1006-00003 · Crestline Packaging Solutions LLC · Correspondence

letter-to-client-initial-diligence-plan.docx DOCUMENT M&A / Corporate

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CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED COMMUNICATION

CALDERWOOD & HARKNESS LLP Attorneys at Law

1900 Euclid Avenue, Suite 3200 Cleveland, OH 44115 Telephone: (216) 555-8400 Facsimile: (216) 555-8401 www.calderwoodharkness.com

July 21, 2022

Derek Huang, Esq. General Counsel Crestline Packaging Solutions LLC 4100 Riverside Commerce Drive, Suite 300 Dayton, OH 45402

Re: Environmental Due Diligence Plan — Proposed Acquisition of Allegheny Chemical Coatings, Inc. C&H Matter No. 1006-00003

Dear Derek:

I. Introduction and Purpose

Pursuant to the engagement letter dated July 19, 2022, by and between Calderwood & Harkness LLP ("C&H" or the "Firm") and Crestline Packaging Solutions LLC ("Crestline" or "CPS"), C&H has been retained to conduct environmental due diligence in connection with Crestline's proposed acquisition (the "Transaction") of one hundred percent (100%) of the outstanding common stock of Allegheny Chemical Coatings, Inc. ("ACC"), a Pennsylvania corporation headquartered at 2200 Iron Works Boulevard, McKeesport, PA 15132. ACC is a manufacturer and distributor of industrial coatings, specialty resins, and related chemical products, operating four facilities across Pennsylvania and West Virginia.

The purpose of this letter is to set forth the scope, timeline, budget, and coordination plan for the environmental diligence workstream associated with the Transaction. This letter is intended to serve as a comprehensive roadmap for the environmental diligence effort and to facilitate coordination among the various advisors and stakeholders involved. We recognize the importance of proceeding expeditiously and methodically, and we have structured the plan set forth herein to achieve both objectives.

The environmental diligence workstream is being conducted in parallel with — but independent of — the financial and accounting diligence being performed by Pendleton & Cascade Insurance Brokers (Robert Feinstein, engagement partner) and the broader M&A transaction negotiation led by Beatrice Holloway (responsible partner) and James Prentice (billing partner) of our firm. We will, of course, coordinate closely with all members of the deal team to ensure that environmental findings are integrated into the overall transaction analysis and reflected appropriately in the definitive transaction documents.

As you are aware, the Transaction is structured as a stock purchase, with a proposed purchase price of $94.5 million, representing a multiple of approximately 7.0x ACC's fiscal year 2021 EBITDA of $13.5 million. Because the Transaction is structured as a stock acquisition rather than an asset acquisition, Crestline will, as a matter of law, succeed to all of ACC's environmental liabilities and obligations — whether known or unknown, disclosed or undisclosed, contingent or accrued, and whether arising under federal, state, or local law. This includes, without limitation, liabilities arising from historical contamination, regulatory noncompliance, pending or threatened enforcement actions, and remediation obligations, as well as ongoing compliance obligations under existing permits, consent orders, and institutional or engineering controls.

We cannot overstate the importance of this structural point. Unlike an asset purchase, where the buyer may selectively exclude contaminated parcels, environmentally impaired operations, or specific liabilities from the scope of acquired assets, a stock purchase provides no such flexibility. The corporate entity — with all of its historical liabilities attached — is the subject of the acquisition. Accordingly, thorough environmental diligence is not merely advisable; it is critical to protecting Crestline's investment, informing purchase price negotiations, and establishing an appropriate contractual risk allocation framework in the Stock Purchase Agreement (the "SPA").

We also note that Commonwealth National Bank, N.A. ("CNB"), acting through Victoria Chen, Managing Director, as agent bank for the proposed $65 million senior secured term loan and $20 million revolving credit facility (together, the "Credit Facilities"), has conditioned its lending commitment on satisfactory environmental diligence. Specifically, CNB's commitment letter requires Phase I Environmental Site Assessments on all target real property, with the further requirement that no unaddressed Recognized Environmental Conditions ("RECs") remain at closing, or, in the alternative, that acceptable Pollution Legal Liability ("PLL") insurance be obtained to backstop identified environmental risks to the lender's satisfaction. The environmental diligence plan set forth herein has been designed to satisfy these lender conditions while simultaneously serving Crestline's own need for a complete understanding of ACC's environmental risk profile.

