (y) any accrued but unpaid priority return and prepaid priority return. Neither the Owner LLCA nor the Master Tenant LLCA provide for a right of first refusal or offer in favor of either Class A Member in respect of any potential transfer of the Class B Units in either the Owner or the Master Tenant.

15. Pursuant to each LLCA or a valid, enforceable and irrevocable consent of the Class A Member and/or Master Tenant, as applicable, each of the applicable Required Permissive Transfer Provisions set forth in Exhibit J is satisfied.

16. Neither the Owner LLCA nor the Master Tenant LLCA may be amended without the written consent of each Owner Member or Master Tenant Member, as applicable.

17. No Managing Member or Affiliate of a Managing Member has assumed any structural or tax ownership risk in respect of any Subject Fund under any Project Document other than as a result of such Managing Member’s or Affiliates breach or default.

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

18. Each Class B Member’s obligation to indemnify the applicable Class A Member will be limited to customary indemnities for breach of the LLCA or bad acts, standard tax indemnities (but not structure or tax ownership) and environmental indemnities. Any such obligation to indemnify the Class A Member is guaranteed by Borrower Member or Vivint Solar Parent. 

19. Solely for an Inverted Lease Structure submitted after the Closing Date, any priority return payable to the Investor has not materially and adversely changed relative to that of any Inverted Lease Structure previously approved by the Administrative Agent.

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

EX-21.1

Exhibit 21.1

List of Subsidiaries of the Company as of December 31, 2015

Name of Subsidiary	Jurisdiction of Incorporation
Vivint Solar Holdings, Inc. (f/k/a Vivint Solar, Inc.)	Delaware
Vivint Solar Provider, LLC	Delaware
Solmetric Corporation	California
Vivint Solar Developer, LLC	Delaware
Vivint Solar Liberty Manager, LLC	Delaware
Vivint Solar Liberty Owner, LLC	Delaware
Vivint Solar Liberty Master Tenant, LLC	Delaware
Vivint Solar Margaux Manager, LLC	Delaware
Vivint Solar Margaux Owner, LLC	Delaware
Vivint Solar Margaux Master Tenant, LLC	Delaware
Vivint Solar Fund III Manager, LLC	Delaware
Vivint Solar Fund III Owner, LLC	Delaware
Vivint Solar Fund III Master Tenant, LLC	Delaware
Vivint Solar Mia Manager, LLC	Delaware
Vivint Solar Mia Project Company, LLC	Delaware
Vivint Solar Aaliyah Manager, LLC	Delaware
Vivint Solar Aaliyah Project Company, LLC	Delaware
Vivint Solar Rebecca Manager, LLC	Delaware
Vivint Solar Rebecca Project Company, LLC	Delaware
Vivint Solar Hannah Manager, LLC	Delaware
Vivint Solar Hannah Project Company, LLC	Delaware
Vivint Solar Nicole Manager, LLC	Delaware
Vivint Solar Nicole Owner, LLC	Delaware
Vivint Solar Nicole Master Tenant, LLC	Delaware
Vivint Solar Elyse Manager, LLC	Delaware
Vivint Solar Elyse Project Company, LLC	Delaware
Vivint Solar Financing I, LLC	Delaware
Vivint Solar Owner I, LLC	Delaware
Vivint Solar Operations, LLC	Delaware
Vivint Solar Fund X Manager, LLC	Delaware
Vivint Solar Fund X Project Company, LLC	Delaware
Vivint Solar Licensing, LLC	Delaware
Vivint Solar Fund XI Manager, LLC	Delaware
Vivint Solar Fund XI Project Company, LLC	Delaware
Vivint Solar Fund XII Manager, LLC	Delaware
Vivint Solar Fund XII Project Company, LLC	Delaware
Vivint Solar Fund XIV Manager, LLC	Delaware
Vivint Solar Fund XIV Project Company, LLC	Delaware
Vivint Solar Fund XIII Manager, LLC	Delaware
Vivint Solar Fund XIII Project Company, LLC	Delaware
Vivint Solar Fund XVI Manager, LLC	Delaware
Vivint Solar Fund XVI Lessor, LLC	Delaware
Vivint Solar Commercial Developer, LLC	Delaware
Vivint Solar Commercial Provider, LLC	Delaware
Vivint Solar Fund XVII GP, LLC	Delaware
Vivint Solar Fund XVII LP, LLC	Delaware
Vivint Solar Fund XVII Lessor, LP	Cayman Islands
Vivint Solar Fund XVIII Manager, LLC	Delaware
Vivint Solar Fund XVIII Project Company, LLC	Delaware

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-199077) pertaining to the 2014 Equity Incentive Plan, 2013 Omnibus Incentive Plan, and Non-Plan Stock Option Agreement of Vivint Solar, Inc. of our report dated March 14, 2016, with respect to the consolidated financial statements of Vivint Solar, Inc., included in this Annual Report (Form 10-K) for the year ended December 31, 2015.

/s/ Ernst & Young LLP

Salt Lake City, Utah

March 14, 2016

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gregory S. Butterfield, certify that:

1) I have reviewed this Annual Report on Form 10-K of Vivint Solar, Inc.;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 14, 2016	By:	/s/ Gregory S. Butterfield
		Gregory S. Butterfield
		Chief Executive Officer and President
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Dana C. Russell, certify that:

1) I have reviewed this Annual Report on Form 10-K of Vivint Solar, Inc.;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 14, 2016	By:	/s/ Dana C. Russell
		Dana C. Russell
		Chief Financial Officer and Executive Vice President
		(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Vivint Solar, Inc. (the “Company”) on Form 10-K for the year ending December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: March 14, 2016	By:	/s/ Gregory S. Butterfield
		Gregory S. Butterfield
		Chief Executive Officer and President
		(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Vivint Solar, Inc. (the “Company”) on Form 10-K for the year ending December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: March 14, 2016	By:	/s/ Dana C. Russell
		Dana C. Russell
		Chief Financial Officer and Executive Vice President
		(Principal Financial and Accounting Officer)

XML

Document and Entity Information - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Mar. 02, 2016	Jun. 30, 2015
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	FY
Trading Symbol	VSLR
Entity Registrant Name	Vivint Solar, Inc.
Entity Central Index Key	0001607716
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	No
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		106,595,407
Entity Public Float			$ 264.1

XML

Consolidated Balance Sheets - USD ($) $ in Thousands		Dec. 31, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents		$ 92,213	$ 261,649
Accounts receivable, net		3,636	1,837
Inventories		631	774
Prepaid expenses and other current assets		17,078	16,806
Total current assets		113,558	281,066
Restricted cash and cash equivalents		15,035	6,516
Solar energy systems, net		1,102,157	588,167
Property and equipment, net		48,168	13,024
Intangible assets, net		2,031	18,487
Goodwill		36,601	36,601
Prepaid tax asset, net		277,496	111,910
Other non-current assets, net		14,024	8,553
TOTAL ASSETS	[1]	1,609,070	1,064,324
Current liabilities:
Accounts payable		49,986	51,354
Accounts payable—related party		1,905	2,132
Distributions payable to non-controlling interests and redeemable non-controlling interests		11,347	6,780
Accrued compensation		13,758	16,794
Current portion of deferred revenue		4,968	314
Current portion of capital lease obligation		5,489	3,502
Accrued and other current liabilities		29,017	14,016
Total current liabilities		116,470	94,892
Capital lease obligation, net of current portion		10,055	6,176
Long-term debt		415,850	105,000
Deferred tax liability, net		216,033	112,227
Deferred revenue, net of current portion		43,304	4,466
Other non-current liabilities		28,565
Total liabilities	[1]	$ 830,277	$ 322,761
Commitments and contingencies (Note 16)
Redeemable non-controlling interests		$ 169,541	$ 128,427
Stockholders' equity:
Common stock, $0.01 par value—1,000,000 authorized, 106,576 shares issued and outstanding as of December 31, 2015; 1,000,000 authorized, 105,303 shares issued and outstanding as of December 31, 2014		1,066	1,053
Additional paid-in capital		530,646	502,785
Accumulated deficit		(12,769)	(25,849)
Total stockholders' equity		518,943	477,989
Non-controlling interests		90,309	135,147
Total equity		609,252	613,136
TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY		$ 1,609,070	$ 1,064,324

[1] The Company’s consolidated assets as of December 31, 2015 and 2014 include $1,005.8 million and $540.1 million consisting of assets of variable interest entities, or VIEs, that can only be used to settle obligations of the VIEs. These assets include solar energy systems, net, of $990.6 million and $525.9 million as of December 31, 2015 and 2014; cash and cash equivalents of $12.0 million and $12.6 million as of December 31, 2015 and 2014; accounts receivable, net, of $3.1 million and $1.5 million as of December 31, 2015 and 2014; and prepaid expenses and other current assets of $0.1 million and zero as of December 31, 2015 and 2014. The Company’s consolidated liabilities as of December 31, 2015 and 2014 included $66.4 million and $11.4 million of liabilities of VIEs whose creditors have no recourse to the Company. These liabilities include distributions payable to non-controlling interests and redeemable non-controlling interests of $11.3 million and $6.8 million as of December 31, 2015 and 2014; deferred revenue of $47.9 million and $4.6 million as of December 31, 2015 and 2014; accrued and other current liabilities of $3.9 million and zero as of December 31, 2015 and 2014; and other non-current liabilities of $3.3 million and zero as of December 31, 2015 and 2014. For further information see Note 11—Investment Funds.

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands		Dec. 31, 2015	Dec. 31, 2014
Common stock, par value		$ 0.01	$ 0.01
Common stock, shares authorized		1,000,000,000	1,000,000,000
Common stock, shares issued		106,576,000	105,303,000
Common stock, shares outstanding		106,576,000	105,303,000
Total assets	[1]	$ 1,609,070	$ 1,064,324
Solar energy systems, net		1,102,157	588,167
Cash and cash equivalents		92,213	261,649
Accounts receivable, net		3,636	1,837
Prepaid expenses and other current assets		17,078	16,806
Total liabilities	[1]	830,277	322,761
Distributions payable to non-controlling interests and redeemable non-controlling interests		11,347	6,780
Accrued and other current liabilities		29,017	14,016
Other non-current liabilities		28,565
Variable Interest Entities
Total assets		1,005,825	540,086
Solar energy systems, net		990,609	525,903
Cash and cash equivalents		12,014	12,641
Accounts receivable, net		3,063	1,542
Prepaid expenses and other current assets		121	0
Total liabilities		66,417	11,352
Distributions payable to non-controlling interests and redeemable non-controlling interests		11,347	6,780
Deferred revenue		47,900	4,600
Accrued and other current liabilities		3,869	0
Other non-current liabilities		$ 3,283	$ 0

[1] The Company’s consolidated assets as of December 31, 2015 and 2014 include $1,005.8 million and $540.1 million consisting of assets of variable interest entities, or VIEs, that can only be used to settle obligations of the VIEs. These assets include solar energy systems, net, of $990.6 million and $525.9 million as of December 31, 2015 and 2014; cash and cash equivalents of $12.0 million and $12.6 million as of December 31, 2015 and 2014; accounts receivable, net, of $3.1 million and $1.5 million as of December 31, 2015 and 2014; and prepaid expenses and other current assets of $0.1 million and zero as of December 31, 2015 and 2014. The Company’s consolidated liabilities as of December 31, 2015 and 2014 included $66.4 million and $11.4 million of liabilities of VIEs whose creditors have no recourse to the Company. These liabilities include distributions payable to non-controlling interests and redeemable non-controlling interests of $11.3 million and $6.8 million as of December 31, 2015 and 2014; deferred revenue of $47.9 million and $4.6 million as of December 31, 2015 and 2014; accrued and other current liabilities of $3.9 million and zero as of December 31, 2015 and 2014; and other non-current liabilities of $3.3 million and zero as of December 31, 2015 and 2014. For further information see Note 11—Investment Funds.

XML

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Revenue:
Operating leases and incentives	$ 61,150	$ 21,688	$ 5,864
Solar energy system and product sales	3,032	3,570	306
Total revenue	64,182	25,258	6,170
Operating expenses:
Cost of revenue—operating leases and incentives	131,213	67,984	19,004
Cost of revenue—solar energy system and product sales	1,762	1,997	123
Sales and marketing	48,078	21,869	7,348
Research and development	3,901	1,892
General and administrative	92,664	78,899	16,438
Amortization of intangible assets	13,172	14,911	14,595
Impairment of intangible assets	4,506
Total operating expenses	295,296	187,552	57,508
Loss from operations	(231,114)	(162,294)	(51,338)
Interest expense	12,568	9,323	3,144
Other (income) expense	(154)	1,372	1,865
Loss before income taxes	(243,528)	(172,989)	(56,347)
Income tax expense (benefit)	9,737	(7,070)	123
Net loss	(253,265)	(165,919)	(56,470)
Net loss attributable to non-controlling interests and redeemable non-controlling interests	(266,345)	(137,036)	(62,108)
Net income available (loss attributable) to common stockholders	$ 13,080	$ (28,883)	$ 5,638
Net income available (loss attributable) per share to common stockholders:
Basic	$ 0.12	$ (0.35)	$ 0.08
Diluted	$ 0.12	$ (0.35)	$ 0.07
Weighted-average shares used in computing net income available (loss attributable) per share to common stockholders:
Basic	106,088	83,446	75,000
Diluted	109,858	83,446	75,223

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Consolidated Statements of Redeemable Non-Controlling Interests and Equity - USD ($) shares in Thousands, $ in Thousands	Total	Redeemable Non-Controlling Interests	Common Stock	Additional Paid-in Capital	(Accumulated Deficit) Retained Earnings	Total Stockholders Equity	Non-Controlling Interests
Balance at Dec. 31, 2012	$ 71,323	$ 17,741	$ 750	$ 73,177	$ (2,604)	$ 71,323
Balance (in Shares) at Dec. 31, 2012			75,000
Stock-based compensation expense	294			294		294
Non-cash contributions for services	160			160		160
Capital contribution from Parent	1,418			1,418		1,418
Contributions from non-controlling interests and redeemable non-controlling interests	60,000	63,154					$ 60,000
Distributions to non-controlling interests and redeemable non-controlling interests	(670)	(3,064)					(670)
Net (loss) income attributable available to stockholders	(51,904)				5,638	5,638	(57,542)
Net (loss) Income attributable to non-controlling interests and redeemable non-controlling interests		(4,566)
Balance at Dec. 31, 2013	80,621	73,265	$ 750	75,049	3,034	78,833	1,788
Balance (in Shares) at Dec. 31, 2013			75,000
Stock-based compensation expense	23,687			23,687		23,687
Non-cash contributions for services	200			200		200
Issuance of common stock, net of costs	412,912		$ 303	412,609		412,912
Issuance of common stock (in shares)			30,303
Costs related to issuance of common stock	(8,760)			(8,760)		(8,760)
Contributions from non-controlling interests and redeemable non-controlling interests	275,777	63,735					275,777
Deemed dividend	43,430			43,430		43,430
Return of capital adjustment	(43,430)			(43,430)		(43,430)
Distributions to non-controlling interests and redeemable non-controlling interests	(8,801)	(5,154)					(8,801)
Net (loss) income attributable available to stockholders	(162,500)				(28,883)	(28,883)	(133,617)
Net (loss) Income attributable to non-controlling interests and redeemable non-controlling interests		(3,419)
Balance at Dec. 31, 2014	$ 613,136	128,427	$ 1,053	502,785	(25,849)	477,989	135,147
Balance (in Shares) at Dec. 31, 2014	105,303		105,303
Stock-based compensation expense	$ 25,604			25,604		25,604
Excess tax effects from stock-based compensation	1,713			1,713		1,713
Issuance of common stock, net of costs	557		$ 13	544		557
Issuance of common stock (in shares)			1,273
Contributions from non-controlling interests and redeemable non-controlling interests	178,833	113,896					178,833
Distributions to non-controlling interests and redeemable non-controlling interests	(23,542)	(6,566)					(23,542)
Net (loss) income attributable available to stockholders	(187,049)				13,080	13,080	(200,129)
Net (loss) Income attributable to non-controlling interests and redeemable non-controlling interests		(68,772)
Balance at Dec. 31, 2015	$ 609,252	$ 169,541	$ 1,066	$ 530,646	$ (12,769)	$ 518,943	$ 90,309
Balance (in Shares) at Dec. 31, 2015	106,576		106,576

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (253,265)	$ (165,919)	$ (56,470)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	24,924	8,523	1,984
Amortization of intangible assets	13,172	15,042	14,595
Impairment of intangible assets	4,506
Deferred income taxes	107,466	74,848	30,927
Stock-based compensation	25,604	23,687	294
Loss on removal of solar energy systems and property and equipment	1,024
Non-cash interest and other expense	3,724	6,512	2,930
Reduction in lease pass-through financing obligation	(231)
Non-cash contributions for services		200	160
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net	(1,799)	(1,018)	(512)
Inventories	143	(195)
Prepaid expenses and other current assets	(576)	(10,486)	(3,605)
Prepaid tax asset, net	(165,586)	(81,172)	(30,738)
Other non-current assets, net	(5,268)	(8,451)	(741)
Accounts payable	1,636	1,905	1,425
Accounts payable—related party	(227)	(935)	2,592
Accrued compensation	(892)	(1,073)	10,367
Deferred revenue	43,492	3,387	1,340
Accrued and other current liabilities	12,909	(773)	4,579
Net cash used in operating activities	(189,244)	(135,918)	(20,873)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for the cost of solar energy systems	(540,399)	(383,522)	(134,138)
Payments for property and equipment	(6,307)	(3,505)
Change in restricted cash and cash equivalents	(8,519)	(1,516)	(3,500)
Purchase of intangible assets	(1,221)	(370)
Payment in connection with business acquisition, net of cash acquired		(12,040)
Proceeds from U.S. Treasury grants		190	10,116
Net cash used in investing activities	(556,446)	(400,763)	(127,522)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from investment by non-controlling interests and redeemable non-controlling interests	292,729	339,512	123,154
Distributions paid to non-controlling interests and redeemable non-controlling interests	(25,541)	(8,751)	(2,284)
Proceeds from long-term debt	310,850	105,000
Proceeds from short-term debt		75,500
Payments on short-term debt		(75,500)
Payments for debt issuance costs	(5,422)
Proceeds from lease pass-through financing obligation	7,228
Proceeds from revolving lines of credit—related party		154,500	83,482
Payments on revolving lines of credit—related party		(200,192)	(60,000)
Payments on revolving lines of credit			(2,000)
Principal payments on capital lease obligations	(5,363)	(2,623)	(987)
Proceeds from issuance of common stock	649	412,912
Payments for deferred offering costs	(589)	(8,066)
Excess tax effects from stock-based compensation	1,713
Capital contribution from Parent			1,418
Net cash provided by financing activities	576,254	792,292	142,783
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(169,436)	255,611	(5,612)
CASH AND CASH EQUIVALENTS—Beginning of period	261,649	6,038	11,650
CASH AND CASH EQUIVALENTS—End of period	92,213	261,649	6,038
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest	8,469	4,473	206
Cash paid for income taxes	67,135	4,350	4
NONCASH INVESTING AND FINANCING ACTIVITIES:
Property acquired under build-to-suit agreements	25,560
Vehicles acquired under capital leases	11,363	8,541	4,749
Accrued distributions to non-controlling interests and redeemable non-controlling interests	4,567	5,204	1,450
Costs of solar energy systems included in changes in accounts payable, accrued compensation and other accrued liabilities	(6,589)	25,990	19,946
Solar energy system sales
NONCASH INVESTING AND FINANCING ACTIVITIES:
Receivable for tax credit recorded as a reduction to solar energy system costs	$ 1,678	$ 4,132	$ 2,122

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Organization

12 Months Ended

Dec. 31, 2015

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization

1.Organization

Vivint Solar, Inc. (the “Company” and formerly known as V Solar Holdings, Inc.) was incorporated as a Delaware corporation on August 12, 2011. Vivint Solar, Inc. and its subsidiaries are collectively referred to as the “Company.” The Company commenced operations in May 2011. In November 2012 (the “Acquisition Date”), investment funds affiliated with The Blackstone Group L.P. (the “Sponsor”) and certain co-investors (collectively, the “Investors”), through 313 Acquisition LLC (“313” or “Parent”), acquired 100% of the equity interests of APX Group, Inc. (“Vivint”) and the Company (the “Acquisition”). The Acquisition was accomplished through certain mergers and related reorganization transactions pursuant to which the Company became a direct wholly owned subsidiary of 313, an entity owned by the Investors. In October 2014, the Company closed its initial public offering with 313 remaining the majority shareholder.

Merger Agreement with SunEdison

On July 20, 2015, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with SunEdison, Inc., a Delaware corporation (“SunEdison”) and SEV Merger Sub, Inc., a wholly-owned subsidiary of SunEdison. The Merger Agreement was subsequently amended on December 9, 2015 to update the terms of the merger. The Company terminated the Merger Agreement on March 7, 2016. 

On March 8, 2016, the Company filed suit in the Court of Chancery State of Delaware against SunEdison alleging that SunEdison willfully breached its obligations under the Merger Agreement and breached its implied covenant of good faith and fair dealing. The Company is seeking declaratory judgment, award damages, costs and reasonable attorney’s fees and such further relief that the court finds equitable, appropriate and just.

Business

The Company primarily offers solar energy to residential customers through long-term customer contracts, such as power purchase agreements and solar energy system leases. The Company enters into these long-term customer contracts primarily through a sales organization that uses a direct-to-home sales model. The long-term customer contracts are typically for 20 years and require the customer to make monthly payments to the Company. In 2015, the Company also began offering customers the option to purchase solar energy systems. In May 2015, the Company began offering solar energy systems to commercial and industrial (“C&I”) customers through long-term customer contracts.

The Company has formed various investment funds and entered into long-term debt facilities to monetize the recurring customer payments under its long-term customer contracts and the investment tax credits, accelerated tax depreciation and other incentives associated with residential solar energy systems. The Company uses the cash received from the investment funds, long-term debt facilities and revenue generated from operations to finance a portion of the Company’s variable and fixed costs associated with installing the residential solar energy systems. The obligations of the Company are in no event obligations of the investment funds.

Since inception, the Company has relied on Vivint and certain of its affiliates for some of its administrative, managerial, account management and operational services. The Company’s use of Vivint services has steadily decreased since 2013 and now consists primarily of IT support. The Company was consolidated by Vivint as a variable interest entity prior to the Acquisition, and continues to be an affiliated entity and related party subsequent to the Acquisition. The Company has entered into various agreements and transactions with Vivint and its affiliates related to these services. See Note 15—Related Party Transactions.          

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2.Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) and reflect the accounts and operations of the Company, its subsidiaries in which the Company has a controlling financial interest and the investment funds formed to fund the purchase of solar energy systems, which are consolidated as variable interest entities (“VIEs”). The Company uses a qualitative approach in assessing the consolidation requirement for VIEs. This approach focuses on determining whether the Company has the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and whether the Company has the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. For all periods presented, the Company has determined that it is the primary beneficiary in the operational VIEs in which it has an equity interest. The Company evaluates its relationships with the VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. For additional information regarding these VIEs, see Note 11—Investment Funds.

The consolidated financial statements reflect all of the costs of doing business, including the allocation of expenses incurred by Vivint on behalf of the Company. For additional information, see Note 15—Related Party Transactions. These expenses were allocated to the Company on a basis that was considered to reasonably reflect the utilization of the services provided to, or the benefit obtained by, the Company. The allocations may not, however, reflect the expense the Company would have incurred as an independent company for the periods presented, and may not be indicative of the Company’s future results of operations and financial position.

With respect to liquidity, the Company believes its cash and cash equivalents, including investment fund commitments, projected investment fund contributions and its current debt facilities, in addition to financing that may be obtained from other sources, including the Company’s financial sponsors, will be sufficient to meet its anticipated cash needs for at least the next 12 months. While the Company believes additional financing is available and will continue to be available to support the current level of operations, the Company believes it has the ability and intent to reduce operations to the level of available financial resources at least through the year ended December 31, 2016.

Certain prior period amounts have been reclassified to conform to current year presentation. These reclassifications did not have a significant impact on the consolidated financial statements.

Segment Information

The Company’s chief operating decision maker is its Chief Executive Officer. The Chief Executive Officer reviews financial information for purposes of allocating resources and evaluating financial performance. Prior to the second quarter of 2015, the Company had one business activity that was focused primarily on providing service to customers in the residential market. During the second quarter of 2015, the Company closed its first C&I investment fund with plans to service customers in the C&I market. As of December 31, 2015, the C&I fund was not operational, i.e., no projects had been initiated within the fund. During the year ended December 31, 2015, the Company has aligned its operations as two reporting segments: (1) Residential and (2) C&I. For additional segment information, see Note 18—Segment Information.

Use of Estimates

The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company regularly makes significant estimates and assumptions including, but not limited to, estimates that affect the Company’s principles of consolidation, investment tax credits, revenue recognition, solar energy systems, net, impairment of long-lived assets, goodwill impairment analysis, the recognition and measurement of loss contingencies, stock-based compensation, provision for income taxes, and non-controlling interests and redeemable non-controlling interests. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ materially from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash and cash equivalents. Cash equivalents consist principally of time deposits and money market accounts with high quality financial institutions.

Restricted Cash

The Company’s guaranty agreements with certain of its fund investors require the maintenance of minimum cash balances of $10.0 million. For additional information, see Note 11—Investment Funds. The Company was also required to deposit $5.0 million into a separate interest reserve account in accordance with the terms of its loan credit facility with Bank of America, N.A. For additional information, see Note 10—Debt Obligations. These minimum cash balances are classified as restricted cash.

Accounts Receivable, Net

Accounts receivable are recorded at the invoiced amount, net of allowance for doubtful accounts. Accounts receivable also include unbilled accounts receivable, which is comprised of the monthly power generation under power purchase agreements not yet invoiced and the monthly bill rate of legal-form leases as of the end of the reporting period. The Company estimates its allowance for doubtful accounts based upon the collectability of the receivables in light of historical trends and adverse situations that may affect customers’ ability to pay. Revisions to the allowance are recorded as an adjustment to bad debt expense. After appropriate collection efforts are exhausted, specific accounts receivable deemed to be uncollectible are charged against the allowance in the period they are deemed uncollectible. Recoveries of accounts receivable previously written-off are recorded as credits to bad debt expense. The Company had an allowance for doubtful accounts of $0.9 million and $0.6 million as of December 31, 2015 and 2014.

Inventories

Inventories include components related to photovoltaic installation devices and software products and are stated at the lower of cost, on an average cost basis, or market. Inventories also include solar energy systems held for sale, which are solar energy systems under construction that have yet to be interconnected to the power grid and that will be sold to customers. Solar energy systems held for sale are stated at the lower of cost, on a first-in-first-out basis, or market. Solar energy systems held for sale was $0.1 million as of December 31, 2015. No solar energy systems were held for sale as of December 31, 2014.

The Company evaluates its inventory reserves on a quarterly basis and writes down the value of inventories for estimated excess and obsolete inventories based on assumptions about future demand and market conditions.

Concentrations of Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The associated concentration risk for cash and cash equivalents is mitigated by banking with creditworthy institutions. At certain times, amounts on deposit exceed Federal Deposit Insurance Corporation insurance limits. The Company does not require collateral or other security to support accounts receivable. The Company is not dependent on any single customer. The loss of a customer would not adversely impact the Company’s operating results or financial position.

The Company purchases solar panels, inverters and other system components from a limited number of suppliers. Three suppliers accounted for approximately 50%, 30% and 20% of the solar photovoltaic module purchases for the year ended December 31, 2015. Two of those suppliers accounted for approximately 50% and 40% of these purchases for the year ended December 31, 2014. The same two suppliers each individually accounted for over 48% of these purchases for the year ended December 31, 2013. Two suppliers accounted for approximately 55% and 40% of the Company’s inverter purchases for the year ended December 31, 2015. One of those suppliers accounted for a substantial majority of the Company’s inverter purchases for the years ended December 31, 2014 and 2013. If these suppliers fail to satisfy the Company’s requirements on a timely basis or if the Company fails to develop, maintain and expand its relationship with these suppliers, the Company could suffer delays in being able to deliver or install its solar energy systems, experience a possible loss of revenue, or incur higher costs, any of which could adversely affect its operating results.

As of December 31, 2015, the Company’s customers under long-term customer contracts are primarily located in Arizona, California, Connecticut, Hawaii, Maryland, Massachusetts, New Jersey, New Mexico, New York, Pennsylvania, South Carolina and Utah. Future operations could be affected by changes in the economic conditions in these and other geographic areas, by changes in the demand for renewable energy generated by solar panel systems or by changes or eliminations of solar energy related government incentives.

Fair Value of Financial Instruments

Assets and liabilities recorded at fair value on a recurring basis in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

· Level I—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

· Level II—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

· Level III—Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

The Company’s financial instruments consist of Level I and Level II assets and liabilities. See Note 3—Fair Value Measurements

Investment Tax Credits

The Company applies for and receives investment tax credits under Section 48(a) of the Internal Revenue Code. The amount for the investment tax credit is equal to 30% of the value of eligible solar property. The Company receives minimal allocations of investment tax credits as the majority of such credits are allocated to the fund investor. Some of the Company’s investment funds obligate it to make certain fund investors whole for losses that the investors may suffer in certain limited circumstances resulting from the disallowance or recapture of investment tax credits as a result of the Internal Revenue Service’s (the “IRS”) assessment of the fair value of such systems. The Company has concluded that the likelihood of a recapture event is remote and consequently has not recorded any liability in the consolidated financial statements for any potential recapture exposure.

U.S. Treasury Grants

In the first quarter of 2014 and prior, certain solar energy systems were eligible to receive U.S. Treasury grants under Section 1603 of the American Recovery and Reinvestment Act of 2009, as amended by the Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of December 2010. The Company recorded a reduction in the basis of the solar energy system in the amount of cash to be received, at the grant approval date. This accounting treatment results in decreased depreciation of such solar energy systems over their useful lives. If it becomes probable that a U.S. Treasury grant is required to be repaid, the Company would assess whether it is necessary to derecognize any grant (or portion thereof) in accordance with Accounting Standards Codification section 450.

