Contract analysis

I. Executive Summary This memorandum summarizes the findings of our environmental due diligence review of Cascadia Renewables Holdings, Inc. ("Cascadia" or "CRH"), an Oregon corporation headquartered at 1100 SW Sixth Avenue, Suite 1800, Portland, Oregon 97204, conducted in connection with the proposed acquisition of 100% of the outstanding equity interests of CRH by Cascadia Acquisition Corp. ("Buyer" or "Acquisition

II. Scope of Review and Methodology A. Documents and Data Room Materials Reviewed In connection with this memorandum, we reviewed the following documents and materials, which were made available through the Cascadia virtual data room (hosted on Thackeray Solutions), as well as materials provided directly by Clearwater and by Cascadia's counsel at Ridgeway, Ashford & Malone PC:

1. Clearwater Phase I Environmental Site Assessment Reports. Phase I Environmental Site Assessment ("ESA") reports prepared by Clearwater Environmental Consulting Inc. for all twenty-three (23) of Cascadia's operating facilities, consisting of fourteen (14) hydroelectric facilities, six (6) wind farms, and three (3) water-treatment concession facilities. These reports were dated between June 2022 and August 2022 and

2. Clearwater Phase II Environmental Site Assessment Reports. Phase II ESA reports prepared by Clearwater for four (4) facilities that were flagged in the Phase I ESA process as having Recognized Environmental Conditions ("RECs"). These Phase II reports are dated between July 2022 and August 2022 and include soil sampling, groundwater monitoring well installation and sampling, and laboratory analytical results.

3. Cascadia Internal Environmental Compliance Files and Incident Logs (2017–2022). Internal records maintained by Cascadia's Environmental Health and Safety ("EH&S") department, including incident reports, spill logs, regulatory inspection records, and internal audit findings for the period from January 1, 2017 through August 2022.

4. Environmental Permits, Licenses, and Registrations. Copies of all environmental permits, licenses, and registrations maintained by Cascadia and its subsidiaries, including National Pollutant Discharge Elimination System ("NPDES") permits, air quality permits, hazardous waste generator identification numbers, and Spill Prevention, Control, and Countermeasure ("SPCC") plans.

5. Regulatory Correspondence. Correspondence between Cascadia (or its subsidiaries) and federal and state regulatory agencies, including the United States Environmental Protection Agency ("EPA"), Oregon Department of Environmental Quality ("Oregon DEQ"), Washington State Department of Ecology ("Ecology"), and Idaho Department of Environmental Quality ("Idaho DEQ"), for the period from 2017 through the present.

6. Environmental Insurance Policies. Cascadia's pollution legal liability ("PLL") insurance policy, including the declarations page, policy form, endorsements, and claims history.

7. Environmental Management System Documentation. Cascadia's corporate environmental management system ("EMS") manual, standard operating procedures ("SOPs") for environmental compliance, and training records for environmental compliance personnel.

8. Historical Land-Use Records. Historical land-use records, title reports, and Trelwick fire insurance maps for select properties, as compiled by Clearwater and included in the Phase I ESA reports.

9. Draft EPA Disclosure Schedules. The environmental representations and warranties proposed by Cascadia and the Selling Shareholders in the draft EPA, together with the corresponding disclosure schedules, as circulated by Ridgeway, Ashford & Malone PC on August 15, 2022. B. Clearwater Environmental Consulting Inc. — Engagement and Qualifications Clearwater Environmental Consulting Inc. is an environmental consulting

III. Overview of Cascadia's Environmental Regulatory Framework Cascadia's operations span three states in the Pacific Northwest — Oregon, Washington, and Idaho — and encompass hydroelectric power generation, wind power generation, and water-treatment concession services. As a result, Cascadia is subject to a complex, multi-layered environmental regulatory framework that includes federal, state, and local requirements

IV. Phase I Environmental Site Assessment — Summary of Findings Clearwater conducted Phase I ESAs for all twenty-three (23) of Cascadia's operating facilities in accordance with ASTM E1527-21. The purpose of a Phase I ESA is to identify Recognized Environmental Conditions ("RECs"), Controlled Recognized Environmental Conditions ("CRECs"), and Historical Recognized Environmental Conditions ("HRECs") at or affecting a

1. Willow Creek Hydroelectric Station (Oregon). The Phase I ESA identified a historical fuel storage area adjacent to the turbine house at this facility. Evidence of soil staining was observed in the vicinity of the locations where former aboveground storage tanks ("ASTs") were used for diesel fuel storage to supply backup generators. Cascadia's records indicate that the ASTs were removed in 2014 as part of a facilit

