Contract analysis

I. Purpose and Scope This memorandum provides a chronological review of all reportable releases, spills, and enforcement actions at all four operating facilities of Allegheny Chemical Coatings, Inc. ("ACC" or the "Target") in connection with the environmental due diligence being conducted on behalf of Crestline Packaging Solutions LLC ("Crestline" or "CPS") in support of Crestline's proposed acquisition of one hundre

1. McKeesport Main Plant, 2200 Iron Works Boulevard, McKeesport, PA 15132 (Allegheny County) — ACC's primary manufacturing facility, where the majority of coating formulation, blending, and packaging operations occur;

2. Charleroi Specialty Coatings Plant, 450 Industrial Park Road, Charleroi, PA 15022 (Washington County) — a secondary production facility focused on specialty and custom-order coating products;

3. Clarksburg Resin Blending Facility, 1875 Route 50 West, Clarksburg, WV 26301 (Harrison County) — a leased facility used for resin blending and intermediate product staging; and

4. Weirton Warehouse & Distribution Center, 600 Commerce Way, Weirton, WV 26062 (Hancock County) — a warehouse and logistics facility used for finished goods storage and distribution. The sources reviewed in the preparation of this memorandum include the following: • ACC internal spill/release logs provided by Carl Johannsen, ACC's Environmental, Health, and Safety ("EHS") Manager, covering the period from 2012 throu

II. Executive Summary Over the ten-year review period (2012–2022), ACC has experienced two reportable spill/release incidents, both of which occurred at its McKeesport Main Plant. No reportable spills or releases were identified at the Charleroi, Clarksburg, or Weirton facilities during the review period or, to the extent records are available, at any time during ACC's tenancy or ownership of those facilities. The tw

III. Methodology The spill and enforcement review documented in this memorandum was conducted using the following methodology: Document Review. The undersigned reviewed all spill and release documentation provided by ACC through the electronic data room maintained by Hargrove, Dalton & Speer LLP, as well as supplemental materials provided directly by Carl Johannsen (ACC EHS Manager) at the request of Calderwood & Har

IV. Chronological Spill and Release History A. Facility-by-Facility Summary Table The following table summarizes the reportable spills and releases identified at each ACC facility during the review period: Note 1 — Clarksburg: A legacy diesel UST release was documented at the Clarksburg property in 2012 by the prior tenant, Valley Freight Lines Inc. (now dissolved). This release is not attributable to ACC and is not

1. Description of Incident. On June 14, 2017, a release of approximately fifty (50) gallons of xylene (mixed xylenes) occurred at ACC's McKeesport Main Plant, located at 2200 Iron Works Boulevard, McKeesport, PA 15132, in Allegheny County. The release occurred at the outdoor chemical transfer area adjacent to Building A, which is the primary raw materials receiving area for the facility. Xylene is a volatile organic

2. Containment and Response. The release was fully contained within the secondary containment area surrounding the AST manifold. The secondary containment consists of a concrete bermed pad designed to capture and contain releases from the above-ground storage tanks and associated piping and transfer equipment. Based on ACC's incident report and the PA DEP's subsequent review, no xylene migrated beyond the boundaries

3. Regulatory Notification and Agency Response. ACC reported the release to the PA DEP Bureau of Environmental Cleanup & Brownfields within twenty-four (24) hours of the incident, in compliance with the notification requirements of the Pennsylvania Land Recycling and Environmental Remediation Standards Act ("Act 2"), 35 P.S. § 6026.101 et seq., and the discharge reporting provisions of 25 Pa. Code § 91.33. The notifi

4. Enforcement Action. None. PA DEP took no enforcement action in connection with the June 14, 2017 xylene spill. No Notice of Violation was issued. No fine, penalty, or other sanctions were imposed. The NFA determination reflects PA DEP's conclusion that the incident was appropriately managed and did not result in any environmental harm or regulatory violation beyond the reportable release itself.

5. Corrective Actions Implemented by ACC. Following the incident, ACC implemented the following corrective actions: • Hose Replacement: The ruptured transfer hose was immediately replaced. In addition, ACC replaced all flexible transfer hoses at the McKeesport facility that were of similar age and vintage, regardless of whether they showed visible signs of wear or degradation. Carl Johannsen reported that a total of

6. Current Status. This incident is closed. The NFA determination has been received from PA DEP. There is no residual contamination associated with the release, as the material was fully contained and recovered. There are no ongoing regulatory obligations specifically related to this incident, and no further action is required. The incident is reflected in ACC's internal spill log and in the TerraVerde Phase I ESA fo