Solar Energy Systems, Net

The Company sells energy to customers through power purchase agreements or leases solar energy systems to customers under legal-form lease agreements. The Company has determined that these contracts should be accounted for as operating leases and, accordingly, the related solar energy systems are stated at cost, less accumulated depreciation and amortization. In 2014, the Company began offering leases to customers.

Solar energy systems, net is comprised of system equipment costs and initial direct costs related to solar energy systems. System equipment costs include components such as solar panels, inverters, racking systems and other electrical equipment, as well as costs for design and installation activities once a long-term customer contract has been executed. Initial direct costs related to solar energy systems consist of sales commissions and other direct customer acquisition expenses. System equipment costs and initial direct costs are capitalized and recorded within solar energy systems, net.

Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the respective assets as follows: 

	Useful Lives
System equipment costs	30 years
Initial direct costs related to solar energy systems	Lease term (20 years)

System equipment costs are depreciated and initial direct costs are amortized once the respective systems have been installed and interconnected to the power grid. As of December 31, 2015 and 2014, the Company had recorded costs of $1,134.7 million and $598.4 million in solar energy systems, of which $882.7 million and $407.7 million related to systems that had been interconnected to the power grid, with accumulated depreciation and amortization of $32.5 million and $10.2 million.

Property and Equipment, Net

The Company’s property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the assets. Vehicles leased under capital leases are depreciated over the life of the lease term, which is typically three years. The estimated useful lives of computer equipment, furniture, fixtures and purchased software are three years. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the assets. The estimated useful lives of leasehold improvements currently range from one to three years. Repairs and maintenance costs are expensed as incurred. Major renewals and improvements that extend the useful lives of existing assets are capitalized and depreciated over their estimated useful lives.

Intangible Assets

Finite-lived intangible assets, which consist of customer contracts, customer relationships, trademarks/trade names and developed technology acquired in business combinations are initially recorded at fair value and presented net of accumulated amortization. These intangible assets are amortized on a straight-line basis over their estimated useful lives. The Company amortizes customer contracts over three years, customer relationships over five years, trademarks/trade names over 10 years and developed technology over five to eight years. See Note 7—Intangible Assets and Goodwill.

In-process research and development reflects research and development projects that have not yet been completed and are capitalized as indefinite-lived intangibles subject to amortization upon completion or impairment if the assets are subsequently impaired or abandoned. In-process research and development projects were acquired in January 2014 as part of the Solmetric acquisition. See Note 4—Solmetric Acquisition.

The Company also capitalizes costs incurred in the development of internal-use software during the application development stage. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. Internal-use software is amortized on a straight-line basis over its estimated useful life. The Company tests these assets for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. During the year ended December 31, 2015, the development for certain internal-use software applications was completed and the Company began to amortize the internal-use software applications over the expected useful lives of three years. For the year ended December 31, 2015, $0.2 million of amortization was recorded for internal-use software. No amortization was recorded for internal-use software prior to the year ended December 31, 2015 as the internal-use software applications were still under development.

Impairment of Long-Lived Assets

The carrying amounts of the Company’s long-lived assets, including solar energy systems, property and equipment and finite-lived intangible assets are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than originally estimated. Factors that the Company considers in deciding when to perform an impairment review include significant negative industry or economic trends, and significant changes or planned changes in the Company’s use of the assets. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate over its remaining life. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. If the useful life is shorter than originally estimated, the Company amortizes the remaining carrying value over the new shorter useful life.

In February 2015, the Company decided to discontinue the external sales of the SunEye and PV Designer products, the rights to which the Company acquired when it acquired Solmetric Corporation, or Solmetric, in January 2014. This discontinuance was considered an indicator of impairment, and a review regarding the recoverability of the carrying value of the related intangible assets was performed. As a result of this review, the Company recorded a total impairment charge of $4.5 million for the year ended December 31, 2015. See Note 7—Intangible Assets and Goodwill.

Goodwill and Impairment Analysis

Goodwill represents the excess of the purchase price of an acquired business over the fair value of the net tangible and intangible assets acquired. As of December 31, 2015, the Company consisted of two operating segments: (1) Residential and (2) C&I. As C&I was created internally in 2015 and the Company’s goodwill was recorded prior to 2015, all goodwill remains with the Residential operating segment. As such, the Company’s impairment test is based on a single operating segment and reporting unit structure.

The Company performs its annual impairment test of goodwill as of October 1st of each fiscal year or whenever events or circumstances change that would indicate that goodwill might be impaired. Triggering events that may indicate impairment include, but are not limited to, a significant adverse change in the business climate, unanticipated competition, loss of key personnel, significant changes in the manner the Company uses the acquired assets or the strategy for the overall business, significant negative industry or economic trends or significant underperformance relative to historical operations or projected future results of operations.

In conducting the impairment test, the Company first assesses qualitative factors, including those stated previously, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. If the qualitative step is not passed, the Company performs a two-step impairment test whereby in the first step, the Company must compare the fair value of the reporting unit with its carrying amount. If the carrying amount exceeds its fair value, the Company performs the second step of the goodwill impairment test to determine the amount of impairment. The second step, measuring the impairment loss, compares the implied fair value of the goodwill with the carrying value of the goodwill. Any excess of the goodwill carrying value over the implied fair value is recognized as an impairment loss.

The Company determined the two-step test was not necessary based on the results of its qualitative assessments and concluded that it was more likely than not that the fair value of its reporting unit was greater than its respective carrying value as of October 1, 2015 and October 1, 2014.

Prepaid Tax Asset, Net

The Company recognizes sales of solar energy systems to the investment funds for income tax purposes. As the investment funds are consolidated by the Company, the gain on the sale of the solar energy systems has been eliminated in the consolidated financial statements. However, this gain is recognized for tax reporting purposes. Since these transactions are intercompany sales for GAAP purposes, any tax expense incurred related to these intercompany sales is deferred and amortized over the estimated useful life of the underlying solar energy systems, which has been estimated to be 30 years.

Other Non-Current Assets

Other non-current assets primarily consist of deferred financing costs, advances receivable due from sales representatives and long-term refundable rent deposits. Costs incurred in connection with obtaining debt financing are deferred and amortized utilizing the straight-line method, which approximates the effective-interest method, over the term of the related financing. The Company provides advance payments of compensation to direct-sales personnel under certain circumstances. The advance is repaid as a reduction of the direct-sales personnel’s future compensation. The Company has established an allowance related to advances to direct-sales personnel who have terminated their employment agreement with the Company. These are non-interest bearing advances.

Distributions Payable to Non-Controlling Interests and Redeemable Non-Controlling Interests

As discussed in Note 11—Investment Funds, the Company and fund investors have formed various investment funds that the Company consolidates as the Company has determined that it is the primary beneficiary of these VIEs. These VIEs are required to pay cumulative cash distributions to their respective fund investors. The Company accrues amounts payable to fund investors in distributions payable to non-controlling interests and redeemable non-controlling interests in its consolidated balance sheets.

Deferred Revenue

Deferred revenue primarily includes deferred investment tax credit (“ITC”) revenue and rebates and incentives. Deferred ITC revenue is related to a lease pass-through arrangement in which a portion of the rent prepayment is allocated to ITC revenue. Rebates and incentives are received from utility companies and various government agencies and are recognized as revenue over the related lease term of 20 years. See Revenue Recognition below.

Home Installation Reserve and Warranties

The Company typically warrants solar energy systems sold to customers for periods of one through twenty years against defects in design and workmanship, and for periods of one to ten years that installation will remain watertight. The manufacturers’ warranties on the solar energy system components, which is typically passed through to the customers, has a typical product warranty period of 10 years and a limited performance warranty period of 25 years. The Company warrants its photovoltaic installation devices and software products for one to two years against defects in materials or installation workmanship.

The Company generally assesses a reserve for damages related to home installations and provides for the estimated cost of warranties at the time the related revenue is recognized. The Company assesses the accrued home installation reserve and warranty regularly and adjusts the amounts as necessary based on actual experience and changes in future estimates. Accrued warranty and home installation reserve is recorded as a component of accrued and other current liabilities on the consolidated balance sheets and was $0.3 million as of December 31, 2015. These accruals were not significant as of December 31, 2014.

Comprehensive Income (Loss)

As the Company had no other comprehensive income or loss, comprehensive income (loss) is the same as net income available (loss attributable) to common stockholders for all periods presented.

Revenue Recognition

The Company recognizes revenue when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery or performance has occurred, (3) the sales price is fixed or determinable and (4) collectability is reasonably assured. The Company generates revenue through power purchase agreements and solar energy system leases, solar renewable energy certificates (“SRECs”) sales, rebate incentives and solar energy system sales. Revenue associated with power purchase agreements and solar energy system leases, SRECs and rebate incentives are included within operating leases and incentives revenue. The Company also recognizes revenue related to the sale of photovoltaic installation devices and software products and solar energy system sales within solar energy system and product sales. In the first quarter of 2015, the Company decided to discontinue the external sales of its photovoltaic installation software products.

Operating Leases and Incentives Revenue

The Company’s primary revenue-generating activity consists of entering into long-term power purchase agreements with residential customers, under which the customer agrees to purchase all of the power generated by the solar energy system for the term of the contract, which is 20 years. The agreement includes a fixed price per kilowatt hour with a fixed annual price escalation percentage. Customers have not historically been charged for installation or activation of the solar energy system. For all power purchase agreements, the Company assesses the probability of collectability on a customer-by-customer basis through a credit review process that evaluates their financial condition and ability to pay.

The Company has determined that power purchase agreements should be accounted for as operating leases after evaluating and concluding that none of the following capitalized lease classification criteria are met: no transfer of ownership or bargain purchase option exists at the end of the lease, the lease term is not greater than 75% of the useful life or the present value of minimum lease payments does not exceed 90% of the fair value at lease inception. As customer payments under a power purchase agreement are dependent on power generation, they are considered contingent rentals and are excluded from future minimum annual lease payments. Revenue from power purchase agreements is recognized based on the actual amount of power generated at rates specified under the contracts, assuming the other revenue recognition criteria discussed above are met.

In 2014, the Company began offering solar energy systems to customers pursuant to legal-form leases. The customer agreements are structured as legal-form leases due to local regulations that can be read to prohibit the sale of electricity pursuant to the Company’s standard power purchase agreement. Pursuant to the lease agreements, the customers’ monthly payments are a pre-determined amount calculated based on the expected solar energy generation by the system and includes an annual fixed percentage price escalation over the period of the contracts, which is 20 years. The Company provides its legal-form lease customers a performance guarantee, under which the Company agrees to make a payment at the end of each year to the customer if the solar energy systems do not meet a guaranteed production level in the prior 12-month period.

The guaranteed production levels have varying terms. Dependent on the level of the production guarantee, the Company either (1) recognizes the monthly lease payments as revenue and records a solar energy performance guarantee liability due to the contingent nature of the lease payments, or (2) straight-lines the contracted payments over the initial term of the lease. Solar energy performance guarantee liabilities were de minimis as of December 31, 2015 and 2014.

Future minimum annual lease receipts from customers under these legal-form lease agreements are as follows (in thousands):

Years Ending December 31,
2016	$	1,668
2017		1,716
2018		1,766
2019		1,817
2020		1,870

The Company applies for and receives SRECs in certain jurisdictions for power generated by its solar energy systems. When SRECs are granted, the Company typically sells them to other companies directly, or to brokers, to assist them in meeting their own mandatory emission reduction or conservation requirements. The Company recognizes revenue related to the sale of these certificates upon delivery, assuming the other revenue recognition criteria discussed above are met. The portion of SRECs included in operating leases and incentives was $13.9 million, $2.6 million and $0.3 million for the years ended December 31, 2015, 2014 and 2013.

The Company considers upfront rebate incentives earned from its solar energy systems to be minimum lease payments and are recognized on a straight-line basis over the life of the long-term customer contracts, assuming the other revenue recognition criteria discussed above are met. The portion of rebates recognized within operating leases and incentives was $0.4 million, $0.2 million and de minimis for the years ended December 31, 2015, 2014 and 2013.

Operating leases and incentives revenue is recorded net of sales tax collected.

Lease Pass-Through Arrangement

In 2015, a lease pass-through fund arrangement became operational under which the Company contributes solar energy systems and the investor contributes cash. Contemporaneously, a subsidiary of the Company entered into a master lease arrangement to lease the solar energy systems and the associated customer lease or power purchase agreements to the fund investor. The Company’s subsidiary makes a tax election to pass-through the investment tax credits (“ITCs”) that accrue to the solar energy systems to the fund investor, who as the legal lessee of the property is allowed to claim the ITCs under Section 50(d)(5) of the Internal Revenue Code and the related regulations.

Under this arrangement, the fund investor makes a large upfront lease payment to the Company’s subsidiary and subsequently makes periodic lease payments. The Company allocates a portion of the aggregate payments received from the fund investor to the estimated fair value of the assigned ITCs. The Company’s subsidiary has an obligation to ensure the solar energy system is in service and operational for a term of five years to avoid any recapture of the ITCs. Accordingly, the Company recognizes ITC revenue as the recapture provisions lapse assuming all other revenue recognition criteria have been met. The amounts allocated to ITCs are initially recorded as deferred revenue in the consolidated balance sheet, and subsequently, one-fifth of the amounts allocated to ITCs is recognized as revenue from operating leases and solar energy systems incentives in the consolidated statements of operations based on the anniversary of each solar energy system’s placed in service date over the next five years. As of December 31, 2015, no ITC revenue has been recognized.

Solar Energy System and Product Sales

Revenue from solar energy system sales is recognized upon the solar energy system passing an inspection by the responsible city department after completion of system installation and interconnection to the power grid per the completed contract method, assuming the remaining revenue recognition criteria discussed above have been met.

Revenue from the sale of photovoltaic installation devices and software products is recognized upon delivery of the product to the customer assuming the remaining revenue recognition criteria discussed above have been met.

Multiple-Element Arrangements

Subsequent to the acquisition of Solmetric in January 2014 and prior to the discontinuance of external sales of the SunEye and PV Designer products, the Company entered into multiple-element arrangements typically involving sales of (1) photovoltaic installation hardware devices containing software essential to the hardware product’s functionality and (2) stand-alone software. The Company allocated revenue based on the Company’s best estimate of selling price, which was determined by considering multiple factors including, but not limited to, market conditions, competitive landscape, internal costs, gross margin objectives and pricing practices. The consideration allocated to the delivered photovoltaic device is recognized at the time of shipment provided that the four general revenue recognition criteria discussed above have been met.

Cost of Revenue

Cost of Revenue—Operating Leases and Incentives

Cost of revenue—operating leases and incentives includes the depreciation of the cost of the solar energy systems and the amortization of capitalized initial direct costs. It also includes other costs related to the processing, account creation, design, installation, interconnection and servicing of solar energy systems that are not capitalized, such as personnel costs not directly associated to a solar energy system installation, warehouse rent and utilities, and fleet vehicle executory costs. The cost of revenue for the sales of SRECs is limited to broker fees which are paid in connection with certain SREC transactions.

Cost of Revenue—Solar Energy System and Product Sales

Cost of revenue—solar energy system and product sales consists of direct and indirect material and labor costs for solar energy systems. It also consists of materials, personnel costs, depreciation, facilities costs, other overhead costs and infrastructure expenses associated with the manufacturing of the photovoltaic installation devices and software products.

Research and Development

Research and development expense is primarily comprised of salaries and benefits associated with research and development personnel and other costs related to photovoltaic installation devices and software products and the development of other solar technologies. Research and development costs are charged to expense when incurred. The Company’s research and development expense was $3.9 million and $1.9 million for the years ended December 31, 2015 and 2014. Prior to the acquisition of Solmetric in January 2014, the Company did not incur any research and development expenses.

Advertising Costs

Advertising costs are expensed when incurred and are included in sales and marketing expenses in the consolidated statements of operations. The Company’s advertising expense was $4.5 million, $3.5 million and $1.3 million for the years ended December 31, 2015, 2014 and 2013.

Other Income (Expense)

The Company incurred interest and penalties primarily associated with employee payroll withholding tax payments that were not paid in a timely manner of $1.4 million and $1.9 million for the years ended December 31, 2014 and 2013. For the year ended December 31, 2015, the Company received an abatement of a portion of such penalties and interest.

Income Taxes

The Company accounts for income taxes under an asset and liability approach. Deferred income taxes reflect the impact of temporary differences between assets and liabilities recognized for financial reporting purposes and the amounts recognized for income tax reporting purposes, net operating loss carryforwards, and other tax credits measured by applying currently enacted tax laws. A valuation allowance is provided when necessary to reduce deferred tax assets to an amount that is more likely than not to be realized.

In the fourth quarter of 2015, the Company prospectively adopted Accounting Standards Update (“ASU”) 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. This update requires that deferred tax assets and liabilities, including any related valuation allowance, be classified as non-current in a classified statement of financial position and eliminates the requirement that an entity separate deferred tax liabilities and assets into current and non-current amounts. The adoption of this update resulted in a reclassification of the Company’s $7.3 million net current deferred tax asset to the net non-current deferred tax liability in the Company’s consolidated balance sheet as of December 31, 2015. No prior periods were retrospectively adjusted.

The Company determines whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Company uses a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon tax authority examination, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.

The Company’s policy is to include interest and penalties related to unrecognized tax benefits, if any, within income tax expense (benefit) in the consolidated statements of operations.

Stock-Based Compensation Expense

Stock-based compensation expense for equity instruments issued to employees is measured based on the grant-date fair value of the awards. The fair value of each time-based employee stock option is estimated on the date of grant using the Black-Scholes-Merton stock option pricing valuation model. The fair value of each performance-based employee stock option is estimated on the date of grant using the Monte Carlo simulation model. The fair value of each restricted stock award and performance share unit award is determined as the closing price of the Company’s stock on the date of grant. The Company recognizes compensation costs using the accelerated attribution method for all employee stock-based compensation awards that are expected to vest over the requisite service period of the awards, which is generally the awards’ vesting period. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Stock-based compensation expense for equity instruments issued to non-employees is recognized based on the estimated fair value of the equity instrument. The fair value of the non-employee awards is subject to remeasurement at each reporting period until services required under the arrangement are completed, which is the vesting date.

Post-Employment Benefits

In the periods presented, the Company participated in a 401(k) Plan sponsored by Vivint that covered all of the Company’s eligible employees. The Company did not provide a discretionary company match to employee contributions during any of the periods presented.

Non-Controlling Interests and Redeemable Non-Controlling Interests

Non-controlling interests and redeemable non-controlling interests represent fund investors’ interest in the net assets of certain consolidated investment funds, which have been entered into by the Company in order to finance the costs of solar energy systems under long-term customer contracts. The Company has determined that the provisions in the contractual arrangements represent substantive profit-sharing arrangements. The Company has further determined that the appropriate methodology for attributing income and loss to the non-controlling interests and redeemable non-controlling interests each period is a balance sheet approach referred to as the hypothetical liquidation at book value (“HLBV”) method. Under the HLBV method, the amounts of income and loss attributed to the non-controlling interests and redeemable non-controlling interests in the consolidated statements of operations reflect changes in the amounts the fund investors would hypothetically receive at each balance sheet date under the liquidation provisions of the contractual agreements of these structures, assuming the net assets of these funding structures were liquidated at recorded amounts. The fund investors’ non-controlling interest in the results of operations of these funding structures is determined as the difference in the non-controlling interests’ claim under the HLBV method at the start and end of each reporting period, after taking into account any capital transactions, such as contributions or distributions, between the fund and the fund investors. The use of the HLBV methodology to allocate income to the non-controlling and redeemable non-controlling interest holders may create volatility in the Company’s consolidated statements of operations as the application of HLBV can drive changes in net income available and loss attributable to non-controlling interests and redeemable non-controlling interests from quarter to quarter.

The Company classifies certain non-controlling interests with redemption features that are not solely within the control of the Company outside of permanent equity on its consolidated balance sheets. Redeemable non-controlling interests are reported using the greater of their carrying value at each reporting date as determined by the HLBV method or their estimated redemption value in each reporting period.

Loss Contingencies

The Company is subject to the possibility of various loss contingencies arising in the ordinary course of business. The Company considers the likelihood of loss or impairment of an asset, or the incurrence of a liability, as well as the Company’s ability to reasonably estimate the amount of loss, in determining loss contingencies. An estimated loss contingency is accrued when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. If the Company determines that a loss is possible and the range of the loss can be reasonably determined, then the Company discloses the range of the possible loss. The Company regularly evaluates current information available to determine whether an accrual is required, an accrual should be adjusted or a range of possible loss should be disclosed.

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-02, Leases (Topic 842). The objective of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This update primarily changes the recognition by lessees of lease assets and liabilities for leases currently classified as operating leases. Lessor accounting remains largely unchanged. This update is effective in fiscal years beginning after December 15, 2018 for public business entities and early adoption is permitted. The amendments should be applied using a modified retrospective approach. The Company has operating leases that will be affected by this update and is evaluating the impact on its consolidated financial statements and disclosures. The Company expects to apply the update upon its effectiveness in the first quarter of 2019.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Topic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The objective of this update is to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The amendments in this update address certain aspects of recognition, measurement, presentation and disclosure of financial instruments. This update is effective in fiscal years beginning after December 15, 2017. The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Company is currently evaluating the impact this update will have on its consolidated financial statements and related disclosures.

In September 2015, the FASB issued ASU 2015-16, Business Combinations – Simplifying the Accounting for Measurement-Period Adjustments. Under current GAAP, an acquirer is required to retrospectively adjust any provisional amounts recognized at the acquisition date with a corresponding adjustment to goodwill when new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts initially recognized or would have resulted in the recognition of additional assets or liabilities. To simplify the accounting for adjustments to provisional amounts, the update eliminates the requirement to retrospectively account for those adjustments. This update is effective in fiscal years beginning after December 15, 2015 and early adoption is permitted. The Company does not currently have acquisitions which would be affected by this update.

In August 2015, the FASB issued ASU 2015-15, Interest – Imputation of Interest (Subtopic 835-30) – Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, which addresses an omission in ASU 2015-03. In April 2015, the FASB issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30) – Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs be presented as a direct reduction from the carrying amount of that debt liability similar to debt discounts. Existing recognition and measurement guidance is not impacted. However, ASU 2015-15 acknowledges that ASU 2015-03 does not address the presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. Per ASU 2015-15, an entity may defer and present debt issuance costs as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement. ASU 2015-15 is effective immediately. ASU 2015-03 is effective in fiscal years beginning after December 15, 2015 and early adoption is permitted. The Company has debt issuance costs related to line-of-credit arrangements and has adopted ASU 2015-15, which resulted in no change of presentation. If the Company enters into other debt arrangements that fall under ASU 2015-03, the Company will account for any related debt issuance costs per the update upon its effectiveness in the first quarter of 2016.

In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date, which defers the effective date of ASU 2014-09. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. ASU 2015-14 defers the effective date of ASU 2014-09 for one year, and the standard is now effective for the Company on January 1, 2018. The deferral allows for early adoption of the standard, which for the Company would be on January 1, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is currently evaluating which transition method to use for adopting ASU 2014-09 when required and does not expect the update to have a significant impact on its consolidated financial statements and related disclosures based on its current business model.

In April 2015, the FASB issued ASU 2015-05, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) – Customers Accounting for Fees Paid in a Cloud Computing Arrangement. This update provides guidance regarding the accounting for fees paid by a customer in cloud computing arrangements. If a cloud computing arrangement includes a software license, the payment of fees should be accounted for in the same manner as the acquisition of other software licenses. If there is no software license, the fees should be accounted for as a service contract. The update is effective in fiscal years beginning after December 15, 2015 and early adoption is permitted. An entity can elect to adopt the amendments either (1) prospectively to all arrangements entered into or materially modified after the effective date or (2) retrospectively. The Company does not expect that this update will have a significant impact on its consolidated financial statements and disclosures.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. This update makes some targeted changes to current consolidation guidance. These changes impact both the voting and the variable interest consolidation models. In particular, the update will change how companies determine whether limited partnerships or similar entities are VIEs. The update is effective in fiscal years, including interim periods, beginning after December 15, 2015, and early adoption is permitted. The Company currently consolidates all VIEs in which it has an equity interest and does not expect that ASU 2015-02 will have a significant impact on its consolidated financial statements and related disclosures.

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Fair Value Measurements

12 Months Ended

Dec. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

3.Fair Value Measurements

The Company measures and reports its cash equivalents at fair value. The following tables set forth the fair value of the Company’s financial assets measured on a recurring basis by level within the fair value hierarchy (in thousands):

	December 31, 2015
	Level I		Level II		Level III		Total
Financial Assets
Time deposits	$	—	$	1,900	$	—	$	1,900
Total financial assets	$	—	$	1,900	$	—	$	1,900
	December 31, 2014
	Level I		Level II		Level III		Total
Financial Assets
Time deposits	$	—	$	1,900	$	—	$	1,900
Money market funds		607		—		—		607
Total financial assets	$	607	$	1,900	$	—	$	2,507

The carrying amounts of certain financial instruments of the Company, consisting of cash and cash equivalents excluding time deposits; accounts receivable; accounts payable; accounts payable—related party and distributions payable to redeemable non-controlling interests (all Level I) approximate fair value due to their relatively short maturities. Time deposits (Level II) approximate fair value due to their short-term nature (30 days) and, upon renewal, the interest rate is adjusted based on current market rates. The Company’s long-term debt is carried at cost and was $415.9 million and $105.0 million as of December 31, 2015 and 2014. The Company estimated the fair value of long-term debt to approximate its carrying value as interest accrues at a floating rate based on market rates. The Company did not have realized gains or losses related to financial assets for any of the periods presented.

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Solmetric Acquisition

12 Months Ended

Dec. 31, 2015

Business Combinations [Abstract]

Solmetric Acquisition

4.Solmetric Acquisition

In January 2014, the Company completed the acquisition of Solmetric (the “Solmetric Acquisition”), a developer and manufacturer of photovoltaic installation devices and software products. The purchase price agreed to in the purchase agreement with Solmetric was $12.0 million plus a net working capital adjustment resulting in total cash purchase consideration of $12.2 million. The total consideration of $12.2 million was used for the purchase of all outstanding stock and options of Solmetric, settlement of Solmetric’s short-term promissory note and settlement of other liabilities including employee-related liabilities of Solmetric incurred in connection with the acquisition. The Company incurred $0.3 million of costs related to retention bonuses to key Solmetric employees and $0.1 million of transaction fees, all of which were included in the consolidated statements of operations for the year ended December 31, 2014.

Pursuant to the terms of the purchase agreement, $1.0 million of the purchase consideration was placed in escrow and was held for general representations and warranties, rather than specific contingencies or specific assets or liabilities of the Company. The Company had no right to these funds, nor did it have a direct obligation associated with them. Accordingly, the Company did not include the escrow funds in its consolidated balance sheets. Notwithstanding any prior claims to the escrow fund due to a breach of representations and warranties, the escrow was released on the one year anniversary of the Solmetric Acquisition.

The estimated fair values of the assets acquired and liabilities assumed were based on information obtained from various sources including third party valuations, management’s internal valuation and historical experience. The fair values of the intangible assets related to customer relationships, trade names and trademarks, developed technology and in-process research and development were determined using the income approach and significant estimates relate to assumptions as to the future economic benefits to be received, cash flow projections and discount rates.

The purchase price was allocated based on the estimated fair value of net assets acquired and liabilities assumed at the date of the acquisition. The purchase price allocation was finalized as of December 31, 2014.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed (in thousands):

Cash acquired	$	139
Inventories		580
Other current assets acquired		221
Property		77
Customer relationships		738
Trademarks/trade names		1,664
Developed technology		1,295
In-process research and development		2,097
Goodwill		7,056
Deferred tax liability, net		(1,478	)
Current liabilities assumed		(210	)
Total	$	12,179

Goodwill, which represents the purchase price in excess of the fair value of net assets acquired, is not deductible for income tax purposes. This goodwill is reflective of the value derived from the Company utilizing Solmetric’s advanced technology to improve the installation and efficacy of its solar panels as well as the expected growth in the Solmetric business, based on its historical performance and the expectation of continued growth as the solar industry expands.

For tax purposes, the acquired intangible assets are not amortized. Accordingly, a deferred tax liability of $2.5 million was recorded for the difference between the book and tax basis related to the intangible assets. Additionally, a deferred tax asset of $1.0 million was recorded mainly as a result of Solmetric’s net operating losses.

Financial results for Solmetric since the acquisition date are included in the results of operations for the year ended December 31, 2014. Solmetric contributed $3.2 million of revenues and $0.4 million of net income for the year ended December 31, 2014. During 2015, the Company discontinued the external sale of two Solmetric products. This discontinuance was considered an indicator of impairment, and the Company performed a review regarding the recoverability of the carrying value of the related intangible assets. As a result of this review, the Company recorded an impairment charge of $4.5 million in the first quarter of 2015.

Unaudited Solmetric Pro Forma Information

The following pro forma financial information is based on the historical financial statements of the Company and presents the Company’s results as if the Solmetric Acquisition had occurred as of January 1, 2013 (in thousands):

	Years Ended
	December 31,
	2014			2013
Pro forma revenue	$	25,380		$	9,122
Pro forma net loss		(165,734	)		(57,046	)
Pro forma net (loss attributable) income available to common stockholders		(28,698	)		5,062

The unaudited pro forma results include the accounting effects resulting from the Solmetric Acquisition, such as the amortization charges from acquired intangible assets, reversal of costs related to special retention bonuses and other payments to employees and transaction costs directly related to the Solmetric Acquisition, elimination of intercompany sales and reversal of the related tax effects. The pro forma information presented does not purport to present what the actual results would have been had the Solmetric Acquisition actually occurred on January 1, 2013, nor is the information intended to project results for any future period.

