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Home My WebLink About20140255.tiff RECEIVED IN THE UNITED STATES BANKRUPTCY COURTIAN 2 4 2014 FOR THE DISTRICT OF DELAWARE =iOCOUN;'r In re: ) Chapter 7 ABOUND SOLAR MANUFACTURING, LLC, ) Case No. 12-11974 (PJW) ABOUND SOLAR TECHNOLOGY HOLDINGS, LLC, ABOUND SOLAR, INC., ) (Jointly Administered) ) Objection Deadline: January 31,2013 at 4:00 p.m. Debtors. ) Hearing Date: February 6,2014 at 2:00 p.m. NOTICE OF MOTION TO APPROVE A SETTLEMENT BETWEEN THE TRUSTEE, CHUBB CUSTOM INSURANCE COMPANY, AND FEDERAL INSURANCE COMPANY PLEASE TAKE NOTICE that on January 16, 2014, Jeoffrey L. Burtch, as Chapter 7 Trustee of the debtors (the "Debtors") in the above-captioned chapter 7 cases, filed the Motion (the "Settlement Motion") Pursuant to Sections 105 and 363 of the Bankruptcy Code and Bankruptcy Rules 6004 and 9019 for an Order (A) Authorizing the Trustee to Enter into a Settlement, Release and Buyback Agreement with Chubb Custom Insurance Company ("Chubb Custom") and Federal Insurance Company ("Federal"), (B) Authorizing the Sale of Interest in Chubb Custom's Insurance Policy and the Federal Insurance Policies, and (C) Permanently Barring All Claims against Chubb Custom under the Chubb Custom Policy and against Federal Insurance Company under the Federal Insurance Policies and Channeling Any Such Claims Exclusively to the Proceeds of the Sale of Such Insurance Policies. PLEASE TAKE FURTHER NOTICE that pursuant to the Settlement Motion, the Trustee seeks entry of an order that will, among other things: (a) authorize and approve a settlement and buyback of an Environmental Site Liability Insurance Policy No. 37312497 issued by Chubb Custom to Debtors on May 9, 2011 for a policy period of March 31, 2011 to March 31, 2014, which policy is the renewal of a prior policy effective for a policy period of March 31, 2008 to March 31, 2011 ("Chubb Custom Policy"); (b) authorize and approve a settlement and buyback of Federal Insurance Company Policy Nos. 3586-79-74 NBO and 7986- 01-49 (the "Federal Insurance Policies"); (c) hold that all claims and interests that were, could have been, or may in the future be asserted against the Chubb Custom Policy shall be channeled exclusively to the proceeds of the sale of the Chubb Custom Policy, which shall be distributed solely in accordance with the order of the Bankruptcy Court; (d) hold that all claims and interests that were, could have been, or may in the future be asserted against the Federal Insurance Policies shall be channeled exclusively to the proceeds of the sale of the Federal Insurance Policies, which shall be distributed solely in accordance with the order of the Bankruptcy Court; and (e) ENJOIN AND FOREVER BAR AND ESTOP ALL CLAIMS AND INTERESTS THAT WERE, COULD HAVE BEEN, OR MAY IN THE FUTURE BE ASSERTED AGAINST THE CHUBB CUSTOM POLICY OR AGAINST CHUBB CUSTOM WITH RESPECT TO THE CHUBB CUSTOM POLICY OR AGAINST THE FEDERAL INSURANCE POLICIES OR AGAINST FEDERAL WITH RESPECT TO THE FEDERAL INSURANCE POLICIES. 2014-0255 AfrO T C,6 nawftAL th ors i, � FirtLe©Q PLEASE TAKE FURTHER NOTICE that a hearing to consider the Settlement Motion is scheduled for February 6, 2014 at 2:00 p.m. (edt) before the Hon. Peter J. Walsh, United States Bankruptcy Judge,at the United States Bankruptcy Court for the District of Delaware, 824 Market St., 6th Floor, Courtroom 2, Wilmington, DE 19801. PLEASE TAKE FURTHER NOTICE that objections, if any, to the Settlement Motion must be filed with the Bankruptcy Court at the United States Bankruptcy Court for the District of Delaware, 824 Market Street, Wilmington, DE 19801 so that such objections must be filed on or before January 31, 2014 at 4:00 p.m. (edt) (the "Objection Deadline"). A copy of all such objections much be served upon the Trustee's counsel at the following addressed: Adam Singer, Esquire, Cooch & Taylor, P.A., 1000 West St., 10th Floor, The Brandywine Bldg., Wilmington, DE 19801 so that it is received prior to the Objection Deadline. IF YOU FAIL TO RESPOND IN ACCORDANCE WITH THIS NOTICE, THE COURT MAY GRANT THE RELIEF DEMANDED BY THE MOTION WITHOUT FURTHER NOTICE OR HEARING. Dated: January 16, 2014 COOCH AND TAYLOR, P.A. j, tn¢er Adam Singer(No. 2472) 1000 West Street, 10th Floor The Brandywine Building P.O. Box 1680 Wilmington, DE 19899 Telephone: (302)984-3800 Facsimile: (302)984-3939 Email: asinger@coochtaylor.com Counsel to Jeoffrey L. Burtch, Chapter 7 Trustee 2 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: : Chapter 7 Abound Solar Manufacturing, LLC, : Case No. 12-11974 (PJW) Abound Solar Technology Holdings, LLC, : (Jointly Administered) Abound Solar, Inc., : Objection Deadline:January 31,2014 at 4:00 p.m.(EDT) Debtors. : Hearing Date: February 6,2014 at 2:00 p.m.(EDT) MOTION OF CHAPTER 7 TRUSTEE TO APPROVE(A) A SETTLEMENT,RELEASE AND BUYBACK AGREEMENT WITH CHUBB CUSTOM INSURANCE COMPANY; (B)A SETTLEMENT,RELEASE AND BUYBACK AGREEMENT WITH FEDERAL INSURANCE COMPANY; (C) THE SALE OF INTERESTS IN CERTAIN INSURANCE POLICIES;AND (D) THE PERMANENT BARRING OF ALL CLAIMS AGAINST CHUBB CUSTOM AND FEDERAL INSURANCE COMPANY UNDER SUCH INSURANCE POLICIES AND CHANNELING ANY SUCH CLAIMS EXCLUSIVELY TO THE PROCEEDS OF THE SALE OF SUCH INSURANCE POLICIES Jeoffrey L. Burtch, Chapter 7 Trustee ("Trustee") in the bankruptcy cases of the above- captioned debtors (the "Debtors"), moves (the"Motion") for entry of an order (a) authorizing the Trustee to enter into a Settlement, Release and Buyback Agreement (the "Agreement") with Chubb Custom Insurance Company ("Chubb Custom") and Federal Insurance Company ("Federal") for certain insurance policies; (b) authorizing the sale of Chubb Custom's insurance policy related thereto (the "Policy"); and (c) permanently barring all claims against Chubb Custom under such insurance policy, and channeling any such claims exclusively to the proceeds of the sale of such insurance policy. In support of the Motion, the Trustee respectfully represent as follows: PRELIMINARY STATEMENT 1. The settlement embodied in the Agreement, a copy of which is attached hereto as Exhibit "A," represents an important and immediate step towards the Trustee's realization of substantial additional cash for one or more of the Chapter 7 estates (the "Estates"). Pursuant to the terms of the Agreement, Chubb Custom, for itself and Federal, will pay $2.2 million directly to the chapter 7 estate of Abound Solar, Inc. in full and final satisfaction of all disputes arising under Environmental Site Liability Insurance Policy No. 37312497 (the "Policy") and Federal Insurance Company Policy No. 3586-79-74 NBO and Federal Insurance Company Policy No. 7986-01-49(the "Prior Federal Insurance Policies"). 2. This substantial dollar amount will provide an immediate source of cash to address remediation of contamination at Insured Sites (as defined below) that: (1) has already transpired, (2) the parties in the future consensually agree should occur, or (3) this Court may ultimately rule should occur. The Agreement further provides this substantial dollar amount without costly, complex, protracted and uncertain coverage litigation with Chubb Custom and Federal that ultimately may not yield any coverage, or any net benefit to the Estates or their respective creditors. For these reasons, and as set forth below, the settlement represented by the Agreement is fair and equitable, and in the best interests of the Estates and creditors. Accordingly,the Motion should be granted. BACKGROUND 3. On July 2, 2012 (the "Petition Date"), each of the Debtors filed with this Court a voluntary petition for relief under Chapter 7 of the Bankruptcy Code. On July 9, 2012, this Court entered an order directing joint administration of the chapter 7 cases. [D.I. 8]. 4. On the Petition Date, Jeoffrey L. Burtch was appointed interim Chapter 7 trustee of the Estates,and he serves in this capacity pursuant to 11 U.S.C. Section 702(d). 5. The Policy was issued by Chubb Custom to Abound Solar entities on May 9, 2011, effective March 31, 2011, for a policy period of March 31, 2011 to March 31, 2014. The Policy is the renewal of a prior policy effective for a policy period of March 31, 2008 to March 31,2011. 2 6. The Policy has coverage limits in the amount of $2 million "Each Pollution Incident Loss Limit" and $6 million in the aggregate, subject to a $25,000 "Each Pollution Incident"deductible. 7. The Policy defines seven Insured Sites: 4557 Denrose Court, Unit B, Fort Collins, CO 80522(the "Denrose Site") 95861-25 Frontage Road, Longmont, CO 80504 3755 Precision Drive, Loveland, CO 80538 2695 Rocky Mountain Avenue, Suite 300, Loveland, CO 80538 2950 Colorful Avenue, Longmont, CO 80504 5880 Indiana 28, Tipton, IN 46072 11551 East 45th Avenue, Denver, CO 80239 8. The Denrose Site was leased by the Debtor Abound Solar, Inc. (sometimes, "ASI). All of the equipment or inventory located at this leased location was property of ASI. With respect to the Denrose Site, the Trustee, with the consensual use of the cash collateral of the United States Department of Energy ("DOE"), in January 2013, addressed certain hazardous waste matters at an estimated cost of $20,601.36. Thereafter, pursuant to a Court approved settlement agreement, D.I. 234, the Trustee expended an additional and approximate $173,518.00 of DOE cash collateral to address hazardous decontamination and disposal of contaminated materials at the Denrose Site. The Trustee has asserted a claim under the Policy for"remediation costs" arising from alleged "pollution incidents" at the Denrose Site. 9. The Prior Federal Insurance Policies include (i) Federal Insurance Company Policy No. 3586-79-74 NBO, which provided liability insurance to AVA Solar, Inc., ASI's predecessor in interest, for the policy period from March 19, 2007 to March 19, 2008 with a per- 3 occurrence limit of$1 million and an aggregate limit of$2 million, and (ii) Federal Insurance Company Policy No. 7986-01-49, which provided commercial excess and umbrella insurance to AVA Solar, Inc. for the policy period from August 8, 2007 to March 19, 2008 with per- occurrence and aggregate limits of $5 million, both of which contain "Pollution" exclusions. The Trustee has been informed by Chubb that no claims were made or asserted under or against the Prior Federal Insurance Policies. 10. On December 14, 2012, the Trustee's counsel placed Chubb Custom on notice of alleged "pollution incidents" and "potential claims" at the premises located at 9586 I-25 Frontage Road in Longmont, Colorado (the "9586 Property"). The Debtor, Abound Solar Manufacturing (sometimes, "ASM"), was the tenant under the Lease. All of the equipment or inventory located at the 9586 Property was property of ASI. Case 12-11972-PJW[D.I. 10]. 11. On February 19, 2013, Chubb Custom partially disclaimed coverage with respect to the 9586 Property under the Policy, and otherwise reserved Chubb Custom's rights. By way of background, the claim made by the Trustee to Chubb Custom relates to alleged cadmium contamination and related hazardous conditions at the 9586 Property. I2. 9586 alleged that ASM's manufacturing operations at the 9586 Property resulted in conditions that will require investigation, clean-up and remediation. 9586 has alleged that the remediation will be in the range of millions of dollars. See generally, D.I. 402. 13. On January 14, 2013, 9586 filed claims against each of the Estates for property conversion, breach of lease and an "environmental claim" arising out of the use of the 9586 Property and the alleged resulting condition of the 9586 Property. The claims allege contamination arising out of pre-petition and post-petition activities at the 9586 Property. 4 14. On July 26, 2013, 9586 also commenced an Adversary Proceeding against Chubb Custom and Debtor Abound Solar Manufacturing. 9586 filed an amended Complaint on August 30, 2013 (the "Adversary Proceeding"). The Adversary Proceeding seeks, inter alia, a determination of the parties' rights and obligations under the Policy as it relates to 9586's claims of cadmium contamination and related conditions at the Property. Chubb Custom has filed a motion to dismiss the Adversary Proceeding. 15. There are additional pending contested matters among 9586, the Trustee and the United States Department of Energy ("DOE"), specifically, 9586's motion for relief from the cash collateral order and the Trustee's motion to abandon property located at the Property. 9586 has additionally threatened to commence additional proceedings against the DOE and the Trustee for the Estates in these bankruptcy cases. 16. Other persons may in the future make claims against the Estates or Abound Solar, Inc., Abound Solar Technology Holdings LLC, and Abound Solar Manufacturing, LLC (collectively the"Debtors") for the costs of environmental response, remediation and/or clean-up at"insured sites." 17. Certain governmental and public entities have made and may in the future make claims against the Estates or the Debtors (and/or Chubb Custom, Federal, or others) for the costs of environmental response, remediation and/or clean-up at"insured sites." INSURANCE COVERAGE DISPUTE CONCERNING THE POLICY 18. Chubb Custom has investigated, and continues to investigate,the Trustee's claims for reimbursement and/or payment of "remediation costs" incurred with respect to the above- referenced "insured sites"pursuant to a reservation of rights. 5 19. The Trustee has tendered to Chubb Custom for defense under the Policy the following matters: a. Adversary Proceeding No. 13-51320 (PJW) (the "Adversary Proceeding") commenced by 9586 against Chubb Custom and Abound Solar Manufacturing; b. A threatened action by 9586 asserted by 9586's property manager in a July 18, 2013 letter(the "Threatened RCRA Suit"); and c. Three proofs of claim filed on January 14, 2013 by 9586 against Abound Solar, Inc. (Case No. 12-11972),Abound Solar Technology Holdings, LLC(Case No. 12-11973) and Abound Solar Manufacturing, LLC (Case No. 12-11974) (collectively the `Bankruptcy Claims"). 20. On September 16, 2013, Chubb Custom responded by letter to the Trustee. A copy of the letter is attached to this Motion as Exhibit B (the "ROR Letter"). The ROR Letter denied coverage for the defense of the Adversary Proceeding, but agreed to provide a defense with respect to the environmental aspects of the Bankruptcy Claims subject to a full reservation of rights. 21. The disputes between the Trustee and Chubb Custom, as partially stated in the ROR Letter, involve numerous points of significant disagreement regarding the coverage afforded by the Chubb Custom Policy (the "Coverage Disputes"). The issues concern, among other things: (a) whether the some or all of the alleged contamination at the 9586 Property and the other "insured sites" constitutes a "Pollution Incident," in whole or in part, that would be subject to coverage under the Policy; (b) the applicability of certain exclusions of the Policy, including the Damage to Owned Property Exclusion; (c)the number of"Each Pollution Incident Loss Limits" potentially applicable to the claims and potential claims; (d) whether the 6 Trustee/Debtors have complied with all terms and conditions of the Policy, including providing timely notice. 22. Each of the Coverage Disputes is a bona fide, genuine and substantial dispute. SETTLEMENT AGREEMENT AND NEGOTIATIONS 23. In an effort to avoid the material risk, expense and burden of further and additional disputes and future litigation with respect to the Coverage Disputes, the Trustee and Chubb Custom engaged in extensive, good faith negotiations in an effort to settle, resolve and terminate any and all disputes and obligations arising from, related to, or in connection with the Policy, including a two day mediation in December 2013 before District Judge James Roberts (Ret.). These negotiations continued after the conclusion of the mediation, and ultimately resulted in the parties' agreement to the settlement terms reflected in the Agreement. Set forth below is a summary of the salient terms of the Agreement:t • Effective Date of the Agreement. The Agreement becomes effective on the latest date on which each of the following conditions have occurred: (a) all Parties2 have executed the Agreement; (b) the Bankruptcy Court has entered the Approval Order; (c)the Approval Order has become a Final Order; and(d)the Trustee has provided to Chubb Custom at least one business day written notice that the Approval Order has become a Final Order. • Buyback of the Chubb Custom Policy. Effective upon the Trustee's receipt of the Payment, and without need for further action, the Trustee shall be deemed to have sold, conveyed, assigned, transferred and delivered to Chubb Custom, and Chubb Custom shall be deemed to have purchased from the Trustee, all rights, title and interests in and under the Chubb Custom Policy, free and clear of all encumbrances, claims and/or interests of any Person of any kind of nature whatsoever, to the fullest extent permitted under Section 363(1)of the Bankruptcy Code. The summary is provided solely for convenience. To the extent that there is any inconsistency between the summary and Agreement,the terms of the Agreement shall control. 2 Capitalized terms used in this summary and not defined in the Motion shall have the meanings ascribed to such terms in the Agreement. 