1. Description of Incident. On February 3, 2020, a release of approximately one hundred twenty (120) gallons of epoxy resin hardener occurred at ACC's McKeesport Main Plant, located at 2200 Iron Works Boulevard, McKeesport, PA 15132, in Allegheny County. The release occurred in the Building B warehouse area, which is used for the storage of raw materials, intermediates, and packaging supplies. The released material w

2. Release Pathway and Environmental Impact. The released material flowed across the warehouse floor and entered an interior floor drain located approximately fifteen (15) feet from the point of release. The floor drain was connected to the municipal sanitary sewer system, specifically the Allegheny County Sanitary Authority ("ALCOSAN") system. This connection was not identified or flagged in ACC's existing environme

3. Regulatory Notification and Agency Response. ACC reported the release to the following agencies: • PA DEP: Notification was made within twenty-four (24) hours of the incident, in compliance with the discharge reporting requirements of 25 Pa. Code § 91.33. The notification was made by telephone to the PA DEP Southwest Regional Office and followed up with a written incident report. • Allegheny County Health Departme

4. Enforcement Action. Following the issuance of the NOV, PA DEP assessed a civil penalty of $4,500 against ACC. The penalty was assessed pursuant to PA DEP's civil penalty assessment procedures for violations of the Clean Streams Law, 35 P.S. § 691.1 et seq., and the implementing regulations at 25 Pa. Code Chapter 91. The Civil Penalty Assessment ("CPA") is attached hereto as Appendix C. ACC paid the $4,500 fine in

5. Corrective Actions Implemented by ACC. ACC implemented a comprehensive set of corrective actions in response to the February 2020 incident, organized into immediate, short-term, and long-term measures: Immediate Actions (completed day of incident and within 48 hours): • The affected floor drain in Building B was sealed with an epoxy plug to prevent any future discharges through that drain connection. • Temporary s

6. Current Status. This incident is closed. The $4,500 civil penalty has been paid in full. All corrective actions identified in ACC's response to the NOV have been completed and documented. There are no ongoing compliance obligations specifically related to this incident, and no further regulatory action is pending or anticipated. Importantly, PA DEP conducted a RCRA compliance inspection of the McKeesport facility

V. Other Reportable Events and Cross-References A. NPDES TSS Exceedance — March 2022 (McKeesport) While not technically a "spill" or "release" within the scope of this memorandum's primary focus, the following NPDES permit exceedance is noted here for completeness, as it is a reportable event involving a discharge from the McKeesport facility that exceeds permitted limits. In its March 2022 Discharge Monitoring Repor

VI. Enforcement History Summary A. Summary Table The following table summarizes all enforcement actions identified at ACC facilities during the review period: Only one enforcement action was identified across all four ACC facilities during the review period. No other notices of violation, administrative orders, consent orders, consent decrees, civil penalty assessments, or other formal enforcement actions were identi

VII. Analysis of Ongoing Liability Exposure A. Residual Liability from Resolved Incidents June 2017 Xylene Spill. The June 14, 2017 xylene spill at the McKeesport Main Plant presents minimal residual liability. The release was fully contained within the secondary containment system, and no xylene reached the soil, groundwater, surface water, or any off-site receptor. PA DEP issued an NFA determination, confirming tha

VIII. Relevance to Environmental Representations in Draft SPA A. Article IV, Section 4.18 Considerations The draft SPA currently under negotiation between Calderwood & Harkness (on behalf of Crestline) and Hargrove, Dalton & Speer (on behalf of ACC's shareholders) includes environmental representations and warranties in Article IV, Section 4.18 (Environmental Matters). As currently drafted (per Calderwood & Harkness'

IX. Recommendations Based on the foregoing review and analysis, the undersigned makes the following recommendations:

1. Disclosure Schedules. Ensure that both documented spill incidents — the June 14, 2017 xylene spill and the February 3, 2020 epoxy resin hardener release — are specifically listed and described in the Seller's disclosure schedules against Article IV, Section 4.18 (Environmental Matters) of the draft SPA. The disclosure should include the date, substance, quantity, release pathway, regulatory notifications, enforcem

2. Additional Document Requests. Request from ACC (through Hargrove, Dalton & Speer LLP, Franklin Speer and Megan Trask) any additional internal spill logs, incident reports, environmental compliance audits, or internal environmental assessment reports not yet produced in the data room, with a particular focus on the period 2012–2017 (for which the spill log provided by Johannsen contains limited entries) and on the

3. Integration into Comprehensive Memorandum. Incorporate the spill and enforcement history documented in this memorandum into the Comprehensive Environmental Diligence Summary Memorandum (draft in progress, targeted for October 22, 2022) as part of the overall environmental risk profile for the transaction. The spill history should be presented in the context of the full range of environmental issues identified thro

4. Coordination with Phase II Analysis. Coo