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Solar Energy Systems

12 Months Ended

Dec. 31, 2015

Solar Energy Systems Disclosure [Abstract]

Solar Energy Systems

5.Solar Energy Systems

Solar energy systems, net consisted of the following (in thousands):

	December 31,			December 31,
	2015			2014
System equipment costs	$	893,088		$	478,502
Initial direct costs related to solar energy systems		171,081			75,349
		1,064,169			553,851
Less: Accumulated depreciation and amortization		(32,505	)		(10,186	)
		1,031,664			543,665
Solar energy system inventory		70,493			44,502
Solar energy systems, net	$	1,102,157		$	588,167

Solar energy system inventory represents the solar components and materials used in the installation of solar energy systems prior to being installed on customers’ roofs. As such, no depreciation is recorded related to this line item. The Company recorded depreciation and amortization expense related to solar energy systems of $22.3 million, $8.1 million and $2.0 million for the years ended December 31, 2015, 2014 and 2013.

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Property and Equipment

12 Months Ended

Dec. 31, 2015

Property Plant And Equipment [Abstract]

Property and Equipment

6.Property and Equipment

Property and equipment, net consisted of the following (in thousands):

	Estimated	December 31,			December 31,
	Useful Lives	2015			2014
Vehicles acquired under capital leases	3 years	$	24,149		$	13,351
Furniture and computer and other equipment	3 years		6,524			2,183
Leasehold improvements	1-3 years		4,116			2,088
			34,789			17,622
Less: Accumulated depreciation and amortization			(12,181	)		(4,598	)
			22,608			13,024
Build-to-suit lease asset under construction			25,560			—
Property and equipment, net		$	48,168		$	13,024

The Company recorded depreciation and amortization related to property and equipment of $8.2 million, $3.4 million and $1.2 million for the years ended December 31, 2015, 2014 and 2013.

The Company leases fleet vehicles that are accounted for as capital leases and are included in property and equipment, net. Depreciation on vehicles under capital leases totaling $5.5 million, $3.0 million and $1.2 million was capitalized in solar energy systems, net for the years ended December 31, 2015, 2014 and 2013. For the years ended December 31, 2015 and 2014, a de minimis amount of depreciation was also expensed. For the year ended December 31, 2013, no depreciation was expensed.

Because of its involvement in certain aspects of the construction of a new headquarters building in Lehi, UT, the Company is deemed the owner of the building for accounting purposes during the construction period. Accordingly, the Company recorded a build-to-suit lease asset of $25.6 million as of December 31, 2015. See Note 16—Commitments and Contingencies.

Future minimum lease payments for vehicles under capital leases as of December 31, 2015 were as follows (in thousands):

Years Ending December 31,
2016	$	6,405
2017		5,679
2018		4,136
2019		1,008
2020		36
Thereafter		—
Total minimum lease payments		17,264
Less: interest		1,720
Present value of capital lease obligations		15,544
Less: current portion		5,489
Long-term portion	$	10,055

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Intangible Assets and Goodwill

12 Months Ended

Dec. 31, 2015

Goodwill And Intangible Assets Disclosure [Abstract]

Intangible Assets and Goodwill

7.Intangible Assets and Goodwill

Intangible assets consisted of the following (in thousands):

	December 31,			December 31,
	2015			2014
Cost:
Internal-use software	$	1,591		$	370
Developed technology		522			1,295
Trademarks/trade names		201			1,664
Customer relationships		164			738
Customer contracts		—			43,783
In-process research and development		—			2,097
Total carrying value		2,478			49,947
Accumulated amortization:
Internal-use software		(219	)		—
Developed technology		(126	)		(160	)
Trademarks/trade names		(39	)		(152	)
Customer relationships		(63	)		(135	)
Customer contracts		—			(31,013	)
Total accumulated amortization		(447	)		(31,460	)
Total intangible assets, net	$	2,031		$	18,487

The Company recorded amortization expense of $13.2 million for the year ended December 31, 2015, $14.9 million for the year ended December 31, 2014, of which $0.1 million was recorded in cost of revenue-solar energy system and product sales, and $14.6 million for the year ended December 31, 2013. Customer contracts acquired in the Acquisition were fully amortized in 2015.

In February 2015, the Company decided to discontinue the external sales of the SunEye and PV Designer products, the rights to which the Company acquired when it acquired Solmetric Corporation, or Solmetric, in January 2014. This discontinuance was considered an indicator of impairment, and a review regarding the recoverability of the carrying value of the related intangible assets was performed. In-process research and development, which was intended to generate Solmetric product sales in the residential market, was discontinued and deemed fully impaired resulting in a charge of $2.1 million. The Solmetric, SunEye and PV Designer trade names will no longer be utilized and were deemed fully impaired resulting in a charge of $1.3 million. The SunEye and PV Designer developed technology assets were deemed fully impaired resulting in a charge of $0.7 million. Customer relationships were deemed partially impaired by $0.4 million due to the loss of external customers who purchased the discontinued products. As a result of this review, the Company recorded a total impairment charge of $4.5 million for the year ended December 31, 2015. No impairment was recorded in the years ended December 31, 2014 and 2013.

As of December 31, 2015, expected amortization expense for the unamortized intangible assets is as follows (in thousands):

Years Ending December 31,
2016	$	656
2017		558
2018		475
2019		129
2020		86
Thereafter		127
Total	$	2,031

No changes to goodwill were recorded for the year ended December 31, 2015. The carrying amount of goodwill for the years ended December 31, 2015 and 2014 was $36.6 million.

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Accrued Compensation

12 Months Ended

Dec. 31, 2015

Accrued Compensation Disclosure [Abstract]

Accrued Compensation

8.Accrued Compensation

Accrued compensation consisted of the following (in thousands):

	December 31,		December 31,
	2015		2014
Accrued payroll	$	6,918	$	10,219
Accrued commissions		6,840		6,575
Total accrued compensation	$	13,758	$	16,794

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Accrued and Other Current Liabilities

12 Months Ended

Dec. 31, 2015

Payables And Accruals [Abstract]

Accrued and Other Current Liabilities

9.Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following (in thousands):

	December 31,		December 31,
	2015		2014
Accrued professional fees	$	7,918	$	1,289
Income tax payable		6,169		4,097
Current portion of lease pass-through financing obligation		3,835		—
Sales and use tax payable		3,524		5,052
Accrued litigation settlements		1,790		450
Deferred rent		1,064		1,090
Accrued unused commitment fees and interest		1,014		478
Other accrued expenses		3,703		1,560
Total accrued and other current liabilities	$	29,017	$	14,016

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Debt Obligations

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Debt Obligations

10.Debt Obligations

Debt obligations consisted of the following (in thousands):

	December 31,		December 31,
	2015		2014
Aggregation credit facility	$	269,100	$	105,000
Working capital credit facility		146,750		—
Total debt	$	415,850	$	105,000

Bank of America, N.A. Aggregation Credit Facility

In September 2014, the Company entered into an aggregation credit facility (the “Aggregation Facility”), which was subsequently amended in February 2015 and November 2015, pursuant to which the Company may borrow up to an aggregate of $375.0 million and, upon the satisfaction of certain conditions and the approval of the lenders, up to an additional aggregate of $175.0 million in borrowings with certain financial institutions for which Bank of America, N.A. is acting as administrative agent.

The February 2015 amendment to the Aggregation Facility increased the funding commitment by $25.0 million pursuant to which the Company may borrow up to an aggregate of $375.0 million. In addition, the right to which the Company may request additional borrowing capacity, upon the satisfaction of certain conditions and the approval of the lenders, was reduced to $175.0 million, such that the total potential capacity under the facility remains at $550.0 million. The other terms of the Aggregation Facility remained unchanged.

The November 2015 amendments primarily included (1) changing the formula for determining the amount that the Company may borrow subject to the satisfaction of certain conditions, without changing the $375.0 million loan commitment, enabling the Company to draw additional loan proceeds from the existing conditions satisfied, (2) converting the facility from a term facility into a revolving facility and (3) requiring the Company to enter into an interest rate hedging agreement before September 13, 2016. For accounting purposes, the Aggregation Facility is considered a modification of the term loan credit facility entered into in May 2014 described below.

Prepayments are permitted under the Aggregation Facility, and the principal and accrued interest on any outstanding loans mature in March 2018. Under the Aggregation Facility, interest on borrowings accrues at a floating rate equal to either (1)(a) the London Interbank Offer Rate (“LIBOR”) or (b) the greatest of (i) the Federal Funds Rate plus 0.5%, (ii) the administrative agent’s prime rate and (iii) LIBOR plus 1% and (2) a margin that varies between 3.25% during the period during which the Company may incur borrowings and 3.50% after such period. Interest is payable at the end of each interest period that the Company may elect as a term of either one, two or three months.

The borrower under the Aggregation Facility is Vivint Solar Financing I, LLC, one of the Company’s indirect wholly owned subsidiaries, which in turn holds the Company’s interests in the managing members in the Company’s existing investment funds. These managing members guarantee the borrower’s obligations under the Aggregation Facility. In addition, Vivint Solar Holdings, Inc. has pledged its interests in the borrower, and the borrower has pledged its interests in the guarantors as security for the borrower’s obligations under the Aggregation Facility. The related solar energy systems are not subject to any security interest of the lenders, and there is no recourse to the Company in the case of a default.

The Aggregation Facility includes customary covenants, including covenants that restrict, subject to certain exceptions, the borrower’s, and the guarantors’ ability to incur indebtedness, incur liens, make investments, make fundamental changes to their business, dispose of assets, make certain types of restricted payments or enter into certain related party transactions. Among other restrictions, the Aggregation Facility provides that the borrower may not incur any indebtedness other than that related to the Aggregation Facility or in respect of permitted swap agreements, and that the guarantors may not incur any indebtedness other than that related to the Aggregation Facility or as permitted under existing investment fund transaction documents. These restrictions do not impact the Company’s ability to enter into investment funds, including those that are similar to those entered into previously. As of December 31, 2015, the Company was in compliance with such covenants. As of December 31, 2015, the Company has not entered into any interest rate hedges as required by the latest debt modification.

As of December 31, 2015, the Company had incurred an aggregate of $269.1 million in borrowings under the Aggregation Facility. The remaining borrowing capacity was $105.9 million as of December 31, 2015. However, the Company does not have immediate access to the remaining $105.9 million balance as future borrowings are dependent on when it has solar energy system revenue to collateralize the borrowings.

The Aggregation Facility also contains certain customary events of default. If an event of default occurs, lenders under the Aggregation Facility will be entitled to take various actions, including the acceleration of amounts due under the Aggregation Facility and foreclosure on the interests of the borrower and the guarantors that have been pledged to the lenders.

Interest expense was approximately $9.9 million and $1.4 million in the years ended December 31, 2015 and 2014. As of December 31, 2015, the current portion of deferred financing costs of $4.0 million was recorded in prepaid expenses and other current assets, and the long-term portion of deferred financing costs of $4.9 million was recorded in other non-current assets, net in the consolidated balance sheet. In addition, a $5.0 million interest reserve amount was deposited in an interest reserve account with the administrative agent and is included in restricted cash and cash equivalents. The interest reserve increases as borrowings increase under the Aggregation Facility.

Working Capital Credit Facility

In March 2015, the Company entered into a revolving credit agreement (the “Working Capital Facility”) pursuant to which the Company may borrow up to an aggregate principal amount of $131.0 million from certain financial institutions for which Goldman Sachs Lending Partners LLC is acting as administrative agent and collateral agent. In May 2015, certain conditions were satisfied and the aggregate amount of available revolver borrowings was increased to $150.0 million. Loans under the Working Capital Facility will be used to pay for the costs incurred in connection with the design and construction of solar energy systems, and letters of credit may be issued for working capital and general corporate purposes. As of December 31, 2015, the Company had incurred an aggregate of $146.8 million in borrowings under the Working Capital Facility. Further, the Company established a letter of credit under the Working Capital Facility for $3.2 million related to an insurance contract. As such, there was no remaining borrowing capacity available as of December 31, 2015.

The Company has pledged the interests in the assets of the Company and its subsidiaries, excluding Vivint Solar Financing I, LLC, as security for its obligations under the Working Capital Facility. Prepayments are permitted under the Working Capital Facility, and the principal and accrued interest on any outstanding loans mature in March 2020. Interest accrues on borrowings at a floating rate equal to, dependent on the type of borrowing, (1) a rate equal to the Eurodollar Rate for the interest period divided by one minus the Eurodollar Reserve Percentage, plus a margin of 3.25%; or (2) the highest of (a) the Federal Funds Rate plus 0.50%, (b) the Citibank prime rate and (c) the one-month interest period Eurodollar rate plus 1.00%, plus a margin of 2.25%. Interest is payable dependent on the type of borrowing at the end of (1) the interest period that the Company may elect as a term and not to exceed three months, (2) quarterly or (3) at maturity of the Working Capital Facility.

The Working Capital Facility includes customary covenants, including covenants that restrict, subject to certain exceptions, the Company’s ability to incur indebtedness, incur liens, make investments, make fundamental changes to its business, dispose of assets, make certain types of restricted payments or enter into certain related party transactions. Among other restrictions, the Working Capital Facility provides that the Company may not incur any indebtedness other than that related to the Working Capital Facility or permitted swap agreements. These restrictions do not impact the Company’s ability to enter into investment funds, including those that are similar to those entered into previously. The Company is also required to maintain $25.0 million in cash and cash equivalents and certain investments as of the last day of each quarter. As of December 31, 2015, the Company was in compliance with such covenants.

The Working Capital Facility also contains certain customary events of default. If an event of default occurs, lenders under the Working Capital Facility will be entitled to take various actions, including the acceleration of amounts then outstanding.

Interest expense for this facility was approximately $2.3 million for the year ended December 31, 2015. As of December 31, 2015, the current portion of deferred debt issuance costs of $0.5 million was recorded in prepaid expenses and other current assets, and the long-term portion of deferred debt issuance costs of $1.8 million was recorded in other non-current assets, net in the consolidated balance sheet.

Bank of America, N.A. Term Loan Credit Facility

In May 2014, the Company entered into a term loan credit facility for an aggregate principal amount of $75.5 million with certain financial institutions for which Bank of America, N.A. acted as administrative agent. In September 2014 in connection with the entry into the Aggregation Facility, the Company repaid the then outstanding $75.5 million in aggregate borrowings and terminated the agreement. Under this credit facility, the Company incurred interest on the term borrowings that accrued at a floating rate based on (1) LIBOR plus a margin equal to 4%, or (2) a rate equal to 3% plus the greatest of (a) the Federal Funds Rate plus 0.5%, (b) the administrative agent’s prime rate and (c) LIBOR plus 1%. Interest expense from inception of this credit facility in May 2014 through payoff in September 2014 was approximately $1.3 million.

The credit facility included customary covenants, including covenants that restricted, subject to certain exceptions, the Company’s ability to incur indebtedness, incur liens, make investments, make fundamental changes to the Company’s business, dispose of assets, make certain types of restricted payments or enter into certain related party transactions. As of the day on which borrowings under the credit facility were repaid, the Company was in compliance with all such covenants. In addition, the $1.6 million interest reserve amount that was deposited in an interest reserve account with the administrative agent was released upon termination of the credit facility.

Revolving Lines of Credit—Related Party

On October 9, 2014, the Company repaid $58.8 million in aggregate borrowings and interest owed to Vivint under the 2013 Loan Agreement and the 2012 Loan Agreement defined below. These loan agreements were terminated upon repayment.

In May 2013, the Company entered into a Subordinated Note and Loan Agreement with APX Parent Holdco, Inc., pursuant to which the Company was able to incur up to $20.0 million in revolver borrowings (“2013 Loan Agreement”). From May 2013 through December 2013, the Company incurred $18.5 million in principal borrowings under the agreement. Interest accrued on these borrowings at 12% per year through November 2013 and 20% per year thereafter, and accrued interest was paid-in-kind through additions to the principal amount on a semi-annual basis. In January 2014, the Company amended and restated the 2013 Loan Agreement, pursuant to which the Company was able to incur an additional $30.0 million in revolver borrowings, resulting in a total borrowing capacity of $50.0 million, with interest on the borrowings accruing at a rate of 12% per year. From January 2014 through September 2014, the Company incurred an aggregate of $154.5 million in revolver borrowings under the 2013 Loan Agreement of which $141.5 million was repaid within one to eight days from the respective borrowing date. None of these borrowings individually exceeded the borrowing capacity of $50.0 million. Interest expense was $3.1 million and $1.5 million for the years ended December 31, 2014 and 2013.

In December 2012 and amended in July 2013, the Company entered into a Subordinated Note and Loan Agreement with Vivint pursuant to which the Company could incur revolver borrowings of up to $20.0 million (“2012 Loan Agreement”). In December 2012, the Company incurred $15.0 million in revolver borrowings. From January 2013 through May 2013, the Company incurred an additional $5.0 million in revolver borrowings. Interest accrued on these borrowings at 7.5% per year, and accrued interest was paid-in-kind through additions to the principal amount on a semi-annual basis. Interest expense was $1.3 million and $1.5 million for the years ended December 31, 2014 and 2013.

In November 2013, the Company entered into a Subordinated Note and Loan Agreement with APX Parent Holdco, Inc. for a one day loan of $20.0 million to obtain funding for an investment fund and repaid the full amount the next day. The imputed interest on the principal amount was not significant.

In July 2013, the Company entered into a Subordinated Note and Loan Agreement with APX Parent Holdco, Inc. for a one day loan of $40.0 million to obtain funding for an investment fund and repaid the full amount the next day. The imputed interest on the principal amount was not significant.

Interest Expense and Amortization of Deferred Financing Costs

For the years ended December 31, 2015 and 2014, total interest expense incurred under debt obligations was $12.2 million and $9.3 million, of which $3.5 million and $2.2 million was amortization of deferred financing costs. For the year ended December 31, 2013, total interest expense incurred under debt obligations was $3.1 million and did not include amortization of deferred financing costs as no deferred financing costs had been incurred.

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Investment Funds

12 Months Ended

Dec. 31, 2015

Summarized Financial Data Of Subsidiary [Abstract]

Investment Funds

11.Investment Funds

As of December 31, 2015, the Company had formed 17 investment funds for the purpose of funding the purchase of solar energy systems. The Company has aggregated the financial information of the investment funds in the table below. The aggregate carrying value of these funds’ assets and liabilities (after elimination of intercompany transactions and balances) in the Company’s consolidated balance sheets were as follows (in thousands):

	December 31,		December 31,
	2015		2014
Assets
Current assets:
Cash and cash equivalents	$	12,014	$	12,641
Accounts receivable, net		3,063		1,542
Prepaid expenses and other current assets		121		—
Total current assets		15,198		14,183
Solar energy systems, net		990,609		525,903
Other non-current assets, net		18		—
Total assets	$	1,005,825	$	540,086
Liabilities
Current liabilities:
Distributions payable to non-controlling interests and redeemable    non-controlling interests	$	11,347	$	6,780
Current portion of deferred revenue		4,824		237
Accrued and other current liabilities		3,869		—
Total current liabilities		20,040		7,017
Deferred revenue, net of current portion		43,094		4,335
Other non-current liabilities		3,283		—
Total liabilities	$	66,417	$	11,352

The Company consolidates the investment funds in which it has an equity interest, and all intercompany balances and transactions between the Company and the investment funds are eliminated in the consolidated financial statements. The Company determined that each of these investment funds meets the definition of a VIE. The Company uses a qualitative approach in assessing the consolidation requirement for VIEs that focuses on determining whether the Company has the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and whether the Company has the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

The Company has considered the provisions within the contractual arrangements that grant it power to manage and make decisions that affect the operation of these VIEs, including determining the solar energy systems and associated long term customer contracts to be sold or contributed to the VIE, and installation, operation and maintenance of the solar energy systems. The Company considers that the rights granted to the other investors under the contractual arrangements are more protective in nature rather than participating rights. As such, the Company has determined it is the primary beneficiary of the VIEs for all periods presented. The Company evaluates its relationships with the VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary.

Under the related agreements, cash distributions of income and other receipts by the fund, net of agreed-upon expenses and estimated expenses, tax benefits and detriments of income and loss, and tax benefits of tax credits, are assigned to the fund investor and Company’s subsidiary as specified in contractual arrangements. Certain of these arrangements have call and put options to acquire the investor’s equity interest as specified in the contractual agreements.

Residential Investment Funds

As of December 31, 2015, the Company had formed 16 residential investment funds. Fund investors for three of the funds are managed indirectly by the Sponsor and are considered related parties. As of December 31, 2015 and 2014, the cumulative total of contributions into the VIEs by all investors was $773.0 million and $480.2 million. Of these contributions, a cumulative total of $110.0 million was contributed by related parties in prior periods.

C&I Investment Fund

In May 2015, a wholly owned subsidiary of the Company entered into a C&I solar investment fund arrangement with a fund investor. The fund was not operational, i.e., no projects had been initiated within the fund as of December 31, 2015, and as such, the Company did not have any assets or liabilities associated with the fund. The total available committed capital under the fund is $150.0 million, which is expected to be contributed in 2016.

Lease Pass-Through Financing Obligation

In the year ended December 31, 2015, a new lease pass-through fund arrangement became operational under which the Company contributes solar energy systems and the investor contributes cash. Contemporaneously, a subsidiary of the Company entered into a master lease arrangement to lease the solar energy systems and the associated customer lease or power purchase agreements to the fund investor. The Company’s subsidiary makes a tax election to pass-through the ITCs that accrue to the solar energy systems to the fund investor, who as the legal lessee of the property is allowed to claim the ITCs under Section 50(d)(5) of the Internal Revenue Code and the related regulations. The solar energy systems are included under solar energy systems, net in the consolidated balance sheets, and as of December 31, 2015, the net carrying value of the solar energy systems was $64.7 million.

Under the arrangement, the fund investor makes a large upfront payment to the Company’s subsidiary and subsequent periodic payments. The Company allocates a portion of the aggregate payments received from the fund investor to the estimated fair value of the assigned ITCs, and the balance to the future customer lease payments that are also assigned to the investor. The Company’s subsidiary has an obligation to ensure the solar energy system is in service and operational for a term of five years to avoid any recapture of the ITCs. Accordingly, the Company recognizes revenue as the recapture provisions lapse assuming all other revenue recognition criteria have been met. The amounts allocated to ITCs are initially recorded as deferred revenue in the consolidated balance sheet, and subsequently, one-fifth of the amounts allocated to ITCs is recognized as revenue from operating leases and solar energy systems incentives in the consolidated statements of operations based on the anniversary of each solar energy system’s placed in service date over the next five years.

The Company accounts for the residual of the payments received from the fund investor, net of amounts allocated to ITCs, as a borrowing by recording the proceeds received as a lease pass-through financing obligation, which will be repaid through customer payments that will be received by the investor. Under this approach, the Company continues to account for the arrangement with the customers in its consolidated financial statements, whether the cash generated from the customer arrangements is received by the lessor or paid directly to the fund investor. A portion of the amounts received by the fund investor from customer payments is applied to reduce the lease pass-through financing obligation, and the balance is allocated to interest expense. The customer payments are recognized into revenue based on cash receipts during the period as required by GAAP. Interest is calculated on the lease pass-through financing obligation using the effective interest rate method. The effective interest rate is the interest rate that equates the present value of the cash amounts to be received by a fund investor over the master lease term with the present value of the cash amounts paid by the investor to the Company, adjusted for any payments made by the Company.

The lease pass-through financing obligation is nonrecourse once the associated assets have been placed in service and all the customer arrangements have been assigned to the fund investor. However, there is a one-time future lease payment reset mechanism that is set to occur after all of the solar energy systems are delivered and placed in service. This reset date occurs when the installed capacity of the solar energy systems and their in-service dates are known or on an agreed upon date. As part of this reset process, the lease prepayment is updated to reflect certain specified conditions as they exist at such date, including the final installed capacity, cost and in-service dates of the solar energy systems. As a result of this reset process, the Company may be obligated to refund a portion of an investor’s master lease prepayments or may be entitled to receive an additional master lease prepayment. Any additional master lease prepayments by an investor would be recorded as an additional lease pass-through financing obligation, while any refunds of master lease prepayments would reduce the lease pass-through financing obligation. As of December 31, 2015, the Company had recorded financing liabilities of $47.3 million related to this fund arrangement as deferred revenue in its consolidated balance sheet.

As of December 31, 2015, the future minimum lease payments to be received from the fund investor based on the solar energy systems then under the lease pass-through fund arrangement, for each of the next five years and thereafter, were as follows (in thousands):

Years Ending December 31,
2016	$	1,701
2017		3,009
2018		3,064
2019		3,111
2020		3,159
Thereafter		10,549
Total minimum lease payments to be received	$	24,593

The fund investor is responsible for services such as warranty support, accounting, lease servicing and performance reporting, which have been outsourced to the Company under administrative and maintenance service agreements.

Guarantees

With respect to the investment funds, the Company and the fund investors have entered into guaranty agreements under which the Company guarantees the performance of certain financial obligations of its subsidiaries to the investment funds. These guarantees do not result in the Company being required to make payments to the fund investors unless such payments are mandated by the investment fund governing documents and the investment fund fails to make such payment.

The Company is contractually obligated to make certain VIE investors whole for losses that the investors may suffer in certain limited circumstances resulting from the disallowance or recapture of investment tax credits. The Company has concluded that the likelihood of a significant recapture event is remote and consequently has not recorded any liability in the consolidated financial statements for any potential recapture exposure. The maximum potential future payments that the Company could have to make under this obligation would depend on the IRS successfully asserting upon audit that the fair market values of the solar energy systems sold or transferred to the funds as determined by the Company exceeded the allowable basis for the systems for purposes of claiming ITCs. The fair market values of the solar energy systems and related ITCs are determined and the ITCs are allocated to the fund investors in accordance with the funds governing agreements. Due to uncertainties associated with estimating the timing and amounts of distributions, the likelihood of an event that may trigger repayment, forfeiture or recapture of ITCs to such investors, and the fact that the Company cannot determine how the IRS will evaluate system values used in claiming ITCs, the Company cannot determine the potential maximum future payments that are required under these guarantees.

For a certain fund, if it does not have sufficient cash flows to make a stated cash distribution to the fund investor each annual period, the Company’s subsidiary (which is the managing member of the fund) is obligated to contribute additional cash sufficient to allow the investment fund to make such distribution to the fund investor. The Company has not made payments under its guarantee of performance of the obligations of the subsidiary in prior periods because the fund has generated sufficient cash flow to make the stated cash distributions to the fund investor. The Company has determined that the maximum potential exposure under the guarantee to the fund is not significant.

From time to time, the Company incurs penalties for non-performance, which non-performance may include delays in the installation process and interconnection to the power grid of solar energy systems and other factors. Based on the terms of the investment fund agreements, the Company will either reimburse a portion of the fund investor’s capital or pay the fund investor a penalty fee. As of December 31, 2015 and 2014, the Company accrued an estimated $5.2 million and $4.0 million in distributions to reimburse fund investors a portion of their capital contributions in order to true-up the investors’ expected rate of return primarily due to a delay in solar energy systems being interconnected to the power grid.

As a result of the guaranty arrangements in certain funds, the Company is required to hold minimum cash balances of $10.0 million and $5.0 million as of December 31, 2015 and 2014, which are classified as restricted cash and cash equivalents on the consolidated balance sheets.

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Redeemable Non-Controlling Interests, Equity and Preferred Stock

12 Months Ended

Dec. 31, 2015

Equity [Abstract]

Redeemable Non-Controlling Interests, Equity and Preferred Stock

12.Redeemable Non-Controlling Interests, Equity and Preferred Stock

Common Stock

The Company has 1.0 billion authorized shares of common stock. As of December 31, 2015 and 2014, the Company had 106.6 million and 105.3 million shares of common stock issued and outstanding.

The Company had shares of common stock reserved for issuance as follows (in thousands):

	December 31,		December 31,
	2015		2014
Shares available for grant under equity incentive plans		12,267		8,783
Stock options issued and outstanding		9,277		10,053
Long-term incentive plan		3,382		4,059
Restricted stock units issued and outstanding		930		22
Total		25,856		22,917

On October 6, 2014, the Company closed its initial public offering in which 20.6 million shares of its common stock were sold at a public offering price of $16.00 per share, which generated net proceeds, after deducting underwriting discounts and commissions and $8.8 million in offering expenses, of $300.6 million.

In August 2014, the Company issued and sold an aggregate of 2.7 million shares of common stock to 313 for $10.667 per share for aggregate proceeds of $28.5 million. In September 2014, the Company issued and sold an aggregate of 7.0 million additional shares to 313 and two of its directors for $10.667 per share for aggregate gross proceeds of $75.0 million. The Company intended for the proceeds from such sales to fund its growing operations and to bolster its financial condition in advance of its initial public offering. Subsequent to such transactions, the Company set the preliminary price range for its initial public offering, the mid-point of which was $17.00 per share. The Company determined that, for financial reporting purposes, it was appropriate to record the aggregate difference between the per share purchase price and mid-point of the preliminary price range for its initial public offering with respect to the shares sold to the two directors, or $14.8 million, as stock-based compensation expense, which was recorded in general and administrative expense. Regarding the shares of common stock sold to 313, the Company also determined that, for financial reporting purposes, it was appropriate to record the aggregate difference of $43.4 million as a deemed distribution within additional paid-in capital.

Non-Controlling Interests and Redeemable Non-Controlling Interests

Seven of the investment funds include a right for the non-controlling interest holder to elect to require the Company’s wholly owned subsidiary to purchase all of its membership interests in the fund after a stated period of time (each, a “Put Option”). In one of the investment funds, the Company’s wholly owned subsidiary has the right to elect to require the non-controlling interest holder to sell all of its membership units to the Company’s wholly owned subsidiary (a “Call Option”) after the expiration of the non-controlling interest holder’s Put Option. In the six other investment funds that have Put Options, the Company’s wholly owned subsidiary has a Call Option for a stated period prior to the effectiveness of the Put Option. In nine other investment funds there is a Call Option which is exercisable after a stated period of time. One investment fund has neither a Put Option nor a Call Option. 

The purchase price for the fund investor’s interest in the seven investment funds under the Put Options is the greater of fair market value at the time the option is exercised and a specified amount, ranging from $0.7 million to $4.1 million. The Put Options for these seven investment funds are exercisable beginning on the date that specified conditions are met for each respective fund. None of the Put Options are expected to become exercisable prior to 2019.

Because the Put Options represent redemption features that are not solely within the control of the Company, the non-controlling interests in these investment funds are presented outside of permanent equity. Redeemable non-controlling interests are reported using the greater of their carrying value at each reporting date (which is impacted by attribution under the hypothetical liquidation at book value method) or their estimated redemption value in each reporting period. The carrying values of redeemable non-controlling interests at December 31, 2015 and December 31, 2014 were greater than the redemption values.

