Contract analysis

I. Executive Summary This memorandum analyzes the non-binding indication of interest received from Ironclad Specialty Insurance Company ("Ironclad"), based in Hartford, Connecticut, for a Pollution Legal Liability ("PLL") insurance policy in connection with Crestline Packaging Solutions LLC's ("Crestline") proposed acquisition of one hundred percent (100%) of the outstanding common stock of Allegheny Chemical Coating

II. Background A. The Transaction Crestline Packaging Solutions LLC is an Ohio limited liability company headquartered at 4100 Riverside Commerce Drive, Suite 300, Dayton, Ohio 45402. Crestline is a portfolio company of Briarwood Capital Partners LP ("Briarwood"), operating through Briarwood's Fund IV, which has aggregate committed capital of approximately $2.1 billion. Crestline proposes to acquire one hundred perce

1. McKeesport Main Plant The Phase I ESA for the McKeesport facility is dated August 15, 2022. The Phase II ESA field investigation was completed on September 26, 2022, and analytical laboratory results were received on October 10, 2022. Phase I Findings. The Phase I ESA identified the following conditions: Recognized Environmental Conditions (RECs): (a) REC-1: Subsurface Contamination and Vapor Intrusion Near Buildi

2. Charleroi Specialty Coatings Plant The Phase I ESA for the Charleroi facility is dated August 18, 2022. No RECs, Controlled Recognized Environmental Conditions ("CRECs"), or HRECs were identified. The site is considered environmentally clean, and no Phase II ESA was conducted.

3. Clarksburg Resin Blending Facility The Phase I ESA for the Clarksburg facility is dated August 22, 2022. The Phase II ESA field investigation commenced on October 3, 2022, and sampling was completed on October 7, 2022. Samples were submitted to Keystone Analytical Laboratories, Inc. for analysis. As of the date of this memorandum, analytical results have not been received. Phase I Findings. The Phase I ESA identif

4. Weirton Warehouse & Distribution Center The Phase I ESA for the Weirton facility is dated August 25, 2022. Phase I Findings. The Phase I ESA identified the following condition: • CREC-1: VRDP Site with Engineering and Institutional Controls. The Weirton site is a former brownfield property that underwent remediation under the West Virginia Voluntary Remediation and Development Program. A Certificate of Completion

5. Aggregate Estimated Environmental Liabilities Based on the findings across all four facilities, the total estimated environmental liabilities range from $1.925 million (low estimate) to $4.345 million (high estimate). This range encompasses remediation costs for known conditions at McKeesport, contingent remediation costs at Clarksburg (subject to Phase II confirmation), and abatement costs for asbestos-containing

III. Summary of Ironclad Specialty Indicative PLL Policy Terms The following sections set forth a detailed summary of the principal terms reflected in the non-binding indication of interest received from Ironclad Specialty Insurance Company on or about October 14, 2022. A copy of the indication is attached as Appendix A. The reader is cautioned that the indication is preliminary and non-binding, and the final policy

1. McKeesport Main Plant — 2200 Iron Works Boulevard, McKeesport, PA 15132

2. Charleroi Specialty Coatings Plant — 450 Industrial Park Road, Charleroi, PA 15022

3. Clarksburg Resin Blending Facility — 1875 Route 50 West, Clarksburg, WV 26301

4. Weirton Warehouse & Distribution Center — 600 Commerce Way, Weirton, WV 26062 Coverage applies to "pollution conditions" on, at, under, or migrating from the covered locations. The definition of "pollution conditions" in the formal policy will be a critical term, as it determines the threshold for triggering coverage and the scope of conditions that fall within the policy's insuring agreements. C. Policy Limits Th

I. Retroactive Date The indication specifies an unlimited retroactive date, meaning the policy would, in principle, cover pre-existing unknown pollution conditions regardless of when the original release or contamination event occurred. This is a favorable term that is particularly important given the legacy industrial history of the McKeesport site (former Keystone Metalworks operations predating ACC's 1987 acquisit