7 • Buyback of the Prior Federal Insurance Policies. Effective upon the Trustee's receipt of the Payment, and without need for further action, the Trustee shall be deemed to have sold, conveyed, assigned, transferred and delivered to Federal, and Federal shall be deemed to have purchased from the Trustee, all rights, title and interests in and under the Prior Federal Insurance Policies, free and clear of all encumbrances, claims and/or interests of any Person of any kind of nature whatsoever, to the fullest extent permitted under Section 363(O of the Bankruptcy Code. • Channeling Injunction. In furtherance of the sale of the Chubb Custom Policy and the Prior Federal Insurance Policies, the Approval Order shall provide that all claims and interests that were, could have been, or may in the future be asserted against the Chubb Custom Policy or the Prior Federal Insurance Policies shall survive, and be channeled to the proceeds of such sale as may be held by the Trustee, which shall be distributed solely in accordance with the further order of the Bankruptcy Court. All Persons shall be forever enjoined, barred, and estopped from asserting claims against the Chubb Custom Policy or Chubb Custom with respect to the Chubb Custom Policy. Further, all Persons shall be forever enjoined, barred, and estopped from asserting claims against the Prior Federal Insurance Policies or Federal with respect to the Prior Federal Insurance Policies • Purchase Amount. Chubb Custom shall pay to the Trustee, as the purchase price to buy the Chubb Custom Policy and the Prior Federal Insurance Policies free and clear of any and all claims and interests, and in full and total satisfaction of any and all obligations, whether now existing or hereafter arising, arising from, related to, in connection with the Released Subject Matter, and as full, complete and final exhaustion of any and all coverage under or related to the Chubb Custom Policy or Prior Federal Insurance Policies, the aggregate sum of two million and two hundred dollars (USD $2,200,000 dollars) (the"Purchase Amount") within fourteen(14) days of the Effective Date and pursuant to section 3.2 of the Agreement. Chubb Custom shall also remit payment for all of the Trustee's actual, out of pocket expenses incurred in providing notice of this Motion. • Releases. In consideration of the promises set forth in the Agreement, the Trustee, and Chubb Custom and Federal fully release, acquit and forever discharge each other from any and all claims arising from, related to, or in connection with the Released Subject Matter. JURISDICTION 24. This Court has jurisdiction to consider this matter pursuant to 28 U.S.C. § 157 and § 1334. This matter is a core proceeding pursuant to 28 U.S.C. § 157(b). Venue is proper before this Court pursuant to 28 U.S.C. § 1408 and § 1409. 8 RELIEF REQUESTED 25. By this Motion and for the reasons set forth below, pursuant to Sections 105(a) and 363(b) and (f) of the Bankruptcy Code and Bankruptcy Rules 6004 and 9019, the Trustee respectfully requests entry of an order, substantially in the form attached: (a) authorizing the Trustee to enter into the Agreement, (b) authorizing the sale of the Chubb Custom Policy, as provided in the Agreement; and (c) permanently barring all claims against Chubb Custom under the Policy, and channeling any such claims exclusively to the proceeds of the sale of the Chubb Custom Policy. BASIS FOR RELIEF REQUESTED A. The Court Should Authorize the Trustee to Enter into the Agreement Pursuant to Bankru_ptcv Rule 9019 26. Bankruptcy Rule 9019(a) provides, in relevant part, that "[o]n motion by the trustee and after notice and a hearing, the court may approve a compromise or settlement." Fed. R. Bankr. P. 9019(a). Settlements and compromises "are favored in bankruptcy" because they "minimize litigation and expedite the administration of a bankruptcy estate." Aetna Cas. & Surety Co. v. Jasmine, Ltd. (In re Jasmine, Ltd.), 258 B.R. 119, 123 (D.N.J. 2000) (quotations omitted). 27. Pursuant to Rule 9019, bankruptcy courts consider the overall wisdom of compromising and settling disputes arising in bankruptcy cases. In re Marvel Entertainment Group, Inc., 222 B.R. 243, 249 (D. Del. 1998) (citing Protective Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson 390 U.S. 414 (1968)). In determining whether to approve a settlement pursuant to Bankruptcy Rule 9019, the court should determine whether"the compromise is fair, reasonable, and in the interests of the Estates." In re Marvel, 222 B.R. at 249 (quoting In re Louise's, Inc., 211 B.R. 798, 801 (D. Del. 1997)). See also Key3Media Group, 9 Inc. v. Puliver.com Inc. (In re Kev3Media Group, Inc.), 336 B.R. 87, 92 (Bankr. D. Del. 2005). In reaching this determination, the court should balance the value of the claim that is being settled against the value to the estates of the approval of the settlement. In re Martin, 91 F.3d 389, 393 (3d Cir. 1996). In striking this balance, the court should consider the following factors: "(I) the probability of success in litigation; (2) the likely difficulties in collection; (3) the complexity of the litigation involved, and the expense, inconvenience and delay necessarily attending it; and(4) the paramount interest of the creditors." Id. Settlements should be approved unless they fall below the lowest point of the range of reasonableness. In re W.T. Grant Co.,699 F.2d 599,608 (2d Cir.), cert. denied sub nom. Cosoff v. Rodman,464 U.S. 822(1983). 28. As described below, application of the Martin factors demonstrates that the Agreement is fair, equitable and in the best interests of the Estates and their respective creditors, and all parties in interest. Accordingly, this Court should authorize the Trustee to enter into the Agreement. i. Litigation of the Coverage Dispute Would be Complex, Expensive, and Pose Significant Risks to the Estates and Creditors 29. Continuing the Coverage Disputes with Chubb Custom would entail protracted and extensive litigation and would jeopardize any potential recovery from the Chubb Custom Policy. The Coverage Disputes involve a number of complex and highly-contested issues, and requires interpretation of several insurance policy terms, conditions and exclusions. The Trustee's pursuit of litigation regarding the Coverage Disputes would significantly increase litigation costs, and thus decreasing the net benefit to the Estates. Furthermore, if such litigation were pursued, the outcome would be uncertain. Such possible outcomes include that the Court rules there is no coverage under the Policy, or that there is coverage and damages only at an amount less than or equal to the Purchase Amount. 10 30. A litigated resolution of the Coverage Disputes would almost certainly come at a high price for the Estates. However, a negotiated resolution of the Coverage Disputes, as represented by the Agreement, avoids the considerable costs, delay and risks inherent in any complex litigation,provides valuable certainty with respect to an important asset of the chapter 7 estates. ii. The Agreement Benefits the Chapter 7 Estates and Serves the Paramount Interests of Creditors 31. The Agreement confers significant, quantifiable benefits to the estates. Pursuant to the Agreement, Chubb Custom will pay $2.2 million directly to the chapter 7 estate of ASI. The Agreement also provides for a comprehensive resolution of the Coverage Dispute, relieving the Trustee of the need to engage in costly and time-consuming litigation to determine Chubb Custom's coverage obligations for claims arising out of the alleged cadmium contamination at the Property. 32. The Agreement will benefit—not prejudice —the creditors of the estates. Absent the Trustee's entry into the Agreement, the Trustee is in danger of losing a valuable asset to address the alleged liabilities asserted against the Estates. Pursuant to the Agreement, however, the Trustee will preserve and enhance the value of the ASI Estate by liquidating a significant contingent asset, while ensuring that the estates do not incur further expense in connection with the Coverage Disputes. 33. The Trustee has determined that the tangible benefits provided by the Agreement outweighs the uncertain outcome and speculative value of a protracted complex litigation of the Coverage Disputes. Accordingly, the Trustee submits that the Agreement is fair and equitable, and serves the best interests of the Estates and creditors. For these reasons, and those that may 11 be advanced at any hearing on the Motion, Trustee respectfully requests that the Court authorize the Trustee's entry into the Agreement. A. The Court Should Authorize the Trustee to Sell the Chubb Custom Policy Free and Clear of All Liens, Claims and Encumbrances Pursuant to Section 363 of the Bankruptcy Code. 34. Section 363 of the Bankruptcy Code provides that a trustee, "after notice and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of the estate." 11 U.S.C. § 363(b)(1). Section 105(a) of the Bankruptcy Code provides, in pertinent part, that "[t]he court may issue any order, process or judgment that is necessary or appropriate to carry out the provisions of [the Bankruptcy Code]." 11 U.S.C. § 105(a). As more fully set forth below, ample justification exists for approval of the proposed sale of the Chubb Custom Policy in accordance with the Agreement. 35. The Agreement is structured as a buyback of all rights, title and interests in and under the Chubb Custom Policy and the Prior Federal Insurance Policies in order to provide Chubb Custom and Federal with finality regarding the Coverage Disputes, and to effectuate a complete release of Chubb Custom from any further obligations under the Policy and from any further involvement in the disputes between the Trustee for the Estates, and parties asserting environmental claims against the Estates. In this regard, pursuant to the Agreement, the Trustee agrees to seek entry of an order pursuant to Section 363 of the Bankruptcy Code authorizing the sale of all rights, title and interests in and under the Chubb Custom Policy free and clear of all liens, claims and encumbrances. 36. Courts have recognized that insurance policies are property of the estate, which may be sold pursuant to Section 363 of the Bankruptcy Code. See e.g., MacArthur Co. v. Johns- Manville Corp. (In re Johns-Manville Corp.), 837 F.2d 89, 92-93 (2d Cir. 1988) (noting that 12 "[n]umerous courts have determined that a debtor's insurance policies are property of the estate," and finding that a bankruptcy court was authorized to approve settlement of insurance coverage claims). 37. A trustee's decision to sell assets outside the ordinary course of business rests upon the sound business judgment of the trustee. See e.g., In re Martin, 91 F.3d at 395; In re Scimeca Found., Inc., 397 B.R. 753, 771 (Bankr. E.D. Pa. 2013) 38. Courts typically consider the following factors in determining whether to approve a sale under Section 363: (i) whether a sound business justification exists for the sale, (ii) whether adequate and reasonable notice of the sale was given to interested parties, (iii) whether the sale will produce a fair and reasonable price for the property, and (iv) whether the parties have acted in good faith. See In re Delaware & Hudson Ry., 124 B.R. at 176; In re Phoenix Steel Corp., 82 B.R. 334, 335-336 (Bankr. D. Del. 1987); In re Abbotts Dairies of Pennsylvanian Inc., 788 F.2d 143, 149-150(3d Cir. 1986). 39. Applying this business judgment standard, courts have approved insurance policy buybacks pursuant to Sections 363(6) and (f) of the Bankruptcy Code. See e.g., In re Johns- Manville Corp., 837 F.2d at 93 (affirming court's "authority to approve the settlements and to channel claims arising under the policies to the proceeds of the settlement"); In re Dow Corning Corp., 198 B.R. 214, 222 n.7 (Bankr. E.D. Mich. 1996) (the appropriate test for approval of insurance settlements under either Bankruptcy Rule 9019 or Section 363(b) of the Bankruptcy Code is the business judgment standard). 40. Furthermore, once the trustee "articulates a reasonable basis for its business decisions (as distinct from a decision made arbitrarily or capriciously), courts will generally not entertain objections to the debtor's conduct." Committee of Asbestos-Related Litigants and/or 13 Creditors v. Johns-Manville Corp. 60 B.R. 612, 616 (Bankr. S.D.N.Y. 1986). There is a presumption that "in making a business decision the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company." In re Integrated Res., Inc., 147 B.R. 650, 656 (Bankr. S.D.N.Y. 1992) (quoting Smith v. Van Gorkom, 488 A.2d 858, 872 (Del. 1985)). Thus, if a trustee's actions satisfy the business judgment rule, then the transaction in question should be approved under Section 363(6)(1). 41. Approval of the proposed sale of the Policy and the Prior Federal Insurance Policies free and clear of all liens, claims and encumbrances is a fundamental premise of the Agreement. The Trustee understands that Chubb Custom and Federal are unwilling to settle the Coverage Dispute and pay the Purchase Amount unless Chubb Custom and Federal receive the full protection of the releases and related protections set forth in the Agreement. Accordingly, the Trustee submits that the sale of the Policy and the Prior Federal Insurance Policies should be free and clear of any and all liens, claims, and encumbrances in accordance with Section 363(f) of the Bankruptcy Code. 42. Pursuant to Section 363(f) of the Bankruptcy Code, a debtor may sell property of the estate"free and clear of any interest in such property of an entity other than the estate" if any one of the following conditions is satisfied: 1. applicable nonbankruptcy law permits sale of such property free and clear of such interest; 2. such entity consents; 3. such interest is a lien and the price at which such property is to be sold is greater than the aggregate value of all liens on such property; 4. such interest is in bona fide dispute; or 14 5. such entity could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest. 11 U.S.C. § 363(f)(1)-(5). 43. Because Section 363(f) of the Bankruptcy Code is stated in the disjunctive, satisfaction of any one of its five requirements will suffice to permit the sale of the assets "free and clear"of liens and interests. 44. In this case, the Trustee submits that one or more of the conditions set forth in Section 363(f) of the Bankruptcy Code is satisfied with respect to the sale of the Policy and the Prior Federal Insurance Policies. In particular, any entity claiming an interest in the Policy and the Prior Federal Insurance Policies who does not object to the Motion, or who objects to the Motion and subsequently withdraws its objection or is overruled by the Court, will be deemed to have consented to the relief sought by the Motion pursuant to Section 363(0(2) of the Bankruptcy Code. Additionally, any entity claiming an interest in the Policy and the Prior Federal Insurance Policies, including without limitation, an entity that does not object to the Motion, and any and all entities who have or may in the future seek to assert a direct right of action against the Policy and the Prior Federal Insurance Policies, fall within one or more of the other subsections of Section 363(f) of the Bankruptcy Code. For example, an entity's interest fall within Section 363(f)(4) if such interests are subject to a bona fide dispute. Further, Section 363(f (5) applies to any entity that asserts an interest such as a tort or contract claim, because such an entity could be compelled in a legal or equitable proceeding to accept a money satisfaction on account of such interests. 45. Any interest in Policy and the Prior Federal Insurance Policies will be adequately protected, as all interests that were, could have been, or may in the future be asserted against the 15 Policy and the Prior Federal Insurance Policies shall survive, and be channeled to the proceeds of the sale that are held by the Trustee. 46. Accordingly, because at least one of the conditions of Section 363(f) is satisfied with respect to the sale of the Policy and the Prior Federal Insurance Policies, the Trustee requests that the Court authorize the sale of the Policy and the Prior Federal Insurance Policies to be free and clear of all liens, claims and encumbrances pursuant to Section 363(f) of the Bankruptcy Code. In addition, in order to fully implement the sale of the Policy and the Prior Federal Insurance Policies in accordance with the Agreement, the Trustee requests that the Court enjoin all entities from asserting against Chubb Custom any claims under the Policy and against Federal and the Prior Federal Insurance Policies. 47. Finally, the Trustee requests that the Court make a finding in the order approving the Motion that Chubb Custom and Federal have purchased the Policy in good faith and are each entitled to the full protections of Section 363(m) of the Bankruptcy Code. Section 363(m) protects a good faith purchaser's interest in property purchased from the debtor notwithstanding that the sale conducted under Section 363(b) is later reversed or modified on appeal. Specifically, Section 363(m) states that: The reversal or modification on appeal of an authorization under subsection (b) or(c) of this section of a sale or lease of property does not affect the validity of a sale or lease under such authorization to an entity that purchased or leased such property in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and such sale or lease were stayed pending appeal. 