Contract analysis

I. Executive Summary This memorandum summarizes the findings of the legal due diligence review conducted by Calderwood & Harkness LLP on behalf of Crestline Packaging Solutions LLC ("CPS" or "Buyer"), an Ohio limited liability company, in connection with the proposed acquisition of substantially all of the assets of Allegheny Valley Packaging, Inc. ("AVP" or "Seller"), a Pennsylvania corporation (S-corporation for fe

1. Environmental Contamination at the Butler Facility. A Phase II Environmental Site Assessment identified trichloroethylene ("TCE") concentrations in shallow groundwater exceeding the Pennsylvania Act 2 Medium-Specific Concentration standard. Estimated remediation costs range from $1,200,000 to $2,800,000. A Seller environmental special indemnity of up to $8,000,000 is recommended.

2. Collective Bargaining Agreement and Successor Employer Obligations. Approximately 185 hourly production employees at the Butler facility are covered by a collective bargaining agreement with the International Paperworkers Union Local 814, which does not expire until March 31, 2027. CPS, as successor employer, will be bound by the terms of this agreement for the remaining approximately 21 months of its term.

3. Sales/Use Tax Exposure. Potential sales/use tax exposure of approximately $420,000 has been identified in three jurisdictions (Pennsylvania, Ohio, and West Virginia) for the periods 2021 through 2024, relating to potential under-collection or under-remittance on certain product categories.

4. Customer Concentration. AVP's top ten customers account for approximately 62% of TTM revenue, presenting material concentration risk that should be addressed through APA representations, R&W insurance coverage, and potentially a customer retention mechanism.

5. Third-Party Consent Requirements. Approximately 12 contracts require counterparty consent to assignment, including AVP's principal containerboard supply agreement with Consolidated Linerboard Corp. and certain customer agreements. Failure to obtain these consents could materially affect post-closing operations. In addition to the foregoing, we have identified several ancillary matters requiring attention in the AP

II. Organizational and Corporate Matters A. Entity Formation and Good Standing AVP is a corporation organized under the laws of the Commonwealth of Pennsylvania. According to records of the Pennsylvania Department of State, AVP was incorporated on March 12, 1987, and has been assigned Pennsylvania Department of State Entity ID 6519847. AVP's federal employer identification number is 25-1784632. We have confirmed thro

1. The APA should include fundamental representations from Seller regarding due organization, valid existence, and good standing of AVP under Pennsylvania law; the authority of AVP to execute, deliver, and perform the APA and the ancillary transaction documents; the capitalization of AVP and the absence of outstanding equity interests other than the 1,000 shares of common stock held by the three identified shareholde

2. The APA should include, as a condition to Buyer's obligation to close, the delivery of evidence of shareholder approval of the asset sale by all three shareholders (Gerald W. Horvath, Patricia A. Horvath, and Michael G. Horvath), consistent with the requirements of the Pennsylvania Business Corporation Law. Under 15 Pa.C.S. § 1932, a sale of substantially all assets requires the approval of holders of a majority o

3. The corporate name "Allegheny Valley Packaging, Inc." is an excluded asset under the proposed transaction structure. However, CPS will require a transitional period during which it may use the AVP name for customer communications, labeling, packaging, and similar wind-down purposes. We recommend a six-month transitional license to be included in the APA or a separate side letter, with appropriate indemnification p

4. We recommend confirming with Seller's counsel whether any buy-sell agreement, right-of-first-refusal agreement, or other shareholder arrangement exists among the three shareholders that could create impediments or require additional consents in connection with the transaction.