The purchase price for the fund investors’ interests under the Call Options varies by fund, but is generally the greater of a specified amount, which ranges from approximately $0.7 million to $7.0 million, the fair market value of such interest at the time the option is exercised, or an amount that causes the fund investor to achieve a specified return on investment. The Call Options are exercisable beginning on the date that specified conditions are met for each respective fund. None of the Call Options are expected to become exercisable prior to 2019.

Preferred Stock

In October 2014, the Company authorized 10.0 million shares of preferred stock that is issuable in series. As of December 31, 2015 and 2014, there were no series of preferred stock issued or designated.

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Equity Compensation Plans

12 Months Ended

Dec. 31, 2015

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Equity Compensation Plans

13.Equity Compensation Plans

Equity Incentive Plans

2014 Equity Incentive Plan

In September 2014, the Company adopted the 2014 Equity Incentive Plan (the “2014 Plan”). Under the 2014 Plan, the Company may grant stock options, restricted stock, restricted stock units, stock appreciation rights, performance units, performance shares and performance awards to its employees, directors and consultants, and its parent and subsidiary corporations’ employees and consultants.

As of December 31, 2015, a total of 13.3 million shares of common stock are reserved for issuance under the 2014 plan, subject to adjustment in the case of certain events. In addition, any shares that otherwise would be returned to the Omnibus Plan (as defined below) as the result of the expiration or termination of stock options may be added to the 2014 Plan. The number of shares available for issuance under the 2014 Plan is subject to an annual increase on the first day of each year, equal to the least of 8.8 million shares, 4% of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year and an amount of shares as determined by the Company. In accordance with the annual increase, an additional 4.2 million shares were reserved for issuance at the beginning of 2015 under the 2014 Plan.

As of December 31, 2015, there were 0.1 million time-based stock options, 0.8 million restricted stock units (“RSUs”), and 0.1 million performance share units (“PSUs”) outstanding under the 2014 Plan. The time-based options are subject to ratable time-based vesting over four years. The RSUs are subject to ratable time-based vesting over one to four years. The PSUs vest quarterly over one to four years subject to individual participants’ achievement of quarterly performance goals.

2013 Omnibus Incentive Plan; Non-plan Option Grant

In July 2013, the Company adopted the 2013 Omnibus Incentive Plan (the “Omnibus Plan”), which was terminated in connection with the adoption of the 2014 Plan in September 2014, and accordingly no additional shares are available for issuance under the Omnibus Plan. The Omnibus Plan continues to govern outstanding awards granted under the plan. In August 2013, the Company granted an option to purchase 0.6 million shares of common stock outside of the Omnibus Plan; however, the provisions of this option were substantially similar to those of the options granted pursuant to the Omnibus Plan.

During 2014 and 2013, the Company granted options of which one-third are subject to ratable time-based vesting over a five year period and two-thirds are subject to vesting upon certain performance conditions and the achievement of certain investment return thresholds by 313. The options have a ten-year contractual period.

In April 2014, the Company amended the vesting schedules of certain options outstanding under the Omnibus Plan and the option granted outside of the Omnibus Plan described above to provide that a portion of each of these options vests upon the Company’s aggregate market capitalization (using the 30-day, volume-weighted average closing bid price listed on the New York Stock Exchange) being equal to or exceeding $1.0 billion at the end of any trading day at least 240 days following the completion of the Company’s public offering.

During the year ended December 31, 2015, the first performance condition was met and 3.3 million performance-based options immediately vested and became exercisable during the second quarter of 2015. The Company accelerated all remaining expense related to the vested options for the first performance condition, resulting in additional stock-based compensation expense of approximately $7.4 million in the second quarter of 2015. For the year ended December 31, 2015, the Company recognized total expense of $10.8 million related to performance-based options. As of December 31, 2015, there were 3.2 million shares subject to outstanding options that are subject to performance and market conditions that have not yet been met. During the year ended December 31, 2014, the Company recorded $5.8 million in stock-based compensation related to the performance conditions as it became probable the performance conditions would be met.

Long-term Incentive Plan

In July 2013, the Company’s board of directors approved 4.1 million shares of common stock for six Long-term Incentive Plan Pools (“LTIP Pools”) that comprise the 2013 Long-term Incentive Plan (the “LTIP”). The purpose of the LTIP is to attract and retain key service providers and strengthen their commitment to the Company by providing incentive compensation measured by reference to the value of the shares of the Company’s common stock. Eligible participants include nonemployee direct sales personnel, who sell the solar energy system contracts, employees that install and maintain the solar energy systems and employees that recruit new employees to the Company.

Based on the terms of the agreement, participants are allocated a portion of the LTIP Pools relative to the performance of other participants. LTIP awards to employees are considered to be granted when the allocation of the LTIP Pools to each participant is fixed, which occurs once performance and service conditions are met. The Company amended five of six of the LTIP Pools in April 2014 and the final pool in August 2014. The amendment modified the date on which each participant’s award is fixed from the date of a public offering to a subsequent date based on fulfilling certain service or other performance conditions based on stockholder returns, which will be the same date on which the award vests.

Nonemployee awards are granted and will be measured on the date on which the performance is complete, which is the date the service or other performance conditions are achieved. The Company recognizes stock-based compensation expense based on the lowest aggregate fair value of the non-employee awards at the reporting date.

During the year ended December 31, 2015, 0.6 million shares of common stock were awarded to participants under the LTIP. As of December 31, 2015, 3.4 million shares remained outstanding, as 0.1 million shares represented the exercise price that were returned to the 2014 Plan. The Company recognized $8.3 million of expense related to these shares in the year ended December 31, 2015. No shares were awarded and no expense was recognized under the LTIP prior to the year ended December 31, 2015.

Stock Options

Stock Option Activity

Stock options are granted under the 2014 Plan and Omnibus Plan as described above. Stock option activity for the year ended December 31, 2015 was as follows (in thousands, except term and per share amounts):

						Weighted-
				Weighted-		Average
	Shares			Average		Remaining		Aggregate
	Underlying			Exercise		Contractual		Intrinsic
	Options			Price		Term		Value
Outstanding—December 31, 2014		10,053		$	1.21			$	80,790
Granted		114			12.56
Exercised		(595	)		1.09
Cancelled		(295	)		1.23
Outstanding—December 31, 2015		9,277		$	1.36		7.8	$	76,488
Options vested and exercisable—December 31, 2015		4,166		$	1.20		7.8	$	34,842
Options vested and expected to vest—December 31, 2015		8,964		$	1.35		7.8	$	73,568

The following table summarizes stock option activity by range of exercise price as of December 31, 2015 (number of awards in thousands):

	Awards Outstanding					Awards Exercisable
			Weighted-Average
	Number of Awards		Remaining	Weighted-Average		Number of Awards		Weighted-Average
Range of Exercise Price	Outstanding		Contractual Life	Exercise Price		Exercisable		Exercise Price
$0.00 - $1.00		5,859	7.6	$	1.00		2,772	$	1.00
$1.01 - $2.00		2,979	8.1		1.30		1,261		1.30
$2.01 - $10.00	320		8.5		4.14		128		4.14
$10.01 - $16.00	119		9.2		13.01		5		16.00
Total		9,277	7.8	$	1.36		4,166	$	1.20

The weighted-average grant date fair value of time-based options granted during the years ended December 31, 2015, 2014 and 2013 was $9.39, $4.69 and $0.91 per share. No performance-based stock options were granted during the year ended December 31, 2015. The weighted-average grant date fair value of performance-based options granted during the years ended December 31, 2014 and 2013 was $2.80 and $2.23 per share. The total intrinsic value of options exercised for the year ended December 31, 2015 was $7.4 million. There were no options exercised for the years ended December 31, 2014 and 2013. Intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the common stock for the options that had exercise prices that were lower than the fair value per share of the common stock.

The total fair value of options vested for the years ended December 31, 2015, 2014 and 2013 was $14.8 million, $1.0 million and $0.1 million.

Determination of Fair Value of Stock Options

The Company estimates the fair value of the time-based stock options granted on each grant date using the Black-Scholes-Merton option pricing model and applies the accelerated attribution method for expense recognition. The Company estimated the fair value and the vesting period of the performance-based options granted in 2013 and 2014 under the Omnibus Plan on each grant date using the Monte Carlo simulation method. No performance-based options were granted in 2015.

The fair values using the Black-Scholes-Merton method were estimated on each grant date using the following weighted-average assumptions:

	Year Ended December 31,
	2015			2014			2013
Expected term (in years)	6.2			6.2			6.3
Volatility		89.0	%		87.1	%		80.0	%
Risk-free interest rate		1.8	%		1.9	%		1.7	%
Dividend yield		0.0	%		0.0	%		0.0	%

Use of the Black-Scholes-Merton option-pricing model requires the input of highly subjective assumptions, including (1) the fair value of the underlying common stock, (2) the expected term of the option, (3) the expected volatility of the price of the Company’s common stock, (4) risk-free interest rates and (5) the expected dividend yield of the Company’s common stock. The assumptions used in the option-pricing model represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. If factors change and different assumptions are used, the Company’s stock-based compensation expense could be materially different in the future.

These assumptions and estimates are as follows:

· Fair Value of Common Stock.     As the Company’s common stock is publicly traded, the fair value of the Company’s common stock is the close price on the grant date. Prior to the initial public offering, the fair value of common stock was estimated. The fair values of the common stock underlying the Company’s stock-based awards were determined by the Company’s board of directors, which considered numerous objective and subjective factors to determine the fair value of common stock at each grant date. These factors included, but were not limited to, the lack of marketability of the Company’s common stock and developments in the business. A significant factor considered for awards granted approaching the initial public offering was the expected offering price.

· Expected Term.     The expected term represents the period that the Company’s option awards are expected to be outstanding. The Company utilized the simplified method in estimating the expected term of its options granted. The simplified method deems the term to be the average of the time to vesting and the contractual life of the options. The Company also considered additional factors including the expected lives used by a peer group of companies within the industry that it considers to be comparable to its business.

· Expected Volatility.     The volatility is derived from the average historical stock volatilities of a peer group of public companies within the Company’s industry that it considers to be comparable to its business over a period equivalent to the expected term of the stock-based grants. The Company did not rely on implied volatilities of traded options in the industry peers’ common stock because of the low volume of activity.

· Risk-Free Interest Rate.     The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the option’s expected term.

· Dividend Yield.     The Company has never declared or paid any cash dividends and does not presently plan to pay cash dividends in the foreseeable future. Consequently, the Company used an expected dividend yield of zero.

The Company estimates potential forfeitures of stock grants and adjusts stock-based compensation expense accordingly. The estimate of forfeitures will be adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized in the period of change and will also impact the amount of stock-based compensation expenses to be recognized in future periods.

The fair values using the Monte Carlo Simulation method were estimated on each grant date using the following weighted-average assumptions:

	Year Ended
	December 31,
	2014			2013
Volatility		80.0	%		80.0	%
Risk-free interest rate		2.7	%		2.6	%

The assumptions used in the Monte Carlo Simulation were determined in a manner consistent with the assumptions for the Black-Scholes-Merton model. No performance-based options were granted in the year ended December 31, 2015. As such, no Monte Carlo Simulation inputs were required for 2015.

Restricted Stock Units

RSUs are granted under the 2014 Plan and the LTIP as described above. RSU activity for the year ended December 31, 2015 was as follows (awards in thousands):

				Weighted-
				Average
	Number of			Grant Date
	Awards			Fair Value
Outstanding at December 31, 2014		22		$	16.00
Granted		1,650			13.01
Vested		(687	)		13.37
Forfeited		(55	)		12.57
Outstanding at December 31, 2015		930			12.84

 The total fair value of RSUs vested was $9.0 million for the year ended December 31, 2015. No RSUs vested in the years ended December 31, 2014 and 2013. The Company determines the fair value of RSUs granted on each grant date based on the fair value of the Company’s common stock on the grant date.

Stock-Based Compensation Expense

Stock-based compensation was included in operating expenses as follows (in thousands):

	Year Ended December 31,
	2015		2014		2013
Cost of revenue	$	3,068	$	1,105	$	6
Sales and marketing		10,737		860		51
General and administrative		11,310		21,722		237
Research and development		489		—		—
Total stock-based compensation	$	25,604	$	23,687	$	294

The income tax benefit related to share-based compensation expense was $4.8 million for the year ended December 31, 2015. There was no income tax benefit related to share-based compensation recognized in the years ended December 31, 2014 and 2013 as there were no option exercises or RSU releases.

In September 2014, the Company recorded $14.8 million of stock-based compensation expense in general and administrative expense related to the sale of shares of common stock to two of its directors as discussed in Note 12—Redeemable Non-Controlling Interests, Equity and Preferred Stock.

Unrecognized stock-based compensation expense, net of estimated forfeitures, for time-based stock options, performance-based stock options, RSUs and PSUs as of December 31, 2015 was as follows (in thousands, except years):

	Unrecognized
	Stock-Based		Weighted-
	Compensation		Average Period
	Expense		of Recognition
Time-based stock options	$	2,788	3.0 years
Performance-based stock options		1,832	1.2 years
RSUs and PSUs		6,947	2.8 years
Total unrecognized stock-based compensation expense as of December 31, 2015	$	11,567

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Income Taxes

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Income Taxes

14.Income Taxes

The income tax expense (benefit) is composed of the following (in thousands):

	Year Ended December 31,
	2015			2014			2013
Current:
Federal	$	52,578		$	1,358		$	2,492
State		15,275			4,035			569
Total current expense		67,853			5,393			3,061
Deferred:
Federal		(46,364	)		(9,636	)		(2,900	)
State		(11,752	)		(2,827	)		(38	)
Total deferred benefit		(58,116	)		(12,463	)		(2,938	)
Income tax expense (benefit)	$	9,737		$	(7,070	)	$	123

The Company operates in only one federal jurisdiction, the United States. The following table presents a reconciliation of the tax benefit computed at the statutory federal rate and the Company’s tax expense (benefit) (in thousands):

	Year Ended December 31,
	2015			2014			2013
Income tax benefit—computed as 35% of pretax loss	$	(85,235	)	$	(60,546	)	$	(19,721	)
Effect of non-controlling interests and redeemable    non-controlling interests		93,221			47,962			21,737
Effect of domestic production activities deduction		(4,699	)		—			—
Effect of nondeductible expenses		1,232			6,617			1,439
State and local income tax expenses		2,289			616			343
Amortization of prepaid tax asset		6,661			2,199			474
Effect of tax credits		(4,106	)		(3,939	)		(4,472	)
Other		374			21			323
Income tax expense (benefit)	$	9,737		$	(7,070	)	$	123

Deferred income taxes reflect the impact of temporary differences between assets and liabilities for financial reporting purposes and the amounts recognized for income tax reporting purposes, net operating loss carryforwards and other tax credits measured by applying currently enacted tax laws. The significant components of the Company’s deferred tax assets and liabilities were as follows (in thousands): 

	December 31,
	2015			2014
Deferred tax assets:
Stock-based compensation	$	9,068		$	3,738
Accruals and reserves		4,582			3,335
Transaction costs		4,216			—
Other		395			743
Gross deferred tax assets		18,261			7,816
Valuation allowance		(212	)		(222	)
Net deferred tax assets		18,049			7,594
Deferred tax liabilities:
Investment in solar funds		(220,803	)		(106,664	)
Depreciation and amortization		(13,004	)		(9,493	)
Accruals and reserves		(275	)		—
Gross deferred tax liabilities		(234,082	)		(116,157	)
Net deferred tax liabilities	$	(216,033	)	$	(108,563	)

The Company sells solar energy systems to the investment funds for income tax purposes. As the investment funds are consolidated by the Company, the gain on the sale of the solar energy systems is not recognized in the consolidated financial statements. However, this gain is recognized for tax reporting purposes. Since these transactions are intercompany sales for GAAP purposes, any tax expense incurred related to these intercompany sales is deferred and amortized over the estimated useful life of the underlying solar energy systems, which has been estimated to be 30 years. Accordingly, the Company has recorded a prepaid tax asset, net of $277.5 million and $111.9 million as of December 31, 2015 and 2014.

The future reversal of deferred tax liabilities is expected to produce a sufficient source of future taxable income of the necessary character and in the necessary periods and jurisdictions to support the realization of the deferred tax assets. As such, no valuation allowance is required except for as noted below.

The Company had net operating loss carryforwards of approximately zero and $0.3 million related to federal and $1.3 million and $1.5 million related to state (collectively the “NOLs”), available to offset future taxable income as of December 31, 2015 and 2014. The NOLs expire in varying amounts from 2028 through 2034 for state tax purposes if unused. As of December 31, 2015 and 2014, the Company recognized a valuation allowance of $0.2 million for the existing state NOLs and other existing state tax attributes due to state-imposed limitations on their utilization.

The Company reported federal business tax credits, primarily composed of federal investment tax credits, of $4.1 million and $3.9 million for the years ended December 31, 2015 and 2014. The Company accounts for its federal business tax credits as a reduction of income tax expense in the year in which the credits arise.

Uncertain Tax Positions

As of December 31, 2015 and 2014, the Company had no unrecognized tax benefits. There were no interest and penalties accrued for any uncertain tax positions as of December 31, 2015 and 2014. The Company does not have any tax positions for which it is reasonably possible the total amount of gross unrecognized benefits will increase or decrease within 12 months of the year ended December 31, 2015. The Company is subject to taxation and files income tax returns in the United States and various state and local jurisdictions. Substantially all of the Company’s federal, state and local income tax returns since inception are still subject to audit.

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Related Party Transactions

12 Months Ended

Dec. 31, 2015

Related Party Transactions [Abstract]

Related Party Transactions

15.Related Party Transactions

The Company’s operations included the following expenses from related party transactions (in thousands):

	Year Ended December 31,
	2015		2014		2013
Cost of revenue—operating leases and incentives	$	6,054	$	7,834	$	1,558
Sales and marketing		2,133		2,312		866
General and administrative		5,241		5,909		2,323
Interest expense(1)		—		4,481		2,924

⁽¹⁾ Includes revolving lines of credit—related party. See Note 10—Debt Obligations.

Vivint Services

The Company has negotiated and entered into a number of agreements with Vivint related to services and other support that Vivint provides to the Company.

In July 2015, in connection with the Merger Agreement, the Company, Vivint and SunEdison entered into a letter agreement subject to the close of the merger. Most of the obligations under the letter agreement were terminated in connection with the termination of the Merger Agreement. However, the letter agreement did immediately terminate a schedule to the Marketing and Customer Relations Agreement between the Company and Vivint.

In 2014, the Company entered into agreements with Vivint that included the following:

· Master Intercompany Framework Agreement. This agreement establishes a framework for the relationship between the Company and Vivint, including master terms regarding the protection of each other’s confidential information, and master procedural terms, such as notice procedures, restrictions on assignment, interpretive provisions, governing law and dispute resolution.

· Non-Competition Agreement. This agreement defines each company’s current areas of business and competitors, and the Company and Vivint agree not to directly or indirectly engage in the other’s business for three years.

· Transition Services Agreement. Pursuant to this agreement Vivint provides the Company various enterprise services that it has historically provided to the Company. Under this agreement, Vivint agreed to provide the services at the same degree of care and diligence that it takes in performing services for its own operations. These services include information technology and infrastructure, employee benefits and certain other services. In exchange, the Company pays Vivint for the services, which represents Vivint’s good faith estimate of their full cost of providing the services to the Company, without markup or surcharge.

· Marketing and Customer Relations Agreement.This agreement governs various cross-marketing initiatives between the companies, in particular the provision of sales leads from each company to the other. The commission rate is based on the amount paid to subcontractors for performing similar lead generation services. The term of this agreement, including the term of the schedules defining the terms of the mutual lead generation program, is three years.

· Bill of Sale.Under this agreement, Vivint transferred certain assets such as office equipment from Vivint to the Company.

· Trademark License Agreement. Pursuant to this agreement, the licensor, a subsidiary majority-owned by Vivint and minority-owned by the Company, granted to the Company a royalty-free exclusive license to the trademark “VIVINT SOLAR” in the field of selling renewable energy or energy storage products and services. The agreement is perpetual but may be terminated voluntarily by the Company or by the licensor upon certain specified termination events. Vivint retains ownership of the Vivint trademark and the Company has no right to use “Vivint” except as part of “VIVINT SOLAR”.

The Company incurred fees under these agreements of $8.0 million for the year ended December 31, 2015 and $2.2 million in 2014 following the Company’s initial public offering. These amounts reflect the level of services provided by Vivint on behalf of the Company.

In June 2013, the Company entered into a full service sublease agreement (the “Sublease Agreement”) with Vivint, which was applied retroactively to be in effect as of January 1, 2013. Under the Sublease Agreement, Vivint provided various administrative services, such as management, human resources, information technology, facilities and use of corporate office space to the Company. The Company paid Vivint a monthly services fee and rent based on headcount and square footage used. In connection with the Company’s initial public offering, the Sublease Agreement was amended to focus exclusively on real estate issues. In 2011, and amended June 2013, the Company entered into a trademark / service mark license agreement (“Trademark Agreement”) with Vivint, pursuant to which the Company paid Vivint a monthly fee in exchange for rights to use certain trademarks, based on kilowatt hours produced by the solar energy systems each month. In June 2013, the Trademark Agreement was amended and restated to grant the Company a royalty-free, non-exclusive license to use certain Vivint marks, subject to certain quality control requirements and was applied retroactively to be in effect as of January 1, 2013. The Trademark Agreement was terminated in connection with the entry into the Trademark License Agreement described above.

The Company incurred fees under the Sublease and Trademark agreements of $7.2 million and $2.9 million for the years ended December 31, 2014 and 2013, which reflect the amount of services provided by Vivint on behalf of the Company. No fees were incurred under these agreements in the year ended December 31, 2015.

Payables to Vivint recorded in accounts payable—related party were $1.9 million and $2.1 million as of December 31, 2015 and 2014. These payables include amounts due to Vivint related to the fees incurred under the service agreements noted above, as well as other miscellaneous intercompany payables including freight, healthcare cost reimbursements and other pass-through purchases.

313 Incentive Units Plan

Incentive units from 313 were granted to certain board members of the Company. Such board members are also employees of Vivint. As a result, the related compensation expense has been allocated between the two companies based on the net equity of the respective companies at the Acquisition. The Company recorded expense of $0.2 million and corresponding noncash capital contributions from 313 during each of the years ended December 31, 2014 and 2013. No expense was incurred in the year ended December 31, 2015. The noncash capital contributions were reported as noncash contributions for services on the Consolidated Statements of Cash Flows and Redeemable Non-Controlling Interests and Equity.

Advisory Agreements

In May 2014, the Company entered into an advisory agreement with Blackstone Advisory Partners L.P., an affiliate of the Sponsor (“BAP”), under which BAP would provide financial advisory and placement services related to the Company’s financing of residential solar energy systems. In August 2015, this agreement was terminated. Under the agreement, the Company was required under certain circumstances to pay a placement fee to BAP ranging from 0.75% to 1.5% of the transaction capital, depending on the identity of the investor and whether the financing related to residential or commercial projects. This agreement replaced the 2013 advisory agreement described below.

Effective May 2013, the Company entered into an advisory agreement with BAP that provided financial advisory and placement services related to the Company’s financing of residential solar energy systems. Under the agreement, BAP was paid a placement fee ranging from 0% to 2% of the transaction capital, depending on the identity of the investor and how contact with the investor was established.

The Company incurred fees under these agreements of $4.4 million, $4.5 million and $1.3 million for the years ended December 31, 2015, 2014 and 2013. The amounts were recorded in general and administrative expense in the Company’s consolidated statements of operations

Advances Receivable—Related Party

Amounts due from direct-sales personnel were $2.9 million and $1.2 million as of December 31, 2015 and 2014. The Company provided a reserve of $0.7 million and $0.9 million as of December 31, 2015 and 2014 related to advances to direct-sales personnel who have terminated their employment agreement with the Company.

Transactions with 313 and Directors

In August and September 2014, the Company issued and sold shares of its common stock to 313 and two of its directors as discussed in Note 12—Redeemable Non-Controlling Interests, Equity and Preferred Stock. In April 2013, the Company received a $1.4 million capital contribution from 313. No other cash contributions were received during the periods presented.

Investment Funds

Fund investors for three of the funds are indirectly managed by the Sponsor and accordingly are considered related parties. The Company accrued equity distributions to these entities of $1.7 million and $1.3 million as of December 31, 2015 and 2014, included in distributions payable to non-controlling and redeemable non-controlling interests. See Note 11—Investment Funds. In July 2014, the Company also entered into a Backup Maintenance Servicing Agreement with Vivint in which Vivint will provide maintenance servicing of the fund assets in the event that the Company is removed as the service provider for two of the funds. No services have been performed by Vivint under this agreement.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2015

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

16.Commitments and Contingencies

Non-Cancellable Leases

In September 2014, the Company entered into a non-cancellable lease whereby the Company will terminate the current lease for its corporate headquarters in Lehi, UT and move into another building being constructed in the same general location. In July 2015, the Company amended the new lease for its new corporate headquarters building that is under construction. These amendments included an extension of the lease term to 12 years from five years with the option to extend for two additional periods of five years, an increase in the leased premises by approximately 32,000 square feet and a change in the base rent that will commence at approximately $0.3 million per month and increase over the term of the lease, as amended, at a rate of 2.5% annually. As a result of the amendment, the Company expects to make total lease payments of $53.1 million over the initial term of the lease.

The Company also entered into new non-cancellable leases for the construction of a second office building and a studio building on the corporate headquarters campus that will increase the leased premises by approximately 160,000 square feet. Both leases have a term of 12 years with the option to extend for two additional periods of five years. The aggregate monthly rent payments under both leases will commence at approximately $0.4 million and increase at a rate of 2.5% annually. As a result of these new leases, the Company expects to make total lease payments of $57.5 million over the initial terms of the leases.

During each year of its operations,the Company has entered into lease agreements for warehouses and related equipment located in states in which the Company conducts operations. The warehouse lease agreements range from a term of one to seven years, with the majority having a term of three years. The equipment lease agreements, the longest of which is 12-months, include basic renewal options for an additional set period, continued renting by the month, or return of the unit.

For all non-cancellable lease arrangements, there are no bargain renewal options, penalties for failure to renew, or any guarantee by the Company of the lessor’s debt or a loan from the Company to the lessor related to the leased property. Aggregate lease expense for these non-cancellable lease arrangements was $11.0 million, $4.3 million and $1.2 million for the years ended December 31, 2015, 2014 and 2013.

Future minimum lease payments under non-cancellable leases as of December 31, 2015 were as follows (in thousands):

Years Ending December 31,
2016	$	14,223
2017		12,577
2018		10,552
2019		9,674
2020		9,295
Thereafter		81,216
Total minimum lease payments	$	137,537

Build-to-Suit Lease Arrangements

As discussed in Non-Cancellable Leases, in September 2014, the Company entered into a non-cancellable lease whereby the Company will terminate the current lease for its corporate headquarters in Lehi, UT and move into another building being constructed in the same general location. Because of its involvement in certain aspects of the construction per the terms of the lease, the Company is deemed the owner of the building for accounting purposes during the construction period. Accordingly, as of December 31, 2015, the Company recorded a build-to-suit lease asset of $25.6 million in property and equipment, net, which included a $25.2 million build-to-suit lease liability in other non-current liabilities, capitalized interest of $0.3 million and building costs paid by the Company of $0.1 million.

Letters of Credit

As of December 31, 2015 and 2014, the Company had $1.8 million stand-by letter of credit related to a three-year forward contract to sell SRECs entered into in November 2013. The agreement expires in January 2017. As the Company expects to be able to deliver the SRECs required under the forward contracts, no liability has been accrued.

As of December 31, 2015, the Company had also established a letter of credit under the Working Capital Facility for $3.2 million related to an insurance contract. See Note 10—Debt Obligations.

Indemnification Obligations

From time to time, the Company enters into contracts that contingently require it to indemnify parties against claims. These contracts primarily relate to provisions in the Company’s services agreements with related parties that may require the Company to indemnify the related parties against services rendered; and certain agreements with the Company’s officers and directors under which the Company may be required to indemnify such persons for liabilities. In addition, under the terms of the agreements related to the Company’s investment funds and other material contracts, the Company may also be required to indemnify fund investors and other third parties for liabilities. As of December 31, 2015 and 2014, the Company accrued an estimated $5.2 million and $4.0 million in distributions to reimburse fund investors a portion of their capital contributions in order to true-up the investors’ expected rate of return primarily due to a delay in solar energy systems being interconnected to the power grid and other factors.

Legal Proceedings

In December 2013, one of the Company’s former sales representatives, on behalf of himself and a purported class, filed a complaint for unspecified damages, injunctive relief and restitution in the Superior Court of the State of California in and for the County of San Diego against Vivint Solar Developer, LLC, one of the Company’s subsidiaries, and unnamed John Doe defendants alleging violations of the California Labor Code and the California Business and Professions Code and seeking penalties of an unspecified amount, interest on all economic damages and reasonable attorney’s fees and costs. In January 2014, the Company filed an answer denying the allegations in the complaint and asserting various affirmative defenses. In late 2014, the parties agreed to preliminary terms of settlement, which were subsequently revised in mid-2015. The settlement agreement provided for a settlement payment from the Company in the amount of $0.4 million. On October 30, 2015, the Court entered a final order approving the settlement agreement and the settlement payment was distributed in accordance with the settlement agreement.

In September 2014, two former installation technicians of the Company, on behalf of themselves and a purported class, filed a complaint for damages, injunctive relief and restitution in the Superior Court of the State of California in and for the County of San Diego against the Company and unnamed John Doe defendants. The complaint alleges certain violations of the California Labor Code and the California Business and Professions Code based on, among other things, alleged improper classification of installer technicians, installer helpers, electrician technicians and electrician helpers, failure to pay minimum and overtime wages, failure to provide accurate itemized wage statements, and failure to provide wages on termination. In December 2014, the original plaintiffs and three additional plaintiffs filed an amended complaint with essentially the same allegations. On November 5, 2015, the parties agreed to preliminary terms of a settlement of all claims related to allegations in the complaint in return for the Company’s payment of $1.7 million to be paid out to the purported class members. The settlement agreement must be approved by the Court, after notice to the purported class. As of December 31, 2015, a $1.7 million reserve was recorded related to this proceeding in the Company’s consolidated financial statements.