11 U.S.C. 363(m). 48. The Trustee submits, and, if necessary, will present evidence at the hearing on the Motion, that the sale of the Policy and the Prior Federal Insurance Policies contemplated by the Agreement is the product of extensive, good faith, and arm's length negotiation between the 16 Trustee, Chubb Custom, and Federal. Thus, the Trustee respectfully requests that the Court find that Chubb Custom and Federal are good faith purchasers pursuant to Section 363(m) of the Bankruptcy Code. 49. Section 105(a) of the Bankruptcy Code provides that "[t]he court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title." 11 U.S.C. § 105(a). No party other than the insured has an independent right or claim which may be asserted against the Policy or Chubb Custom or against the Prior Federal Insurance Policies or Federal.3 Accordingly, the establishment of a channeling injunction — a condition required by Chubb Custom and Federal as part of the Agreement - only serves only to enjoin any parties from causing Chubb Custom and Federal to incur costs defending itself against frivolous actions. Any party who asserts a claim under the Policy or the Prior Federal Insurance Policies will instead have the ability to assert a claim against the proceeds of the proposed sale. For the foregoing reasons, the Trustee respectfully submits that the establishment of the channeling injunction is appropriate and necessary to implement the Agreement. 50. Similar relief has been granted in other bankruptcy cases. E.g., In re In re Caribbean Petroleum Corp., Case No. 10-12553 (KG) (Bankr. D.Del.), D.I. 982 (May 4, 2012 Order approving settlement agreement and issuing channeling injunction); see also Apco Liquidating Trust, Case No. 05-12355 (BLS) (Bankr. D.Del.), D.I. 781(November 1, 2013 Order approving settlement agreement). 3 As more fully set forth in the Brief filed by Chubb Custom in support of its Motion to Dismiss filed in the Adversary Proceeding [A.P. No. 13-51320, D.I. 33, pages 9-13], as a matter of Colorado law, the law under which the Trustee expects that claims would be asserted, tort claimants and property damage claimants lack standing to assert a direct action against Chubb Custom or Federal. Further, under the terms of the Policy, claimants other than the insured are specifically precluded from asserting a direct action against the insurer. 17 51. The Trustee respectfully submits that he has a sound business justification for the sale, that adequate and reasonable notice of the sale was given to interested parties, that the sale will produce a fair and reasonable price for the property, and that the Trustee, Chubb Custom, and Federal have each acted in good faith. Accordingly, the Trustee respectfully requests that the sale be approved. C. DOE Liens Attach to the Purchase Amount 52. Previously in these jointly administered cases, the Trustee filed a Motion for Adequate Protection to Secured Party and for related relief. [D.I. 237] (the"Adequate Protection Motion"). On April 11, 2013, this Court entered an order approving the Adequate Protection Motion. [D.I. 256] (the "Adequate Protection Order"). 53. The Adequate Protection Order states in part(at paragraph three): Adequate Protection Liens. As adequate protection of the interests of the Secured Party against any Diminution in Value of such interest, and to secure the payment of the Pre-Petition Obligations in an amount equal to any Diminution in Value, the Trustee on behalf of the Chapter 7 estates, pursuant to sections 361 and 363(e) of the Bankruptcy Code, shall be deemed to have granted, as of the Commencement Date, to the Secured Party additional and replacement continuing, valid, binding, enforceable, non-avoidable and automatically perfected post-petition security interests in and liens (the "Adequate Protection Liens") on all pre-and post-petition assets of the Debtors and the Chapter 7 estates (the "Adequate Protection Collateral"). 54. The Adequate Protection Order further stated in part (at paragraph four): Priority of Adequate Protection Liens. A "Prior Lien" for purposes of this Order shall mean a valid, perfected, enforceable, and non-avoidable security interest, lien, or mortgage as of the Commencement Date. The Adequate Protection Liens shall be valid, perfected, enforceable, and non-avoidable first priority liens with respect to all Adequate Protection Collateral that is not subject to a "Prior Lien." The Adequate Protection Liens shall be valid, perfected, enforceable, and non-avoidable liens junior to any 18 Prior Lien. The Adequate Protection Liens shall be enforceable jointly and severally against the property of the Chapter 7 estates. 55. The Adequate Protection Order further stated in part(at paragraph 17); Binding Effect of Order. The terms and provisions of this Order are valid and binding upon and inure to the benefit of the Trustee, the Secured Party and the Chapter 7 estates, all other creditors of the Chapter 7 estates, and all other parties in interest and their respective successors and assigns." 56. Therefore, the Approval Order provides that the Adequate Protection Liens of the DOE attach to the Purchase Amount. D. Waiver of Stay Under Bankruptcy Rule 6004(h) is Appropriate 57. To implement the relief requested in the Motion immediately, the Trustee seeks a waiver of the fourteen-day stay of an order authorizing the use, sale, or lease of property under Bankruptcy Rule 6004(h). Bankruptcy Rule 6004(h) provides that "[ajn order authorizing the use, sale, or lease of property other than cash collateral is stayed until the expiration of 14 days after entry of the order, unless the court orders otherwise. Fed. R. Bankr. P. 6004(h). 58. The purpose of Bankruptcy Rule 6004(h) is to provide sufficient time for an objecting party to appeal before an order can be implemented. See Advisory Committee Notes to Bankruptcy Rule 6004(h). Although Bankruptcy Rule 6004(h) and the Advisory Committee Notes are silent as to when a court should "order otherwise" and eliminate or reduce the fourteen-day period, the leading treatise on bankruptcy suggests that the stay period should be eliminated "where there has been no objection to the procedure." 10 Collier on Bankruptcy, ¶ 6004.10 at 6004-18 (L. King., 14th rev. ed. 2008). The treatise further provides that, if an objecting party informs the court of its intent to appeal, the stay may be reduced to the amount of time actually necessary to file such appeal. 19 59. For the reasons set forth above, the Trustee submits that time is of the essence with respect to the relief requested in the Motion. The settlement embodied in the Agreement provides certainty and finality regarding an important asset of the estates. Consummation of the Agreement will enables the Trustee to receive over $2 Million, which would be available to address ongoing administrative expenses, and alleged administrative expenses (including potential costs of remediation of alleged contamination). Accordingly, the Trustee requests that the Court waive the fourteen-day stay period under Bankruptcy Rule 6004(h) or, in the alternative, if an objection to the relief requested in the Motion is filed, reduce the stay period to the minimum amount of time needed by the objecting party to file its appeal. STATEMENT CONCERNING POSITION OF UNITED STATES DEPARTMENT OF ENERGY 60. Prior to entering into the Agreement, the Trustee contacted the Department of Energy ("DOE") regarding the dollar amount of the proposed settlement. The DOE has informed the Trustee that it does not oppose the settlement amount of$2.2 Million. NOTICE 61. Notice of this Motion will be provided to: (a) all of the creditors of the Debtors as stated in the creditor matrix provided by the Debtors to the Clerk of the Court; (b) all parties who have entered their appearance in the Abound Solar Cases pursuant to Rule 2002 of the Federal Rules of Bankruptcy Procedure; (c) all known owners of"insured sites" identified in the Policy; (d) the Colorado Department of Public Health and Environment; (e) the United States Environmental Protection Agency; (f) Office of the United States Trustee, and other parties as maybe stated on certificates of service and/or affidavits of mailing that will be filed in these cases relating to this Motion. Further, in an effort to provide as much notice as possible to 20 parties who are not known creditors, the Trustee will publish notice of this Motion in the USA Today and the Denver Post. Dated: January 16,2014 COOCH AND TAYLOR, P.A. am Sing Adam Singer(No. 2472) 1000 West Street, 10th Floor The Brandywine Building P.O. Box 1680 Wilmington,DE 19899 Telephone: (302)984-3800 Facsimile: (302)984-3939 Email: asinger@coochtaylor.com Counsel to Jeoffrey L. Burtch, Chapter 7 Trustee 21 EXHIBIT "A" SETTLEMENT,RELEASE AND BUYBACK AGREEMENT Iti This Settlement,Release and Buyback Agreement("Agreement"),dated as of January Js,2014,is made by and between Chubb Custom Insurance Company,a subsidiary of Federal Insurance Company("Chubb Custom"), Federal Insurance Company("Federal"),and Jeoffiey L. Burtch, solely in his capacity as the Chapter 7 Trustee of the estates of Abound Solar,Inc., Abound Solar Technology Holdings LLC,and Abound Solar Manufacturing, LLC(the "Trustee"). The Chapter 7 bankruptcy cases of Abound Solar,Inc., Abound Solar Technology Holdings LLC,and Abound Solar Manufacturing,LLC are jointly administered under the caption In re Abound Solar Manufacturing, LLC,Abound Solar Technology Holdings, LLC, Abound Solar, Inc., Chapter 7,Case No. 12-11974(PJW)("Abound Solar Cases"). Chubb Custom,Federal and the Trustee are referred to herein individually as a"Party"and collectively, the"Parties." The Debtors Abound Solar,Inc. ("ASI"),Abound Solar Technology Holdings LLC,and Abound Solar Manufacturing,LLC("ASM")are collectively referred to as"Abound Solar,"or the"Debtor." WHEREAS, Chubb Custom issued to ASI and other Abound Solar entities an Environmental Site Liability Insurance Policy,Policy No. 37312497, issued on May 9,2011, effective March 31,2011, for a policy period of March 31,2011 to March 31,2014,which policy is the renewal of a prior policy effective for a policy period of March 31,2008 to March 31,2011 (collectively,the"Policy");and WHEREAS,the Policy has limits of insurance of$2 million for"Each Pollution Incident Loss Limit"and a$6 million Aggregate Limit,subject to a$25,000"Each Pollution Incident" deductible,and further provides that"the most[Chubb Custom]will pay for all loss and business interruption expense arising from the same,continuous,repeated or related pollution incident is the Each Pollution Incident Loss Limit;"and WHEREAS,the Policy provides that Chubb Custom has"the right and duty to defend [Abound Solar]against a claim to which this insurance applies,"and further provides that"legal expense"incurred in the defense of Abound Solar reduces the Limits of Insurance under the Policy;and WHEREAS, by letter of December 14, 2012,the Trustee's counsel placed Chubb Custom on notice of alleged"pollution incidents"and"potential claims" arising from Abound Solar's possession and use of premises located at 95861-25 Frontage Road, Longmont Colorado(the "9586 Property"), which is identified as an "insured site"under the Policy;and WHEREAS, by letter of February 19,2013,Chubb Custom partially disclaimed coverage with respect to the 9586 Property under the Policy,and otherwise reserved Chubb Custom's rights;and WHEREAS,the Trustee further has asserted a claim for"remediation costs"arising from alleged"pollution incidents"at the following additional"insured site:"4557 Denrose Court,Unit B,Fort Collins,CO; and 6898865/ • WHEREAS,the Trustee has given notice of his intention to assert claims for "remediation costs"incurred at the following two additional "insured sites": CDG Warehouse, 11551 East 45th Street,Denver,CO,and Longmont West, 2950 Colorful Avenue,Longmont, CO;and WHEREAS,Chubb Custom has been investigating the Trustee's claims for reimbursement and/or payment of"remediation costs"incurred with respect to the above- referenced"insured sites"pursuant to a reservation of rights;and WHEREAS,the Trustee has tendered to Chubb Custom for defense under the Policy the following matters: A. Adversary Proceeding No. 13-51320(PJW) (the"Adversary Proceeding") commenced by 9586 LLC against Chubb Custom and ASM; B. A threatened action by 9586 LLC described in a July 18,2013 letter from 9586 LLC's property manager("Threatened RCRA Suit");and C. three proofs of claim filed on January 14,2013 by 9586 LLC against Abound Solar, Inc. (in Case No. 12-11972),Abound Solar Technology Holdings,LLC(in Case No. 12-11973),and Abound Solar Manufacturing,LLC(Case No. 12-11974)(the `Bankruptcy Claims");and WHEREAS, in a September 16,2013 letter,Chubb Custom denied coverage for the defense of the Adversary Proceeding,but agreed to provide a defense with respect to the environmental aspects of the Bankruptcy Claims(the"Environmental Claim");and WHEREAS,on November 1,2013,Chubb Custom filed (i)a motion to dismiss the first amended complaint filed in the Adversary Proceeding, (ii)a motion for entry of an order determining that the Bankruptcy Court does not have authority to enter a final judgment or order in the Adversary Proceeding, and(iii)a motion to withdraw the Bankruptcy Court reference;and WHEREAS, on November 8,2013,the Trustee filed objections to the Bankruptcy Claims and announced that the Trustee was commencing formal discovery with respect thereto;and WHEREAS,there are additional pending contested matters among 9586 LLC,the Trustee and the United States Department of Energy("DOE"), specifically,9586 LLC's motion for relief from the cash collateral order and the Trustee's motion to abandon property located at the 9586 Property(the"Contested Matters"),and 9586 LLC additionally has threatened to commence additional proceedings against the DOE and the Trustee for the Chapter 7 estates in the Abound Solar Cases; and WHEREAS,other Persons (as defined below)may in the future make claims against the the Chapter 7 estates or Abound Solar for the costs of environmental response,remediation, and/or clean-up at"insured sites"("Existing and Future Non-Litigated Damage Claims");and 2 WHEREAS, certain governmental or public entities have filed claims in the Abound Solar Cases,or may in the future file claims in the Abound Solar Cases or against Abound Solar (and/or Chubb Custom or others) for the costs of environmental response,remediation, and/or clean-up at"insured sites"(the"Existing and Future Governmental/Public Entities Claims"); and WHEREAS, there are disputes between the Parties regarding their respective rights and obligations with respect to insurance coverage under the Policy (the"Coverage Disputes");and WHEREAS, Federal issued (1)Federal Insurance Company Policy No. 3586-79-74 NBO,which provided liability insurance to AVA Solar, Inc.,ASI's predecessor in interest, for the policy period from March 19,2007 to March 19, 2008 with a per-occurrence limit of$1 million and an aggregate limit of$2 million, and (2)Federal Insurance Company Policy No. 7986-01-49, which provided commercial excess and umbrella insurance to AVA Solar, Inc. for the policy period from August 8, 2007 to March 19, 2008 with per-occurrence and aggregate limits of$5 million, both of which contain "Pollution"exclusions(the"Prior Federal Insurance Policies"); and WHEREAS, to avoid the risk,expense, and burden of litigation,and without admitting any liability,Chubb Custom, Federal and the Trustee now desire to forever satisfy, settle, resolve, terminate, release, and extinguish any and all disputes and controversies that do or could exist relating to, arising out of,connected with, pertaining to,or in any way respecting the Released Subject Matter(as defined below),which shall be effected by a settlement,release and buy-back of the Policy and the Prior Federal Insurance Policies as described herein,and which furthermore shall be deemed to effect an exhaustion of the Policy and the Prior Federal Insurance Policies; WHEREAS, Chubb Custom and Federal would not enter into this Agreement without obtaining the benefit of the releases contained in this Agreement and the channeling injunction set forth in the Approval Order(as defined below). NOW,THEREFORE, in consideration of the foregoing and the mutual promises set forth below, the Trustee, Chubb Custom, and Federal, intending to be legally bound, agree as follows: I. DEFINITIONS For the purpose of this Agreement only, the following terms shall have the indicated definitions. These are in addition to the defined terms appearing elsewhere herein. 1.1 "Approval Order"means a Final Order in the form annexed hereto as Exhibit 1 (or a form of order substantially similar thereto, but only if adopted with the approval of Chubb Custom and Federal in their sole discretion). Chubb Custom and Federal shall not be obligated to accept or approve any variation in the form of the Approval Order. 