III. Material Contracts A. Overview We have reviewed the material contracts of AVP that are proposed to be assumed by CPS as part of the Acquired Assets under the APA. In total, we have identified approximately 47 material contracts for potential assumption, including customer supply agreements, vendor and raw material supply agreements, equipment leases, and the collective bargaining agreement with the International

1. Closing Condition for Material Consents. The receipt of counterparty consent should be a condition to Buyer's obligation to close with respect to: (a) the CLC supply agreement; and (b) any customer agreement with a counterparty that accounts for more than 5% of AVP's TTM revenue and that contains an assignment or change-of-control consent requirement. Failure to obtain these material consents should give Buyer the

2. Commercially Reasonable Efforts Covenant. For all other contracts requiring counterparty consent (i.e., those not rising to the level of a closing condition), the APA should include a covenant requiring Seller to use commercially reasonable efforts to obtain such consents prior to closing. To the extent any such consents are not obtained by closing, the APA should provide for a post-closing cooperation mechanism u

3. Consents Tracker. We have prepared a Regulatory and Third-Party Consents Tracker (attached as Appendix H) identifying each contract requiring consent, the relevant counterparty, the specific consent provision, the status of consent solicitation, and the classification of each consent as either a closing condition or an "efforts" item. This tracker should be updated regularly between signing and closing. F. Recomme

IV. Real Property A. Owned Properties AVP owns two manufacturing facilities in western Pennsylvania, both of which are included in the Acquired Assets and will be conveyed to CPS at closing. A detailed summary of the real property, including title commitment status, survey status, and environmental permit information, is set forth in Appendix C.

1. Butler Plant Address: 250 Industrial Boulevard, Butler, Pennsylvania 16001 The Butler Plant is AVP's primary manufacturing facility and corporate headquarters. The facility consists of approximately 285,000 square feet of manufacturing, warehouse, and office space situated on approximately 22.5 acres of land in Butler County, Pennsylvania. Approximately 290 of AVP's approximately 340 total employees work at the Bu

2. Meadville Plant Address: 1480 Conneaut Lake Road, Meadville, Pennsylvania 16335 The Meadville Plant is AVP's secondary manufacturing facility. The facility consists of approximately 110,000 square feet of manufacturing and warehouse space situated on approximately 8.2 acres of land in Crawford County, Pennsylvania. Approximately 50 of AVP's employees work at the Meadville facility. The Meadville facility is a non-

1. Owner's title insurance policies from Sentinel Title Insurance Corporation should be obtained for both the Butler and Meadville properties, in amounts equal to the allocated values of the respective properties. The title insurance policies should include standard endorsements for zoning, survey, environmental lien, and other matters customary for commercial and industrial properties.

2. The APA should include comprehensive real property representations from Seller, covering: (a) good and marketable title to each property, free and clear of all liens and encumbrances other than Permitted Encumbrances; (b) the condition of the properties, including the structural integrity and condition of improvements; (c) compliance with all applicable zoning, building, and land use laws and regulations; (d) the

3. Environmental permit transfer and re-issuance timelines should be confirmed with PA DEP. As discussed in Section VI.D and Section XI.B, the Title V operating permit for the Butler facility and the General Permit GP-3 for the Meadville facility will each require transfer or re-issuance to CPS. Pre-closing applications should be initiated to minimize any gap in permit coverage. If permit transfers cannot be complete

4. The Special Warranty Deeds should be prepared in standard Pennsylvania form and reviewed by Great Lakes Title & Escrow Inc. prior to execution.

V. Intellectual Property A. Overview AVP's intellectual property portfolio is modest in scope but includes certain assets of significant value to the ongoing business. The intellectual property included in the Acquired Assets consists of the following categories: • Trademarks and trade names used in connection with AVP's packaging products and services, excluding the corporate name "Allegheny Valley Packaging, Inc.,"

1. An intellectual Property Assignment Agreement should be prepared and executed at closing, capturing all intellectual property included in the Acquired Assets, including trademarks and trade names (other than the excluded corporate name), proprietary formulations, customer lists, trade secrets, know-how, domain names, and related assets. The IP Assignment Agreement should include appropriate representations and war

2. The non-competition and non-solicitation agreements to be executed at closing with Gerald W. Horvath and Michael G. Horvath should include IP-related restrictive covenants, including provisions prohibiting the use or disclosure of trade secrets and proprietary information and requiring the assignment of any IP developed during the post-closing period that relates to the acquired business.

3. The consulting agreement with Michael G. Horvath should include robust confidentiality provisions and an IP assignment clause covering any inventions, formulations, or other intellectual property developed by Mr. Horvath during the term of the consulting engagement.