II. Calderwood & Harkness Engagement Team

The following professionals have been assigned to the environmental diligence workstream within the broader Transaction engagement team:

Beatrice Holloway — Responsible Partner (M&A). Beatrice serves as the responsible partner for the overall Transaction and will provide high-level supervision of the environmental diligence workstream, ensuring alignment between environmental findings and the broader deal strategy and negotiation posture.

James Prentice — Billing Partner (M&A). James serves as the billing partner for the engagement and will oversee all budgetary matters, invoicing, and client billing in accordance with the terms of the engagement letter.

Harrison Caldwell — Of Counsel (Environmental & Land Use). Harrison will serve as the lead for all environmental technical analysis, including review of Phase I and Phase II Environmental Site Assessment reports, regulatory compliance review across all four ACC facilities, environmental insurance evaluation, and preparation of environmental provisions for the SPA. Harrison brings over twenty years of experience in environmental transactional diligence, Superfund liability allocation, and environmental regulatory counseling for manufacturing clients. His standard hourly rate is $725.

Grace Nakamura — Lead Associate (Real Estate). Grace will conduct property-level analysis, review all real property leases at ACC's leased facilities for environmental provisions, draft and review environmental document requests, and assist Harrison with regulatory compliance analysis. Grace's standard hourly rate is $625.

Rafael Dominguez — Working Associate (Real Estate). Rafael will support the workstream through regulatory compliance research, environmental lien searches, review of publicly available environmental databases, and preparation of memoranda on state-specific regulatory requirements (particularly Pennsylvania's Act 2 Land Recycling Program and West Virginia's Voluntary Remediation and Redevelopment Program). Rafael's standard hourly rate is $495.

Simone Estrada — Paralegal. Simone will manage the document repository for all environmental diligence materials, coordinate document production tracking, assist with preparation of the Environmental Document Request List, and provide administrative coordination among the C&H team, TerraVerde, and client contacts. Simone's standard hourly rate is $275.

Harrison Caldwell will serve as the primary day-to-day contact for the environmental diligence workstream and should be contacted directly with any questions, requests, or updates related to environmental matters. On the client side, we understand that Patricia Okonkwo, Vice President of Environmental Health & Safety at CPS, will serve as the primary technical contact for environmental diligence matters. We look forward to working closely with Patricia and her team throughout this process.

III. Environmental Consultant — TerraVerde Environmental Consulting LLC

Calderwood & Harkness recommends, and has been coordinating with, TerraVerde Environmental Consulting LLC ("TerraVerde"), an Ohio limited liability company based at 1350 Polaris Parkway, Suite 220, Columbus, OH 43240, to serve as the environmental consulting firm for the Transaction. TerraVerde has extensive experience in transactional environmental diligence for manufacturing, chemicals, and industrial clients, and C&H has worked with TerraVerde on numerous prior engagements with consistently excellent results.

The TerraVerde engagement team will be led by the following professionals:

• Principal-in-Charge: Dr. Nina Sorensen, P.E., CHMM — Dr. Sorensen holds a Ph.D. in Environmental Engineering from Carnegie Mellon University and is both a licensed Professional Engineer and a Certified Hazardous Materials Manager. She will provide senior technical oversight of all Phase I and Phase II assessment work.

• Project Manager: Kevin O'Malley, P.G. — Mr. O'Malley is a licensed Professional Geologist and will manage the day-to-day execution of field investigations, including scheduling, field oversight, data analysis, and report preparation.

TerraVerde will conduct all Phase I and Phase II Environmental Site Assessments under the direction and oversight of Calderwood & Harkness. All Phase I ESAs will be conducted in strict conformance with the ASTM E1527-21 standard (Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process), which is the current edition of the ASTM Phase I standard and satisfies the "All Appropriate Inquiries" requirements under 40 C.F.R. Part 312, necessary to establish the innocent landowner, contiguous property owner, and bona fide prospective purchaser protections under CERCLA.

Any Phase II ESAs deemed necessary following the Phase I assessments will be conducted in conformance with the ASTM E1903-19 standard (Standard Practice for Environmental Site Assessments: Phase II Environmental Site Assessment Process), as supplemented by applicable state-specific guidance. For facilities located in Pennsylvania, Phase II work will be conducted with reference to the Pennsylvania Department of Environmental Protection's Land Recycling Program ("Act 2") guidance, including the applicable Statewide Health Standards and Site-Specific Standards under 25 Pa. Code Chapter 250. For facilities located in West Virginia, Phase II work will be conducted with reference to the West Virginia Department of Environmental Protection's Voluntary Remediation and Redevelopment Program ("VRDP") under W. Va. Code §§ 22-22-1 et seq. and related program guidance documents.