3 1.2 "Claim"means any of the following: (1) "Claim"as that term is defined in the United States Bankruptcy Code, 11 U.S.C. § 101(5);or(2) any claim,whether past,present or future, known or unknown, asserted or unasserted,foreseen or unforeseen, fixed or contingent,or direct or indirect,and whether by statute or regulation or in law,equity,admiralty or otherwise(including any claim(a)arising out of,related to,or involving the Released Subject Matter or any alleged bad faith,unfair claim practices,unfair trade practices,deceptive trade practices, insurance code violations,consumer protection violations, fraud,misrepresentation, non-disclosure,breach of fiduciary duty, conspiracy,or extra-contractual or tort liability;(b)for any form of damages, indemnity or defense obligations, insurance premiums(whether retrospectively rated or otherwise),deductibles,self-insured retentions, costs,expenses, contribution or subrogation;or(c)pursuant to or under a contract, other agreement, promise,representation or warranty;or(d)pursuant to any direct action or statutory or regulatory right of action,assertion of right, complaint, cross-complaint,counterclaim,affirmative defense,writ, demand, inquiry, request,suit, lawsuit, liability, action,cause of action, administrative proceeding,governmental action,order,judgment, settlement, lien, loss,cost or expense. 1.3 "Effective Date"means the date on which all of the conditions established in Section 2.3, below,have been satisfied. 1.4 "Execution Date"means the earliest date on which this Agreement has been signed by all of the Parties. 1.5 "Final Order"means an order or judgment that remains in effect and has not been reversed,vacated, stayed,or amended, and as to which(a)the time to appeal or seek review,rehearing,or writ of certiorari has expired and (b) no appeal or petition for review,reconsideration, rehearing,or certiorari has been taken or, if taken,remains pending. "Person"means any individual, corporation,partnership, association, trust(or estate, guardian or beneficiary thereof),or entity or organization of any form whatsoever, including,but not limited to,any federal,state,provincial, territorial, or local governmental entity or agency,or quasi-governmental entity or agency. 1.6 "Released Subject Matter"means each and all of the following, collectively and individually: (a) The Policy; (b) The Prior Federal Insurance Policies; (c) The Coverage Disputes; (d) The Adversary Proceeding; (e) The Threatened RCRA Suit 4 (0 The Environmental Claims; (g) The Bankruptcy Claims; (h) The Environmental Claim; (i) The 9586 Property; (j) All other"insured sites"; (k) The Contested Matters; (1) Existing and Future Non-Litigated Damage Claims. IL CONDITIONS PRECEDENT TO THE EFFECTIVE DATE OF THIS AGREEMENT 2.1 Promptly after the execution of this Agreement,the Trustee shall file a motion with the Bankruptcy Court(the"Approval Motion") seeking approval of this Agreement and the entry of the Approval Order. 2.2 The Trustee shall promptly provide notice of the Approval Motion(the "Notice")including notice to: (a)all of the creditors of the Debtors as stated in the creditor matrix provided by the Debtor to the Clerk of the Court; (b)all parties who have entered their appearance in the Abound Solar Cases pursuant to Rule 2002 of the Federal Rules of Bankruptcy Procedure;(c)all known owners of"insured sites" identified in the Policy; (d)the Colorado Department of Public Health and Environment;(e)the United States Environmental Protection Agency;and(f) Office of the United States Trustee. Further,the Trustee shall provide notice by publication of the Approval Motion substantially as set forth in Exhibit 2 hereto in the USA Today and the Denver Post. The Trustee will promptly provide copies of all invoices for his actual, out-of-pocket expenses incurred in connection with providing notice as set forth herein. Chubb Custom will reimburse the Trustee for such actual, out of pocket expenses within fourteen(14)days of the Effective Date. Chubb Custom shall not responsible for payment of the actual,out-of-pocket expenses incurred in connection with providing notice unless the Trustee provides Chubb Custom with copies of all such invoices. 2.3 This Agreement shall become effective on the latest date on which each of the following conditions shall have occurred: (a)all Parties have executed this Agreement; (b)the Bankruptcy Court shall have entered the Approval Order; (c)the Approval Order shall have become a Final Order; and(d) the Trustee shall have provided to Chubb Custom at least one business day written notice that the Approval Order has become a Final Order. 2.4 In the event the Bankruptcy Court determines not to enter the Approval Order, or if the Bankruptcy Court or any court exercising appellate jurisdiction stays, reverses,alters, amends or modifies the Approval Order, either Party shall have the option to withdraw from and terminate this 5 Agreement. Such withdrawal and/or termination is without liability to the other Party to this Agreement. III. PURCHASE,SALE AND PAYMENT 3.1 Following the Effective Date,and effective upon the Trustee's receipt of the Payment as provided for in Section 3.2 of this Agreement, pursuant to section 363 of the Bankruptcy Code and/or any other applicable rule or Bankruptcy Code provision,as well as the Approval Order, and without the need for further action,the Trustee shall be deemed to have sold, conveyed, assigned,transferred,and delivered to Chubb Custom,and Chubb Custom shall be deemed to have purchased from the Trustee, all rights, title,and interests in and under the Policy,and the Trustee shall be deemed to have sold,conveyed, assigned,transferred, and delivered to Federal, and Federal shall be deemed to have purchased from the Trustee, all rights,title, and interests in and under the Prior Federal Insurance Policies, free and clear of all liens,encumbrances,claims,and/or interests of any Person of any kind or nature whatsoever,to the fullest extent permitted under section 363(f) and(h) of the Bankruptcy Code and the Approval Order. The Parties agree that the Purchase Amount is at least equal to the fair value of the Policy and the Prior Federal Insurance Policies, and that the negotiations resulting in this Agreement occurred at arm's length and in good faith. In furtherance thereof, the Approval Order shall provide that all claims and interests that were,could have been,or may in the future be asserted against the Policy or the Prior Federal Insurance Policies shall survive, and be channeled exclusively to the proceeds of such sale as may be held by the Trustee. All Persons shall be forever enjoined, barred,and estopped from asserting claims against the Policy or the Prior Federal Insurance Policies,or against Chubb Custom with respect to the Policy or against Federal Insurance Company with respect to the Prior Federal Insurance Policies. 3.2 Chubb Custom,on its own behalf and on behalf of Federal, shall pay to the Trustee on behalf of the Chapter 7 estate of Abound Solar, Inc.,as the purchase price to buy the Chubb Custom Policy and the Prior Federal Insurance Policies free and clear of any and all claims and interests, in full and total satisfaction,settlement,resolution, termination, release, and extinguishment of any and all obligations that do or could exist relating to, arising out of, in connection with,or in any way pertaining to,the Released Subject Matter,and as full,complete, and final exhaustion of any and all coverage under or relating to the Policy, the sum of two million, two hundred dollars($2,200,000) (the"Purchase Amount")within fourteen(14)days of the Effective Date. 6 IV. RELEASES 4.1 In consideration of the promises set forth in this Agreement, each Party hereby fully releases, acquits, and forever discharges the other Party and its respective parents, subsidiaries, affiliates, partners, co-venturers, shareholders, predecessors, successors in interest, assignors(whether express, implied,or by operation of law), and present, former,and future directors, officers, employees,agents, claims adjusters(as applicable), professionals, and assigns of each of the foregoing, and all others claiming by, from, or through the foregoing or on their behalf, but only in their respective capacities as such, from any and all Claims arising out of, related to, connected with, or in any manner pertaining to the Released Subject Matter. Nothing in this Section 4.1 is intended to, nor shall be construed to, release,waive,or otherwise affect the Parties' rights and obligations under this Agreement. V. FURTHER PROVISIONS 5.1 It is the principal purpose of this Agreement that, in consideration of the Purchase Amount,after the Effective Date, and effective upon the Trustee's receipt of the Payment,no Person may assert any claim against the Policy or the Prior Federal Insurance Policies or against Chubb Custom under or through the Policy or against Federal Insurance under or through the Prior Federal Insurance Policies with respect to the Released Subject Matter. Accordingly, in the event that any entity, including any insurer of Abound Solar, asserts any claim against Chubb Custom or against the Policy on the basis of purported coverage under the Policy,or against Federal Insurance Company or against the Prior Federal Insurance Policies on the basis of purported coverage under the Prior Federal Insurance Policies, the Trustee shall assert that all such policies are exhausted and such claim is enjoined and barred by the Approval Order. VI. REPRESENTATION AND WARRANTIES 6.1 Subject to Bankruptcy Court approval as set forth in Section 2 of this Agreement with respect to the Trustee,each Person who executes this Agreement on behalf of a Party represents that he or she has the authority of said Party to do so. 6.2 The Parties agree to execute all documents and to do all things necessary to fully effectuate the terms of this Agreement. 6.3 The Parties represent that,as of the Execution Date,they have not assigned to any other Person any of the rights extinguished by the releases given herein. 7 6.4 Except as provided herein,this Agreement, and any acts in the performance of this Agreement, are not intended to, nor shall they be admissible,discoverable, or relevant in any case or other proceeding for any purpose including, but not limited to,efforts to prove either the acceptance by any Party of coverage or of any particular theory of coverage,or as evidence of any obligation that any Party has or may have to anyone.This Agreement shall be deemed to fall within the protection afforded compromises and offers to compromise under Rule 408 of the Federal Rules of Evidence and any similar law applicable in any state or other territory. Nothing contained in this Section 6.4, however,shall be interpreted to restrict the right of any Party: (a)to bring a claim or to introduce evidence predicated on a breach of this Agreement;(b)to assert a defense to any claim relating to a claimed breach of this Agreement; or (c)to provide proof as to the fact(as opposed to the terms)of the settlement, release and buyback provided herein. 6.5 Each Party shall provide such further and other written assurances necessary to effectuate the terms and intent of this Agreement.In the event that a Party seeks a court order determining that the settlement,release and buyback provided herein was effective and/or in good faith,the Parties shall cooperate and assist each other to the fullest extent possible in obtaining such determinations. VII. GOVERNING LAW 7.1 This Agreement shall be governed by,to the extent applicable,the Bankruptcy Code,and shall be construed in accordance with the laws of the State of Delaware,without regard to any conflict of laws provisions that would require the application of the law of another jurisdiction. VIII. INTEGRATION 8.1 This Agreement constitutes the entire Agreement between the Parties with respect to the subject matter hereof, and except as set forth in this Agreement,no representations, warranties,or promises have been made or relied upon by the Parties regarding this Agreement. This Agreement supersedes all discussions, agreements and understandings, both written and oral, among the Parties with respect thereto. IX. REPRESENTATION BY COUNSEL/NO CONSTRUCTION AGAINST EITHER PARTY/RESERVATION OF RIGHTS 9.1 Each Party has participated in the drafting of this Agreement with the assistance of counsel. Therefore, the language of this Agreement shall not be construed against any Party as the drafter or because of the identity of any Party as an insurance company. 8 9.2 This Agreement is a compromise of disputed positions. Subject to the terms of this Agreement, nothing in this Agreement shall be deemed a waiver by Chubb Custom,Federal, or the Trustee of any rights or conditions under the Policy or the Prior Federal Insurance Policies,or as an expansion of the duties owed by Chubb Custom or the Trustee under the Policy and/or the duties owed by Federal or the Trustee under the Prior Federal Insurance Policies. 9.3 This Agreement does not adopt any specific coverage theory. Except as expressly provided herein, the Parties fully reserve all rights and obligations with respect to any other policies of insurance, alleged or otherwise, and with regard to all issues of defense and indemnity.Neither the existence of this Agreement nor any actions taken in accordance with its terms shall be construed in any way so as to prejudice the interests or rights of the Parties as to matters not released under this Agreement. All rights, causes of action,claims, and benefits of the Parties, including,but not limited to,those with respect to any other policies of insurance, alleged or otherwise,which are not expressly waived, limited, released,or bought back by the Parties under this Agreement, are reserved. 9.4 Each Party expressly reserves any and all rights,positions, and defenses it may have against any Person that is not a party to this Agreement with respect to the Released Subject Matter. 9.5 Except as provided herein,no waiver or estoppels shall arise as a result of this Agreement or any alleged delay in its having been undertaken,nor shall any exclusion or other limitation of any policy of insurance, including, but not limited to, the Policy and/or the Prior Federal Insurance Policies be considered waived. X. EXECUTION IN COUNTERPARTS/FACSIMILE AND/OR ELECTRONIC TRANSMSSION 10.1 This Agreement may be executed in several counterparts, each of which shall be deemed an original. Further,execution of this Agreement may be effected by facsimile or other electronic mail transmission of executed copies of the signature pages delivered to counsel for the Parties. XL CONFIDENTIALITY 11.1 The Parties shall treat all negotiations regarding this Agreement as confidential. Accordingly, information concerning such negotiations shall not be disclosed, published, or in any way used in any proceeding,except (a) in any action or proceeding where the existence or the terms of this Agreement are an issue(including any proceeding to obtain Bankruptcy 9 Court approval of this Agreement), or where one of the Parties is seeking enforcement of this Agreement; (b)as required by law or ordered by a court or other body of competent jurisdiction; (c)to reinsurers or prospective reinsurers of Chubb Custom and/or Federal,or to their retrocessionaires; (d)to any auditor or counsel of Chubb Custom and/or Federal or of the Trustee;or(e)by written consent of the Parties hereto. NIL NOTICES 12.1 Any notices given under this Agreement shall be in writing,delivered by hand delivery or overnight courier,with a copy by email,and sent to the following addresses or as the Parties may subsequently direct in writing: Trustee: Jeoffrey L.Burtch Cooch and Taylor The Brandywine Building 1000 West Street, 10th Floor Wilmington,DE 19801 With a copy to: Adam Singer,Esquire Cooch and Taylor The Brandywine Building 1000 West Street, 10th Floor Wilmington,DE 19801 asinger@coochtaylor.com Chubb Group of Insurance Patricia Bligh Companies: Chubb Group of Insurance Companies Assistant Vice President 15 Mountain View Road Warren,New Jersey 07059-6711 pbligh@chubb.com 10 With a copy to: William P.Shelley/Jacob C.Cohn Gordon&Rees LLP One Commerce Square 2005 Market Street,Suite 2900 Philadelphia,Pennsylvania 19103 wshelley@gordonrees.com;jcohn@gordonrees.com IN WITNESS WHEREOF,the Parties have executed this Agreement by their duly authorized representatives. Jeoffrey L.Burtch,in his capacity as the Chapter 7 Trustee of the estates of Abound Solar,Inc., Abound Solar Technology Holdings LLC,and Abound olar Manufacturing,LLC Date- By: ,;; 0 Av.., 7'`c Nam : ` jet7/ His: e3ett.A y�c� f�' %, CHUBB CUSTOM INSU RANCE vAN`/ CE COMPANY Date: ///f///y Naftfe: c//vt rt 7R,('v At Ev iki Its: C/'c i ?if„✓r,,.f f CIA/n,/ /Oabp/ FEDERAL INSU,$ANCE COMPANY By: Date: /WI Narafe: nevn• ✓v kiekbpwi'4 Its: //id 1tc!