In November and December 2014, two putative class action lawsuits were filed in the U.S. District Court for the Southern District of New York against the Company, its directors, certain of its officers and the underwriters of the Company’s initial public offering of common stock alleging violation of securities laws and seeking unspecified damages. In January 2015, the Court ordered these cases to be consolidated into the earlier filed case, Hyatt v. Vivint Solar, Inc. et al., 14-cv-9283 (KBF). The plaintiffs filed a consolidated amended complaint in February 2015. On May 6, 2015, the Company filed a motion to dismiss the complaint and on December 10, 2015, the Court issued an Opinion and Order dismissing the complaint with prejudice. On January 5, 2016, the plaintiffs filed a Notice of Appeal to the Second Circuit Court of Appeals. The Company is unable to estimate a range of loss, if any, that could result were there to be an adverse final decision. If an unfavorable outcome were to occur in thiscase, it is possible that the impact could be material to the Company’s results of operations in the period(s) in which any such outcome becomes probable and estimable.

On July 31, 2015, a putative class action lawsuit was filed in the Court of Chancery State of Delaware against the Company’s directors, SunEdison Inc. (“SunEdison”), and TerraForm Power (“TerraForm”), alleging that the proposed acquisition by SunEdison is unfair to the Company’s stockholders. On August 7, 2015, a second putative class action lawsuit was filed in the same court alleging similar claims, and including 313, Acquisition, LLC as a named defendant. Both complaints seek injunctive relief and unspecified damages. On or about September 10, 2015, two purported class action lawsuits were also filed in Utah's Fourth District State Court (the "Utah Actions"), alleging similar claims to the complaints previously filed in the Delaware Chancery Court. On September 22, 2015, the Company, through counsel notified plaintiff's counsel in the Utah Actions that pursuant to the Company's Articles of Incorporation, any such derivative action was subject to exclusive jurisdiction in the Delaware Chancery Court, and accordingly, the Utah Actions should be dismissed. After a December 2015 amendment to the proposed acquisition, a new complaint was filed in the Delaware Chancery Court on January 11, 2016. The new complaint alleges breach of fiduciary duty against the Company's directors, certain officers, and SunEdison, and seeks damages on behalf of a putative class. In view of the Company’s indemnification obligation to its directors, the Company is unable to estimate a range of loss, if any, that could result were there to be an adverse final decision. If an unfavorable outcome were to occur in thesecases, it is possible that the impact could be material to the Company’s results of operations in the period(s) in which any such outcome becomes probable and estimable.

On September 9, 2015, two of the Company’s customers, on behalf of themselves and a purported class, named the Company in a putative class action, Case No. BCV-15-100925(Cal. Super. Ct., Kern County), alleging violation of California Business and Professional Code Section 17200 and requesting relief pursuant to Section 1689 of the California Civil Code. The complaint seeks: (1) rescission of their power purchase agreements along with restitution to the plaintiffs individually and (2) declaratory and injunctive relief. On October 16, 2015, the Company moved to compel arbitration of the plaintiffs’ claims pursuant to the provisions set forth in the power purchase agreements, which the Court granted and dismissed the class claims without prejudice. Plaintiffs have appealed the Court’s order. It is not possible to estimate the amount or range of potential loss, if any, at this time.

On March 8, 2016, the Company filed suit in the Court of Chancery State of Delaware against SunEdison and SEV Merger Sub Inc. alleging that SunEdison willfully breached its obligations under the Merger Agreement pursuant to which the Company was to be acquired and breached its implied covenant of good faith and fair dealing. The Company is seeking declaratory judgment, award damages, costs and reasonable attorney’s fees and such further relief that the court finds equitable, appropriate and just. While the Company believes that SunEdison willfully breached its obligations under the Merger Agreement and that the Company’s claims have merit and are likely to succeed, the outcomes of lawsuits are inherently unpredictable.

In addition to the matters discussed above, in the normal course of business, the Company has from time to time been named as a party to various legal claims, actions and complaints. While the outcome of these matters cannot be predicted with certainty, the Company does not currently believe that the outcome of any of these claims will have a material adverse effect, individually or in the aggregate, on its consolidated financial position, results of operations or cash flows.

The Company accrues for losses that are probable and can be reasonably estimated. The Company evaluates the adequacy of its legal reserves based on its assessment of many factors, including interpretations of the law and assumptions about the future outcome of each case based on available information.

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Basic and Diluted Net Income (Loss) Per Share

12 Months Ended

Dec. 31, 2015

Earnings Per Share [Abstract]

Basic and Diluted Net Income (Loss) Per Share

17.Basic and Diluted Net Income (Loss) Per Share

The Company computes basic net income (loss) per share by dividing net income available or loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could be exercised or converted into common shares, and is computed by dividing net earnings available to common stockholders by the weighted-average number of common shares outstanding plus the effect of potentially dilutive shares to purchase common stock.

The following table sets forth the computation of the Company’s basic and diluted net income available (loss attributable) per share to common stockholders for the years ended December 31, 2015, 2014 and 2013 (in thousands, except per share amounts):

	Year Ended December 31,
	2015		2014			2013
Numerator:
Net income available (loss attributable) to common stockholders	$	13,080	$	(28,883	)	$	5,638
Denominator:
Shares used in computing net income available (loss attributable)     per share to common stockholders, basic		106,088		83,446			75,000
Weighted-average effect of potentially dilutive shares to purchase    common stock		3,770		—			223
Shares used in computing net income available (loss attributable)    per share to common stockholders, diluted		109,858		83,446			75,223
Net income available (loss attributable) per share to common    stockholders
Basic	$	0.12	$	(0.35	)	$	0.08
Diluted	$	0.12	$	(0.35	)	$	0.07

As of December 31, 2015 and 2013, stock-based awards for 3.3 million and 4.4 million underlying shares of common stock were subject to performance conditions that had not yet been met. Accordingly, these performance-based stock awards were not included in the computation of diluted net income per share for the years ended December 31, 2015 and 2013. In addition, options remaining to be granted under the LTIP Pools were not included in the computation of diluted net income per share as these shares had not been granted as of December 31, 2015 and 2013. For the years ended December 31, 2015 and 2013, a de minimis number of shares were excluded from the dilutive share calculations as the effect on net income per share would have been antidilutive. For the year ended December 31, 2014, the Company incurred net losses attributable to common stockholders. As such, the potentially dilutive shares were anti-dilutive and were not considered in the weighted-average number of common shares outstanding for that period.

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Segment Information

12 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

Segment Information

18.Segment Information

Prior to the second quarter 2015, the Company had one business activity that was focused primarily on providing service to customers in the residential market. During the second quarter of 2015, the Company closed its first C&I investment fund with plans to service customers in the C&I market. As of December 31, 2015, the C&I fund was not operational, i.e., no projects had been initiated within the fund. During the year ended December 31, 2015, the Company has aligned its operations as two reporting segments: (1) Residential and (2) C&I.

As of December 31, 2015, the Company recorded no assets related to the C&I segment. Segment loss from operations is comprised of operating unit revenue less operating expenses attributable to each operating segment. For the year ended December 31, 2015, no revenue was recognized in the C&I segment as the C&I investment fund was not operational. Operating expenses in the C&I segment included fees related to the closing of the C&I fund and costs of employees directly involved in the development of C&I. Prior to the second quarter of 2015, all reported results related to the Residential segment, and as such, no restatement of prior period segment results was necessary. Operating results by reporting segment in 2015 were as follows:

	Year Ended December 31, 2015
	Residential			C&I			Total
Revenue:
Operating leases and incentives	$	61,150		$	—		$	61,150
Solar energy system and product sales		3,032			—			3,032
Total revenue		64,182			—			64,182
Operating expenses:
Cost of revenue—operating leases and incentives		131,213			—			131,213
Cost of revenue—solar energy system and product sales		1,762			—			1,762
Sales and marketing		47,408			670			48,078
Research and development		3,901			—			3,901
General and administrative		90,438			2,226			92,664
Amortization of intangible assets		13,172			—			13,172
Impairment of intangible assets		4,506			—			4,506
Total operating expenses		292,400			2,896			295,296
Loss from operations	$	(228,218	)	$	(2,896	)	$	(231,114	)

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Subsequent Events

12 Months Ended

Dec. 31, 2015

Subsequent Events [Abstract]

Subsequent Events

19.Subsequent Events

SunEdison Acquisition

The Company previously entered into the Merger Agreement, dated as of July 20, 2015 and amended as of December 9, 2015, by and among SunEdison, SEV Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of SunEdison, and the Company, pursuant to which the Company was to have been acquired by SunEdison. The Company terminated the Merger Agreement on March 7, 2016. 

On March 8, 2016, the Company filed suit in the Court of Chancery State of Delaware against SunEdison alleging that SunEdison willfully breached its obligations under the Merger Agreement and breached its implied covenant of good faith and fair dealing. The Company is seeking declaratory judgment, award damages, costs and reasonable attorney’s fees and such further relief that the court finds equitable, appropriate and just. While the Company believes that SunEdison willfully breached its obligations under the Merger Agreement and that the Company’s claims have merit and are likely to succeed, the outcomes of lawsuits are inherently unpredictable.

Term Loan Facility

On March 14, 2016, Vivint Solar Financing Holdings, LLC, one of the Company’s subsidiaries, entered into a financing agreement pursuant to which it may borrow up to an aggregate principal amount of $200.0 million of term loan borrowings from investment funds and accounts advised by Highbridge Principal Strategies, LLC. The Company refers to such financing agreement as the “term loan facility.” The Company will initially incur $75.0 million in borrowings,one-third at closing and the remainder within 30 days of the closing date. Such initial borrowings are referred to as “Tranche A” borrowings. The remaining $125.0 million aggregate principal amount in borrowings may be incurred in three installments of at least $25.0 million aggregate principal amount prior to the first anniversary of the closing date. Such subsequent borrowings, if any, are referred to as “Tranche B” borrowings. If no Tranche B borrowings are incurred, the Company must repay outstanding Tranche A borrowings in December 2016. If any Tranche B borrowings are incurred, the maturity date for all borrowings will be extended to the fourth anniversary of the closing date. If any Tranche B borrowings are incurred, the Company may not prepay any borrowings until the second anniversary of the closing date and any subsequent prepayments are subject to a fee equal to a 3.0% penalty. Borrowings under the term loan facility will be used for the construction and acquisition of solar energy systems.

Interest on the Tranche A borrowings accrues at a floating rate of LIBOR plus 5.5%; provided that if any Tranche B borrowings are incurred, the interest rate increases to a floating rate of LIBOR plus 8.0% for the entire principal amount outstanding. The term loan facility includes customary events of default, conditions to borrowing and covenants, including covenants that restrict, subject to certain exceptions, the borrower’s, and the guarantors’ ability to incur indebtedness, incur liens, make investments, make fundamental changes to their business, dispose of assets, make certain types of restricted payments or enter into certain related party transactions. These restrictions do not impact the Company’s ability to enter into investment funds, including those that are similar to those entered into previously. Additionally, the parties to the term loan facility must maintain certain consolidated and project subsidiary loan-to-value ratios and a consolidated debt service coverage ratio, with such covenants to be tested as of the last day of each fiscal quarter and upon each incurrence of borrowings. Each of the parties to the term loan facility has pledged assets not otherwise pledged under another existing debt facility as collateral to secure their obligations under the term loan facility. Vivint Solar Financing Holdings Parent, LLC, another of the Company’s subsidiaries and the parent company of the borrower and certain other of the Company’s subsidiaries guarantee the borrower’s obligations under the financing agreement.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) and reflect the accounts and operations of the Company, its subsidiaries in which the Company has a controlling financial interest and the investment funds formed to fund the purchase of solar energy systems, which are consolidated as variable interest entities (“VIEs”). The Company uses a qualitative approach in assessing the consolidation requirement for VIEs. This approach focuses on determining whether the Company has the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and whether the Company has the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. For all periods presented, the Company has determined that it is the primary beneficiary in the operational VIEs in which it has an equity interest. The Company evaluates its relationships with the VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. For additional information regarding these VIEs, see Note 11—Investment Funds.

The consolidated financial statements reflect all of the costs of doing business, including the allocation of expenses incurred by Vivint on behalf of the Company. For additional information, see Note 15—Related Party Transactions. These expenses were allocated to the Company on a basis that was considered to reasonably reflect the utilization of the services provided to, or the benefit obtained by, the Company. The allocations may not, however, reflect the expense the Company would have incurred as an independent company for the periods presented, and may not be indicative of the Company’s future results of operations and financial position.

With respect to liquidity, the Company believes its cash and cash equivalents, including investment fund commitments, projected investment fund contributions and its current debt facilities, in addition to financing that may be obtained from other sources, including the Company’s financial sponsors, will be sufficient to meet its anticipated cash needs for at least the next 12 months. While the Company believes additional financing is available and will continue to be available to support the current level of operations, the Company believes it has the ability and intent to reduce operations to the level of available financial resources at least through the year ended December 31, 2016.

Certain prior period amounts have been reclassified to conform to current year presentation. These reclassifications did not have a significant impact on the consolidated financial statements.

Segment Information

Segment Information

The Company’s chief operating decision maker is its Chief Executive Officer. The Chief Executive Officer reviews financial information for purposes of allocating resources and evaluating financial performance. Prior to the second quarter of 2015, the Company had one business activity that was focused primarily on providing service to customers in the residential market. During the second quarter of 2015, the Company closed its first C&I investment fund with plans to service customers in the C&I market. As of December 31, 2015, the C&I fund was not operational, i.e., no projects had been initiated within the fund. During the year ended December 31, 2015, the Company has aligned its operations as two reporting segments: (1) Residential and (2) C&I. For additional segment information, see Note 18—Segment Information.

Use of Estimates

Use of Estimates

The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company regularly makes significant estimates and assumptions including, but not limited to, estimates that affect the Company’s principles of consolidation, investment tax credits, revenue recognition, solar energy systems, net, impairment of long-lived assets, goodwill impairment analysis, the recognition and measurement of loss contingencies, stock-based compensation, provision for income taxes, and non-controlling interests and redeemable non-controlling interests. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ materially from those estimates.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash and cash equivalents. Cash equivalents consist principally of time deposits and money market accounts with high quality financial institutions.

Restricted Cash

Restricted Cash

The Company’s guaranty agreements with certain of its fund investors require the maintenance of minimum cash balances of $10.0 million. For additional information, see Note 11—Investment Funds. The Company was also required to deposit $5.0 million into a separate interest reserve account in accordance with the terms of its loan credit facility with Bank of America, N.A. For additional information, see Note 10—Debt Obligations. These minimum cash balances are classified as restricted cash.

Accounts Receivable, Net

Accounts Receivable, Net

Accounts receivable are recorded at the invoiced amount, net of allowance for doubtful accounts. Accounts receivable also include unbilled accounts receivable, which is comprised of the monthly power generation under power purchase agreements not yet invoiced and the monthly bill rate of legal-form leases as of the end of the reporting period. The Company estimates its allowance for doubtful accounts based upon the collectability of the receivables in light of historical trends and adverse situations that may affect customers’ ability to pay. Revisions to the allowance are recorded as an adjustment to bad debt expense. After appropriate collection efforts are exhausted, specific accounts receivable deemed to be uncollectible are charged against the allowance in the period they are deemed uncollectible. Recoveries of accounts receivable previously written-off are recorded as credits to bad debt expense. The Company had an allowance for doubtful accounts of $0.9 million and $0.6 million as of December 31, 2015 and 2014.

Inventories

Inventories

Inventories include components related to photovoltaic installation devices and software products and are stated at the lower of cost, on an average cost basis, or market. Inventories also include solar energy systems held for sale, which are solar energy systems under construction that have yet to be interconnected to the power grid and that will be sold to customers. Solar energy systems held for sale are stated at the lower of cost, on a first-in-first-out basis, or market. Solar energy systems held for sale was $0.1 million as of December 31, 2015. No solar energy systems were held for sale as of December 31, 2014.

The Company evaluates its inventory reserves on a quarterly basis and writes down the value of inventories for estimated excess and obsolete inventories based on assumptions about future demand and market conditions.

Concentrations of Risk

Concentrations of Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The associated concentration risk for cash and cash equivalents is mitigated by banking with creditworthy institutions. At certain times, amounts on deposit exceed Federal Deposit Insurance Corporation insurance limits. The Company does not require collateral or other security to support accounts receivable. The Company is not dependent on any single customer. The loss of a customer would not adversely impact the Company’s operating results or financial position.

The Company purchases solar panels, inverters and other system components from a limited number of suppliers. Three suppliers accounted for approximately 50%, 30% and 20% of the solar photovoltaic module purchases for the year ended December 31, 2015. Two of those suppliers accounted for approximately 50% and 40% of these purchases for the year ended December 31, 2014. The same two suppliers each individually accounted for over 48% of these purchases for the year ended December 31, 2013. Two suppliers accounted for approximately 55% and 40% of the Company’s inverter purchases for the year ended December 31, 2015. One of those suppliers accounted for a substantial majority of the Company’s inverter purchases for the years ended December 31, 2014 and 2013. If these suppliers fail to satisfy the Company’s requirements on a timely basis or if the Company fails to develop, maintain and expand its relationship with these suppliers, the Company could suffer delays in being able to deliver or install its solar energy systems, experience a possible loss of revenue, or incur higher costs, any of which could adversely affect its operating results.

As of December 31, 2015, the Company’s customers under long-term customer contracts are primarily located in Arizona, California, Connecticut, Hawaii, Maryland, Massachusetts, New Jersey, New Mexico, New York, Pennsylvania, South Carolina and Utah. Future operations could be affected by changes in the economic conditions in these and other geographic areas, by changes in the demand for renewable energy generated by solar panel systems or by changes or eliminations of solar energy related government incentives.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Assets and liabilities recorded at fair value on a recurring basis in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

· Level I—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

· Level II—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

· Level III—Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

The Company’s financial instruments consist of Level I and Level II assets and liabilities. See Note 3—Fair Value Measurements

Investment Tax Credits

Investment Tax Credits

The Company applies for and receives investment tax credits under Section 48(a) of the Internal Revenue Code. The amount for the investment tax credit is equal to 30% of the value of eligible solar property. The Company receives minimal allocations of investment tax credits as the majority of such credits are allocated to the fund investor. Some of the Company’s investment funds obligate it to make certain fund investors whole for losses that the investors may suffer in certain limited circumstances resulting from the disallowance or recapture of investment tax credits as a result of the Internal Revenue Service’s (the “IRS”) assessment of the fair value of such systems. The Company has concluded that the likelihood of a recapture event is remote and consequently has not recorded any liability in the consolidated financial statements for any potential recapture exposure.

US Treasury Grants

U.S. Treasury Grants

In the first quarter of 2014 and prior, certain solar energy systems were eligible to receive U.S. Treasury grants under Section 1603 of the American Recovery and Reinvestment Act of 2009, as amended by the Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of December 2010. The Company recorded a reduction in the basis of the solar energy system in the amount of cash to be received, at the grant approval date. This accounting treatment results in decreased depreciation of such solar energy systems over their useful lives. If it becomes probable that a U.S. Treasury grant is required to be repaid, the Company would assess whether it is necessary to derecognize any grant (or portion thereof) in accordance with Accounting Standards Codification section 450.

Solar Energy Systems, Net

Solar Energy Systems, Net

The Company sells energy to customers through power purchase agreements or leases solar energy systems to customers under legal-form lease agreements. The Company has determined that these contracts should be accounted for as operating leases and, accordingly, the related solar energy systems are stated at cost, less accumulated depreciation and amortization. In 2014, the Company began offering leases to customers.

Solar energy systems, net is comprised of system equipment costs and initial direct costs related to solar energy systems. System equipment costs include components such as solar panels, inverters, racking systems and other electrical equipment, as well as costs for design and installation activities once a long-term customer contract has been executed. Initial direct costs related to solar energy systems consist of sales commissions and other direct customer acquisition expenses. System equipment costs and initial direct costs are capitalized and recorded within solar energy systems, net.

Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the respective assets as follows: 

	Useful Lives
System equipment costs	30 years
Initial direct costs related to solar energy systems	Lease term (20 years)

System equipment costs are depreciated and initial direct costs are amortized once the respective systems have been installed and interconnected to the power grid. As of December 31, 2015 and 2014, the Company had recorded costs of $1,134.7 million and $598.4 million in solar energy systems, of which $882.7 million and $407.7 million related to systems that had been interconnected to the power grid, with accumulated depreciation and amortization of $32.5 million and $10.2 million.

Property and Equipment, Net

Property and Equipment, Net

The Company’s property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the assets. Vehicles leased under capital leases are depreciated over the life of the lease term, which is typically three years. The estimated useful lives of computer equipment, furniture, fixtures and purchased software are three years. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the assets. The estimated useful lives of leasehold improvements currently range from one to three years. Repairs and maintenance costs are expensed as incurred. Major renewals and improvements that extend the useful lives of existing assets are capitalized and depreciated over their estimated useful lives.

Intangible Assets

Intangible Assets

Finite-lived intangible assets, which consist of customer contracts, customer relationships, trademarks/trade names and developed technology acquired in business combinations are initially recorded at fair value and presented net of accumulated amortization. These intangible assets are amortized on a straight-line basis over their estimated useful lives. The Company amortizes customer contracts over three years, customer relationships over five years, trademarks/trade names over 10 years and developed technology over five to eight years. See Note 7—Intangible Assets and Goodwill.

In-process research and development reflects research and development projects that have not yet been completed and are capitalized as indefinite-lived intangibles subject to amortization upon completion or impairment if the assets are subsequently impaired or abandoned. In-process research and development projects were acquired in January 2014 as part of the Solmetric acquisition. See Note 4—Solmetric Acquisition.

Capitalization of Internal Use-Software Costs

The Company also capitalizes costs incurred in the development of internal-use software during the application development stage. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. Internal-use software is amortized on a straight-line basis over its estimated useful life. The Company tests these assets for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. During the year ended December 31, 2015, the development for certain internal-use software applications was completed and the Company began to amortize the internal-use software applications over the expected useful lives of three years. For the year ended December 31, 2015, $0.2 million of amortization was recorded for internal-use software. No amortization was recorded for internal-use software prior to the year ended December 31, 2015 as the internal-use software applications were still under development.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The carrying amounts of the Company’s long-lived assets, including solar energy systems, property and equipment and finite-lived intangible assets are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than originally estimated. Factors that the Company considers in deciding when to perform an impairment review include significant negative industry or economic trends, and significant changes or planned changes in the Company’s use of the assets. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate over its remaining life. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. If the useful life is shorter than originally estimated, the Company amortizes the remaining carrying value over the new shorter useful life.

In February 2015, the Company decided to discontinue the external sales of the SunEye and PV Designer products, the rights to which the Company acquired when it acquired Solmetric Corporation, or Solmetric, in January 2014. This discontinuance was considered an indicator of impairment, and a review regarding the recoverability of the carrying value of the related intangible assets was performed. As a result of this review, the Company recorded a total impairment charge of $4.5 million for the year ended December 31, 2015. See Note 7—Intangible Assets and Goodwill.

Goodwill and Impairment Analysis

Goodwill and Impairment Analysis

Goodwill represents the excess of the purchase price of an acquired business over the fair value of the net tangible and intangible assets acquired. As of December 31, 2015, the Company consisted of two operating segments: (1) Residential and (2) C&I. As C&I was created internally in 2015 and the Company’s goodwill was recorded prior to 2015, all goodwill remains with the Residential operating segment. As such, the Company’s impairment test is based on a single operating segment and reporting unit structure.

The Company performs its annual impairment test of goodwill as of October 1st of each fiscal year or whenever events or circumstances change that would indicate that goodwill might be impaired. Triggering events that may indicate impairment include, but are not limited to, a significant adverse change in the business climate, unanticipated competition, loss of key personnel, significant changes in the manner the Company uses the acquired assets or the strategy for the overall business, significant negative industry or economic trends or significant underperformance relative to historical operations or projected future results of operations.

In conducting the impairment test, the Company first assesses qualitative factors, including those stated previously, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. If the qualitative step is not passed, the Company performs a two-step impairment test whereby in the first step, the Company must compare the fair value of the reporting unit with its carrying amount. If the carrying amount exceeds its fair value, the Company performs the second step of the goodwill impairment test to determine the amount of impairment. The second step, measuring the impairment loss, compares the implied fair value of the goodwill with the carrying value of the goodwill. Any excess of the goodwill carrying value over the implied fair value is recognized as an impairment loss.

The Company determined the two-step test was not necessary based on the results of its qualitative assessments and concluded that it was more likely than not that the fair value of its reporting unit was greater than its respective carrying value as of October 1, 2015 and October 1, 2014.

Prepaid Tax Asset, Net

Prepaid Tax Asset, Net

The Company recognizes sales of solar energy systems to the investment funds for income tax purposes. As the investment funds are consolidated by the Company, the gain on the sale of the solar energy systems has been eliminated in the consolidated financial statements. However, this gain is recognized for tax reporting purposes. Since these transactions are intercompany sales for GAAP purposes, any tax expense incurred related to these intercompany sales is deferred and amortized over the estimated useful life of the underlying solar energy systems, which has been estimated to be 30 years.

Other Non-Current Assets

Other Non-Current Assets

Other non-current assets primarily consist of deferred financing costs, advances receivable due from sales representatives and long-term refundable rent deposits. Costs incurred in connection with obtaining debt financing are deferred and amortized utilizing the straight-line method, which approximates the effective-interest method, over the term of the related financing. The Company provides advance payments of compensation to direct-sales personnel under certain circumstances. The advance is repaid as a reduction of the direct-sales personnel’s future compensation. The Company has established an allowance related to advances to direct-sales personnel who have terminated their employment agreement with the Company. These are non-interest bearing advances.

Distributions Payable to Non-Controlling Interests and Redeemable Non-Controlling Interests

Distributions Payable to Non-Controlling Interests and Redeemable Non-Controlling Interests

As discussed in Note 11—Investment Funds, the Company and fund investors have formed various investment funds that the Company consolidates as the Company has determined that it is the primary beneficiary of these VIEs. These VIEs are required to pay cumulative cash distributions to their respective fund investors. The Company accrues amounts payable to fund investors in distributions payable to non-controlling interests and redeemable non-controlling interests in its consolidated balance sheets.

Deferred Revenue

Deferred Revenue

Deferred revenue primarily includes deferred investment tax credit (“ITC”) revenue and rebates and incentives. Deferred ITC revenue is related to a lease pass-through arrangement in which a portion of the rent prepayment is allocated to ITC revenue. Rebates and incentives are received from utility companies and various government agencies and are recognized as revenue over the related lease term of 20 years. See Revenue Recognition below.

Home Installation Reserve and Warranties

Home Installation Reserve and Warranties

The Company typically warrants solar energy systems sold to customers for periods of one through twenty years against defects in design and workmanship, and for periods of one to ten years that installation will remain watertight. The manufacturers’ warranties on the solar energy system components, which is typically passed through to the customers, has a typical product warranty period of 10 years and a limited performance warranty period of 25 years. The Company warrants its photovoltaic installation devices and software products for one to two years against defects in materials or installation workmanship.

The Company generally assesses a reserve for damages related to home installations and provides for the estimated cost of warranties at the time the related revenue is recognized. The Company assesses the accrued home installation reserve and warranty regularly and adjusts the amounts as necessary based on actual experience and changes in future estimates. Accrued warranty and home installation reserve is recorded as a component of accrued and other current liabilities on the consolidated balance sheets and was $0.3 million as of December 31, 2015. These accruals were not significant as of December 31, 2014.

Comprehensive Income (Loss)

Comprehensive Income (Loss)

As the Company had no other comprehensive income or loss, comprehensive income (loss) is the same as net income available (loss attributable) to common stockholders for all periods presented.

Revenue Recognition

Revenue Recognition

The Company recognizes revenue when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery or performance has occurred, (3) the sales price is fixed or determinable and (4) collectability is reasonably assured. The Company generates revenue through power purchase agreements and solar energy system leases, solar renewable energy certificates (“SRECs”) sales, rebate incentives and solar energy system sales. Revenue associated with power purchase agreements and solar energy system leases, SRECs and rebate incentives are included within operating leases and incentives revenue. The Company also recognizes revenue related to the sale of photovoltaic installation devices and software products and solar energy system sales within solar energy system and product sales. In the first quarter of 2015, the Company decided to discontinue the external sales of its photovoltaic installation software products.

Operating Leases and Incentives Revenue

The Company’s primary revenue-generating activity consists of entering into long-term power purchase agreements with residential customers, under which the customer agrees to purchase all of the power generated by the solar energy system for the term of the contract, which is 20 years. The agreement includes a fixed price per kilowatt hour with a fixed annual price escalation percentage. Customers have not historically been charged for installation or activation of the solar energy system. For all power purchase agreements, the Company assesses the probability of collectability on a customer-by-customer basis through a credit review process that evaluates their financial condition and ability to pay.

The Company has determined that power purchase agreements should be accounted for as operating leases after evaluating and concluding that none of the following capitalized lease classification criteria are met: no transfer of ownership or bargain purchase option exists at the end of the lease, the lease term is not greater than 75% of the useful life or the present value of minimum lease payments does not exceed 90% of the fair value at lease inception. As customer payments under a power purchase agreement are dependent on power generation, they are considered contingent rentals and are excluded from future minimum annual lease payments. Revenue from power purchase agreements is recognized based on the actual amount of power generated at rates specified under the contracts, assuming the other revenue recognition criteria discussed above are met.

In 2014, the Company began offering solar energy systems to customers pursuant to legal-form leases. The customer agreements are structured as legal-form leases due to local regulations that can be read to prohibit the sale of electricity pursuant to the Company’s standard power purchase agreement. Pursuant to the lease agreements, the customers’ monthly payments are a pre-determined amount calculated based on the expected solar energy generation by the system and includes an annual fixed percentage price escalation over the period of the contracts, which is 20 years. The Company provides its legal-form lease customers a performance guarantee, under which the Company agrees to make a payment at the end of each year to the customer if the solar energy systems do not meet a guaranteed production level in the prior 12-month period.