TerraVerde will be retained directly by Crestline under a separate engagement agreement to be negotiated between Crestline and TerraVerde. C&H will review the proposed engagement agreement and will approve all TerraVerde scopes of work, sampling and analysis plans, and deliverables prior to execution. This structure ensures that the environmental consulting work product benefits from attorney oversight and direction while maintaining appropriate contractual accountability between Crestline and its consultant.

IV. Scope of Environmental Diligence — Overview

The environmental diligence workstream encompasses six principal components, each of which is described in greater detail in the sections that follow:

1. Phase I Environmental Site Assessments at all four ACC operating facilities, conducted by TerraVerde in conformance with ASTM E1527-21, to identify Recognized Environmental Conditions, Controlled Recognized Environmental Conditions, and Historical Recognized Environmental Conditions at each property.

2. Phase II Subsurface Investigations at facilities where Phase I ESA results identify one or more RECs warranting further evaluation. Phase II investigations will include soil borings, groundwater sampling, soil vapor testing, and/or other assessment methods as appropriate to characterize the nature and extent of identified conditions.

3. Regulatory Compliance Review across all four facilities, encompassing federal, state, and local environmental regulatory programs, including but not limited to the Resource Conservation and Recovery Act (RCRA), the Clean Air Act (CAA), the Clean Water Act/National Pollutant Discharge Elimination System (CWA/NPDES), the Emergency Planning and Community Right-to-Know Act and Toxics Release Inventory (EPCRA/TRI), the Toxic Substances Control Act (TSCA), the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA/Superfund), and applicable asbestos and lead-based paint regulations.

4. Environmental Representations, Warranties, and Indemnification Analysis and Drafting for incorporation into the Stock Purchase Agreement, tailored to address the specific environmental risks identified through the diligence process and to allocate those risks appropriately between buyer and seller.

5. Evaluation of Environmental Insurance Options, including the availability, terms, coverage scope, and cost of a Pollution Legal Liability ("PLL") insurance policy to backstop identified and unknown environmental risks, with a view toward satisfying both lender requirements and buyer risk management objectives.

6. Preparation of a Comprehensive Environmental Diligence Summary Memorandum synthesizing all findings from the foregoing workstreams, including facility-by-facility risk ratings, estimated environmental liabilities, and actionable recommendations for transaction structuring and post-closing environmental management.

Each of these components is designed to provide Crestline, its management team, its board, and its equity sponsor, Briarwood Capital Partners LP, with the information necessary to make informed decisions regarding the Transaction and to negotiate appropriate protections in the definitive documentation.

V. Target Facilities — Description and Diligence Plan

ACC operates four facilities across Pennsylvania and West Virginia. Below, we provide a detailed description of each facility, its environmental profile, and the specific diligence plan for each.

A. Facility 1 — McKeesport Main Plant (Headquarters)

Address: 2200 Iron Works Boulevard, McKeesport, PA 15132

County: Allegheny County, Pennsylvania

Parcel ID: 0383-M-00125-0000-00

Acreage: 14.3 acres, consisting of approximately 185,000 square feet of manufacturing space and approximately 12,000 square feet of office space in multiple interconnected buildings

Operations: This is ACC's primary manufacturing facility and corporate headquarters. Operations include solvent-based and epoxy coating manufacturing, raw material mixing and blending, product filling and packaging, quality control laboratory testing, and warehousing of raw materials and finished goods. The facility operates two shifts, five days per week, with approximately 145 full-time employees.

Ownership: Fee simple. The property has been owned by ACC since 1987, when ACC acquired it from Keystone Metalworks, Inc. (now defunct) through a bankruptcy sale under 11 U.S.C. § 363.

Known Environmental History: The McKeesport facility has the most significant and complex environmental history in ACC's portfolio. Prior to ACC's acquisition, the property was operated as a steel fabrication facility by Keystone Metalworks from approximately 1952 through 1986. Steel fabrication operations involved cutting, welding, grinding, surface treatment, and coating of structural steel components, and are associated with the use and release of various hazardous substances.