/ Y/,,..t f af,N/f 77-pyre/ (835569 II EXHIBIT 1 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: • Abound Solar Manufacturing, LLC, • Abound Solar Technology Holdings, LLC, . Abound Solar, Inc. Chapter 7 Case No. 12-11974 (PJW) Debtors, : Jointly Administered Re: Docket Nos. ORDER(A) AUTHORIZING THE CHAPTER 7 TRUSTEE TO ENTER INTO A SETTLEMENT,RELEASE AND BUYBACK AGREEMENT WITH CHUBB CUSTOM INSURANCE COMPANY AND FEDERAL INSURANCE COMPANY; (B) AUTHORIZING THE SALE OF INTERESTS IN A CERTAIN INSURANCE POLICY RELATED THERETO, AND(C) PERMANENTLY BARRING ALL CLAIMS AGAINST CHUBB CUSTOM AND FEDERAL INSURANCE COMPANY UNDER SUCH INSURANCE POLICIES,AND CHANNELING ANY SUCH CLAIMS EXCLUSIVELY TO THE PROCEEDS OF THE SALE OF SUCH INSURANCE POLICIES Upon the motion of Jeoffrey L. Burtch in his capacity as the Chapter 7 Trustee of the estates of Abound Solar, Inc., Abound Solar Technology Holdings LLC, and Abound Solar Manufacturing, LLC (the "Trustee") in the above-captioned, jointly administered chapter 7 cases (collectively, the "Debtors", or "Abound Solar"), pursuant to Sections 105 and 363 of the Bankruptcy Code and Bankruptcy Rules 6004 and 9019 for entry of an order (a) authorizing the Trustee to enter into a Settlement, Release and Buyback Agreement (the "Agreement") with Chubb Custom Insurance Company ("Chubb Custom") and Federal Insurance Company ("Federal"), (b) authorizing the sale of certain insurance policies related thereto, and (c) permanently barring all claims against Chubb Custom and/or Federal under such insurance policies, and channeling any such claims exclusively to the proceeds of the sale of such insurance policies (the "Motion"),' all as more fully set forth in the Motion; and a hearing having been held to consider the relief requested in the Motion (the "Hearing"); and upon the record of the Hearing and all of the proceedings had before the Court relating to the Motion; and the Court having found and determined that the relief requested in the Motion is in the best interests of the Debtors, the Chapter 7 estates and the respective creditors of each of those estates, and all parties in interest, and that the legal and factual bases set forth in the Motion and at the Hearing establish just cause for the relief granted herein; and after due deliberation and sufficient cause appearing therefor, and all objections, if any, having been overruled, it is hereby: FOUND AND DETERMINED THAT: A. This Court has jurisdiction to consider the Motion and the relief requested therein pursuant to 28 U.S.C. §§ 157 and 1334. B. Consideration of the Motion and the relief requested therein is a core proceeding pursuant to 28 U.S.C. § 157(b)(2). C. Venue is proper in this District and this Court under 28 U.S.C. §§ 1408 and 1409. D. The Agreement effectuates a settlement, release, and buyback of an Environmental Site Liability Insurance Policy, Policy No. 37312497, issued on May 9, 2011, effective March 31, 2011, for a policy period of Much 31, 2011 to March 31, 2014, which policy is the renewal of a prior policy effective for a policy period of March 31, 2008 to March 31, 2011 (collectively, the "Policy"), having coverage limits in the amount of$2 million"Each Pollution Incident Loss Limit" and $6 million Aggregate Limit, subject to a $25,000 "Each Pollution Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Motion or the Agreement. 2 Incident" deductible, and further providing that "the most [Chubb Custom] will pay for all loss and business interruption expense arising from the same, continuous, repeated or related pollution incident is the Each Pollution Incident Loss Limit." E. The Policy provides that Chubb Custom has "the right and duty to defend [Abound Solar] against a claim to which this insurance applies," and further provides that"legal expense" incurred in the defense of Abound Solar reduces the Limits of Insurance under the Policy. F. By letter of December 14, 2012, the Trustee's counsel placed Chubb on notice of alleged "pollution incidents" and "potential claims" arising from Abound Solar's possession and use of premises located at 9586 I-25 Frontage Road, Longmont Colorado (the "9586 Property"), which is identified as an "insured site" under the Policy. G. By letter of February 19, 2013, Chubb Custom partially disclaimed coverage with respect to the 9586 Property under the Policy, and otherwise reserved Chubb Custom's rights. H. The Trustee further has asserted a claim for "remediation costs" arising from alleged "pollution incidents" at the following additional "insured site": 4557 Denrose Court, Unit B, Fort Collins, CO. I. The Trustee has given notice of his intention to assert claims for "remediation costs" incurred at the following two additional "insured sites": CDG Warehouse, 11551 East 45th Street, Denver, CO, and Longmont West, 2950 Colorful Avenue, Longmont, CO. 3 J. Chubb Custom has been investigating the Trustee's claims for reimbursement and/or payment of "remediation costs" incurred with respect to the above- referenced"insured sites"pursuant to a reservation of rights. K. The Trustee has tendered to Chubb Custom for defense under the Policy the following matters: 1. Adversary Proceeding No. 13-51320 (PJW) (the "Adversary Proceeding") commenced by 9586 LLC against Chubb Custom and Abound Solar; 2. A threatened action by 9586 LLC described in a July 18, 2013 letter from 9586 LLC's property manager("Threatened RCRA Suit"); and 3. Three proofs of claim filed on January 14, 2013 by 9586 LLC against Abound Solar, Inc. (in Case No. 12-11972), Abound Solar Technology Holdings, LLC (in Case No. 12-11973), and Abound Solar Manufacturing, LLC (Case No. 12-11974)(the "Bankruptcy Claims"). L. In a September 16, 2013 letter, Chubb Custom denied coverage for the defense of the Adversary Proceeding, but agreed to provide a defense with respect to the environmental aspects of the Bankruptcy Claims(the"Environmental Claim"). M. On November 1, 2013, Chubb Custom filed (i) a motion to dismiss the first amended complaint filed in the Adversary Proceeding, (ii) a motion for entry of an order determining that the Bankruptcy Court does not have authority to enter a final judgment or order in the Adversary Proceeding, and (iii) a motion to withdraw the Bankruptcy Court reference. 4 N. On November 8, 2013, the Trustee filed objections to the Bankruptcy Claims and announced that the Trustee was commencing formal discovery with respect thereto. O. There are additional pending contested matters among 9586 LLC, the Trustee and the United States Department of Energy ("DOE"), specifically, 9586 LLC's motion for relief from the cash collateral order and the Trustee's motion to abandon property located at the 9586 Property (the "Contested Matters"), and 9586 LLC additionally has threatened to commence additional proceedings against the DOE and the Trustee for the Chapter 7 estates. P. Other Persons may in the future make claims against the Trustee for the Chapter 7 estates or Abound Solar for the costs of environmental response, remediation, and/or clean-up at "insured sites" ("Existing and Future Non-Litigated Damage Claims"). Q. Certain governmental and public entities have filed claims in the Chapter 7 estates, or may in the future file claims in the Chapter 7 cases or against Abound Solar (and/or Chubb Custom or others) for the costs of environmental response, remediation, and/or clean-up at "insured sites" (the "Existing and Future Governmental/Public Entities Claims"). R. There are disputes between the Parties regarding their respective rights and obligations with respect to insurance coverage under the Policy (the "Coverage Disputes"). S. Each of the Coverage Disputes is a bona fide, genuine, and substantial dispute. 5 T. The Agreement further effectuates a settlement, release, and buyback of the following two insurance policies issued by Federal, the parent corporation of Chubb Custom: (I) Federal Insurance Company Policy No. 3586-79-74 NBO, which provided liability insurance to AVA Solar ("AVI"), a predecessor of Abound Solar, Inc. for the policy period from March 19, 2007 to March 19, 2008, with a per-occurrence limit of$1 million and an aggregate limit of$2 million, and (2) Federal Insurance Company Policy No. 7986-01-49, which provided commercial excess and umbrella insurance to AVI for the policy period from August 8,2007 to March 19, 2008,with per-occurrence and aggregate limits of$5 million, both of which contain "Pollution" exclusions (the "Prior Federal Insurance Policies"). U. To avoid the risk, expense, and burden of litigation, and without admitting any liability, Chubb Custom, Federal, and the Trustee desire to forever settle, resolve, compromise and terminate any and all disputes and existing or alleged obligations arising from, relating to, or in respect of the Released Subject Matter. V. The Trustee, Chubb Custom, and Federal negotiated the Agreement in good faith and at arm's length to resolve disputed claims in compliance with all applicable laws. W. The compromise and settlement memorialized in the Agreement is not the product of fraud or collusion. X. The Agreement represents an informed, sound exercise of the Trustee's business judgment. 6 Y. Considering all of the circumstances of the chapter 7 cases, the Agreement is fair and equitable, reasonable, and in the best interests of the Debtors, the Chapter 7 estates and creditors, and all parties in interest. The Trustee has demonstrated good, sufficient, and sound business purposes and justifications for the relief requested in the Motion. Z. The settlement and compromise with Chubb Custom and Federal embodied in the Agreement are consistent with and within the reasonable range of litigation outcomes if the Trustee were to litigate the matters resolved pursuant to this Order. AA. The releases, settlement, and sale to be made by the Trustee pursuant to the Agreement are appropriate, and Chubb Custom and Federal would not have entered into the Agreement or agreed to any compromises or settlements contained in the Agreement, and Chubb Custom and Federal would not pay the Purchase Amount pursuant to the Agreement without obtaining the benefit of the releases contained in the Agreement and the channeling injunction set forth in this Order. BB. The settlement effected by the Agreement meets the standard established by the United States Court of Appeals for the Third Circuit for approval of settlements, which requires consideration of the following factors: (1) the probability of success in the litigation; (2) the likely difficulties in collection; (3) the complexity of the litigation involved and related expense and inconvenience; and (4) the interests of the creditors. Myers v. Martin (In re Martin), 91 F.3d 389, 7 393 (3d Cir. 1996); see also Fry's Metals, Inc. v. Gibbons (In re RFE Industries, Inc.), 283 F.3d 159, 165 (3d Cir. 2002). CC. The Purchase Amount is at least equal to the fair value of the Policy and the Prior Federal Insurance Policies. DD. The consideration to be paid by Chubb Custom and Federal under the Agreement is fair, equitable,and reasonable to the Debtors, the Chapter 7 estates, and to all persons who hold claims against the Debtors or the Chapter 7 estates for all relevant purposes under the Bankruptcy Code, and constitutes reasonably equivalent value. EE. As evidenced by the affidavits of service and publication previously filed with the Court (see D.I. ( 1), the notice of the Motion and relief sought therein was proper timely and sufficient under the particular circumstances, and provided for adequate opportunity for any party in interest, including those parties or entities whose identities presently are unknown to the Trustee and all parties or entities with an interest in the Policy and/or the Prior Federal Insurance Policies, to file an objection or response to the Motion and provided a fair and reasonable opportunity for any party in interest, including those parties or entities whose identities presently are unknown to the Trustee and all parties or entities with an interest in the Policy and/or the Prior Federal Insurance Policies, and no other or further notice of the Motion,the Hearing, or entry of this Order is required. FF. The transaction set forth in the Agreement pursuant to which Chubb Custom is to acquire all rights, title and interests of the Debtors and the Chapter 7 estates in and under the Policy and Federal is to acquire all rights, title and interests of the Debtors and the Chapter 7 estates in and under the Prior Federal Insurance Policies free and 8 clear of all liens, encumbrances, claims, and/or interests as provided in the Agreement constitutes a sale of property pursuant to Bankruptcy Code Sections 363(6)and 363(f). GG. Chubb Custom and Federal are good faith purchasers within the meaning of Section 363(m)of the Bankruptcy Code. HH. The Trustee is authorized to sell all of the Debtors' and/or the Chapter 7 estates' rights, title, and interests in and under Policy and the Prior Federal Insurance Policies free and clear of all interests because, in each case, one or more of the standards set forth in Sections 363(f)(1)-(5) of the Bankruptcy Code has been satisfied, and all holders of interests against the Debtors, their estates, the Policy or the Prior Federal Insurance Policies who did not object, or who withdrew their objections, to the Motion are deemed to have consented thereto pursuant to Section 363(f)(2) of the Bankruptcy Code. II. Holders of interests, including those who did object, fall within one or more of the other subsections of Section 363(f) of the Bankruptcy Code, including, without limitation, Section 363(f)(4) because such interests are subject to a bona fide dispute, and Section 363(0(5) because the holders of any such interest could be compelled in a legal or equitable proceeding to accept a money satisfaction on account of such interest. ORDERED, ADJUDGED,AND DECREED THAT: 1. The Motion is GRANTED. 2. All objections and responses, if any, to the Motion or the relief requested therein that have not been withdrawn, waived, or settled, and all reservations of rights 9 included in such objections and responses, are overruled on the merits and denied with prejudice. 3. Pursuant to Sections 105 and 363 of the Bankruptcy Code, Bankruptcy Rule 9019, the Trustee is authorized to enter into the Agreement and take such steps as may be necessary to implement and effectuate the terms of this Order, the Agreement, and any related transactions. 4. Once all conditions of Section 2.3 of the Agreement have been satisfied, pursuant to Sections 105 and 363 of the Bankruptcy Code and Bankruptcy Rule 9019, and effective upon the Trustee's receipt of the Purchase Amount as provided for in Section 3.2 of the Agreement, and without need for further action: (i) the Trustee shall be deemed to have sold, conveyed, assigned, transferred, and delivered to Chubb Custom, and Chubb Custom shall be deemed to have purchased from the Trustee, all rights, title, and interests in and under the Policy, free and clear of all liens, encumbrances, claims and/or interests of any Person of any kind or nature whatsoever, to the fullest extent permitted under Section 363(f) of the Bankruptcy Code; and (ii) the Trustee shall be deemed to have sold, conveyed, assigned, transferred, and delivered to Federal, and Federal shall be deemed to have purchased from the Trustee, all rights, title, and interests in and under the Prior Federal Insurance Policies, free and clear of all liens, encumbrances, claims and/or interests of any Person of any kind or nature whatsoever, to the fullest extent permitted under Section 363(1) of the Bankruptcy Code 5. All claims and interests that were, could have been or may in the future be asserted under or against the Policy and/or the Prior Federal Insurance Policies shall survive, 10 and be channeled solely and exclusively to the proceeds of such sale that are held by the Trustee. 6. Pursuant to Section 105(a)of the Bankruptcy Code, all Persons are hereby and shall be permanently and forever enjoined, barred and estopped from asserting claims against the Policy or Chubb Custom with respect to the Policy, or against the Prior Federal Insurance Policies or against Federal with respect to the Prior Federal Insurance Policies to the fullest extent of the Agreement. Chubb Custom and Federal shall pay the Purchase Amount to the Trustee for the benefit of the Chapter 7 estate of Abound Solar, Inc. the Purchase Amount in accordance with the Agreement. The Adequate Protection Liens of the DOE, as defined in this Court's Order found at Docket Entry 256, attach to the Purchase Amount. 7. The Purchase Amount will be held by the Trustee in a separate trustee account, and will not be distributed without further order of the Court. Nothing in this Order authorizes Rabobank, N.A. or Bankruptcy Management Solutions, Inc. to deduct monthly service fees from any Trustee bank account created in these cases for the purposes of holding such Purchase Amount, and such service fees may not be deducted by either of those entities from such Purchase Amount. 8. Chubb Custom is hereby dismissed from Adversary Proceeding No. 13- 51320, however such dismissal shall be without prejudice to the rights of 9586 LLC to assert a claim (or claims) against the Purchase Amount however any such claim(s)asserted by 9586 shall be without prejudice to the Trustee or any party in interest to contest such claim(s). 9. The Trustee on behalf of the Chapter 7 estates fully releases, acquits and forever discharges Chubb Custom and Federal Insurance Company from any and all claims 11 arising out of,related to,connected with,or in any manner pertaining to the Released Subject Matter to the fullest extent of the Agreement. 