The guaranteed production levels have varying terms. Dependent on the level of the production guarantee, the Company either (1) recognizes the monthly lease payments as revenue and records a solar energy performance guarantee liability due to the contingent nature of the lease payments, or (2) straight-lines the contracted payments over the initial term of the lease. Solar energy performance guarantee liabilities were de minimis as of December 31, 2015 and 2014.

Future minimum annual lease receipts from customers under these legal-form lease agreements are as follows (in thousands):

Years Ending December 31,
2016	$	1,668
2017		1,716
2018		1,766
2019		1,817
2020		1,870

The Company applies for and receives SRECs in certain jurisdictions for power generated by its solar energy systems. When SRECs are granted, the Company typically sells them to other companies directly, or to brokers, to assist them in meeting their own mandatory emission reduction or conservation requirements. The Company recognizes revenue related to the sale of these certificates upon delivery, assuming the other revenue recognition criteria discussed above are met. The portion of SRECs included in operating leases and incentives was $13.9 million, $2.6 million and $0.3 million for the years ended December 31, 2015, 2014 and 2013.

The Company considers upfront rebate incentives earned from its solar energy systems to be minimum lease payments and are recognized on a straight-line basis over the life of the long-term customer contracts, assuming the other revenue recognition criteria discussed above are met. The portion of rebates recognized within operating leases and incentives was $0.4 million, $0.2 million and de minimis for the years ended December 31, 2015, 2014 and 2013.

Operating leases and incentives revenue is recorded net of sales tax collected.

Lease Pass-Through Arrangement

In 2015, a lease pass-through fund arrangement became operational under which the Company contributes solar energy systems and the investor contributes cash. Contemporaneously, a subsidiary of the Company entered into a master lease arrangement to lease the solar energy systems and the associated customer lease or power purchase agreements to the fund investor. The Company’s subsidiary makes a tax election to pass-through the investment tax credits (“ITCs”) that accrue to the solar energy systems to the fund investor, who as the legal lessee of the property is allowed to claim the ITCs under Section 50(d)(5) of the Internal Revenue Code and the related regulations.

Under this arrangement, the fund investor makes a large upfront lease payment to the Company’s subsidiary and subsequently makes periodic lease payments. The Company allocates a portion of the aggregate payments received from the fund investor to the estimated fair value of the assigned ITCs. The Company’s subsidiary has an obligation to ensure the solar energy system is in service and operational for a term of five years to avoid any recapture of the ITCs. Accordingly, the Company recognizes ITC revenue as the recapture provisions lapse assuming all other revenue recognition criteria have been met. The amounts allocated to ITCs are initially recorded as deferred revenue in the consolidated balance sheet, and subsequently, one-fifth of the amounts allocated to ITCs is recognized as revenue from operating leases and solar energy systems incentives in the consolidated statements of operations based on the anniversary of each solar energy system’s placed in service date over the next five years. As of December 31, 2015, no ITC revenue has been recognized.

Solar Energy System and Product Sales

Revenue from solar energy system sales is recognized upon the solar energy system passing an inspection by the responsible city department after completion of system installation and interconnection to the power grid per the completed contract method, assuming the remaining revenue recognition criteria discussed above have been met.

Revenue from the sale of photovoltaic installation devices and software products is recognized upon delivery of the product to the customer assuming the remaining revenue recognition criteria discussed above have been met.

Multiple-Element Arrangements

Subsequent to the acquisition of Solmetric in January 2014 and prior to the discontinuance of external sales of the SunEye and PV Designer products, the Company entered into multiple-element arrangements typically involving sales of (1) photovoltaic installation hardware devices containing software essential to the hardware product’s functionality and (2) stand-alone software. The Company allocated revenue based on the Company’s best estimate of selling price, which was determined by considering multiple factors including, but not limited to, market conditions, competitive landscape, internal costs, gross margin objectives and pricing practices. The consideration allocated to the delivered photovoltaic device is recognized at the time of shipment provided that the four general revenue recognition criteria discussed above have been met.

Cost of Revenue

Cost of Revenue

Cost of Revenue—Operating Leases and Incentives

Cost of revenue—operating leases and incentives includes the depreciation of the cost of the solar energy systems and the amortization of capitalized initial direct costs. It also includes other costs related to the processing, account creation, design, installation, interconnection and servicing of solar energy systems that are not capitalized, such as personnel costs not directly associated to a solar energy system installation, warehouse rent and utilities, and fleet vehicle executory costs. The cost of revenue for the sales of SRECs is limited to broker fees which are paid in connection with certain SREC transactions.

Cost of Revenue—Solar Energy System and Product Sales

Cost of revenue—solar energy system and product sales consists of direct and indirect material and labor costs for solar energy systems. It also consists of materials, personnel costs, depreciation, facilities costs, other overhead costs and infrastructure expenses associated with the manufacturing of the photovoltaic installation devices and software products.

Research and Development

Research and Development

Research and development expense is primarily comprised of salaries and benefits associated with research and development personnel and other costs related to photovoltaic installation devices and software products and the development of other solar technologies. Research and development costs are charged to expense when incurred. The Company’s research and development expense was $3.9 million and $1.9 million for the years ended December 31, 2015 and 2014. Prior to the acquisition of Solmetric in January 2014, the Company did not incur any research and development expenses.

Advertising Costs

Advertising Costs

Advertising costs are expensed when incurred and are included in sales and marketing expenses in the consolidated statements of operations. The Company’s advertising expense was $4.5 million, $3.5 million and $1.3 million for the years ended December 31, 2015, 2014 and 2013.

Other Income (Expense)

Other Income (Expense)

The Company incurred interest and penalties primarily associated with employee payroll withholding tax payments that were not paid in a timely manner of $1.4 million and $1.9 million for the years ended December 31, 2014 and 2013. For the year ended December 31, 2015, the Company received an abatement of a portion of such penalties and interest.

Income Taxes

Income Taxes

The Company accounts for income taxes under an asset and liability approach. Deferred income taxes reflect the impact of temporary differences between assets and liabilities recognized for financial reporting purposes and the amounts recognized for income tax reporting purposes, net operating loss carryforwards, and other tax credits measured by applying currently enacted tax laws. A valuation allowance is provided when necessary to reduce deferred tax assets to an amount that is more likely than not to be realized.

In the fourth quarter of 2015, the Company prospectively adopted Accounting Standards Update (“ASU”) 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. This update requires that deferred tax assets and liabilities, including any related valuation allowance, be classified as non-current in a classified statement of financial position and eliminates the requirement that an entity separate deferred tax liabilities and assets into current and non-current amounts. The adoption of this update resulted in a reclassification of the Company’s $7.3 million net current deferred tax asset to the net non-current deferred tax liability in the Company’s consolidated balance sheet as of December 31, 2015. No prior periods were retrospectively adjusted.

The Company determines whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Company uses a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon tax authority examination, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.

The Company’s policy is to include interest and penalties related to unrecognized tax benefits, if any, within income tax expense (benefit) in the consolidated statements of operations.

Stock-Based Compensation Expense

Stock-Based Compensation Expense

Stock-based compensation expense for equity instruments issued to employees is measured based on the grant-date fair value of the awards. The fair value of each time-based employee stock option is estimated on the date of grant using the Black-Scholes-Merton stock option pricing valuation model. The fair value of each performance-based employee stock option is estimated on the date of grant using the Monte Carlo simulation model. The fair value of each restricted stock award and performance share unit award is determined as the closing price of the Company’s stock on the date of grant. The Company recognizes compensation costs using the accelerated attribution method for all employee stock-based compensation awards that are expected to vest over the requisite service period of the awards, which is generally the awards’ vesting period. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Stock-based compensation expense for equity instruments issued to non-employees is recognized based on the estimated fair value of the equity instrument. The fair value of the non-employee awards is subject to remeasurement at each reporting period until services required under the arrangement are completed, which is the vesting date.

Post-Employment Benefits

Post-Employment Benefits

In the periods presented, the Company participated in a 401(k) Plan sponsored by Vivint that covered all of the Company’s eligible employees. The Company did not provide a discretionary company match to employee contributions during any of the periods presented.

Non-Controlling Interests and Redeemable Non-Controlling Interests

Non-Controlling Interests and Redeemable Non-Controlling Interests

Non-controlling interests and redeemable non-controlling interests represent fund investors’ interest in the net assets of certain consolidated investment funds, which have been entered into by the Company in order to finance the costs of solar energy systems under long-term customer contracts. The Company has determined that the provisions in the contractual arrangements represent substantive profit-sharing arrangements. The Company has further determined that the appropriate methodology for attributing income and loss to the non-controlling interests and redeemable non-controlling interests each period is a balance sheet approach referred to as the hypothetical liquidation at book value (“HLBV”) method. Under the HLBV method, the amounts of income and loss attributed to the non-controlling interests and redeemable non-controlling interests in the consolidated statements of operations reflect changes in the amounts the fund investors would hypothetically receive at each balance sheet date under the liquidation provisions of the contractual agreements of these structures, assuming the net assets of these funding structures were liquidated at recorded amounts. The fund investors’ non-controlling interest in the results of operations of these funding structures is determined as the difference in the non-controlling interests’ claim under the HLBV method at the start and end of each reporting period, after taking into account any capital transactions, such as contributions or distributions, between the fund and the fund investors. The use of the HLBV methodology to allocate income to the non-controlling and redeemable non-controlling interest holders may create volatility in the Company’s consolidated statements of operations as the application of HLBV can drive changes in net income available and loss attributable to non-controlling interests and redeemable non-controlling interests from quarter to quarter.

The Company classifies certain non-controlling interests with redemption features that are not solely within the control of the Company outside of permanent equity on its consolidated balance sheets. Redeemable non-controlling interests are reported using the greater of their carrying value at each reporting date as determined by the HLBV method or their estimated redemption value in each reporting period.

Loss Contingencies

Loss Contingencies

We are subject to the possibility of various loss contingencies arising in the ordinary course of business. We consider the likelihood of loss or impairment of an asset, or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss, in determining loss contingencies. We accrue an estimated loss contingency when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. If we determine that a loss is possible and the range of the loss can be reasonably determined, then we disclose the range of the possible loss. We regularly evaluate current information available to determine whether an accrual is required, an accrual should be adjusted or a range of possible loss should be disclosed.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-02, Leases (Topic 842). The objective of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This update primarily changes the recognition by lessees of lease assets and liabilities for leases currently classified as operating leases. Lessor accounting remains largely unchanged. This update is effective in fiscal years beginning after December 15, 2018 for public business entities and early adoption is permitted. The amendments should be applied using a modified retrospective approach. The Company has operating leases that will be affected by this update and is evaluating the impact on its consolidated financial statements and disclosures. The Company expects to apply the update upon its effectiveness in the first quarter of 2019.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Topic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The objective of this update is to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The amendments in this update address certain aspects of recognition, measurement, presentation and disclosure of financial instruments. This update is effective in fiscal years beginning after December 15, 2017. The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Company is currently evaluating the impact this update will have on its consolidated financial statements and related disclosures.

In September 2015, the FASB issued ASU 2015-16, Business Combinations – Simplifying the Accounting for Measurement-Period Adjustments. Under current GAAP, an acquirer is required to retrospectively adjust any provisional amounts recognized at the acquisition date with a corresponding adjustment to goodwill when new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts initially recognized or would have resulted in the recognition of additional assets or liabilities. To simplify the accounting for adjustments to provisional amounts, the update eliminates the requirement to retrospectively account for those adjustments. This update is effective in fiscal years beginning after December 15, 2015 and early adoption is permitted. The Company does not currently have acquisitions which would be affected by this update.

In August 2015, the FASB issued ASU 2015-15, Interest – Imputation of Interest (Subtopic 835-30) – Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, which addresses an omission in ASU 2015-03. In April 2015, the FASB issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30) – Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs be presented as a direct reduction from the carrying amount of that debt liability similar to debt discounts. Existing recognition and measurement guidance is not impacted. However, ASU 2015-15 acknowledges that ASU 2015-03 does not address the presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. Per ASU 2015-15, an entity may defer and present debt issuance costs as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement. ASU 2015-15 is effective immediately. ASU 2015-03 is effective in fiscal years beginning after December 15, 2015 and early adoption is permitted. The Company has debt issuance costs related to line-of-credit arrangements and has adopted ASU 2015-15, which resulted in no change of presentation. If the Company enters into other debt arrangements that fall under ASU 2015-03, the Company will account for any related debt issuance costs per the update upon its effectiveness in the first quarter of 2016.

In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date, which defers the effective date of ASU 2014-09. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. ASU 2015-14 defers the effective date of ASU 2014-09 for one year, and the standard is now effective for the Company on January 1, 2018. The deferral allows for early adoption of the standard, which for the Company would be on January 1, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is currently evaluating which transition method to use for adopting ASU 2014-09 when required and does not expect the update to have a significant impact on its consolidated financial statements and related disclosures based on its current business model.

In April 2015, the FASB issued ASU 2015-05, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) – Customers Accounting for Fees Paid in a Cloud Computing Arrangement. This update provides guidance regarding the accounting for fees paid by a customer in cloud computing arrangements. If a cloud computing arrangement includes a software license, the payment of fees should be accounted for in the same manner as the acquisition of other software licenses. If there is no software license, the fees should be accounted for as a service contract. The update is effective in fiscal years beginning after December 15, 2015 and early adoption is permitted. An entity can elect to adopt the amendments either (1) prospectively to all arrangements entered into or materially modified after the effective date or (2) retrospectively. The Company does not expect that this update will have a significant impact on its consolidated financial statements and disclosures.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. This update makes some targeted changes to current consolidation guidance. These changes impact both the voting and the variable interest consolidation models. In particular, the update will change how companies determine whether limited partnerships or similar entities are VIEs. The update is effective in fiscal years, including interim periods, beginning after December 15, 2015, and early adoption is permitted. The Company currently consolidates all VIEs in which it has an equity interest and does not expect that ASU 2015-02 will have a significant impact on its consolidated financial statements and related disclosures.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Estimated Useful Lives of the Respective Assets

Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the respective assets as follows: 

	Useful Lives
System equipment costs	30 years
Initial direct costs related to solar energy systems	Lease term (20 years)

Schedule of Future Minimum Annual Lease Receipts From Customers

Future minimum annual lease receipts from customers under these legal-form lease agreements are as follows (in thousands):

Years Ending December 31,
2016	$	1,668
2017		1,716
2018		1,766
2019		1,817
2020		1,870

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2015

Fair Value Disclosures [Abstract]

Schedule of Fair Value of Financial Assets Measured on Recurring Basis

The Company measures and reports its cash equivalents at fair value. The following tables set forth the fair value of the Company’s financial assets measured on a recurring basis by level within the fair value hierarchy (in thousands):

	December 31, 2015
	Level I		Level II		Level III		Total
Financial Assets
Time deposits	$	—	$	1,900	$	—	$	1,900
Total financial assets	$	—	$	1,900	$	—	$	1,900
	December 31, 2014
	Level I		Level II		Level III		Total
Financial Assets
Time deposits	$	—	$	1,900	$	—	$	1,900
Money market funds		607		—		—		607
Total financial assets	$	607	$	1,900	$	—	$	2,507

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Solmetric Acquisition (Tables) - Solmetric

12 Months Ended

Dec. 31, 2015

Summary of Estimated Fair Value of Assets Acquired and Liabilities Assumed

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed (in thousands):

Cash acquired	$	139
Inventories		580
Other current assets acquired		221
Property		77
Customer relationships		738
Trademarks/trade names		1,664
Developed technology		1,295
In-process research and development		2,097
Goodwill		7,056
Deferred tax liability, net		(1,478	)
Current liabilities assumed		(210	)
Total	$	12,179

Pro Forma Information

The following pro forma financial information is based on the historical financial statements of the Company and presents the Company’s results as if the Solmetric Acquisition had occurred as of January 1, 2013 (in thousands):

	Years Ended
	December 31,
	2014			2013
Pro forma revenue	$	25,380		$	9,122
Pro forma net loss		(165,734	)		(57,046	)
Pro forma net (loss attributable) income available to common stockholders		(28,698	)		5,062

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Solar Energy Systems (Tables)

12 Months Ended

Dec. 31, 2015

Solar Energy Systems Disclosure [Abstract]

Solar Energy Systems

Solar energy systems, net consisted of the following (in thousands):

	December 31,			December 31,
	2015			2014
System equipment costs	$	893,088		$	478,502
Initial direct costs related to solar energy systems		171,081			75,349
		1,064,169			553,851
Less: Accumulated depreciation and amortization		(32,505	)		(10,186	)
		1,031,664			543,665
Solar energy system inventory		70,493			44,502
Solar energy systems, net	$	1,102,157		$	588,167

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Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2015

Property Plant And Equipment [Abstract]

Summary of Property and Equipment Net

Property and equipment, net consisted of the following (in thousands):

	Estimated	December 31,			December 31,
	Useful Lives	2015			2014
Vehicles acquired under capital leases	3 years	$	24,149		$	13,351
Furniture and computer and other equipment	3 years		6,524			2,183
Leasehold improvements	1-3 years		4,116			2,088
			34,789			17,622
Less: Accumulated depreciation and amortization			(12,181	)		(4,598	)
			22,608			13,024
Build-to-suit lease asset under construction			25,560			—
Property and equipment, net		$	48,168		$	13,024

Summary of Future Minimum Lease Payments For Vehicles Under Capital Leases

Future minimum lease payments for vehicles under capital leases as of December 31, 2015 were as follows (in thousands):

Years Ending December 31,
2016	$	6,405
2017		5,679
2018		4,136
2019		1,008
2020		36
Thereafter		—
Total minimum lease payments		17,264
Less: interest		1,720
Present value of capital lease obligations		15,544
Less: current portion		5,489
Long-term portion	$	10,055

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Intangible Assets and Goodwill (Tables)

12 Months Ended

Dec. 31, 2015

Goodwill And Intangible Assets Disclosure [Abstract]

Summary of Intangible Assets

Intangible assets consisted of the following (in thousands):

	December 31,			December 31,
	2015			2014
Cost:
Internal-use software	$	1,591		$	370
Developed technology		522			1,295
Trademarks/trade names		201			1,664
Customer relationships		164			738
Customer contracts		—			43,783
In-process research and development		—			2,097
Total carrying value		2,478			49,947
Accumulated amortization:
Internal-use software		(219	)		—
Developed technology		(126	)		(160	)
Trademarks/trade names		(39	)		(152	)
Customer relationships		(63	)		(135	)
Customer contracts		—			(31,013	)
Total accumulated amortization		(447	)		(31,460	)
Total intangible assets, net	$	2,031		$	18,487

Summary of Expected Amortization Expense

As of December 31, 2015, expected amortization expense for the unamortized intangible assets is as follows (in thousands):

Years Ending December 31,
2016	$	656
2017		558
2018		475
2019		129
2020		86
Thereafter		127
Total	$	2,031

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Accrued Compensation (Tables)

12 Months Ended

Dec. 31, 2015

Accrued Compensation Disclosure [Abstract]

Summary of Accrued Compensation

Accrued compensation consisted of the following (in thousands):

	December 31,		December 31,
	2015		2014
Accrued payroll	$	6,918	$	10,219
Accrued commissions		6,840		6,575
Total accrued compensation	$	13,758	$	16,794

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Accrued and Other Current Liabilities (Tables)

12 Months Ended

Dec. 31, 2015

Payables And Accruals [Abstract]

Schedule of Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following (in thousands):

	December 31,		December 31,
	2015		2014
Accrued professional fees	$	7,918	$	1,289
Income tax payable		6,169		4,097
Current portion of lease pass-through financing obligation		3,835		—
Sales and use tax payable		3,524		5,052
Accrued litigation settlements		1,790		450
Deferred rent		1,064		1,090
Accrued unused commitment fees and interest		1,014		478
Other accrued expenses		3,703		1,560
Total accrued and other current liabilities	$	29,017	$	14,016

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Debt Obligations (Tables)

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Schedule of Debt

Debt obligations consisted of the following (in thousands):

	December 31,		December 31,
	2015		2014
Aggregation credit facility	$	269,100	$	105,000
Working capital credit facility		146,750		—
Total debt	$	415,850	$	105,000

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Investment Funds (Tables)

12 Months Ended

Dec. 31, 2015

Schedule Of Investments [Abstract]

Aggregate Carrying Value of Funds Assets and Liabilities

The aggregate carrying value of these funds’ assets and liabilities (after elimination of intercompany transactions and balances) in the Company’s consolidated balance sheets were as follows (in thousands):

	December 31,		December 31,
	2015		2014
Assets
Current assets:
Cash and cash equivalents	$	12,014	$	12,641
Accounts receivable, net		3,063		1,542
Prepaid expenses and other current assets		121		—
Total current assets		15,198		14,183
Solar energy systems, net		990,609		525,903
Other non-current assets, net		18		—
Total assets	$	1,005,825	$	540,086
Liabilities
Current liabilities:
Distributions payable to non-controlling interests and redeemable    non-controlling interests	$	11,347	$	6,780
Current portion of deferred revenue		4,824		237
Accrued and other current liabilities		3,869		—
Total current liabilities		20,040		7,017
Deferred revenue, net of current portion		43,094		4,335
Other non-current liabilities		3,283		—
Total liabilities	$	66,417	$	11,352

Schedule of Future Minimum Lease Payments to be Received from Fund Investor

As of December 31, 2015, the future minimum lease payments to be received from the fund investor based on the solar energy systems then under the lease pass-through fund arrangement, for each of the next five years and thereafter, were as follows (in thousands):

Years Ending December 31,
2016	$	1,701
2017		3,009
2018		3,064
2019		3,111
2020		3,159
Thereafter		10,549
Total minimum lease payments to be received	$	24,593

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Redeemable Non-Controlling Interests, Equity and Preferred Stock (Tables)

12 Months Ended

Dec. 31, 2015

Noncontrolling Interest [Abstract]

Schedule of Shares of Common Stock Reserved for Issuance

The Company had shares of common stock reserved for issuance as follows (in thousands):

	December 31,		December 31,
	2015		2014
Shares available for grant under equity incentive plans		12,267		8,783
Stock options issued and outstanding		9,277		10,053
Long-term incentive plan		3,382		4,059
Restricted stock units issued and outstanding		930		22
Total		25,856		22,917

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Equity Compensation Plans (Tables)

12 Months Ended

Dec. 31, 2015

Summary of Stock Option Activity

Stock options are granted under the 2014 Plan and Omnibus Plan as described above. Stock option activity for the year ended December 31, 2015 was as follows (in thousands, except term and per share amounts):

						Weighted-
				Weighted-		Average
	Shares			Average		Remaining		Aggregate
	Underlying			Exercise		Contractual		Intrinsic
	Options			Price		Term		Value
Outstanding—December 31, 2014		10,053		$	1.21			$	80,790
Granted		114			12.56
Exercised		(595	)		1.09
Cancelled		(295	)		1.23
Outstanding—December 31, 2015		9,277		$	1.36		7.8	$	76,488
Options vested and exercisable—December 31, 2015		4,166		$	1.20		7.8	$	34,842
Options vested and expected to vest—December 31, 2015		8,964		$	1.35		7.8	$	73,568

Stock Option Activity By Range Of Exercise Price

The following table summarizes stock option activity by range of exercise price as of December 31, 2015 (number of awards in thousands):

	Awards Outstanding					Awards Exercisable
			Weighted-Average
	Number of Awards		Remaining	Weighted-Average		Number of Awards		Weighted-Average
Range of Exercise Price	Outstanding		Contractual Life	Exercise Price		Exercisable		Exercise Price
$0.00 - $1.00		5,859	7.6	$	1.00		2,772	$	1.00
$1.01 - $2.00		2,979	8.1		1.30		1,261		1.30
$2.01 - $10.00	320		8.5		4.14		128		4.14
$10.01 - $16.00	119		9.2		13.01		5		16.00
Total		9,277	7.8	$	1.36		4,166	$	1.20

Weighted Average Assumptions to Estimate Fair Value of Stock Options

The fair values using the Black-Scholes-Merton method were estimated on each grant date using the following weighted-average assumptions:

	Year Ended December 31,
	2015			2014			2013
Expected term (in years)	6.2			6.2			6.3
Volatility		89.0	%		87.1	%		80.0	%
Risk-free interest rate		1.8	%		1.9	%		1.7	%
Dividend yield		0.0	%		0.0	%		0.0	%

Restricted Stock Units Activity

RSUs are granted under the 2014 Plan and the LTIP as described above. RSU activity for the year ended December 31, 2015 was as follows (awards in thousands):

				Weighted-
				Average
	Number of			Grant Date
	Awards			Fair Value
Outstanding at December 31, 2014		22		$	16.00
Granted		1,650			13.01
Vested		(687	)		13.37
Forfeited		(55	)		12.57
Outstanding at December 31, 2015		930			12.84

Summary of Stock-Based Compensation Expense

Stock-based compensation was included in operating expenses as follows (in thousands):

	Year Ended December 31,
	2015		2014		2013
Cost of revenue	$	3,068	$	1,105	$	6
Sales and marketing		10,737		860		51
General and administrative		11,310		21,722		237
Research and development		489		—		—
Total stock-based compensation	$	25,604	$	23,687	$	294

Summary of Unrecognized Stock-Based Compensation Expense

Unrecognized stock-based compensation expense, net of estimated forfeitures, for time-based stock options, performance-based stock options, RSUs and PSUs as of December 31, 2015 was as follows (in thousands, except years):

	Unrecognized
	Stock-Based		Weighted-
	Compensation		Average Period
	Expense		of Recognition
Time-based stock options	$	2,788	3.0 years
Performance-based stock options		1,832	1.2 years
RSUs and PSUs		6,947	2.8 years
Total unrecognized stock-based compensation expense as of December 31, 2015	$	11,567

Monte Carlo Simulation Method

Weighted Average Assumptions to Estimate Fair Value of Stock Options

The fair values using the Monte Carlo Simulation method were estimated on each grant date using the following weighted-average assumptions:

	Year Ended
	December 31,
	2014			2013
Volatility		80.0	%		80.0	%
Risk-free interest rate		2.7	%		2.6	%

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Schedule of Income Tax Expense (Benefit)

The income tax expense (benefit) is composed of the following (in thousands):

	Year Ended December 31,
	2015			2014			2013
Current:
Federal	$	52,578		$	1,358		$	2,492
State		15,275			4,035			569
Total current expense		67,853			5,393			3,061
Deferred:
Federal		(46,364	)		(9,636	)		(2,900	)
State		(11,752	)		(2,827	)		(38	)
Total deferred benefit		(58,116	)		(12,463	)		(2,938	)
Income tax expense (benefit)	$	9,737		$	(7,070	)	$	123

Schedule of Reconciliation on Tax Benefit Computed at Statutory Federal Rate and Tax Expense (Benefit)

The following table presents a reconciliation of the tax benefit computed at the statutory federal rate and the Company’s tax expense (benefit) (in thousands):

	Year Ended December 31,
	2015			2014			2013
Income tax benefit—computed as 35% of pretax loss	$	(85,235	)	$	(60,546	)	$	(19,721	)
Effect of non-controlling interests and redeemable    non-controlling interests		93,221			47,962			21,737
Effect of domestic production activities deduction		(4,699	)		—			—
Effect of nondeductible expenses		1,232			6,617			1,439
State and local income tax expenses		2,289			616			343
Amortization of prepaid tax asset		6,661			2,199			474
Effect of tax credits		(4,106	)		(3,939	)		(4,472	)
Other		374			21			323
Income tax expense (benefit)	$	9,737		$	(7,070	)	$	123

Schedule of Deferred Tax Assets and Liabilities

Deferred income taxes reflect the impact of temporary differences between assets and liabilities for financial reporting purposes and the amounts recognized for income tax reporting purposes, net operating loss carryforwards and other tax credits measured by applying currently enacted tax laws. The significant components of the Company’s deferred tax assets and liabilities were as follows (in thousands): 

	December 31,
	2015			2014
Deferred tax assets:
Stock-based compensation	$	9,068		$	3,738
Accruals and reserves		4,582			3,335
Transaction costs		4,216			—
Other		395			743
Gross deferred tax assets		18,261			7,816
Valuation allowance		(212	)		(222	)
Net deferred tax assets		18,049			7,594
Deferred tax liabilities:
Investment in solar funds		(220,803	)		(106,664	)
Depreciation and amortization		(13,004	)		(9,493	)
Accruals and reserves		(275	)		—
Gross deferred tax liabilities		(234,082	)		(116,157	)
Net deferred tax liabilities	$	(216,033	)	$	(108,563	)

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Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2015

Related Party Transactions [Abstract]

Components of Related Party Transactions

The Company’s operations included the following expenses from related party transactions (in thousands):

	Year Ended December 31,
	2015		2014		2013
Cost of revenue—operating leases and incentives	$	6,054	$	7,834	$	1,558
Sales and marketing		2,133		2,312		866
General and administrative		5,241		5,909		2,323
Interest expense(1)		—		4,481		2,924

⁽¹⁾ Includes revolving lines of credit—related party. See Note 10—Debt Obligations.