Following ACC's acquisition of the property, three 10,000-gallon underground storage tanks (USTs) used for storage of No. 2 fuel oil and waste solvents were identified and removed in 1993. Soil sampling conducted during UST removal activities identified contamination in surrounding soils, and ACC filed with the Pennsylvania Department of Environmental Protection (PA DEP) under the Land Recycling and Environmental Remediation Standards Act (Act 2, 35 P.S. §§ 6026.101–6026.908) in 1994. Following a period of remedial investigation and remediation activities, PA DEP issued a No Further Action ("NFA") letter under the Statewide Health Standard in May 2001. C&H will obtain and review the complete Act 2 administrative file, including the remedial investigation report, cleanup plan, and NFA letter, to confirm the scope and terms of the closure and any continuing obligations.

Chemicals of Concern: The principal chemicals of concern at this facility include volatile organic compounds (VOCs) — specifically toluene, xylene, methyl ethyl ketone (MEK), and ethylbenzene — associated with current solvent-based coating manufacturing operations and historical releases. Additionally, heavy metals, particularly chromium and lead, are chemicals of concern due to their use in legacy pigment operations and the property's prior steel fabrication history.

Regulatory Profile:

• RCRA: Large Quantity Generator (LQG) of hazardous waste. EPA Identification Number PAD-098-721-445. ACC generates hazardous waste at this facility including spent solvents (D001 — ignitable waste; F003 and F005 — spent non-halogenated and halogenated solvents), waste paints and coatings, and waste containing chromium (D007) and lead (D008). The facility is subject to full LQG requirements, including 90-day accumulation area management, biennial reporting, contingency planning, and personnel training requirements.

• Clean Air Act: Title V Operating Permit issued by PA DEP, Permit No. TV-0383-0125, issued June 1, 2019, and expiring May 31, 2024. The facility is classified as a major source for Hazardous Air Pollutants (HAPs), with combined HAP emissions of approximately 38.2 tons per year, which exceeds the 25-ton-per-year major source threshold under Section 112 of the Clean Air Act. The facility is subject to the National Emission Standards for Hazardous Air Pollutants (NESHAP) for miscellaneous surface coating operations. We note that ACC submitted a permit modification application in March 2022 for the installation and operation of a new regenerative thermal oxidizer (RTO) on production Line 4, which is pending review by PA DEP. The status and terms of this pending modification will be reviewed as part of our regulatory compliance analysis.

• Clean Water Act / NPDES: The facility operates under NPDES Stormwater Individual Permit No. PA0025631 for discharge of stormwater from the facility's loading and storage areas. There is no process wastewater discharge; all process wastewater is collected and disposed of as hazardous waste.

• EPCRA / TRI: The facility is a TRI reporter under Section 313 of EPCRA, reporting releases and transfers of toluene and xylene on EPA Form R filings. The facility also files Tier II reports with the Allegheny County Local Emergency Planning Committee (LEPC) and the State Emergency Response Commission (SERC).

Assessment of Complexity: The McKeesport facility represents the highest-risk property in ACC's portfolio from an environmental perspective. The combination of extensive current chemical handling operations, legacy industrial use (steel fabrication, 1952–1986), prior UST releases and remediation, ongoing major source air emissions, and LQG hazardous waste generation creates a multi-dimensional environmental risk profile. Although a PA DEP NFA letter was obtained in 2001, the scope and terms of that closure must be carefully evaluated, particularly with respect to any residual contamination, vapor intrusion pathways, and potential reopener conditions. We anticipate that this facility will require thorough Phase I investigation and, if additional RECs are identified beyond those addressed by the 2001 NFA letter, a Phase II subsurface investigation.

Diligence Plan: TerraVerde will conduct a Phase I ESA at the McKeesport facility with a target completion date of mid-August 2022. The Phase I ESA results will be reviewed and analyzed by C&H (Caldwell and Nakamura). Based on the Phase I findings, a Phase II scope of work will be developed if RECs are identified that warrant further evaluation, with a target commencement date for Phase II fieldwork of early-to-mid September 2022. In parallel with the Phase I/Phase II assessment process, C&H will conduct a comprehensive regulatory compliance review encompassing RCRA, CAA (including the pending thermal oxidizer permit modification), CWA/NPDES, EPCRA/TRI, and applicable asbestos and lead-based paint regulations.