IV. Coverage Gap Analysis This section identifies and analyzes the principal coverage gaps in the Ironclad indicative PLL policy terms. For each identified gap, we provide a detailed assessment of the risk to Crestline and specific recommendations for negotiation with the insurer. A. Known Conditions Exclusion — Critical Issue

1. Scope of the Exclusion The indication states that the policy will exclude "pollution conditions known to any insured or disclosed in any environmental site assessment, report, or investigation provided to the insurer in connection with the underwriting of this policy." This is a broad formulation that encompasses not only conditions actually known to Crestline's management or employees, but also any condition iden

2. Impact on McKeesport Phase II Findings As noted in Section II.E above, C&H transmitted the Phase I ESAs for all four facilities and the McKeesport Phase II ESA analytical results to Whitfield & Calder on or about October 5, 2022, for inclusion in the underwriting submission to Ironclad. Accordingly, the following conditions identified in the McKeesport Phase II are now "known" within the meaning of the exclusion a

3. Significance of the Gap The exclusion of these conditions from PLL coverage is particularly consequential because they represent the primary identified environmental liabilities at the McKeesport facility — and, indeed, across all four ACC facilities. TerraVerde's preliminary remediation cost estimate of $1.2 million to $2.8 million is driven almost entirely by the groundwater treatment and vapor mitigation costs

4. Recommendation. C&H recommends that Crestline, through Whitfield & Calder, request that Ironclad offer one or both of the following: (a) Known Conditions Buyback / Scheduled Pollutant Endorsement. A scheduled pollutant endorsement or known conditions coverage buyback that explicitly covers the identified McKeesport contamination (and, upon receipt and review, the Clarksburg Phase II findings). This endorsement wou

1. Ambiguity in the Indication The indication uses the phrase "pre-existing pollution conditions" without providing a clear definition. The distinction between "pre-existing" contamination and "new" contamination is critical to the operation of the policy, particularly given the unlimited retroactive date. In principle, the unlimited retroactive date means that pre-existing unknown conditions should be covered. Howev

2. Legacy Contamination at McKeesport This ambiguity is of particular concern with respect to legacy contamination at the McKeesport facility. Prior to ACC's acquisition of the property in 1987, the site was used for steel fabrication by Keystone Metalworks, a defunct company. While the 1994 Act 2 release from the former USTs received an NFA letter in May 2001, there is reason to believe that residual contamination m

3. Recommendation. C&H recommends that Crestline request clear policy language establishing the following three categories: (a) Pre-existing unknown conditions — pollution conditions that existed prior to the policy inception date but were not identified in the environmental reports provided to the insurer. These conditions should be fully covered, consistent with the unlimited retroactive date. (b) Pre-existing know

1. The Gap The indication references vapor intrusion coverage but suggests that it may be subject to a sublimit. The amount of the sublimit has not been specified in the non-binding indication. This is a significant concern because TCE vapor intrusion at McKeesport Building C is one of the most consequential environmental findings identified through the due diligence process.

2. Significance. The Phase II sub-slab soil gas sampling beneath Building C detected TCE at 42 µg/m³, which is double the PA DEP vapor intrusion screening level of 21 µg/m³. This exceedance indicates an active vapor intrusion pathway from subsurface contamination into the Building C enclosed space. Building C houses ACC's primary solvent-based coating mixing and blending operations, with approximately fifty or more e

3. Recommendation. C&H recommends that Crestline request one of the following: (a) Removal of Sublimit. Request that Ironclad remove the vapor intrusion sublimit entirely, so that vapor intrusion claims share the full per-occurrence and aggregate limits. (b) Adequate Sublimit. If removal is not feasible, request that the vapor intrusion sublimit be set at no less than $5,000,000, which is commensurate with the potent

1. The Gap Ironclad's indication specifies that defense costs are included within — and therefore erode — the policy's aggregate and per-occurrence limits. This structure, commonly referred to as "burning limits" or a "wasting" policy, means that every dollar spent defending a covered claim reduces the amount available to pay indemnity for that claim and all other claims during the policy period.

