Contract analysis

I. Executive Summary This memorandum summarizes the results of Calderwood & Harkness LLP's ("C&H") oversight of environmental due diligence conducted in connection with the proposed acquisition by Crestline Packaging Solutions LLC ("Crestline" or the "Acquiror") of one hundred percent (100%) of the outstanding common stock of Allegheny Chemical Coatings, Inc. ("ACC" or the "Target"). The proposed transaction is struc

II. Background A. The Target — Allegheny Chemical Coatings, Inc. Allegheny Chemical Coatings, Inc. is a Pennsylvania corporation incorporated in 1987, with its principal executive offices and primary manufacturing operations located at 2200 Iron Works Boulevard, McKeesport, Pennsylvania 15132. ACC operates in the specialty industrial coatings sector, manufacturing and distributing epoxy, polyurethane, and solvent-bas

III. Summary of Facilities Allegheny Chemical Coatings, Inc. operates from four facilities located in western Pennsylvania and the northern panhandle of West Virginia. Two facilities are owned in fee simple by ACC, and two are occupied under commercial lease agreements. The following table provides a summary of key attributes for each facility. A more detailed discussion of the environmental findings at each location

IV. Phase I Environmental Site Assessment Findings A. McKeesport Main Plant TerraVerde completed the Phase I Environmental Site Assessment for the McKeesport Main Plant on August 15, 2022, in accordance with the ASTM E1527-21 standard. The assessment encompassed a review of historical records, regulatory databases, aerial photographs, topographic maps, Trelwick fire insurance maps, a site reconnaissance visit, and in

V. Phase II Environmental Site Assessment Findings A. McKeesport Main Plant — Phase II Investigation

1. Scope and Methodology The Phase II Environmental Site Assessment at the McKeesport Main Plant was commenced on September 12, 2022, and field work was completed on September 26, 2022. The investigation was designed by TerraVerde in consultation with C&H to address the two RECs identified in the Phase I ESA: (1) the potential vapor intrusion pathway from residual subsurface contamination beneath the former UST field

2. Groundwater Results Groundwater analytical results revealed the following conditions of significance: Toluene at MW-3: Toluene was detected in groundwater at monitoring well MW-3 at a concentration of 1,420 µg/L. The applicable Pennsylvania Act 2 Statewide Health Standard for toluene in groundwater is 1,000 µg/L. This result represents an exceedance of 42% above the standard (1,420 ÷ 1,000 = 1.42x). Monitoring wel

3. Soil Results Soil analytical results revealed the following conditions of note: Tetrachloroethylene (PCE) at SB-7: PCE was detected in soil at boring SB-7 at a concentration of 3.8 mg/kg. SB-7 is located along the eastern property boundary near the outdoor drum storage area. The applicable Pennsylvania Act 2 Statewide Health Standards for PCE in soil are 2.4 mg/kg (residential used aquifer) and 14 mg/kg (non-resid

4. Sub-Slab Soil Gas / Vapor Intrusion Results The sub-slab soil gas sampling beneath Building C yielded the most significant finding of the Phase II investigation: Trichloroethylene (TCE) in sub-slab soil gas beneath Building C: TCE was detected in sub-slab soil gas at a concentration of 42 µg/m³. The applicable Pennsylvania DEP vapor intrusion screening level for TCE is 21 µg/m³. This result represents an exceedanc

5. Remediation Cost Estimate (McKeesport) TerraVerde prepared a preliminary remediation cost estimate for the McKeesport Main Plant, dated October 18, 2022, based on the Phase II findings summarized above. The estimated total remediation cost is in the range of $1,200,000 to $2,800,000, encompassing the following components: Groundwater Treatment: Remediation of the toluene plume identified at MW-3 is estimated to co

1. Scope and Methodology The Phase II Environmental Site Assessment at the Clarksburg Resin Blending Facility was commenced on October 3, 2022, and field work was completed on October 7, 2022. Landlord consent for the investigation was obtained from Gerald Boothe, Managing Member of Mountainview Properties LLC, prior to commencement of field activities. The investigation was designed by TerraVerde in consultation wit

2. Results. ANALYTICAL DATA NOT YET AVAILABLE. The laboratory analytical results for the Clarksburg Phase II investigation were expected by October 28, 2022. As of the date of this memorandum, and as of the date the transaction negotiations were paused, these results have not been received. TerraVerde has confirmed that the samples remain in the laboratory's chain of custody and that no analytical anomalies or qualit

3. Preliminary Remediation Cost Estimate (Contingent) In the absence of analytical data, TerraVerde has prepared a preliminary and contingent remediation cost estimate for the Clarksburg facility, based on the assumption that the Phase II investigation will confirm contamination requiring remediation. These estimates are expressly preliminary and subject to material revision based on the actual analytical results. So

VI. Regulatory Compliance Review C&H, with the assistance of TerraVerde's regulatory compliance specialists, conducted a review of ACC's environmental regulatory compliance status across all four operating facilities. The review encompassed the following regulatory frameworks: RCRA, Clean Air Act, Clean Water Act/NPDES, EPCRA/TRI/Tier II, TSCA, and CERCLA/Superfund, as well as state analog programs administered by PA