Asbestos and Lead-Based Paint: Based on preliminary information from ACC, asbestos-containing materials (ACM) have been identified in the McKeesport facility, including pipe insulation throughout the manufacturing building and vinyl floor tiles in certain production areas. Lead-based paint (LBP) has been identified in the office building, which was originally constructed circa 1955. ACC reportedly maintains management-in-place programs for both ACM and LBP. C&H will review the existing asbestos and lead-based paint surveys, management-in-place plans, and O&M programs, and will evaluate whether updated condition assessments are necessary. We will also obtain abatement cost estimates to inform potential remediation budgets and purchase price considerations.

B. Facility 2 — Charleroi Specialty Coatings Plant

Address: 450 Industrial Park Road, Charleroi, PA 15022

County: Washington County, Pennsylvania

Parcel ID: 120-015-00-03-0018-00

Acreage: 8.7 acres, consisting of approximately 92,000 square feet of manufacturing space and approximately 4,500 square feet of combined office and laboratory space

Operations: The Charleroi facility is ACC's center for water-based and UV-curable coatings production. This represents ACC's growth platform and newer product line, reflecting the broader industry trend toward lower-VOC formulations. Operations include water-based resin blending, UV-curable coating formulation, quality assurance testing, and packaging.

Ownership: Fee simple. The property has been owned by ACC since 2003, when the facility was constructed on a greenfield site.

Known Environmental History: The Charleroi facility was a greenfield development on former agricultural land. Prior to ACC's acquisition and construction, the property was used for crop farming and had no history of industrial use. No underground storage tanks have been present on the property, and no environmental releases or remediation activities have been reported.

Chemicals of Concern: The chemicals of concern at this facility are limited primarily to acrylates, isocyanates (used in minor quantities in certain UV-curable formulations), and water-based resins. The environmental risk profile is comparatively low relative to the McKeesport facility, as the facility does not use or store large quantities of organic solvents and does not handle heavy metals in significant concentrations.

Regulatory Profile:

• RCRA: Small Quantity Generator (SQG) of hazardous waste. EPA Identification Number PAD-112-583-667. Waste generation consists primarily of off-specification product and rinse water containing acrylate residues.

• Clean Air Act: PA DEP State-Only Operating Permit No. 63-00982. The facility is classified as a minor source and is not subject to Title V permitting requirements. The facility has maintained compliance with its permit conditions.

• The facility does not hold an NPDES permit and does not have reportable TRI quantities.

Assessment of Complexity: The Charleroi facility presents a low environmental risk profile. The greenfield development history, absence of legacy industrial use, newer construction, and low-hazard chemical profile all contribute to a favorable outlook. We expect the Phase I ESA to result in a finding of no RECs.

Diligence Plan: TerraVerde will conduct a Phase I ESA at the Charleroi facility with a target completion date of mid-to-late August 2022. A Phase II investigation is not anticipated absent unexpected findings in the Phase I assessment.

C. Facility 3 — Clarksburg Resin Blending Facility

Address: 1875 Route 50 West, Clarksburg, WV 26301

County: Harrison County, West Virginia

Parcel ID: 04-0012-0056-0000

Acreage: 5.2 acres, consisting of approximately 48,000 square feet of warehouse and blending space and approximately 3,000 square feet of office space

Operations: The Clarksburg facility is used primarily for resin receipt, blending, and redistribution. Bulk resins are received by tank truck, blended to customer specifications, and shipped to end users and to ACC's other facilities. Manufacturing activity at this location is minimal; the facility functions principally as a blending and logistics hub.

Ownership: The Clarksburg facility is leased from Mountainview Properties LLC, a West Virginia limited liability company, with Gerald Boothe serving as Managing Member. The lease commenced January 1, 2015, for an initial term of fifteen (15) years, expiring December 31, 2029. The lease is structured as a triple-net lease. The environmental provisions of the lease require the tenant (ACC) to remediate any contamination caused by the tenant's operations during the lease term, but the lease allocates responsibility for pre-existing contamination to the landlord. The specific terms of the environmental provisions will be analyzed in detail by C&H as part of the diligence process.