4. Post-closing, CPS should implement a formal trade secret protection program and file federal trademark applications for key marks, as discussed above.

VI. Environmental Matters A. Phase I ESA — Butler Plant A Phase I Environmental Site Assessment of the Butler Plant was conducted by Greenvale Environmental Sciences LLC under the supervision of Dr. Alicia Fernandez in accordance with ASTM Standard E1527-21. The Phase I ESA report was delivered on May 5, 2025. The Phase I ESA identified one Recognized Environmental Condition ("REC") at the Butler property. The REC re

1. Environmental Representations. The APA should include comprehensive environmental representations from Seller, covering: (a) compliance with all applicable Environmental Laws; (b) possession of all required Environmental Permits; (c) the absence of pending or threatened environmental claims, actions, or proceedings; (d) the absence of Releases of Hazardous Substances at, on, under, or from the properties, except a

2. Seller's Environmental Special Indemnity. The APA should include a special environmental indemnity from Seller, covering pre-closing environmental conditions at both the Butler and Meadville facilities, with a maximum liability cap of $8,000,000 and a survival period of 36 months following the closing. This special indemnity is separate from, and in addition to, the general indemnification provisions of the APA an

3. Interaction with R&W Insurance. We have been in communication with Greystone Marsh Advisory LLC (broker: Philip J. Tanaka) regarding the treatment of the Butler environmental REC under the proposed R&W insurance policy from Northbridge Specialty Insurance Company (Policy No. NSW-2025-07812). It is expected that the Butler environmental REC will be treated as a "known matter" exclusion under the R&W policy, meaning

4. Phase II Monitoring. The final Phase II ESA report is expected in June 2025. Additional sampling may be recommended by Greenvale Environmental Sciences LLC to further delineate the contaminant plume and refine the remediation cost estimates. We recommend that the parties await the final Phase II results before finalizing the APA, and that the environmental special indemnity cap and other environmental provisions b

5. Environmental Permit Transfers. Applications for transfer of PA DEP Permit No. TV-10-00287 (Butler) and General Permit GP-3 (Meadville) should be prepared and submitted in advance of closing. The APA should include a Seller cooperation covenant requiring Seller to assist in the permit transfer process, and the parties should consider whether the completion of permit transfers should be a closing condition or wheth

VII. Litigation and Disputes A. Pending Litigation Our review of AVP's litigation history and current litigation docket, including searches of federal and state court records in Pennsylvania, has not identified any material pending litigation against AVP. Specifically, we did not find any pending claims involving breach of contract, product liability, employment discrimination, intellectual property infringement, env

1. The APA should include representations from Seller regarding the absence of material pending or threatened litigation, arbitration, or governmental proceedings involving AVP or any of the Acquired Assets. These representations should cover claims, actions, suits, proceedings, and investigations at law or in equity, before any court, tribunal, arbitrator, or governmental authority.

2. Product liability claims relating to products shipped by AVP prior to the closing should be classified as Excluded Liabilities and should not transfer to CPS. We recommend that the APA include a clear allocation of product liability risk, with all product liability claims arising from products manufactured, sold, or shipped by AVP prior to the closing being retained by Seller. CPS should confirm that AVP maintains

3. Workers' compensation claims relating to injuries occurring prior to the closing are pre-closing liabilities and should not transfer to CPS. We recommend confirming that AVP's workers' compensation insurance program is occurrence-based (rather than claims-made) so that coverage will continue to respond to pre-closing injuries regardless of when the claim is filed.

VIII. Employment and Benefits A. Workforce Overview AVP employs approximately 340 individuals across its two facilities, allocated as follows: CPS plans to extend offers of employment to substantially all of AVP's employees in connection with the closing. This approach is consistent with the operational continuity objectives of the acquisition and also serves to mitigate potential exposure under the Worker Adjustment

2. Pension Obligations AVP maintains or has previously maintained a defined benefit pension plan. Our review indicates that the pension plan is underfunded by an estimated $3,100,000. The pension obligation, including the underfunding, is classified as an Excluded Liability under the proposed transaction structure. CPS will not assume any obligations or liabilities related to the pension plan, and all such obligation