10. Chubb Custom and Federal fully release, acquit and forever discharge the Trustee and the Chapter 7 estates from any and all claims arising out of,related to, connected with, or in any manner pertaining to the Released Subject Matter to the fullest extent of the Agreement. • 11. Notwithstanding the possible applicability of Bankruptcy Rule 6004(h), the terms and conditions of this Order shall be immediately effective and enforceable upon its entry. 12. The Court shall retain jurisdiction to hear and determine all matters, claims, rights or disputes arising from or related to the implementation of this Order. Dated: February 2014 Wilmington, Delaware THE HONORABLE PETER J. WALSH UNITED STATES BANKRUPTCY JUDGE 12 EXHIBIT 2 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: : Chapter 7 Abound Solar Manufacturing, LLC, Abound Solar Technology : Case No. 12-11974(PJW) Holdings,LLC, and Abound Solar, Inc. : (Jointly Administered) Debtors, , NOTICE OF MOTION TO APPROVE A SETTLEMENT BETWEEN THE TRUSTEE, CHUBB CUSTOM INSURANCE COMPANY,AND FEDERAL INSURANCE COMPANY On January 16, 2014, Jeoffrey L. Burtch, as Chapter 7 Trustee of the debtors ("Debtors") in the above-captioned chapter 7 cases, filed the Motion (the "Settlement Motion") Pursuant to Sections 105 and 363 of the Bankruptcy Code and Bankruptcy Rules 6004 and 9019 for an Order (A) Authorizing the Trustee to Enter into a Settlement, Release and Buyback Agreement with Chubb Custom Insurance Company ("Chubb Custom") and Federal Insurance Company ("Federal"), (B) Authorizing the Sale of Interest in Chubb Custom's Insurance Policy and the Federal Insurance Policies, and (C) Permanently Barring All Claims against Chubb Custom under the Chubb Custom Policy and against Federal Insurance Company under the Federal Insurance Policies and Channeling Any Such Claims Exclusively to the Proceeds of the Sale of Such Insurance Policies. Pursuant to the Settlement Motion, the Trustee seeks entry of an order that will, among other things: (a) authorize and approve a settlement and buyback of an Environmental Site Liability Insurance Policy No. 37312497 issued by Chubb Custom to Debtors on May 9, 2011 for a policy period of March 31, 2011 to March 31, 2014, which policy is the renewal of a prior policy effective for a policy period of March 31, 2008 to March 31, 2011 ("Chubb Custom Policy"); (b) authorize and approve a settlement and buyback of Federal Insurance Company Policy Nos. 3586-79-74 NBO and 7986-01-49 (the"Federal Insurance Policies"); (c) hold that all claims and interests that were, could have been, or may in the future be asserted against the Chubb Custom Policy shall be channeled exclusively to the proceeds of the sale of the Chubb Custom Policy, which shall be distributed solely in accordance with the order of the Bankruptcy Court; (d) hold that all claims and interests that were, could have been, or may in the future be asserted against the Federal Insurance Policies shall be channeled exclusively to the proceeds of the sale of the Federal Insurance Policies, which shall be distributed solely in accordance with the order of the Bankruptcy Court; and (e) ENJOIN AND FOREVER BAR AND ESTOP ALL CLAIMS AND INTERESTS THAT WERE, COULD HAVE BEEN,OR MAY IN THE FUTURE BE ASSERTED AGAINST THE CHUBB CUSTOM POLICY OR AGAINST CHUBB CUSTOM WITH RESPECT TO THE CHUBB CUSTOM POLICY OR AGAINST THE FEDERAL INSURANCE POLICIES OR AGAINST FEDERAL WITH RESPECT TO THE FEDERAL INSURANCE POLICIES. A hearing to consider the Settlement Motion is scheduled for February 6, 2014 at 2:00 p.m. (edt) before the Hon. Peter J. Walsh, United States Bankruptcy Judge, at the United States Bankruptcy Court for the District of Delaware, 824 Market St., 6th Floor, Courtroom 2, Wilmington,DE 19801. 6898820/ Objections, if any, to the Settlement Motion must be filed with the Bankruptcy Court at the United States Bankruptcy Court for the District of Delaware, 824 Market Street, Wilmington, DE 19801 so that such objections must be filed on or before January 31, 2014 at 4:00 p.m. (edt) (the "Objection Deadline"). A copy of all such objections much be served upon the Trustee's counsel at the following addressed: Adam Singer, Esquire, Cooch&Taylor, P.A., 1000 West St., 10th Floor, The Brandywine Bldg., Wilmington, DE 19801 so that it is received prior to the Objection Deadline. IF YOU FAIL TO RESPOND IN ACCORDANCE WITH THIS NOTICE, THE COURT MAY GRANT THE RELIEF DEMANDED BY THE MOTION WITHOUT FURTHER NOTICE OR HEARING. 6898820/ IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: : Chapter 7 Abound Solar Manufacturing, LLC, : Case No. 12-11974(PJW) Abound Solar Technology Holdings, LLC, . Abound Solar, Inc. : (Jointly Administered) Debtors, • . Re: Docket Nos. _ ORDER(A)AUTHORIZING THE CHAPTER 7 TRUSTEE TO ENTER INTO A SETTLEMENT,RELEASE AND BUYBACK AGREEMENT WITH CHUBB CUSTOM INSURANCE COMPANY AND FEDERAL INSURANCE COMPANY; (B)AUTHORIZING THE SALE OF INTERESTS IN A CERTAIN INSURANCE POLICY RELATED THERETO,AND(C) PERMANENTLY BARRING ALL CLAIMS AGAINST CHUBB CUSTOM AND FEDERAL INSURANCE COMPANY UNDER SUCH INSURANCE POLICIES,AND CHANNELING ANY SUCH CLAIMS EXCLUSIVELY TO THE PROCEEDS OF THE SALE OF SUCH INSURANCE POLICIES Upon the motion of Jeoffrey L. Burtch in his capacity as the Chapter 7 Trustee of the estates of Abound Solar, Inc., Abound Solar Technology Holdings LLC, and Abound Solar Manufacturing, LLC (the "Trustee") in the above-captioned, jointly administered chapter 7 cases (collectively, the "Debtors", or "Abound Solar"), pursuant to Sections 105 and 363 of the Bankruptcy Code and Bankruptcy Rules 6004 and 9019 for entry of an order (a) authorizing the Trustee to enter into a Settlement, Release and Buyback Agreement (the "Agreement") with Chubb Custom Insurance Company ("Chubb Custom") and Federal Insurance Company ("Federal"), (b) authorizing the sale of certain insurance policies related thereto, and (c) permanently barring all claims against Chubb Custom and/or Federal under such insurance policies, and channeling any such claims exclusively to the proceeds of the sale of such insurance policies (the "Motion"),t all as more fully set forth in the Motion; and a hearing having been held to consider the relief requested in the Motion (the "Hearing"); and upon the record of the Hearing and all of the proceedings had before the Court relating to the Motion; and the Court having found and determined that the relief requested in the Motion is in the best interests of the Debtors, the Chapter 7 estates and the respective creditors of each of those estates, and all parties in interest, and that the legal and factual bases set forth in the Motion and at the Hearing establish just cause for the relief granted herein; and after due deliberation and sufficient cause appearing therefor, and all objections, if any,having been overruled, it is hereby: FOUND AND DETERMINED THAT: A. This Court has jurisdiction to consider the Motion and the relief requested therein pursuant to 28 U.S.C. §§ 157 and 1334. B. Consideration of the Motion and the relief requested therein is a core proceeding pursuant to 28 U.S.C. § 157(b)(2). C. Venue is proper in this District and this Court under 28 U.S.C. §§ 1408 and 1409. D. The Agreement effectuates a settlement, release, and buyback of an Environmental Site Liability Insurance Policy, Policy No. 37312497, issued on May 9, 2011, effective March 31, 2011, for a policy period of March 31, 2011 to March 31, 2014, which policy is the renewal of a prior policy effective for a policy period of March 31, 2008 to March 31, 2011 (collectively, the "Policy"), having coverage limits in the amount of$2 million "Each Pollution Incident Loss Limit" and $6 million Aggregate Limit, subject to a $25,000 "Each Pollution Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Motion or the Agreement. 2 Incident" deductible, and further providing that "the most [Chubb Custom] will pay for all loss and business interruption expense arising from the same, continuous, repeated or related pollution incident is the Each Pollution Incident Loss Limit." E. The Policy provides that Chubb Custom has "the right and duty to defend [Abound Solar] against a claim to which this insurance applies," and further provides that"legal expense"incurred in the defense of Abound Solar reduces the Limits of Insurance under the Policy. F. By letter of December 14, 2012, the Trustee's counsel placed Chubb on notice of alleged "pollution incidents" and "potential claims" arising from Abound Solar's possession and use of premises located at 9586 1-25 Frontage Road, Longmont Colorado (the "9586 Property"), which is identified as an "insured site"under the Policy. G. By letter of February 19, 2013, Chubb Custom partially disclaimed coverage with respect to the 9586 Property under the Policy, and otherwise reserved Chubb Custom's rights. H. The Trustee further has asserted a claim for "remediation costs" arising from alleged "pollution incidents" at the following additional "insured site": 4557 Denrose Court, Unit B, Fort Collins, CO. I. The Trustee has given notice of his intention to assert claims for "remediation costs" incurred at the following two additional "insured sites": CDG Warehouse, 11551 East 45th Street, Denver, CO, and Longmont West, 2950 Colorful Avenue, Longmont, CO. 3 J. Chubb Custom has been investigating the Trustee's claims for reimbursement and/or payment of "remediation costs" incurred with respect to the above- referenced"insured sites"pursuant to a reservation of rights. K. The Trustee has tendered to Chubb Custom for defense under the Policy the following matters: 1. Adversary Proceeding No. 13-51320 (PJW) (the "Adversary Proceeding") commenced by 9586 LLC against Chubb Custom and Abound Solar; 2. A threatened action by 9586 LLC described in a July 18, 2013 letter from 9586 LLC's property manager("Threatened RCRA Suit"); and 3. Three proofs of claim filed on January 14, 2013 by 9586 LLC against Abound Solar, Inc. (in Case No. 12-11972), Abound Solar Technology Holdings, LLC (in Case No. 12-11973), and Abound Solar Manufacturing, LLC (Case No. 12-11974) (the"Bankruptcy Claims"). L. In a September 16, 2013 letter, Chubb Custom denied coverage for the defense of the Adversary Proceeding, but agreed to provide a defense with respect to the environmental aspects of the Bankruptcy Claims (the`Environmental Claim"). M. On November I, 2013, Chubb Custom filed (i) a motion to dismiss the first amended complaint filed in the Adversary Proceeding, (ii) a motion for entry of an order determining that the Bankruptcy Court does not have authority to enter a final judgment or order in the Adversary Proceeding, and (iii) a motion to withdraw the Bankruptcy Court reference. 4 N. On November 8, 2013, the Trustee filed objections to the Bankruptcy Claims and announced that the Trustee was commencing formal discovery with respect thereto. O. There are additional pending contested matters among 9586 LLC,the Trustee and the United States Department of Energy ("DOE"), specifically, 9586 LLC's motion for relief from the cash collateral order and the Trustee's motion to abandon property located at the 9586 Property (the "Contested Matters"), and 9586 LLC additionally has threatened to commence additional proceedings against the DOE and the Trustee for the Chapter 7 estates. P. Other Persons may in the future make claims against the Trustee for the Chapter 7 estates or Abound Solar for the costs of environmental response, remediation, and/or clean-up at "insured sites" ("Existing and Future Non-Litigated Damage Claims"). Q. Certain governmental and public entities have filed claims in the Chapter 7 estates, or may in the future file claims in the Chapter 7 cases or against Abound Solar (and/or Chubb Custom or others) for the costs of environmental response, remediation, and/or clean-up at "insured sites" (the "Existing and Future Governmental/Public Entities Claims"). R. There are disputes between the Parties regarding their respective rights and obligations with respect to insurance coverage under the Policy (the "Coverage Disputes"). S. Each of the Coverage Disputes is a bona fide, genuine,and substantial dispute. 5 T. The Agreement further effectuates a settlement, release, and buyback of the following two insurance policies issued by Federal, the parent corporation of Chubb Custom: (1) Federal Insurance Company Policy No. 3586-79-74 NBO, which provided liability insurance to AVA Solar ("AVI"), a predecessor of Abound Solar, Inc. for the policy period from March 19, 2007 to March 19, 2008, with a per-occurrence limit of$1 million and an aggregate limit of$2 million, and (2) Federal Insurance Company Policy No. 7986-01-49, which provided commercial excess and umbrella insurance to AVI for the policy period from August 8, 2007 to March 19, 2008, with per-occurrence and aggregate limits of$5 million, both of which contain "Pollution" exclusions (the "Prior Federal Insurance Policies"). U. To avoid the risk, expense, and burden of litigation, and without admitting any liability, Chubb Custom, Federal, and the Trustee desire to forever settle, resolve, compromise and terminate any and all disputes and existing or alleged obligations arising from, relating to, or in respect of the Released Subject Matter. V. The Trustee, Chubb Custom, and Federal negotiated the Agreement in good faith and at arm's length to resolve disputed claims in compliance with all applicable laws. W. The compromise and settlement memorialized in the Agreement is not the product of fraud or collusion. X. The Agreement represents an informed, sound exercise of the Trustee's business judgment. 6 Y. Considering all of the circumstances of the chapter 7 cases, the Agreement is fair and equitable, reasonable, and in the best interests of the Debtors, the Chapter 7 estates and creditors, and all parties in interest. The Trustee has demonstrated good, sufficient, and sound business purposes and justifications for the relief requested in the Motion. Z. The settlement and compromise with Chubb Custom and Federal embodied in the Agreement are consistent with and within the reasonable range of litigation outcomes if the Trustee were to litigate the matters resolved pursuant to this Order. AA. The releases, settlement, and sale to be made by the Trustee pursuant to the Agreement are appropriate, and Chubb Custom and Federal would not have entered into the Agreement or agreed to any compromises or settlements contained in the Agreement, and Chubb Custom and Federal would not pay the Purchase Amount pursuant to the Agreement without obtaining the benefit of the releases contained in the Agreement and the channeling injunction set forth in this Order. BB. The settlement effected by the Agreement meets the standard established by the United States Court of Appeals for the Third Circuit for approval of settlements, which requires consideration of the following factors: (1) the probability of success in the litigation; (2) the likely difficulties in collection; (3) the complexity of the litigation involved and related expense and inconvenience; and(4) the interests of the creditors. Myers v. Martin (In re Martin), 91 F.3d 389, 7 393 (3d Cir. 1996); see also Fry's Metals, Inc. v. Gibbons (In re RFE Industries, Inc.), 283 F.3d 159, 165 (3d Cir. 2002). CC. The Purchase Amount is at least equal to the fair value of the Policy and the Prior Federal Insurance Policies. DD. The consideration to be paid by Chubb Custom and Federal under the Agreement is fair, equitable, and reasonable to the Debtors,the Chapter 7 estates, and to all persons who hold claims against the Debtors or the Chapter 7 estates for all relevant purposes under the Bankruptcy Code, and constitutes reasonably equivalent value. EE. As evidenced by the affidavits of service and publication previously filed with the Court (see D.I. [ 1), the notice of the Motion and relief sought therein was proper timely and sufficient under the particular circumstances, and provided for adequate opportunity for any party in interest, including those parties or entities whose identities presently are unknown to the Trustee and all parties or entities with an interest in the Policy and/or the Prior Federal Insurance Policies, to file an objection or response to the Motion and provided a fair and reasonable opportunity for any party in interest, including those parties or entities whose identities presently are unknown to the Trustee and all parties or entities with an interest in the Policy and/or the Prior Federal Insurance Policies, and no other or further notice of the Motion, the Hearing, or entry of this Order is required. FF. The transaction set forth in the Agreement pursuant to which Chubb Custom is to acquire all rights, title and interests of the Debtors and the Chapter 7 estates in and under the Policy and Federal is to acquire all rights, title and interests of the Debtors and the Chapter 7 estates in and under the Prior Federal Insurance Policies free and 8 clear of all liens, encumbrances, claims, and/or interests as provided in the Agreement constitutes a sale of property pursuant to Bankruptcy Code Sections 363(6)and 363(f). GG. Chubb Custom and Federal are good faith purchasers within the meaning of Section 363(m)of the Bankruptcy Code. HH. The Trustee is authorized to sell all of the Debtors' and/or the Chapter 7 estates' rights,title, and interests in and under Policy and the Prior Federal Insurance Policies free and clear of all interests because, in each case, one or more of the standards set forth in Sections 363(f)(I)-(5) of the Bankruptcy Code has been satisfied, and all holders of interests against the Debtors, their estates, the Policy or the Prior Federal Insurance Policies who did not object, or who withdrew their objections, to the Motion are deemed to have consented thereto pursuant to Section 363(0(2) of the Bankruptcy Code. II. Holders of interests, including those who did object, fall within one or more of the other subsections of Section 363(f) of the Bankruptcy Code, including, without limitation, Section 363(f)(4) because such interests are subject to a bona fide dispute, and Section 363(0(5) because the holders of any such interest could be compelled in a legal or equitable proceeding to accept a money satisfaction on account of such interest. ORDERED, ADJUDGED,AND DECREED THAT: 1. The Motion is GRANTED. 