2. North Cascades Hydroelectric Station (Washington). The Phase I ESA identified historical records indicating the presence of PCB-containing transformer oil at this facility. The transformers in question were replaced in 2016 as part of an equipment modernization program; however, records obtained from Washington Department of Ecology and from Cascadia's internal files indicated that residual soil and groundwater co

3. Bull Run Water Treatment Facility (Oregon). The Phase I ESA identified a former chemical storage area at this facility with evidence of historical releases of water-treatment chemicals, including chlorine, alum (aluminum sulfate), and polymer coagulants. Staining and deterioration of the concrete containment pad in the former chemical storage area were observed during Clearwater's site reconnaissance. This facilit

4. Boise River Hydroelectric Station (Idaho). The Phase I ESA identified historical mercury contamination from a pre-Cascadia ownership era associated with former mine tailings located on an adjacent property. Clearwater's review of historical land-use records, aerial photographs, and Idaho DEQ files indicated that mine tailings containing mercury were deposited on the adjacent property during mining operations that

V. Phase II Environmental Site Assessment — Detailed Findings This Section presents a detailed discussion of the Phase II ESA findings for each of the four (4) facilities at which RECs were identified during the Phase I ESA process. For each facility, we summarize the Phase II investigation scope and results, the current regulatory status, the estimated remediation costs, and our risk assessment. A. Willow Creek Hydr

VI. Environmental Permits and Compliance Status A. NPDES Permits (Clean Water Act) Cascadia and its subsidiaries hold eighteen (18) active NPDES permits across Oregon, Washington, and Idaho for discharges associated with hydroelectric power generation and water-treatment facility operations. These permits authorize the discharge of process water, cooling water, fish passage flows, and stormwater to receiving waters i

VII. Pending and Potential Environmental Liabilities A. Active Remediation Obligations As discussed in Section V.B above, the North Cascades Hydroelectric Station (Washington) is currently enrolled in Washington's Voluntary Cleanup Program under an Agreed Order with the Washington Department of Ecology. This is the only Cascadia facility with an active remediation obligation. The ongoing obligations under the Agreed

VIII. Review of Environmental Representations in Draft EPA We have reviewed the environmental representations and warranties contained in the draft Equity Purchase Agreement circulated by Ridgeway, Ashford & Malone PC on August 15, 2022, together with the corresponding disclosure schedules. The draft EPA contains customary environmental representations, including representations regarding: • Compliance with all appli

1. Specific Indemnity — North Cascades Hydroelectric Station. The EPA should include a specific indemnity from the Selling Shareholders for remediation costs at the North Cascades Hydroelectric Station above a negotiated threshold (e.g., costs exceeding $800,000). This indemnity should survive for a period sufficient to cover the completion of the RI/FS and any resulting remedial action (we recommend a survival perio

2. Environmental Escrow or Holdback — Willow Creek Hydroelectric Station. The EPA should provide for an environmental escrow or holdback in an amount sufficient to cover the estimated cost of soil remediation at the Willow Creek Hydroelectric Station (i.e., $250,000, representing the high-end of Clearwater's cost estimate). The escrow should be released upon completion of the remediation and receipt of regulatory clo

3. CERCLA Representation and Bring-Down — Boise River Hydroelectric Station. The EPA should include a specific representation that Cascadia has not been named as a PRP at any CERCLA site (which is currently true) and that this representation should be brought down to the closing date. Additionally, a CERCLA-specific indemnity should be included to protect the Buyer against future PRP designation or contribution claim

4. Pre-Closing Compliance Covenant. The EPA should include a covenant by the Selling Shareholders to maintain environmental compliance at all Cascadia facilities pending closing, with particular emphasis on: (i) continued compliance with FERC license environmental conditions at all fourteen hydroelectric facilities; (ii) continued compliance with the North Cascades VCP Agreed Order; and (iii) compliance with any new

5. R&W Insurance Coordination. The Transaction contemplates a representations and warranties insurance policy issued by Northgate Specialty Insurance Co. (Policy No. NSW-RI-2022-09814) with a coverage limit of $195,000,000, representing approximately 10% of the enterprise value of $1,950,000,000. The R&W policy must be coordinated with the environmental provisions of the EPA to confirm that: (i) the environmental rep

IX. Interaction with Other Diligence Workstreams The environmental due diligence findings discussed in this memorandum intersect with several other C&H due diligence workstreams. This Section identifies the relevant