2. Significance. In complex environmental claims, defense costs can be substantial. This is particularly true in multi-party CERCLA contribution actions, state regulatory enforcement proceedings involving contested liability allocation, and toxic tort or bodily injury litigation. In C&H's experience, defense costs in environmental matters routinely consume between thirty percent (30%) and fifty percent (50%) or more

3. Recommendation. C&H recommends that Crestline pursue the following, in order of preference: (a) Defense Outside Limits. Request that defense costs be provided in addition to — rather than within — the policy limits. Under a "defense outside limits" or "supplementary payments" structure, the policy would provide defense cost coverage that does not reduce the indemnity limits available for cleanup, bodily injury, an

1. The Gap The indication notes that claims arising from or relating to asbestos and lead-based paint are subject to a sublimit, the amount of which has not been specified but may be $2,000,000 or less.

2. Significance. The McKeesport facility has documented asbestos-containing materials (pipe insulation in Buildings A and B, approximately 2,400 linear feet; floor tiles in Building A, approximately 14,000 square feet) and lead-based paint (in the office building, constructed circa 1955). These materials are currently managed in place pursuant to existing management plans. While the current estimated abatement costs

3. Recommendation. C&H recommends that Crestline request disclosure of the proposed sublimit amount and negotiate a combined asbestos/LBP sublimit of at least $5,000,000. The sublimit should apply separately from the environmental remediation limits so that asbestos or LBP claims do not reduce the coverage available for groundwater contamination, vapor intrusion, or other pollution-related claims. F. Contractual Liab

1. The Gap The indication includes a standard contractual liability exclusion, which bars coverage for liability "assumed under contract." The only exception to this exclusion is for indemnification obligations arising by operation of environmental law.

2. Significance. This exclusion raises concerns for the Clarksburg and Weirton facilities, both of which are leased properties: Clarksburg. The triple-net lease between ACC (as tenant) and Mountainview Properties LLC (as landlord) includes provisions requiring the tenant to remediate contamination caused by the tenant's operations. Post-acquisition, Crestline — as the successor to ACC's stock and thereby the indirect

3. Recommendation. C&H recommends that Crestline request a carve-back from the contractual liability exclusion for environmental remediation obligations arising under leases or occupancy agreements where the obligation relates to a pollution condition at a covered location. This is a standard market request in PLL placements for acquisitions involving leased properties and is generally accepted by PLL underwriters. T

1. Business Interruption Business interruption coverage is not included in the indicative terms. If environmental remediation activities at the McKeesport facility — particularly vapor mitigation work at Building C — require curtailment of operations, temporary evacuation, or shutdown of mixing and blending equipment, the resulting business interruption losses could be significant. ACC's annual revenue is approximate

2. Non-Owned Disposal Site Coverage NODS coverage is not included in the indicative terms. As a RCRA Large Quantity Generator, ACC ships hazardous waste from the McKeesport facility to off-site treatment, storage, and disposal facilities. Under CERCLA Section 107, generators of hazardous waste that is disposed of at a facility that later requires cleanup may be held jointly and severally liable as Potentially Respons

3. Transportation Coverage The indication references transportation coverage at a sublimit, but the sublimit amount has not been specified. ACC ships chemical products, raw materials, solvents, and hazardous waste to and from its facilities by truck and common carrier. A transportation incident resulting in a release of hazardous materials could give rise to cleanup costs, third-party property damage claims, and bodi

4. Change in Law / Regulatory Reopener The indication is unclear regarding whether the policy covers increased remediation costs triggered by changes in applicable environmental standards after the policy inception date. For example, if PA DEP lowers the Act 2 Statewide Health Standard for toluene or TCE during the policy period, Crestline could face additional cleanup obligations at McKeesport that were not required

V. Comparison to Contractual Risk Allocation This section evaluates the Ironclad indicative PLL policy in the context of the contr