2. All objections and responses, if any, to the Motion or the relief requested therein that have not been withdrawn, waived, or settled, and all reservations of rights 9 included in such objections and responses, are overruled on the merits and denied with prejudice. 3. Pursuant to Sections 105 and 363 of the Bankruptcy Code, Bankruptcy Rule 9019, the Trustee is authorized to enter into the Agreement and take such steps as may be necessary to implement and effectuate the terms of this Order, the Agreement, and any related transactions. 4. Once all conditions of Section 2.3 of the Agreement have been satisfied, pursuant to Sections 105 and 363 of the Bankruptcy Code and Bankruptcy Rule 9019, and effective upon the Trustee's receipt of the Purchase Amount as provided for in Section 3.2 of the Agreement, and without need for further action: (i) the Trustee shall be deemed to have sold, conveyed, assigned, transferred, and delivered to Chubb Custom, and Chubb Custom shall be deemed to have purchased from the Trustee, all rights, title, and interests in and under the Policy, free and clear of all liens, encumbrances, claims and/or interests of any Person of any kind or nature whatsoever, to the fullest extent permitted under Section 363(f) of the Bankruptcy Code; and (ii) the Trustee shall be deemed to have sold, conveyed, assigned, transferred, and delivered to Federal, and Federal shall be deemed to have purchased from the Trustee, all rights, title, and interests in and under the Prior Federal Insurance Policies, free and clear of all liens, encumbrances, claims and/or interests of any Person of any kind or nature whatsoever, to the fullest extent permitted under Section 363(f) of the Bankruptcy Code . 5. All claims and interests that were, could have been or may in the future be asserted under or against the Policy and/or the Prior Federal Insurance Policies shall survive, 10 and be channeled solely and exclusively to the proceeds of such sale that are held by the Trustee. 6. Pursuant to Section 105(a)of the Bankruptcy Code,all Persons are hereby and shall be permanently and forever enjoined, barred and estopped from asserting claims against the Policy or Chubb Custom with respect to the Policy, or against the Prior Federal Insurance Policies or against Federal with respect to the Prior Federal Insurance Policies to the fullest extent of the Agreement. Chubb Custom and Federal shall pay the Purchase Amount to the Trustee for the benefit of the Chapter 7 estate of Abound Solar, Inc. the Purchase Amount in accordance with the Agreement. The Adequate Protection Liens of the DOE, as defined in this Court's Order found at Docket Entry 256, attach to the Purchase Amount. 7. The Purchase Amount will be held by the Trustee in a separate trustee account,and will not be distributed without further order of the Court. Nothing in this Order authorizes Rabobank, N.A. or Bankruptcy Management Solutions, Inc. to deduct monthly service fees from any Trustee bank account created in these cases for the purposes of holding such Purchase Amount, and such service fees may not be deducted by either of those entities from such Purchase Amount. 8. Chubb Custom is hereby dismissed from Adversary Proceeding No. 13- 51320, however such dismissal shall be without prejudice to the rights of 9586 LLC to assert a claim(or claims) against the Purchase Amount however any such claim(s)asserted by 9586 shall be without prejudice to the Trustee or any party in interest to contest such claim(s). 9. The Trustee on behalf of the Chapter 7 estates fully releases, acquits and forever discharges Chubb Custom and Federal Insurance Company from any and all claims 11 arising out of, related to, connected with, or in any manner pertaining to the Released Subject Matter to the fullest extent of the Agreement. 10. Chubb Custom and Federal fully release, acquit and forever discharge the Trustee and the Chapter 7 estates from any and all claims arising out of, related to, connected with, or in any manner pertaining to the Released Subject Matter to the fullest extent of the Agreement. 11. Notwithstanding the possible applicability of Bankruptcy Rule 6004(h), the terms and conditions of this Order shall be immediately effective and enforceable upon its entry. 12. The Court shall retain jurisdiction to hear and determine all matters, claims, rights or disputes arising from or related to the implementation of this Order. Dated: February_, 2014 Wilmington, Delaware THE HONORABLE PETER J. WALSH UNITED STATES BANKRUPTCY JUDGE 12 EXHIBIT B JACOB C.COHN JCOHN®OOROONREES.COM GORDON & REES itr DIRECT DIAL:(215)717-4004 DIRECT FAX: (215)693-6644 ATTORNEYS AT LAW ONE COMMERCE SQUARE 2005 MARKET ST.,SUITE 2900 PHILADELPHIA,PA 19103 PHONE:(215)561-2300 FAX: (215)693-66.50 W W W.GORDONREES.COM September 16, 2013 VIA E-MAIL/FIRST CLASS MAIL Gregory F.Fischer, Esquire Conch&Taylor The Brandywine Building 1000 West Street 10th Floor P.O.Box 1680 Wilmington,DE 19899-1680 Re: Our File No.: 3731-24-97/001 ("Policy") Policyholder: Abound Solar, Inc., et al. (Collectively"Abound Solar") Claimants: 9586 LLC Site: 95861-25 Frontage Road, Longmont,CO("Property") Company: Chubb Custom Insurance Company("Chubb Custom") Dear Mr.Fischer: This letter responds to the following letters recently received from you: 1. Letter dated August 16, 2013 tendering defense of the Trustee of the estate of Abound Solar Manufacturing, LLC in connection with Adversary Proceeding No. 13-51320 (PJW)(the"Adversary Proceeding")commenced against Chubb Custom and Abound Solar and attaching a copy of the original adversary complaint(which since has been superseded by the filing of an amended complaint); 2. Letter dated August 19,2013 tendering defense of a threatened action by 9586 LLC and attaching a July 18,2013 letter received from 9586 LLC;and 3. Letter dated August 26,2013 attaching and tendering defense of three substantially identical proofs of claim filed on January 14,2013 by 9586 LLC against Abound Solar, Inc.(in Case No. 12-11972),Abound Solar Technology Holdings,LLC(in Case No. 12-11973),and Abound Solar Manufacturing, LLC(Case No. 12-11974) (the"Bankruptcy Claims"). Gregory F. Fischer, Esquire September 16, 2013 Page 2 As set forth in detail below,Chubb Custom is prepared to defend the Trustee,solely in his capacity as the Trustee of Abound Solar, Inc.,Abound Solar Technology Holdings, LLC and Abound Solar Manufacturing,LLC (collectively,"Abound Solar"),subject to a full reservation of rights and subject to the terms and conditions of the Policy, but only against the alleged environmental liability claims asserted by 9586 LLC against Abound Solar and/or the Trustee. 1. Background Abound Solar is insured by Chubb Custom Insurance Company("Chubb")under Environmental Site Liability Insurance Policy No.37312497(the "Policy"),issued on May 3, 2012,effective February 1,2012,for a policy period of March 31,2011 to March 31,2014. We understand that Abound Solar filed for bankruptcy protection on July 2, 2012. We further understand that Jeoffrey L.Burtch was appointed Chapter 7 Trustee("Trustee")for the bankruptcy estates of the Abound Solar entities. A. First Notice of Claim By letter to the Trustee's counsel dated December 12,2012,9586 LLC's counsel gave notice of a claim against the estate of Abound Solar Manufacturing,LLC for environmental issues. The letter asserted that counsel for the Trustee and counsel for the DOE"informed 9586 LLC of numerous environmental problems at the Property,"including"the discharge,dispersal and release or escape of the contaminant cadmium upon the building,the migration of cadmium throughout the building(and potentially outside the building)and the release of cadmium contaminated water into tanks outside the building. Such discharges, dispersals and releases are believed to have originated in equipment and tools used to manufacture solar panels as well as from broken solar panels." The letter further reported that Abound Solar Manufacturing may have transferred materials and/or solar panels to an adjacent property leased by Abound Solar and stated that 9586 LLC was "justifiably concerned"that these activities may have contaminated the adjacent property(which is not believed to be owned by the Owner). By letter of December 14,2012,the Trustee's counsel placed Chubb on notice of "pollution incidents"and"potential claims." This letter enclosed copies of the 9586 LLC's December 12,2012 letter,as well as a letter concerning cadmium contamination at Abound Solar's Ft.Collins, Colorado R&D facility. Chubb acknowledged the claim by letter dated December 19,2012. Reference is made to Chubb Custom's February 19,2013 letter to you,disclaiming coverage for the cost of removing non-leaking barrels and other containers from the premises because the presence of such materials does not qualify as a covered "pollution incident"under the Policy,and otherwise reserving Chubb Custom's rights. B. The Bankruptcy Claims On January 14,2013,9586 LLC filed the Bankruptcy Claims. The Bankruptcy Claims are substantially identical,except as to the identity of the Abound Solar entity against which such claims are asserted. The Bankruptcy Claims are unliquidated,and apparently contingent and Gregory F.Fischer,Esquire September 16,2013 Page 3 disputed,and appear to assert three distinct claims. The first claim is described as a"Property Conversion Claim"and alleges that in October 2012,the Trustee wrongfully auctioned off fixtures on the Property that were property 9586 LLC,in breach of the lease between 9586 LLC and Abound Solar. The third claim,asserted solely against Abound Solar Maufacturing,LLC,is for"Breach of Lease." This appears to be,at least in part,a contingent claim for rejection damages for breach of lease in the event that the Trustee rejects the lease on the Property(which Chubb Custom understands subsequently occurred,effective March 31,2013). The second claim is described as an"Environmental Claim""aris[ing] from [Abound Solar's] pre-petition and post-petition use of the Leased Premises to manufacture solar panels." 9586 LLC alleges: As a result of such use,the Leased Premises are contaminated with hazardous waste,including cadmium. Specifically,cadmium has been confirmed in and on the equipment stored on the Leased Premises and on the floors and walls of the Leased Premises [and t]here are other areas likely contaminate,but[Abound Solar]has failed to address those areas and has turned a blind eye to them. In addition,[Abound Solar]has left behind on the Leased Premises hazardous,waste-laden waste water,drums with cadmium- contaminated waste,and waste solar panels." The Trustee did not alert Chubb Custom to the filing of the Bankruptcy Claims prior to tendering them for the defense in your August 26,2013 letter. C. The Adversary Proceeding The Adversary Proceeding was commenced on July 26,2013 by the filing of a complaint by 9586 LLC against Chubb Custom and Abound Solar. The currently-operative pleading in the Adversary Proceeding is 9586 LLC's First Amended Complaint(the"Complaint"),filed on August 30, 2013. The Complaint names Abound Solar Manufacturing,LLC as a defendant, asserting that it"is included as a party herein because it is a necessary party pursuant to Fed.R. Bankr.P.7019." (¶4). The Complaint generally alleges that the action"arises out of cadmium [c]ontamination"caused by Abound Solar at its former manufacturing facility at 95861-25 Frontage Road, Longmont Colorado, leased from 9586 LLC. (¶8). The Complaint alleges that Section 9.2 of the Lease requires Abound Solar to"investigate,clean up and otherwise remediate at Tenant's sold expense, any release of Hazardous Materials caused,contributed to,or created by"Abound Solar(¶ 12),and under Section 17.2 of the Lease,Abound Solar is obligated to "defend and indemnify 9586 for any losses arising from or in connection with . . . Hazardous Materials,such as cadmium." (¶ 13). The Complaint further alleges,upon information and belief,that"the Property is contaminated from Abound Solar's manufacturing operations, including but not limited to the discharge,dispersal and release or escape of the contaminant cadmium upon the Building,the migration of cadmium throughout the building and outside the building." (¶23). Gregory F.Fischer,Esquire September 16, 2013 Page 4 9586 LLC alleges that because the Property is identified in the Policy as an "insured site,"9586 LLC obtained status as"a direct and third-party beneficiary of Chubb's obligations under the Policy. (¶ 16). 9586 LLC further alleges that"[t]hrough the Policy, Chubb is . . .both the intended and actual guarantor of Abound Solar's indemnity obligation under the Lease, thereby rendering 9586 LLC a direct and third-party beneficiary of those obligations." (¶ 17). 9586 also alleges that"[t]hrough the Policy,Chubb is also . . .the insurer for 9586 LLC in 9586 LLC's capacity as the owner of an"insured site"under the Policy." (1118). The Complaint incorrectly asserts(¶30)that Chubb's February 19, 2013 reservation of rights letter constituted a"denial"of coverage. The Complaint further alleges that Chubb wrongfully failed"to timely investigate this matter and provide coverage,"thereby forcing the Owner"to retain consultants to begin formulating a plan to remediate the Contamination." 0135). The Complaint purports to allege four counts: Count I, asserted against Chubb and Abound Solar,seeks"to determine the parties' respective rights and obligations under the Policy. Count II is directed solely against Chubb and purports to assert a breach of contract claim against Chubb. Count III, again directed solely against Chubb,purports to assert a claim for insurance bad faith against Chubb including,inter alia, for engaging in"unfair claims settlement practices"in violation of Colorado law. Count IV is asserted solely against the Debtor and seeks a declaration that "insurance proceeds owed to [the Owner] under the Policy are not property of the Estate pursuant to I U.S.C. §541. Significantly,the Complaint seeks neither monetary nor injunctive relief from Abound Solar. Instead,as to Abound Solar,the Complaint merely asks"that the Court declare that insurance proceeds owed to 9586 LLC are not property of the Estate." II. The Policy Without intending to vary or alter the complete terms and conditions of the Policy, which are incorporated by reference herein in their entirety,the Policy, an Environmental Site Liability Policy, is a claims-made-and-reported policy with a"delineation date"of March 31,2008. The Insured Sites include 9586 LLC's property,9586 1-25 Frontage Rd., Longmont, Colorado. The relevant Abound Solar entities are all "named insureds"under the Policy. 9586 LLC, however, is not insured,as a"named insured"or otherwise, under the Policy As set forth in the Declarations,the Policy has limits of insurance of$2 million"Each Pollution Incident Loss Limit"and$6 million Aggregate Limit,subject to a$25,000"Each Pollution Incident"deductible. "Section III, Limits Of Insurance And Deductible,"subsection 1 Gregory F. Fischer,Esquire September 16,2013 Page 5 (a)(1),provides that"the most we will pay for all loss and business interruption expense arising from the same,continuous,repeated or related pollution incident is the Each Pollution Incident Loss Limit." The potentially-applicable Insuring Agreement is"Section I,Coverage,Coverage B— Bodily Injury,Property Damage And Remediation Costs—New Pollution Incident,"which provides, in relevant part: We will pay loss that the insured becomes legally obligated to pay as a result of a claim for bodily injury,property damage'or remediation costs,resulting from a pollution incident that commenced on or after the delineation date,and is on, under or migrating beyond the boundaries from the insured site,provided that such claim is first made against the insured and reported to us in writing during the policy period . . . . We will also pay remediation costs resulting from discovery of a pollution incident that commenced on or after the delineation date,and is on or under the insured site,provided that such pollution incident is reported to us in writing as soon as possible after discovery and in any event during the policy period. "Section I,Coverage,subsection 2. Defense And Settlement"provides that Chubb Custom has the right and duty to defend the insured against a claim to which this insurance applies,provided,however,that such duty to defend or continue defending such claim ends once the Limits of Property Damage means: A. Physical injury to or destruction of natural resources and other tangible property, including loss of use. . .;or B. Loss of use of natural resources and other tangible property that has not been physically injured or destroyed, but not diminution of value of such property. Property damage does not include remediation costs. Remediation costs means: A. Reasonable and necessary costs to investigate,neutralize,remove,remediate (including associated monitoring)or dispose of soil,surfacewater,groundwater or other contamination to the extent required by environmental laws or that have been actually incurred by the government. . .or by third parties. 