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2015

Commitments And Contingencies Disclosure [Abstract]

Schedule of Future Minimum Lease Payments under Non-Cancelable Operating Leases

Future minimum lease payments under non-cancellable leases as of December 31, 2015 were as follows (in thousands):

Years Ending December 31,
2016	$	14,223
2017		12,577
2018		10,552
2019		9,674
2020		9,295
Thereafter		81,216
Total minimum lease payments	$	137,537

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Basic and Diluted Net Income (Loss) Per Share (Tables)

12 Months Ended

Dec. 31, 2015

Earnings Per Share [Abstract]

Computation of Basic and Diluted Net Loss per Share to Common Stockholders

The following table sets forth the computation of the Company’s basic and diluted net income available (loss attributable) per share to common stockholders for the years ended December 31, 2015, 2014 and 2013 (in thousands, except per share amounts):

	Year Ended December 31,
	2015		2014			2013
Numerator:
Net income available (loss attributable) to common stockholders	$	13,080	$	(28,883	)	$	5,638
Denominator:
Shares used in computing net income available (loss attributable)     per share to common stockholders, basic		106,088		83,446			75,000
Weighted-average effect of potentially dilutive shares to purchase    common stock		3,770		—			223
Shares used in computing net income available (loss attributable)    per share to common stockholders, diluted		109,858		83,446			75,223
Net income available (loss attributable) per share to common    stockholders
Basic	$	0.12	$	(0.35	)	$	0.08
Diluted	$	0.12	$	(0.35	)	$	0.07

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Segment Information (Tables)

12 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

Operating Results by Reporting Segment

Operating results by reporting segment in 2015 were as follows:

	Year Ended December 31, 2015
	Residential			C&I			Total
Revenue:
Operating leases and incentives	$	61,150		$	—		$	61,150
Solar energy system and product sales		3,032			—			3,032
Total revenue		64,182			—			64,182
Operating expenses:
Cost of revenue—operating leases and incentives		131,213			—			131,213
Cost of revenue—solar energy system and product sales		1,762			—			1,762
Sales and marketing		47,408			670			48,078
Research and development		3,901			—			3,901
General and administrative		90,438			2,226			92,664
Amortization of intangible assets		13,172			—			13,172
Impairment of intangible assets		4,506			—			4,506
Total operating expenses		292,400			2,896			295,296
Loss from operations	$	(228,218	)	$	(2,896	)	$	(231,114	)

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Organization - Additional Information (Details)	12 Months Ended
	Dec. 31, 2015
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Delaware corporation incorporation date	Aug. 12, 2011
Contractual term of customers	20 years
313 Acquisition LLC
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Date of acquisition	Nov. 16, 2012
Percentage of equity interest acquired	100.00%
Sun Edison Inc
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Merger agreement amendment date	Dec. 09, 2015
Merger Agreement termination date	Mar. 07, 2016

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Summary of Significant Accounting Policies - Additional Information (Details)	3 Months Ended	12 Months Ended
	Mar. 31, 2015 Segment	Dec. 31, 2015 USD ($) Segment Supplier	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Summary Of Significant Accounting Policies [Line Items]
Number of reporting segments | Segment	1	2
Restricted cash		$ 15,035,000	$ 6,516,000
Allowance for doubtful accounts receivable		900,000	600,000
Solar energy systems held for sale		$ 100,000	0
Investment tax credits as percentage of value of eligible solar property		30.00%
Solar energy systems, gross		$ 1,064,169,000	553,851,000
Accumulated depreciation and amortization		32,505,000	10,186,000
Impairment charges related to discontinued operations		$ 4,500,000	0	$ 0
Amortization period of prepaid tax asset		30 years
Lease term on deferred revenue		20 years
Accrued warranty and home installation reserve		$ 300,000	0
Other comprehensive income (loss), net of tax		$ 0
Contractual term of customers		20 years
Description of operating lease agreements		The Company has determined that power purchase agreements should be accounted for as operating leases after evaluating and concluding that none of the following capitalized lease classification criteria are met: no transfer of ownership or bargain purchase option exists at the end of the lease, the lease term is not greater than 75% of the useful life or the present value of minimum lease payments does not exceed 90% of the fair value at lease inception
Operating leases and incentives		$ 61,150,000	21,688,000	5,864,000
Rebates recognized within operating leases and incentives		400,000	200,000	0
Research and development		3,901,000	1,892,000
Advertising costs		4,500,000	3,500,000	1,300,000
Interest and penalties associated with employee payroll withholding tax payments			1,400,000	1,900,000
Reclassification of net current deferred tax asset to net non-current deferred tax liability		$ 7,300,000
Percentage of tax benefit realized upon ultimate settlement		50.00%
Financing Obligation
Summary Of Significant Accounting Policies [Line Items]
Service and operational term		5 years
Recognized revenue on investment		0.20%
Investment tax credit revenue recognition		$ 0
Solmetric
Summary Of Significant Accounting Policies [Line Items]
Impairment charges related to discontinued operations		$ 4,500,000
Customer Contracts
Summary Of Significant Accounting Policies [Line Items]
Amortization period of intangible assets		3 years
Customer Relationships
Summary Of Significant Accounting Policies [Line Items]
Amortization period of intangible assets		5 years
Impairment charges related to discontinued operations		$ 400,000
Trademarks/Trade Names
Summary Of Significant Accounting Policies [Line Items]
Amortization period of intangible assets		10 years
Internal-use software
Summary Of Significant Accounting Policies [Line Items]
Amortization period of intangible assets		3 years
Amortization of internal-use software		$ 200,000	0
Vehicles
Summary Of Significant Accounting Policies [Line Items]
Vehicles under capital leases, useful life		3 years
Solar Energy Systems
Summary Of Significant Accounting Policies [Line Items]
Solar energy systems, gross		$ 1,134,700,000	598,400,000
Power Grid
Summary Of Significant Accounting Policies [Line Items]
Solar energy systems, gross		882,700,000	407,700,000
Solar Renewable Energy Certificates
Summary Of Significant Accounting Policies [Line Items]
Operating leases and incentives		$ 13,900,000	$ 2,600,000	$ 300,000
Cost of Goods Product Line | Solar Photovoltaic Module Purchases
Summary Of Significant Accounting Policies [Line Items]
Number of suppliers | Supplier		3
Cost of Goods Product Line | Inverter Purchases
Summary Of Significant Accounting Policies [Line Items]
Number of suppliers | Supplier		2
Cost of Goods Product Line | Supplier One | Solar Photovoltaic Module Purchases
Summary Of Significant Accounting Policies [Line Items]
Percentage of purchase from each suppliers		50.00%	50.00%	48.00%
Cost of Goods Product Line | Supplier One | Inverter Purchases
Summary Of Significant Accounting Policies [Line Items]
Percentage of purchase from each suppliers		55.00%
Cost of Goods Product Line | Supplier Two | Solar Photovoltaic Module Purchases
Summary Of Significant Accounting Policies [Line Items]
Percentage of purchase from each suppliers		30.00%	40.00%	48.00%
Cost of Goods Product Line | Supplier Two | Inverter Purchases
Summary Of Significant Accounting Policies [Line Items]
Percentage of purchase from each suppliers		40.00%
Cost of Goods Product Line | Supplier Three | Solar Photovoltaic Module Purchases
Summary Of Significant Accounting Policies [Line Items]
Percentage of purchase from each suppliers		20.00%
Bank Of America Aggregation Credit Facility
Summary Of Significant Accounting Policies [Line Items]
Restricted cash		$ 5,000,000
Minimum
Summary Of Significant Accounting Policies [Line Items]
Restricted cash		$ 10,000,000	$ 5,000,000
Product warranty period against defects in design and workmanship		1 year
Warranty period		1 year
Minimum | Developed Technology
Summary Of Significant Accounting Policies [Line Items]
Amortization period of intangible assets		5 years
Minimum | Solar Energy Systems
Summary Of Significant Accounting Policies [Line Items]
Warranty period		10 years
Minimum | Photovoltaic Installation Software Products and Devices
Summary Of Significant Accounting Policies [Line Items]
Warranty period		1 year
Maximum
Summary Of Significant Accounting Policies [Line Items]
Product warranty period against defects in design and workmanship		20 years
Warranty period		10 years
Maximum | Developed Technology
Summary Of Significant Accounting Policies [Line Items]
Amortization period of intangible assets		8 years
Maximum | Solar Energy Systems
Summary Of Significant Accounting Policies [Line Items]
Warranty period		25 years
Maximum | Photovoltaic Installation Software Products and Devices
Summary Of Significant Accounting Policies [Line Items]
Warranty period		2 years
Cash and Cash Equivalents
Summary Of Significant Accounting Policies [Line Items]
Maturity of time deposits		3 months

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Summary of Significant Accounting Policies - Estimated Useful Lives of the Respective Assets (Details)	12 Months Ended
	Dec. 31, 2015
Accounting Policies [Abstract]
System equipment costs, Useful Lives	30 years
Initial direct costs related to solar energy systems, Useful Lives	20 years

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Summary of Significant Accounting Policies - Schedule Of Future Minimum Annual Lease Receipts From Customers (Details) $ in Thousands	Dec. 31, 2015 USD ($)
Accounting Policies [Abstract]
2016	$ 1,668
2017	1,716
2018	1,766
2019	1,817
2020	$ 1,870

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Fair Value Measurements - Schedule of Fair Value of Financial Assets Measured on Recurring Basis (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Financial Assets	$ 1,900	$ 2,507
Level I
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Financial Assets		607
Level II
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Financial Assets	1,900	1,900
Time Deposits
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Financial Assets	1,900	1,900
Time Deposits | Level II
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Financial Assets	$ 1,900	1,900
Money Market Funds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Financial Assets		607
Money Market Funds | Level I
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Financial Assets		$ 607

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Fair Value Measurements - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Fair Value Disclosures [Abstract]
Long-term debt	$ 415,850,000	$ 105,000,000
Realized gains or losses on financial assets	$ 0	$ 0

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Solmetric Acquisition - Additional Information (Details) $ in Thousands	1 Months Ended	12 Months Ended
	Jan. 31, 2014 USD ($)	Dec. 31, 2015 USD ($) Product	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Business Acquisition [Line Items]
Impairment charges related to discontinued operations		$ 4,500	$ 0	$ 0
Solmetric
Business Acquisition [Line Items]
Purchase price agreed in the purchase agreement	$ 12,000		12,179
Purchase price on acquisition date	12,200
Purchase of outstanding stock and options	12,200
Retention bonus for employees			300
Transaction fees			100
Purchase consideration placed in escrow	$ 1,000
Deferred tax liabilities gross			2,500
Deferred tax assets			1,000
Revenue from acquisition			3,200
Net income from acquisition			$ 400
Number of discontinued products | Product		2
Impairment charges related to discontinued operations		$ 4,500

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Solmetric Acquisition - Summary of Estimated Fair Values of the Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Jan. 31, 2014
Business Acquisition [Line Items]
Goodwill	$ 36,601	$ 36,601
Solmetric
Business Acquisition [Line Items]
Cash acquired		139
Inventories		580
Other current assets acquired		221
Property		77
Goodwill		7,056
Deferred tax liability, net		(1,478)
Current liabilities assumed		(210)
Total purchase consideration		12,179	$ 12,000
Solmetric | Customer Relationships
Business Acquisition [Line Items]
Intangible assets		738
Solmetric | Trademarks/Trade Names
Business Acquisition [Line Items]
Intangible assets		1,664
Solmetric | Developed Technology
Business Acquisition [Line Items]
Intangible assets		1,295
Solmetric | In Process Research And Development
Business Acquisition [Line Items]
Intangible assets		$ 2,097

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Solmetric Acquisition - Pro Forma Information (Details) - Solmetric - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Business Acquisition [Line Items]
Pro forma revenue	$ 25,380	$ 9,122
Pro forma net loss	(165,734)	(57,046)
Pro forma net (loss attributable) income available to common stockholders	$ (28,698)	$ 5,062

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Solar Energy Systems (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Property Subject To Or Available For Operating Lease [Line Items]
Solar energy systems, gross	$ 1,064,169	$ 553,851
Less: Accumulated depreciation and amortization	(32,505)	(10,186)
Solar energy systems, net excluding inventory	1,031,664	543,665
Solar energy system inventory	70,493	44,502
Solar energy systems, net	1,102,157	588,167
System Equipment Costs
Property Subject To Or Available For Operating Lease [Line Items]
Solar energy systems, gross	893,088	478,502
Initial Direct Costs Related to Solar Energy Systems
Property Subject To Or Available For Operating Lease [Line Items]
Solar energy systems, gross	$ 171,081	$ 75,349

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Solar Energy Systems - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Property Subject To Or Available For Operating Lease [Line Items]
Depreciation and amortization expense	$ 24,924,000	$ 8,523,000	$ 1,984,000
Solar Energy System Inventory
Property Subject To Or Available For Operating Lease [Line Items]
Depreciation	0
Depreciation and amortization expense	$ 22,300,000	$ 8,100,000	$ 2,000,000

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Property and Equipment - Summary of Property and Equipment Net (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Property Plant And Equipment [Line Items]
Property and Equipment, Estimated Useful Lives	30 years
Property, gross	$ 34,789	$ 17,622
Less: Accumulated depreciation and amortization	(12,181)	(4,598)
Property and equipment, net, excluding Build-to-suit assets	22,608	13,024
Build-to-suit lease asset under construction	25,560
Property and equipment, net	$ 48,168	13,024
Vehicles Acquired Under Capital Leases
Property Plant And Equipment [Line Items]
Property and Equipment, Estimated Useful Lives	3 years
Property, gross	$ 24,149	13,351
Furniture and Computer and Other Equipment
Property Plant And Equipment [Line Items]
Property and Equipment, Estimated Useful Lives	3 years
Property, gross	$ 6,524	2,183
Leasehold Improvements
Property Plant And Equipment [Line Items]
Property, gross	$ 4,116	$ 2,088
Leasehold Improvements | Minimum
Property Plant And Equipment [Line Items]
Property and Equipment, Estimated Useful Lives	1 year
Leasehold Improvements | Maximum
Property Plant And Equipment [Line Items]
Property and Equipment, Estimated Useful Lives	3 years

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Property and Equipment - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Property Plant And Equipment [Line Items]
Depreciation and amortization expense	$ 24,924	$ 8,523	$ 1,984
Build-to-suit lease assets	25,560
Property and equipment
Property Plant And Equipment [Line Items]
Depreciation and amortization expense	8,200	3,400	1,200
Vehicles Acquired Under Capital Leases | Solar Energy Systems
Property Plant And Equipment [Line Items]
Depreciation and amortization expense	$ 5,500	$ 3,000	$ 1,200

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Property and Equipment - Summary of Future Minimum Lease Payments For Vehicles Under Capital Leases (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Property Plant And Equipment [Line Items]
Less: current portion	$ 5,489	$ 3,502
Long-term portion	10,055	$ 6,176
Vehicles Acquired Under Capital Leases
Property Plant And Equipment [Line Items]
2016	6,405
2017	5,679
2018	4,136
2019	1,008
2020	36
Total minimum lease payments	17,264
Less: interest	1,720
Present value of capital lease obligations	15,544
Less: current portion	5,489
Long-term portion	$ 10,055

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Intangible Assets and Goodwill - Summary of Intangible Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Finite Lived And Indefinite Lived Intangible Assets [Line Items]
Intangible assets, carrying value	$ 2,478	$ 49,947
Intangible assets, accumulated amortization	(447)	(31,460)
Total intangible assets, net	2,031	18,487
Internal-use software
Finite Lived And Indefinite Lived Intangible Assets [Line Items]
Intangible assets, carrying value	1,591	370
Intangible assets, accumulated amortization	(219)
Developed Technology
Finite Lived And Indefinite Lived Intangible Assets [Line Items]
Intangible assets, carrying value	522	1,295
Intangible assets, accumulated amortization	(126)	(160)
Trademarks/Trade Names
Finite Lived And Indefinite Lived Intangible Assets [Line Items]
Intangible assets, carrying value	201	1,664
Intangible assets, accumulated amortization	(39)	(152)
Customer Relationships
Finite Lived And Indefinite Lived Intangible Assets [Line Items]
Intangible assets, carrying value	164	738
Intangible assets, accumulated amortization	$ (63)	(135)
Customer Contracts
Finite Lived And Indefinite Lived Intangible Assets [Line Items]
Intangible assets, carrying value		43,783
Intangible assets, accumulated amortization		(31,013)
In-Process Research And Development
Finite Lived And Indefinite Lived Intangible Assets [Line Items]
Intangible assets, carrying value		$ 2,097

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Intangible Assets and Goodwill- Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Finite Lived And Indefinite Lived Intangible Assets [Line Items]
Amortization of intangible assets	$ 13,172,000	$ 14,911,000	$ 14,595,000
Amortization of intangible assets recorded in cost of revenue		100,000
Impairment charges related to discontinued operations	4,500,000	0	$ 0
Changes to goodwill	0
Goodwill	36,601,000	36,601,000
Solmetric
Finite Lived And Indefinite Lived Intangible Assets [Line Items]
Impairment charges related to discontinued operations	4,500,000
Goodwill		$ 7,056,000
Customer Relationships
Finite Lived And Indefinite Lived Intangible Assets [Line Items]
Impairment charges related to discontinued operations	400,000
Solmetric's SunEye and PV Designer Products | In Process Research And Development | Solmetric
Finite Lived And Indefinite Lived Intangible Assets [Line Items]
Impairment charges related to discontinued operations	2,100,000
Solmetric's SunEye and PV Designer Products | Trademarks/Trade Names | Solmetric
Finite Lived And Indefinite Lived Intangible Assets [Line Items]
Impairment charges related to discontinued operations	1,300,000
Solmetric's SunEye and PV Designer Products | Developed Technology | Solmetric
Finite Lived And Indefinite Lived Intangible Assets [Line Items]
Impairment charges related to discontinued operations	$ 700,000

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Intangible Assets and Goodwill - Summary of Expected Amortization Expense (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Goodwill And Intangible Assets Disclosure [Abstract]
2016	$ 656
2017	558
2018	475
2019	129
2020	86
Thereafter	127
Total intangible assets, net	$ 2,031	$ 18,487

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Accrued Compensation - Summary of Accured Compensation (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Accrued Compensation Disclosure [Abstract]
Accrued payroll	$ 6,918	$ 10,219
Accrued commissions	6,840	6,575
Total accrued compensation	$ 13,758	$ 16,794

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Accrued and Other Current Liabilities - Schedule of Accrued and Other Current Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Payables And Accruals [Abstract]
Accrued professional fees	$ 7,918	$ 1,289
Income tax payable	6,169	4,097
Current portion of lease pass-through financing obligation	3,835
Sales and use tax payable	3,524	5,052
Accrued litigation settlements	1,790	450
Deferred rent	1,064	1,090
Accrued unused commitment fees and interest	1,014	478
Other accrued expenses	3,703	1,560
Total accrued and other current liabilities	$ 29,017	$ 14,016

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Debt Obligations - Schedule of Debt Obligations (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Line Of Credit Facility [Line Items]
Total debt	$ 415,850	$ 105,000
Bank Of America Aggregation Credit Facility
Line Of Credit Facility [Line Items]
Aggregate term loan borrowing	269,100	$ 105,000
Bank Of America Working Capital Credit Facility
Line Of Credit Facility [Line Items]
Aggregate term loan borrowing	$ 146,750

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Debt Obligations - Additional Information (Details) - USD ($)		1 Months Ended						3 Months Ended	9 Months Ended	12 Months Ended
	Oct. 09, 2014	Feb. 28, 2015	Sep. 30, 2014	May. 31, 2014	Jan. 31, 2014	Dec. 31, 2013	Nov. 30, 2013	Sep. 30, 2014	Sep. 30, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Nov. 30, 2015	May. 31, 2015	Mar. 31, 2015	Jul. 31, 2013	May. 31, 2013	Dec. 31, 2012
Line Of Credit Facility [Line Items]
Interest expense										$ 12,568,000	$ 9,323,000	$ 3,144,000
Restricted cash and cash equivalents										15,035,000	6,516,000
Letter of credit related to insurance contract										3,200,000
Repayments of Short-term Debt											75,500,000
Interest expense incurred under debt obligations										12,200,000	9,300,000	3,100,000
Amortization of deferred financing costs										3,500,000	2,200,000	0
APX Parent Holdco, Inc.
Line Of Credit Facility [Line Items]
Aggregate term loan borrowing																$ 40,000,000
Loan obtained							$ 20,000,000
Two Thousand Thirteen Loan Agreement
Line Of Credit Facility [Line Items]
Aggregate term loan borrowing						$ 18,500,000						18,500,000
Interest expense											3,100,000	1,500,000
Two Thousand Twelve Loan Agreement
Line Of Credit Facility [Line Items]
Interest expense											1,300,000	$ 1,500,000
Minimum
Line Of Credit Facility [Line Items]
Restricted cash and cash equivalents										$ 10,000,000	5,000,000
Bank Of America Aggregation Credit Facility
Line Of Credit Facility [Line Items]
Aggregate borrowing capacity		$ 375,000,000											$ 375,000,000
Additional borrowing capacity		175,000,000
Increase in funding commitment		25,000,000
Credit facility increasing amount		$ 550,000,000
Debt Instrument interest rate description										Interest on borrowings accrues at a floating rate equal to either (1)(a) the London Interbank Offer Rate (“LIBOR”) or (b) the greatest of (i) the Federal Funds Rate plus 0.5%, (ii) the administrative agent’s prime rate and (iii) LIBOR plus 1% and (2) a margin that varies between 3.25% during the period during which the Company may incur borrowings and 3.50% after such period. Interest is payable at the end of each interest period that the Company may elect as a term of either one, two or three months.
Revolving credit facility maturity date										Mar. 12, 2018
Aggregate term loan borrowing										$ 269,100,000	105,000,000
Remaining borrowing capacity										105,900,000
Interest expense										9,900,000	$ 1,400,000
Deferred debt issuance costs, current portion										4,000,000
Deferred debt issuance costs, long-term portion										4,900,000
Restricted cash and cash equivalents										$ 5,000,000
Bank Of America Aggregation Credit Facility | Minimum
Line Of Credit Facility [Line Items]
Debt instrument interest rate										3.25%
Bank Of America Aggregation Credit Facility | Maximum
Line Of Credit Facility [Line Items]
Debt instrument interest rate										3.50%
Bank Of America Aggregation Credit Facility | Federal Funds Rate Plus
Line Of Credit Facility [Line Items]
Debt instrument interest rate										0.50%
Bank Of America Aggregation Credit Facility | L I B O R Plus
Line Of Credit Facility [Line Items]
Debt instrument interest rate										1.00%
Bank Of America Working Capital Credit Facility
Line Of Credit Facility [Line Items]
Aggregate borrowing capacity														$ 150,000,000	$ 131,000,000
Debt Instrument interest rate description										(1) a rate equal to the Eurodollar Rate for the interest period divided by one minus the Eurodollar Reserve Percentage, plus a margin of 3.25%; or (2) the highest of (a) the Federal Funds Rate plus 0.50%, (b) the Citibank prime rate and (c) the one-month interest period Eurodollar rate plus 1.00%, plus a margin of 2.25%. Interest is payable dependent on the type of borrowing at the end of (1) the interest period that the Company may elect as a term and not to exceed three months, (2) quarterly or (3) at maturity of the Working Capital Facility
Revolving credit facility maturity date										Mar. 31, 2020
Debt instrument interest rate										2.25%
Aggregate term loan borrowing										$ 146,750,000
Remaining borrowing capacity										0
Interest expense										2,300,000
Deferred debt issuance costs, current portion										500,000
Deferred debt issuance costs, long-term portion										1,800,000
Letter of credit related to insurance contract										3,200,000
Minimum cash balance requirement										$ 25,000,000
Bank Of America Working Capital Credit Facility | Federal Funds Rate Plus
Line Of Credit Facility [Line Items]
Debt instrument interest rate										0.50%
Bank Of America Working Capital Credit Facility | Eurodollar Reserve Percentage Plus
Line Of Credit Facility [Line Items]
Debt instrument interest rate										3.25%
Bank Of America Working Capital Credit Facility | Euro Dollar Rate Plus
Line Of Credit Facility [Line Items]
Debt instrument interest rate										1.00%
Bank of America, N.A. Term Loan Credit Facility
Line Of Credit Facility [Line Items]
Debt Instrument interest rate description										Under this credit facility, the Company incurred interest on the term borrowings that accrued at a floating rate based on (1) LIBOR plus a margin equal to 4%, or (2) a rate equal to 3% plus the greatest of (a) the Federal Funds Rate plus 0.5%, (b) the administrative agent’s prime rate and (c) LIBOR plus 1%.
Debt instrument interest rate				3.00%
Aggregate term loan borrowing				$ 75,500,000
Interest expense								$ 1,300,000
Restricted cash and cash equivalents										$ 1,600,000
Repayments of Short-term Debt			$ 75,500,000
Bank of America, N.A. Term Loan Credit Facility | Federal Funds Rate Plus
Line Of Credit Facility [Line Items]
Debt instrument interest rate				0.50%
Bank of America, N.A. Term Loan Credit Facility | L I B O R Plus
Line Of Credit Facility [Line Items]
Debt instrument interest rate				1.00%
Bank of America, N.A. Term Loan Credit Facility | London Interbank Offered Rate (LIBOR)
Line Of Credit Facility [Line Items]
Debt instrument interest rate				4.00%
Revolving Lines of Credit | 2013 Loan Agreement and 2012 Loan Agreement
Line Of Credit Facility [Line Items]
Repayment of revolving line of credit	$ 58,800,000
Revolving Lines of Credit | Two Thousand Thirteen Loan Agreement | APX Parent Holdco, Inc.
Line Of Credit Facility [Line Items]
Aggregate borrowing capacity					$ 50,000,000												$ 20,000,000
Additional borrowing capacity					$ 30,000,000
Repayment of revolving line of credit									$ 141,500,000
Line of credit, interest rate					12.00%	20.00%	12.00%
Proceeds from revolving line of credit									$ 154,500,000
Revolving Lines of Credit | Two Thousand Twelve Loan Agreement
Line Of Credit Facility [Line Items]
Line of credit, interest rate										7.50%
Revolving Lines of Credit | Two Thousand Twelve Loan Agreement | Vivint
Line Of Credit Facility [Line Items]
Aggregate borrowing capacity																$ 20,000,000
Aggregate term loan borrowing																	$ 5,000,000	$ 15,000,000

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Investment Funds - Additional Information (Details)	12 Months Ended
	Dec. 31, 2015 USD ($) Segment InvestmentFund	May. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)
Investment Holdings [Line Items]
Summary of investment fund	As of December 31, 2015, the Company had formed 17 investment funds for the purpose of funding the purchase of solar energy systems.
Number of investment funds | InvestmentFund	17
Solar energy systems, net	$ 1,102,157,000		$ 588,167,000
Accrued distribution	5,200,000		4,000,000
Restricted cash	15,035,000		6,516,000
Minimum
Investment Holdings [Line Items]
Restricted cash	$ 10,000,000		5,000,000
Residential Investment Funds
Investment Holdings [Line Items]
Summary of investment fund	As of December 31, 2015, the Company had formed 16 residential investment funds.
Number of investment funds | InvestmentFund	16
Investors cash contribution to variable interest equity	$ 773,000,000		$ 480,200,000
Residential Investment Funds | Investor
Investment Holdings [Line Items]
Investors cash contribution to variable interest equity	$ 110,000,000
C&I Investment Fund
Investment Holdings [Line Items]
Investors committed capital contribution to variable interest equity		$ 150,000,000
Commitment under the fund arrangement, description	The total available committed capital under the fund is $150.0 million, which is expected to be contributed in 2016.
Number of projects initiated | Segment	0
Financing Obligation
Investment Holdings [Line Items]
Solar energy systems, net	$ 64,700,000
Service and operational term	5 years
Recognized revenue on investment	0.20%
Deferred revenue	$ 47,300,000

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Investment Funds - Aggregate Carrying Value of Funds Assets and Liabilities (Details) - USD ($) $ in Thousands		Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents		$ 92,213	$ 261,649	$ 6,038	$ 11,650
Accounts receivable, net		3,636	1,837
Prepaid expenses and other current assets		17,078	16,806
Total current assets		113,558	281,066
Solar energy systems, net		1,102,157	588,167
Other non-current assets, net		14,024	8,553
TOTAL ASSETS	[1]	1,609,070	1,064,324
Current liabilities:
Distributions payable to non-controlling interests and redeemable non-controlling interests		11,347	6,780
Current portion of deferred revenue		4,968	314
Accrued and other current liabilities		29,017	14,016
Total current liabilities		116,470	94,892
Deferred revenue, net of current portion		43,304	4,466
Other non-current liabilities		28,565
Total liabilities	[1]	830,277	322,761
Variable Interest Entities
Current assets:
Cash and cash equivalents		12,014	12,641
Accounts receivable, net		3,063	1,542
Prepaid expenses and other current assets		121	0
Total current assets		15,198	14,183
Solar energy systems, net		990,609	525,903
Other non-current assets, net		18
TOTAL ASSETS		1,005,825	540,086
Current liabilities:
Distributions payable to non-controlling interests and redeemable non-controlling interests		11,347	6,780
Current portion of deferred revenue		4,824	237
Accrued and other current liabilities		3,869	0
Total current liabilities		20,040	7,017
Deferred revenue, net of current portion		43,094	4,335
Other non-current liabilities		3,283	0
Total liabilities		$ 66,417	$ 11,352

[1] The Company’s consolidated assets as of December 31, 2015 and 2014 include $1,005.8 million and $540.1 million consisting of assets of variable interest entities, or VIEs, that can only be used to settle obligations of the VIEs. These assets include solar energy systems, net, of $990.6 million and $525.9 million as of December 31, 2015 and 2014; cash and cash equivalents of $12.0 million and $12.6 million as of December 31, 2015 and 2014; accounts receivable, net, of $3.1 million and $1.5 million as of December 31, 2015 and 2014; and prepaid expenses and other current assets of $0.1 million and zero as of December 31, 2015 and 2014. The Company’s consolidated liabilities as of December 31, 2015 and 2014 included $66.4 million and $11.4 million of liabilities of VIEs whose creditors have no recourse to the Company. These liabilities include distributions payable to non-controlling interests and redeemable non-controlling interests of $11.3 million and $6.8 million as of December 31, 2015 and 2014; deferred revenue of $47.9 million and $4.6 million as of December 31, 2015 and 2014; accrued and other current liabilities of $3.9 million and zero as of December 31, 2015 and 2014; and other non-current liabilities of $3.3 million and zero as of December 31, 2015 and 2014. For further information see Note 11—Investment Funds.