3 "Pollution incident"is defined as"a discharge, dispersal,seepage,migration,release or escape of any solid,liquid,gaseous or thermal irritant or contaminant. ..into or upon land,or any structure on land,the atmosphere or any groundwater,watercourse or body of water." Gregory F. Fischer, Esquire September 16, 2013 Page 6 Insurance are exhausted or are tendered into court. Legal expense is included in loss,reduces the Limits of Insurance,and is included within the Deducible shown in Item 4 of the Declarations. We will present all settlement offers to the insured,and if we recommend a settlement which is acceptable to a claimant,exceeds any applicable deductible and is within the Limits Of Insurance, and the insured refuses to consent to such settlement offer,then our duty to defend shall end and the insured shall defend such claim independently and our liability shall not exceed the amount for which the claim could have been settled if your recommendation had been accepted,exclusive of the deductible or any outstanding deducible amounts and legal expense incurred up to and including the date of such refusal "Section IV, Conditions, 18. Voluntary Payments"provides: "Except for emergency expense,the insured shall not voluntarily enter into any settlement,make any payment or assume any obligation with respect to this insurance without our consent,which shall not be unreasonably withheld." "Section 1,Coverage, subsection 3, Exclusions,"provides in part, 3. Exclusions This insurance does not apply to any loss . . . : B. Contractual Liability Which the insured is legally obligated to pay by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability: (1) That the insured would have in the absence of such contract or agreement; or (2) Assumed in a contract or agreement that is designated in an"Insured Contract Endorsement," if we attach such n endorsement to this policy. C. Damage to Owned Property "Arising from property damage to property owned, leased,rented,occupied or loaned to an insured." E. Insured vs. Insured Arising from a claim by an insured against any other person or entity who is also an insured under this insurance. This exclusion does not apply to a claim initiated by a third party or a claim that arises out of an indemnification given by one named insured to another named insured in a contract or agreement that is described in an"Insured Contract Endorsement," if we attach such an Gregory F. Fischer,Esquire September 16,2013 Page 7 endorsement to this policy. There is also a"Non-Compliance"exclusion barring coverage"Arising from a responsible insured's intentional,knowing,willful or deliberate non-compliance"with its environmental obligations,and a"Known Pollution Incident/Non-Disclosure"exclusion. J. Non-Compliance Arising from a responsible insured's intentional,knowing,willful or deliberate non-compliance with any statute,regulation,ordinance,administrative complaint, notice of violation,notice letter,instruction of any governmental agency or body, or executive,judicial or administrative order. "Section II.Duties Of The Insured In The Event Of A Claim, Pollution Incident Or Business Interruption,"subsection"1.Reporting A Claim, Discovery Of A Pollution Incident Or Business Interruption"provides: A. You must report a claim or discovery of a pollution incident to us as soon as possible and in any event during the policy period . . . Subsection 3 of Section II, "Duty To Remediate Or Mitigate A Pollution Incident further provides: In the event of a pollution incident,you must take all actions necessary to comply with environmental laws including retaining competent contractors and other professionals. We have the right to review and approve all such actions. In addition,we have the right but not the duty to participate in decisions regarding remediation costs and take all actions necessary to comply with environmental laws. Any sums expended by us in taking such action shall be deemed incurred by the insured and shall reduce the limits of insurance. Subsection 3 of Section II, "Cooperation,"provides: You agree to cooperate and otherwise offer us reasonable assistance in the defense, investigation or settlement of a claim. Such cooperation and assistance shall include participating at meetings,testifying at hearings,depositions,and trials,and securing evidence Further,"Section IV.Conditions,"contains the following clause: 10. Legal Action Against Us—No person or organization has a right under this insurance: A. to join us as a party or otherwise bring us into a claim; or B. to sue us under this insurance unless all of its terms have been fully complied with. Gregory F.Fischer, Esquire September 16,2013 Page 8 A person or organization may sue us to recover on a fully executed settlement agreement or on a final judgment against the insured obtained after an actual trial, arbitration or alternative resolution proceeding,but we will not be liable for loss that is not payable under the terms of this insurance or that is in excess of the applicable Limits Of Insurance." III. Analysis,Partial Disclaimer,and Reservation of Rights A. The Adversary Proceeding As outlined above,the Complaint in the Adversary Proceeding asserts, erroneously,that 9586 LLC is an insured under the Policy. While the Complaint seeks to recover damages from Chubb Custom, it seeks no monetary or injunctive relief from the Abound Solar estate. Therefore,the Complaint does not appear to be a"claim"to which the Policy applies, and therefore Chubb Custom is under no duty to defend the Trustee in connection with this Complaint. The recent addition of a declaratory judgment count to 9586 LLC's Complaint seeking a declaration that any monies claimed from Chubb by 9586 LLC do not constitute property of the estate does not change this conclusion because 9586 still is not asserting any sort of claim against the estate for monetary or injunctive relief arising from the alleged"pollution incidents"at the Property. 9586,instead,is seeking a declaration on a pure issue of bankruptcy law based upon the Trustee's alleged position regarding the status of potential policy proceeds as constituting property of the estate. Respectfully,the Policy does not require Chubb Custom to defend Abound Solar/the Trustee in connection with an issue of bankruptcy law over the ownership of policy proceeds that 9586 LLC erroneously alleges are payable directly to it as an insured under the Policy. Chubb Custom therefore declines the Trustee's tender of the defense of Abound Solar/the Estate in the Adversary Proceeding, at least based upon the current allegations of 9586 LLC's Complaint. B. The Bankruptcy Claims 9586 LLC's Bankruptcy Claims against Abound Solar allege a total of three claims. The first claim contained in all three proofs of claim alleges a claim for conversion by Abound Solar and/or the Trustee of 9586 LLC's property. These claims,which have nothing to do with environmental liability,do not allege a"claim"that is potentially covered by the Policy. Chubb therefore respectfully declines to defend,or fund the Trustee's defense,of the conversion claims. The second claim, "Environmental Claims,"alleges claims "for payment of any and all investigation, regulatory compliance,clean-up and remediation costs,attorneys' fees and statutory interest"arising from alleged cadmium contamination of the Property. This aspect of the Bankruptcy Claims appears to allege a potentially-covered claim under the Policy. Subject to a full reservation of rights under the Policy, and subject to obtaining any necessary bankruptcy court approvals that might be necessary to permit Chubb Custom to use proceeds of the Policy for the purpose of defending Abound Solar/the Trustee and to assign counsel for the purpose of doing so,Chubb Custom accepts Abound Solar's tender of the defense of the"Environmental Claims"aspect of the Bankruptcy Claims. We are aware that Abound Solar recently retained Gregory F. Fischer,Esquire September 16,2013 Page 9 environmental counsel. Without waiver of Chubb Custom's right to appoint counsel and control the defense of the"Environmental Claims,"Chubb Custom is willing to consider an arrangement whereby the Trustee's environmental counsel will defend Abound Solar/the Trustee against these claims with fees and expenses incurred by such environmental counsel being paid and/or reimbursed by Chubb. If the Trustee is interested in pursuing this possibility, please contact me directly to further discuss potential arrangements. Otherwise,Chubb Custom will appoint counsel of its choosing to undertake this defense. The third claim,contained only in the proof of claim against Abound Solar Manufacturing,LLC,alleges a claim for"Breach of Lease,"which 9586 LLC alleges are"in part related to the claims described above,"which include the alleged"Property Conversion Claim" and"Environmental Claim." To the extent that the alleged"Breach of Lease"claim relates to the"Property Conversion Claim,"Chubb Custom respectfully declines to defend Abound Solar/the Trustee for the reasons explained above. Further,to the extent that 9586 LLC's "Breach of Lease"claim asserts a claim for statutory lease rejection claims,these damages,too, have nothing to do with alleged environmental liabilities. Therefore,such claims are not "claims"to which the Policy potentially might apply,and therefore Chubb Custom respectfully declines to defend Abound Solar and/or the Trustee against such claims. To the extent that the "Breach of Lease"claim relates to the alleged"Environmental Claim,"Chubb Custom accepts the Trustee's tender of the defense of this claim as well. As no insured contract endorsement was added to this Policy,however,the Lease and any other contract with 9586 LLC does not qualify as an"insured contract"under the Policy. Accordingly,any coverage for a contractual claim relating to the"Environmental Claim"(or otherwise)may be subject in whole or part to the Policy's"Contractual Liability"exclusion,quoted above. C. The July 18,2013 Letter The July 18,2013 letter sent on behalf of 9586 LLC,asserts claims against the Trustee and the Department of Energy("DOE")for alleged cadmium contamination at the Property. The DOE is not an insured under the Policy,and Chubb Custom does not understand the Trustee to be tendering defense of DOE against 9586 LLC's claims. As respects the allegations of misconduct directed toward the Trustee,this appears to be the same claim as previously was alleged in January 2013,through the"Environmental Claims"aspect of the Bankruptcy Claims, albeit in greater detail. As stated above,Chubb Custom arrPpts the Trustee's tender of 9586's LLC's"Environmental Claim." D. Reservation of Rights Chubb Custom's defense of the Abound Solar/the Trustee is subject a complete reservation of rights. Without limiting the scope of Chubb Custom's reservation,based upon information provided to Chubb Custom to date as well as information gleaned from Chubb's investigation,at least the following policy provisions may apply to preclude or limit coverage; First,as set forth in Chubb Custom's February 19,2013 letter to you,the presence of non-leaking containers containing hazardous materials at the Property does not constitute a "Pollution Incident"and the cost of proper disposal of such containers is not covered under the Gregory F. Fischer,Esquire September 16, 2013 Page 10 Policy. Other aspects of the"Environmental Claims"also may not constitute"Pollution Incidents"and Chubb Custom reserves the right to deny coverage in whole or in part on this ground. Second, according to 9586 LLP's allegations, most,if not all,of the alleged cadmium contamination is restricted to property owned by, leased to, and/or occupied by Abound Solar and therefore may be subject, in whole or in part,to the"Damage to Owned Property Exclusion" which excludes all"loss,"which includes, inter alia,"remediation cost"and Chubb Custom reserves the right to deny coverage in whole or in part on this ground Third,9586 LLP's claims are based at least in part upon alleged breaches of contract. Since there is no "insured contract endorsement"added to the Policy,the"Contractual Liability" exclusion may be applicable to preclude coverage except with respect to potentially-covered liability that Abound Solar/the Trustee otherwise would have had in the absence of any contract Chubb Custom reserves the right to deny coverage in whole or in part on this ground. Fourth,9586 LLC alleges status as an insured under the Policy. While Chubb Custom disputes this allegation,to the extent that 9586 LLC prevails in this contention, the Policy's "Insured vs. Insured"exclusion may be applicable,and Chubb Custom reserves the right to deny coverage in whole or in part on this ground. Fifth,as previously noted in Chubb Custom's February 19,2013 letter,Chubb Custom reserves the right to deny coverage in whole or in part on the basis of the Policy's "Non- Compliance"exclusion. Sixth,Chubb Custom reserves the right to deny coverage in whole or in part on the ground of late notice. In this respect,Chubb Custom notes that,in recent bankruptcy filings in the main bankruptcy case, 9586 LLC alleges that Abound Solar/the Trustee was aware of cadmium contamination on the property at least as early as July 2012,and by July 24, 2012,had obtained at least one estimate for decontaminating at least part of the Property. These allegations support the conclusion that by July 2012,at the latest,Abound Solar/the Trustee had "discovered"a"pollution incident"on the Property. The Trustee, however,did not notify Chubb Custom of any alleged"pollution incident"until the Trustee's counsel's December 14, 2012 letter to Chubb Custom giving notice of 9586 LLC's claim. In this respect, it further bears noting that 9586 LLC's recent bankruptcy filings allege that as of July 2012,the alleged cadmium contamination was confined to the"Restricted Area"where hazardous materials, including cadmium, were utilized in the solar panel manufacturing process; that post-petition activities by the Trustee's agents thereafter caused the cadmium contamination to be spread beyond the Restricted Area,inter alia,by failing to follow appropriate safety protocols during an equipment auction in October 2012; and that the resulting spread of contamination throughout the Property allegedly has caused the estimated cost of decontaminating to Property to increase substantially. Seventh,Chubb Custom reserves the right to deny coverage in whole or in part on the basis of 9586 LLC's possible breach of its"Duty to Remediate Or Mitigate"under the Policy. As noted above, 9586 LLC alleges in recent bankruptcy filings that, although Abound Solar/the Gregory F. Fischer,Esquire September 16,2013 Page 11 Trustee was aware of cadmium contamination by July 2012 at the latest,and instead of undertaking to remediate the alleged contamination engaged in actions that exacerbated the alleged contamination. In addition to the foregoing,Chubb Custom notes that in certain bankruptcy court filings, 9586 LLC has made statements to the effect that the cost of remediating the Property and returning it to a safe and rentable condition may exceed$3.6 million. In this respect,Chubb Custom reminds the Trustee that the Policy's limits of liability are$2 million per"pollution incident"and$6 million in the aggregate,subject to a$25,000 per"pollution incident" deductible,and that, pursuant to"Section III,Limits Of Insurance And Deductible,"subsection 1 (a)(1),"the most we will pay for all loss and business interruption expense arising from the same,continuous, repeated or related pollution incident is the Each Pollution Incident Loss Limit." Chubb reserves the right to assert,pursuant to this provision,that all of 9586 LLC's claims are subject to a single$2 million limit. Furthermore,whatever the amount of the potentially applicable limits of insurance,such limits are reduced by payment of"legal expense," including any legal expense incurred in Chubb Custom's defense of the Trustee in connection with 9586 LLC's claims. Finally,Chubb Custom reserves the right to seek a judicial determination of its coverage obligations and to recover defense costs it has spent in the event that it is determined that Chubb Custom had no defense obligation. Reserving all rights and waiving none, I remain, Sincerely, GORDON&REES LLP fill):11 Jacob C.Cohn JCC: 1090141/16890513v I Hello