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Investment Funds - Schedule of Future Minimum Lease Payments to be Received from Fund Investor (Details) $ in Thousands	Dec. 31, 2015 USD ($)
Schedule Of Investments [Line Items]
2016	$ 1,668
2017	1,716
2018	1,766
2019	1,817
2020	1,870
Solar Energy Systems
Schedule Of Investments [Line Items]
2016	1,701
2017	3,009
2018	3,064
2019	3,111
2020	3,159
Thereafter	10,549
Total minimum lease payments to be received	$ 24,593

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Redeemable Non-Controlling Interests, Equity and Preferred Stock - Additional Information (Details) - USD ($)				1 Months Ended	9 Months Ended	12 Months Ended
	Oct. 06, 2014	Sep. 30, 2014	Aug. 31, 2014	Aug. 31, 2014	Sep. 30, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Oct. 31, 2014
Redeemable Noncontrolling Interest [Line Items]
Common stock, shares authorized						1,000,000,000	1,000,000,000
Common stock, shares issued						106,576,000	105,303,000
Common stock, shares outstanding						106,576,000	105,303,000
Issuance of common stock (in shares)	20,600,000
Shares of Common Stock Sold, Per Share	$ 16.00
Net proceeds from issuance of common stock	$ 300,600,000
Payments of stock offering expenses	$ 8,800,000
Proceeds from issuance of common stock						$ 649,000	$ 412,912,000
Initial Public Offering Estimated Mid Point Price Per Share				$ 17.00
Stock-based compensation expense						25,604,000	23,687,000	$ 294,000
Additional paid-in capital						$ 530,646,000	$ 502,785,000
Preferred Stock, Shares Authorized									10,000,000
Preferred Stock, Shares Issued						0	0
Put Option
Redeemable Noncontrolling Interest [Line Items]
Fund options expected to exercise						$ 0
Put Option | Minimum
Redeemable Noncontrolling Interest [Line Items]
Purchase price for investors' interest in funds under Put Options						700,000
Put Option | Maximum
Redeemable Noncontrolling Interest [Line Items]
Purchase price for investors' interest in funds under Put Options						4,100,000
Call Option
Redeemable Noncontrolling Interest [Line Items]
Fund options expected to exercise						0
Call Option | Minimum
Redeemable Noncontrolling Interest [Line Items]
Purchase price for investors' interest in funds under Put Options						700,000
Call Option | Maximum
Redeemable Noncontrolling Interest [Line Items]
Purchase price for investors' interest in funds under Put Options						7,000,000
General and Administrative Expense
Redeemable Noncontrolling Interest [Line Items]
Stock-based compensation expense						$ 11,310,000	$ 21,722,000	$ 237,000
General and Administrative Expense | Director
Redeemable Noncontrolling Interest [Line Items]
Stock-based compensation expense		$ 14,800,000			$ 14,800,000
313 Acquisition LLC
Redeemable Noncontrolling Interest [Line Items]
Issuance of common stock (in shares)				2,700,000
Shares of Common Stock Sold, Per Share			$ 10.667	$ 10.667
Proceeds from issuance of common stock			$ 28,500,000
Additional paid-in capital		$ 43,400,000			$ 43,400,000
313 Acquisition LLC | Director
Redeemable Noncontrolling Interest [Line Items]
Issuance of common stock (in shares)					7,000,000
Shares of Common Stock Sold, Per Share		$ 10.667			$ 10.667
Proceeds from issuance of common stock		$ 75,000,000

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Redeemable Non-Controlling Interests, Equity and Preferred Stock - Schedule of Shares of Common Stock Reserved for Issuance (Details) - shares	Dec. 31, 2015	Dec. 31, 2014
Equity [Abstract]
Shares available for grant under equity incentive plans	12,267,000	8,783,000
Stock options issued and outstanding	9,277,000	10,053,000
Long-term incentive plan	3,382,000	4,059,000
Restricted stock units issued and outstanding	930,000	22,000
Total	25,856,000	22,917,000

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Equity Compensation Plans - Additional Information (Details)				1 Months Ended	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2014 USD ($) Director	Apr. 30, 2014 USD ($)	Aug. 31, 2013 shares	Sep. 30, 2014 Director shares	Jun. 30, 2015 USD ($) shares	Sep. 30, 2014 USD ($) Director	Dec. 31, 2015 USD ($) $ / shares shares	Dec. 31, 2014 USD ($) $ / shares shares	Dec. 30, 2014 shares	Dec. 31, 2013 USD ($) $ / shares shares	Jul. 31, 2013 shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock shares reserved for issuance							25,856,000	22,917,000
Number of shares outstanding							9,277,000	10,053,000
Stock unit							930,000	22,000
Aggregate market capitalization | $		$ 1,000,000,000
Number of days of trading		240 days
Award vesting period for outside of plan		30 days
Long-term incentive plan							3,382,000	4,059,000
Stock-based compensation expense | $							$ 25,604,000	$ 23,687,000		$ 294,000
Share-based award, stock options granted in period							114,000
Share-based award, stock options exercises in period							595,000
Expected dividend yield | $							$ 0
RSUs vested, number of shares							687,000
Income tax benefit related to share-based compensation expense | $							$ 4,800,000
Members of board of directors | Director	2			2		2
General and Administrative
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense | $							$ 11,310,000	21,722,000		$ 237,000
Director | General and Administrative
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense | $	$ 14,800,000					$ 14,800,000
Performance Shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares outstanding							3,300,000			4,400,000
RSUs
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Fair value of RSUs vested | $							$ 9,000,000
RSUs vested, number of shares									0	0
Income tax benefit related to share-based compensation expense | $								$ 0		$ 0
2014 Equity Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock shares reserved for issuance							13,300,000	8,800,000
Percentage of outstanding shares of common stock							4.00%
Number of additional shares available for issuance							4,200,000
2014 Equity Incentive Plan | Time Based Condition
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares outstanding							100,000
Award vesting period							4 years
2014 Equity Incentive Plan | Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock unit							800,000
2014 Equity Incentive Plan | Performance Shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock unit							100,000
2014 Equity Incentive Plan | Minimum | Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Award vesting period							1 year
2014 Equity Incentive Plan | Minimum | Performance Shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Award vesting period							1 year
2014 Equity Incentive Plan | Maximum | Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Award vesting period							4 years
2014 Equity Incentive Plan | Maximum | Performance Shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Award vesting period							4 years
Two Thousand And Thirteen Omnibus Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of additional shares available for issuance				0
Number of shares outstanding							3,200,000
Share-based award, compensation cost | $								$ 5,800,000
Share-based award, stock options granted in period							0
Share-based award, stock options exercises in period								0		0
Intrinsic value net of options exercised | $							$ 7,400,000
Fair value of options vested | $							$ 14,800,000	$ 1,000,000		$ 100,000
Two Thousand And Thirteen Omnibus Incentive Plan | Time Based Condition
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Weighted-average grant-date fair value of options granted | $ / shares							$ 9.39	$ 4.69		$ 0.91
Two Thousand And Thirteen Omnibus Incentive Plan | Time Based Condition | Share-based Compensation Award, Tranche One
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Award vesting period								5 years		5 years
Stock options subject to ratable time-based vesting percentage								33.33%		33.33%
Stock options contractual period								10 years		10 years
Two Thousand And Thirteen Omnibus Incentive Plan | Performance Condition
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options vested, number of shares							3,300,000
Options exercisable, number of shares					3,300,000
Additional stock-based compensation expenses | $					$ 7,400,000
Recognized stock based compensation expense | $							$ 10,800,000
Weighted-average grant-date fair value of options granted | $ / shares								$ 2.80		$ 2.23
Two Thousand And Thirteen Omnibus Incentive Plan | Performance Condition | Share-based Compensation Award, Tranche Two
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options subject to ratable time-based vesting percentage								66.67%		66.67%
Non-omnibus Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock option plan, number of shares available for grant			600,000
Long Term Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Long-term incentive plan											4,100,000
Long-term incentive plan, number of shares granted in period							600,000	0
Long-term incentive plan, number of shares remained outstanding							3,400,000
Long-term incentive plan, number of shares represented exercise price returned to 2014 Plan							100,000
Stock-based compensation expense | $							$ 8,300,000	$ 0

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Equity Compensation Plans - Summary of Stock Option Activity (Details) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($) $ / shares shares
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Shares Underlying Options, Outstanding, Balance | shares	10,053,000
Shares Underlying Options, Granted | shares	114,000
Shares Underlying Options, Exercised | shares	(595,000)
Shares Underlying Options, Cancelled | shares	(295,000)
Shares Underlying Options, Outstanding, Balance | shares	9,277,000
Shares Underlying Options, Options vested and exercisable | shares	4,166,000
Shares Underlying Options, Options vested and expected to vest | shares	8,964,000
Weighted-Average Exercise Price, Outstanding, Balance | $ / shares	$ 1.21
Weighted-Average Exercise Price, Granted | $ / shares	12.56
Weighted-Average Exercise Price, Exercised | $ / shares	1.09
Weighted-Average Exercise Price, Cancelled | $ / shares	1.23
Weighted-Average Exercise Price, Outstanding, Balance | $ / shares	1.36
Weighted-Average Exercise Price, Options vested and exercisable | $ / shares	1.20
Weighted-Average Exercise Price, Options vested and expected to vest | $ / shares	$ 1.35
Weighted-Average Remaining Contractual Term, Outstanding, Balance	7 years 9 months 18 days
Weighted-Average Remaining Contractual Term, Options vested and exercisable	7 years 9 months 18 days
Weighted-Average Remaining Contractual Term, Options vested and expected to vest	7 years 9 months 18 days
Aggregate Intrinsic Value, Outstanding, Balance | $	$ 80,790
Aggregate Intrinsic Value, Outstanding, Balance | $	76,488
Aggregate Intrinsic Value, Options vested and exercisable | $	34,842
Aggregate Intrinsic Value, Options vested and expected to vest | $	$ 73,568

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Equity Compensation Plans - Summary of Stock Option Activity by Range of Exercise Price (Details) shares in Thousands	12 Months Ended
	Dec. 31, 2015 $ / shares shares
Schedule Of Stock Options [Line Items]
Awards Outstanding, Number of Awards Outstanding | shares	9,277
Awards Outstanding, Weighted Average Years of Remaining Contractual Life	7 years 9 months 18 days
Awards Outstanding, Weighted Average Exercise Price	$ 1.36
Awards Exercisable, Number of Awards Exercisable | shares	4,166
Awards Exercisable, Weighted Average Exercise Price	$ 1.20
$0.00 - $1.00
Schedule Of Stock Options [Line Items]
Range of Exercise Prices, lower limit	0.00
Range of Exercise Prices, upper limit	$ 1.00
Awards Outstanding, Number of Awards Outstanding | shares	5,859
Awards Outstanding, Weighted Average Years of Remaining Contractual Life	7 years 7 months 6 days
Awards Outstanding, Weighted Average Exercise Price	$ 1.00
Awards Exercisable, Number of Awards Exercisable | shares	2,772
Awards Exercisable, Weighted Average Exercise Price	$ 1.00
$1.01 - $2.00
Schedule Of Stock Options [Line Items]
Range of Exercise Prices, lower limit	1.01
Range of Exercise Prices, upper limit	$ 2.00
Awards Outstanding, Number of Awards Outstanding | shares	2,979
Awards Outstanding, Weighted Average Years of Remaining Contractual Life	8 years 1 month 6 days
Awards Outstanding, Weighted Average Exercise Price	$ 1.30
Awards Exercisable, Number of Awards Exercisable | shares	1,261
Awards Exercisable, Weighted Average Exercise Price	$ 1.30
$2.01 - $10.00
Schedule Of Stock Options [Line Items]
Range of Exercise Prices, lower limit	2.01
Range of Exercise Prices, upper limit	$ 10.00
Awards Outstanding, Number of Awards Outstanding | shares	320
Awards Outstanding, Weighted Average Years of Remaining Contractual Life	8 years 6 months
Awards Outstanding, Weighted Average Exercise Price	$ 4.14
Awards Exercisable, Number of Awards Exercisable | shares	128
Awards Exercisable, Weighted Average Exercise Price	$ 4.14
$10.01 - $16.00
Schedule Of Stock Options [Line Items]
Range of Exercise Prices, lower limit	10.01
Range of Exercise Prices, upper limit	$ 16.00
Awards Outstanding, Number of Awards Outstanding | shares	119
Awards Outstanding, Weighted Average Years of Remaining Contractual Life	9 years 2 months 12 days
Awards Outstanding, Weighted Average Exercise Price	$ 13.01
Awards Exercisable, Number of Awards Exercisable | shares	5
Awards Exercisable, Weighted Average Exercise Price	$ 16.00

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Equity Compensation Plans - Black-Scholes-Merton Option Pricing Model Used to Estimate Fair Value(Details)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Expected term (in years)	6 years 2 months 12 days	6 years 2 months 12 days	6 years 3 months 18 days
Volatility	89.00%	87.10%	80.00%
Risk-free interest rate	1.80%	1.90%	1.70%
Dividend yield	0.00%	0.00%	0.00%

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Equity Compensation Plans - Monte Carlo Simulation Option Pricing Model Used to Estimate Fair Value (Details)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Volatility	89.00%	87.10%	80.00%
Risk-free interest rate	1.80%	1.90%	1.70%
Monte Carlo Simulation Method
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Volatility		80.00%	80.00%
Risk-free interest rate		2.70%	2.60%

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Equity Compensation Plans - Restricted Stock Units Activity (Details)	12 Months Ended
	Dec. 31, 2015 $ / shares shares
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Number of Awards, Outstanding at December 31, 2014 | shares	22,000
Number of Awards, Granted | shares	1,650,000
Number of Awards, Vested | shares	(687,000)
Number of Awards, Forfeited | shares	(55,000)
Number of Awards, Outstanding at December 31, 2015 | shares	930,000
Weighted Average Grant Date Fair Value, Outstanding at December 31, 2014 | $ / shares	$ 16.00
Weighted Average Grant Date Fair Value, Granted | $ / shares	13.01
Weighted Average Grant Date Fair Value, Vested | $ / shares	13.37
Weighted Average Grant Date Fair Value, Forfeited | $ / shares	12.57
Weighted Average Grant Date Fair Value, Outstanding at December 31, 2015 | $ / shares	$ 12.84

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Equity Compensation Plans - Summary of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Schedule Of Stock Options [Line Items]
Stock-based compensation expense	$ 25,604	$ 23,687	$ 294
Cost of Revenue
Schedule Of Stock Options [Line Items]
Stock-based compensation expense	3,068	1,105	6
Sales and Marketing
Schedule Of Stock Options [Line Items]
Stock-based compensation expense	10,737	860	51
General and Administrative
Schedule Of Stock Options [Line Items]
Stock-based compensation expense	11,310	$ 21,722	$ 237
Research and Development
Schedule Of Stock Options [Line Items]
Stock-based compensation expense	$ 489

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Equity Compensation Plans - Summary of Unrecognized Stock-Based Compensation Expense (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($)
Schedule Of Stock Options [Line Items]
Unrecognized Stock-Based Compensation Expense	$ 11,567
Time Based Stock Options
Schedule Of Stock Options [Line Items]
Unrecognized Stock-Based Compensation Expense, stock options	$ 2,788
Weighted- Average Period of Recognition	3 years
Performance Based Stock Options
Schedule Of Stock Options [Line Items]
Unrecognized Stock-Based Compensation Expense, stock options	$ 1,832
Weighted- Average Period of Recognition	1 year 2 months 12 days
RSUs and PSUs
Schedule Of Stock Options [Line Items]
Unrecognized Stock-Based Compensation Expense, other than stock options	$ 6,947
Weighted- Average Period of Recognition	2 years 9 months 18 days

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Income Taxes - Schedule of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Current:
Federal	$ 52,578	$ 1,358	$ 2,492
State	15,275	4,035	569
Total current expense	67,853	5,393	3,061
Deferred:
Federal	(46,364)	(9,636)	(2,900)
State	(11,752)	(2,827)	(38)
Total deferred benefit	(58,116)	(12,463)	(2,938)
Income tax expense (benefit)	$ 9,737	$ (7,070)	$ 123

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Income Taxes - Schedule of Reconciliation on Tax Benefit Computed at Statutory Federal Rate and Tax Expense (Benefit) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Income Tax Expense Benefit Continuing Operations Income Tax Reconciliation [Abstract]
Income tax benefit—computed as 35% of pretax loss	$ (85,235)	$ (60,546)	$ (19,721)
Effect of non-controlling interests and redeemable non-controlling interests	93,221	47,962	21,737
Effect of domestic production activities deduction	(4,699)
Effect of nondeductible expenses	1,232	6,617	1,439
State and local income tax expenses	2,289	616	343
Amortization of prepaid tax asset	6,661	2,199	474
Effect of tax credits	(4,106)	(3,939)	(4,472)
Other	374	21	323
Income tax expense (benefit)	$ 9,737	$ (7,070)	$ 123

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Income Taxes - Schedule of Reconciliation on Tax Benefit Computed at Statutory Federal Rate and Tax Expense (Benefit) (Parenthetical) (Details)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Income Tax Disclosure [Abstract]
Income tax benefit—statutory federal rate	35.00%	35.00%	35.00%

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Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Deferred tax assets:
Stock-based compensation	$ 9,068	$ 3,738
Accruals and reserves	4,582	3,335
Transaction costs	4,216
Other	395	743
Gross deferred tax assets	18,261	7,816
Valuation allowance	(212)	(222)
Net deferred tax assets	18,049	7,594
Deferred tax liabilities:
Investment in solar funds	(220,803)	(106,664)
Depreciation and amortization	(13,004)	(9,493)
Accruals and reserves	(275)
Gross deferred tax liabilities	(234,082)	(116,157)
Net deferred tax liabilities	$ (216,033)	$ (108,563)

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Income Taxes - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Tax Contingency [Line Items]
Useful life of assets	30 years
Prepaid tax asset, net	$ 277,496,000	$ 111,910,000
Unrecognized tax benefits	0	0
Unrecognized tax benefits, income tax penalties and interest accrued	0	0
Internal Revenue Service (IRS)
Income Tax Contingency [Line Items]
Federal business tax credits	4,100,000	3,900,000
Federal
Income Tax Contingency [Line Items]
NOL carryforwards	0	300,000
State
Income Tax Contingency [Line Items]
NOL carryforwards	1,300,000	1,500,000
NOL, Valuation Allowance	$ 200,000	$ 200,000
Minimum | State
Income Tax Contingency [Line Items]
Operating loss carryforwards expiration year	2028
Maximum | State
Income Tax Contingency [Line Items]
Operating loss carryforwards expiration year	2034

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Related Party Transactions - Components of Related Party Transactions (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Related Party Transaction [Line Items]
Cost of revenue—operating leases and incentives		$ 131,213	$ 67,984	$ 19,004
Sales and marketing		48,078	21,869	7,348
General and administrative		92,664	78,899	16,438
Interest expense		12,568	9,323	3,144
Related Party
Related Party Transaction [Line Items]
Cost of revenue—operating leases and incentives		6,054	7,834	1,558
Sales and marketing		2,133	2,312	866
General and administrative		$ 5,241	5,909	2,323
Interest expense	[1]		$ 4,481	$ 2,924

[1] Includes revolving lines of credit—related party. See Note 10—Debt Obligations.

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Related Party Transactions - Additional Information (Details) - USD ($)	1 Months Ended	12 Months Ended
	Apr. 30, 2013	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	May. 31, 2014	May. 31, 2013
Related Party Transaction [Line Items]
Accounts payable—related party		$ 1,905,000	$ 2,132,000
Non-cash contributions for services			200,000	$ 160,000
Accrued equity distributions		1,700,000	1,300,000
Related Party
Related Party Transaction [Line Items]
Amounts due from direct-sales personnel		2,900,000	1,200,000
Provision for advances to direct-sales personnel		700,000	900,000
Vivint Services
Related Party Transaction [Line Items]
Fees incurred in conjunction with agreements entered		8,000,000	2,200,000
Rental cost		0	7,200,000	2,900,000
Accounts payable—related party		1,900,000	2,100,000
313 Incentive Units Plan | Director
Related Party Transaction [Line Items]
Non-cash contributions for services		$ 0	200,000	200,000
Blackstone Advisory Partners L.P.
Related Party Transaction [Line Items]
Agreement termination date		Aug. 31, 2015
Blackstone Advisory Partners L.P. | General and Administrative Expense
Related Party Transaction [Line Items]
Placement fees		$ 4,400,000	4,500,000	$ 1,300,000
Blackstone Advisory Partners L.P. | Minimum
Related Party Transaction [Line Items]
Percentage of placement fee					0.75%	0.00%
Blackstone Advisory Partners L.P. | Maximum
Related Party Transaction [Line Items]
Percentage of placement fee					1.50%	2.00%
Transactions with 313 and Directors
Related Party Transaction [Line Items]
Capital contribution received	$ 1,400,000	$ 0	$ 0

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Commitments and Contingencies - Additional Information (Details)		1 Months Ended		12 Months Ended
	Nov. 05, 2015 USD ($)	Jul. 31, 2015 USD ($) ft²	Nov. 30, 2013	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Oct. 31, 2014 USD ($)
Other Commitments [Line Items]
Non-Cancellable operating leases, agreement terms				The Company has determined that power purchase agreements should be accounted for as operating leases after evaluating and concluding that none of the following capitalized lease classification criteria are met: no transfer of ownership or bargain purchase option exists at the end of the lease, the lease term is not greater than 75% of the useful life or the present value of minimum lease payments does not exceed 90% of the fair value at lease inception
Aggregate operating lease expense				$ 11,000,000	$ 4,300,000	$ 1,200,000
Standby letter of credit outstanding				3,200,000
Forward Contract Term			3 years		3 years
Loss contingency, accrued distribution amount				5,200,000	$ 4,000,000
Purported Class Members
Other Commitments [Line Items]
Accrued legal settlements	$ 1,700,000			1,700,000
Legal Reserve
Other Commitments [Line Items]
Proposed settlement agreement				400,000
Standby Letters of Credit
Other Commitments [Line Items]
Standby letter of credit outstanding				1,800,000			$ 1,800,000
Accounts Payable and Accrued Liabilities				$ 0
Non-Cancellable Operating Leases
Other Commitments [Line Items]
Non-Cancellable operating leases, agreement terms				The warehouse lease agreements range from a term of one to seven years, with the majority having a term of three years. The equipment lease agreements, the longest of which is 12-months, include basic renewal options for an additional set period, continued renting by the month, or return of the unit.
Build To Suit Lease Arrangements
Other Commitments [Line Items]
Build-to-suit lease asset				$ 25,600,000
Capitalized interest				300,000
Build-to-suit lease liability				25,200,000
Building costs paid				$ 100,000
Warehouse Lease Agreement | Non-Cancellable Operating Leases
Other Commitments [Line Items]
Non-Cancellable operating leases, lease term				3 years
Warehouse Lease Agreement | Non-Cancellable Operating Leases | Minimum | Solmetric
Other Commitments [Line Items]
Non-Cancellable operating leases, lease term				1 year
Warehouse Lease Agreement | Non-Cancellable Operating Leases | Maximum
Other Commitments [Line Items]
Non-Cancellable operating leases, lease term				7 years
Equipment Lease Agreement | Non-Cancellable Operating Leases
Other Commitments [Line Items]
Non-Cancellable operating leases, lease term				12 months
New Corporate Headquarters Building
Other Commitments [Line Items]
Non-Cancellable operating leases, lease term		5 years		12 years
Non-Cancellable operating leases, agreement terms				These amendments included an extension of the lease term to 12 years from five years with the option to extend for two additional periods of five years, an increase in the leased premises by approximately 32,000 square feet and a change in the base rent that will commence at approximately $0.3 million per month and increase over the term of the lease, as amended, at a rate of 2.5% annually.
Non-Cancellable operating leases, lease renewal term		5 years
Increase of lease office premises | ft²		32,000
Aggregate monthly rental		$ 300,000
Lease rental expenses increase rate		2.50%
Non-Cancellable operating leases, additional minimum lease payment over the term		$ 53,100,000
Second Office and Studio Building
Other Commitments [Line Items]
Non-Cancellable operating leases, lease term		12 years
Non-Cancellable operating leases, agreement terms				Both leases have a term of 12 years with the option to extend for two additional periods of five years. The aggregate monthly rent payments under both leases will commence at approximately $0.4 million and increase at a rate of 2.5% annually.
Non-Cancellable operating leases, lease renewal term		5 years
Increase of lease office premises | ft²		160,000
Aggregate monthly rental		$ 400,000
Lease rental expenses increase rate		2.50%
Non-Cancellable operating leases, additional minimum lease payment over the term		$ 57,500,000

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Commitments and Contingencies - Schedule of Future Minimum Lease Payments under Non-Cancelable Operating Leases (Details) $ in Thousands	Dec. 31, 2015 USD ($)
Commitments And Contingencies Disclosure [Abstract]
2016	$ 14,223
2017	12,577
2018	10,552
2019	9,674
2020	9,295
Thereafter	81,216
Total minimum lease payments	$ 137,537

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Basic and Diluted Net Income (Loss) Per Share - Computation of Basic and Diluted Net Loss per Share to Common Stockholders (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Numerator:
Net income available (loss attributable) to common stockholders	$ 13,080	$ (28,883)	$ 5,638
Denominator:
Shares used in computing net income available (loss attributable) per share to common stockholders, basic	106,088	83,446	75,000
Weighted-average effect of potentially dilutive shares to purchase common stock	3,770		223
Shares used in computing net income available (loss attributable) per share to common stockholders, diluted	109,858	83,446	75,223
Net income available (loss attributable) per share to common stockholders:
Basic	$ 0.12	$ (0.35)	$ 0.08
Diluted	$ 0.12	$ (0.35)	$ 0.07

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Basic and Diluted Net Income (Loss) Per Share - Additional Information (Details) - shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2013	Dec. 31, 2014
Schedule Of Earnings Per Share Basic And Diluted [Line Items]
Number of shares outstanding	9,277,000		10,053,000
Performance Shares
Schedule Of Earnings Per Share Basic And Diluted [Line Items]
Number of shares outstanding	3,300,000	4,400,000
Performance-based stock awards not included in the computation of diluted net income per share	3,300,000	4,400,000

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Segment Information - Additional Information (Details)		3 Months Ended	12 Months Ended
		Mar. 31, 2015 Segment	Dec. 31, 2015 USD ($) Segment	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Segment Reporting Information [Line Items]
Number of reporting segments | Segment		1	2
Total assets	[1]		$ 1,609,070,000	$ 1,064,324,000
Total revenue			$ 64,182,000	$ 25,258,000	$ 6,170,000
C&I
Segment Reporting Information [Line Items]
Number of projects initiated | Segment			0
Total assets			$ 0
Total revenue			$ 0

[1] The Company’s consolidated assets as of December 31, 2015 and 2014 include $1,005.8 million and $540.1 million consisting of assets of variable interest entities, or VIEs, that can only be used to settle obligations of the VIEs. These assets include solar energy systems, net, of $990.6 million and $525.9 million as of December 31, 2015 and 2014; cash and cash equivalents of $12.0 million and $12.6 million as of December 31, 2015 and 2014; accounts receivable, net, of $3.1 million and $1.5 million as of December 31, 2015 and 2014; and prepaid expenses and other current assets of $0.1 million and zero as of December 31, 2015 and 2014. The Company’s consolidated liabilities as of December 31, 2015 and 2014 included $66.4 million and $11.4 million of liabilities of VIEs whose creditors have no recourse to the Company. These liabilities include distributions payable to non-controlling interests and redeemable non-controlling interests of $11.3 million and $6.8 million as of December 31, 2015 and 2014; deferred revenue of $47.9 million and $4.6 million as of December 31, 2015 and 2014; accrued and other current liabilities of $3.9 million and zero as of December 31, 2015 and 2014; and other non-current liabilities of $3.3 million and zero as of December 31, 2015 and 2014. For further information see Note 11—Investment Funds.

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Segment Information - Operating Results By Reporting Segment (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Revenue:
Operating leases and incentives	$ 61,150,000	$ 21,688,000	$ 5,864,000
Solar energy system and product sales	3,032,000	3,570,000	306,000
Total revenue	64,182,000	25,258,000	6,170,000
Operating expenses:
Cost of revenue—operating leases and incentives	131,213,000	67,984,000	19,004,000
Cost of revenue—solar energy system and product sales	1,762,000	1,997,000	123,000
Sales and marketing	48,078,000	21,869,000	7,348,000
Research and development	3,901,000	1,892,000
General and administrative	92,664,000	78,899,000	16,438,000
Amortization of intangible assets	13,172,000	14,911,000	14,595,000
Impairment of intangible assets	4,506,000
Total operating expenses	295,296,000	187,552,000	57,508,000
Loss from operations	(231,114,000)	$ (162,294,000)	$ (51,338,000)
Residential
Revenue:
Operating leases and incentives	61,150,000
Solar energy system and product sales	3,032,000
Total revenue	64,182,000
Operating expenses:
Cost of revenue—operating leases and incentives	131,213,000
Cost of revenue—solar energy system and product sales	1,762,000
Sales and marketing	47,408,000
Research and development	3,901,000
General and administrative	90,438,000
Amortization of intangible assets	13,172,000
Impairment of intangible assets	4,506,000
Total operating expenses	292,400,000
Loss from operations	(228,218,000)
C&I
Revenue:
Total revenue	0
Operating expenses:
Sales and marketing	670,000
General and administrative	2,226,000
Total operating expenses	2,896,000
Loss from operations	$ (2,896,000)

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Subsequent Events - Additional Information (Details)		12 Months Ended
	Mar. 14, 2016 USD ($) Installment	Dec. 31, 2015
Subsequent Event | Term Loan Facility
Subsequent Event [Line Items]
Aggregate borrowing capacity	$ 200,000,000
Proceeds from revolving line of credit	$ 75,000,000
Terms of receiving initial proceeds	one-third at closing and the remainder within 30 days of the closing date.
Remaining borrowing capacity	$ 125,000,000
Number of Installments | Installment	3
Percentage of penalty	3.00%
Subsequent Event | Term Loan Facility | Minimum
Subsequent Event [Line Items]
Proceeds from revolving line of credit	$ 25,000,000
Debt Instrument, Basis Spread on Variable Rate	5.50%
Subsequent Event | Term Loan Facility | Maximum
Subsequent Event [Line Items]
Debt Instrument, Basis Spread on Variable Rate	8.00%
Sun Edison Inc
Subsequent Event [Line Items]
Merger agreement amendment date		Dec. 09, 2015
Merger Agreement termination date		Mar. 07, 2016