Known Environmental History: The Clarksburg property has a notable environmental history related to prior tenant operations. Prior to ACC's tenancy, the property was operated as a trucking terminal by Valley Freight Lines Inc. (now dissolved) from approximately 1968 through 2012. During that period, one 15,000-gallon underground storage tank (UST) used for diesel fuel was installed and operated at the site. The UST was removed in 2012 by the prior tenant, and soil contamination consisting of diesel-range organics (DRO) was identified in soils surrounding the former UST location. The West Virginia Department of Environmental Protection (WV DEP) assigned Site ID No. WVUST-2012-04887 to the UST release case. A closure letter was issued by WV DEP in March 2013; however, the closure was issued with the acknowledgment that residual DRO concentrations in soil remained above West Virginia action levels at certain sample locations. Institutional controls were imposed as a condition of closure and have been recorded at the Harrison County Clerk's Office at Book 1245, Page 312. The institutional controls restrict certain land uses, including the installation of potable water wells and soil disturbance in specified areas without WV DEP approval.

Chemicals of Concern: Current chemicals of concern at the Clarksburg facility include epoxy resins, hardeners (amines), and solvents (principally acetone and methyl ethyl ketone). Additionally, legacy contamination consisting of diesel-range organics from the former trucking terminal operations remains a concern, as discussed above.

Regulatory Profile:

• RCRA: Conditionally Exempt Small Quantity Generator (CESQG). EPA Identification Number WVD-054-319-882. Waste generation is minimal and consists primarily of empty resin containers and small quantities of waste solvents.

• Clean Air Act: WV DEP Registration Permit R13-3201. The facility is classified as a minor source with no significant air emissions.

• The facility has maintained regulatory compliance across all applicable programs.

Assessment of Complexity: The Clarksburg facility presents a moderate level of environmental risk. While ACC's own operations at the facility are relatively low-risk, the legacy diesel contamination from the former trucking terminal and the associated institutional controls create potential complications. Moreover, the leased-property status of the facility introduces additional transactional complexity, as any Phase II investigation requiring subsurface intrusion will likely require landlord consent from Gerald Boothe / Mountainview Properties LLC. The lease's environmental allocation provisions — specifically the distinction between pre-existing contamination (landlord responsibility) and tenant-caused contamination (tenant responsibility) — will need to be carefully analyzed in the context of the Transaction, particularly regarding how these allocations transfer upon Crestline's assumption of the ACC lease.

Diligence Plan: TerraVerde will conduct a Phase I ESA at the Clarksburg facility with a target completion date of late August 2022. In parallel, C&H will conduct a thorough analysis of the lease's environmental provisions, assignment and consent requirements, and the implications of the institutional controls recorded against the property. If the Phase I ESA identifies RECs warranting Phase II investigation (which we consider likely given the known residual DRO contamination), landlord consent from Mountainview Properties LLC will need to be obtained prior to subsurface investigation. C&H will prepare a draft landlord consent letter for this purpose. Regulatory compliance review will proceed in parallel with the site assessment work.

D. Facility 4 — Weirton Warehouse & Distribution Center

Address: 600 Commerce Way, Weirton, WV 26062

County: Hancock County, West Virginia

Parcel ID: 07-0304-0012-0000

Acreage: 3.1 acres, consisting of approximately 65,000 square feet of warehouse space and approximately 2,000 square feet of office space

Operations: The Weirton facility is used exclusively for finished goods storage and distribution. No manufacturing, blending, or chemical processing activities are conducted at this location. The facility does not generate hazardous waste.

Ownership: The Weirton facility is leased from Northern Panhandle Realty Corp., a West Virginia corporation, with Susan Delvecchio serving as President. The lease commenced March 1, 2018, for an initial term of ten (10) years, expiring February 28, 2028. The lease is structured as a double-net lease. Notably, the lease is silent on environmental obligations beyond a general requirement that the tenant comply with all applicable laws and regulations. This silence creates potential ambiguity regarding the allocation of environmental responsibilities between landlord and tenant, which will need to be evaluated in the context of the Transaction.

Known Environmental History: The warehouse building was constructed in 2016 on a remediated brownfield site that was formerly part of the Weirton Steel Company's industrial complex. The property underwent environmental remediation under the West Virginia Voluntary Remediation and Redevelopment Program (VRDP, W. Va. Code §§ 22-22-1 et seq.), and a Certificate of Completion was issued by WV DEP in September 2015. As a condition of the VRDP Certificate of Completion, engineering controls (consisting of an engineered cap, including the warehouse building foundation and surrounding asphalt paving) and institutional controls were put in place to prevent exposure to residual subsurface contamination. A deed restriction reflecting these controls has been recorded at the Hancock County Clerk's Office at Book 487, Page 89. The engineering and institutional controls impose ongoing compliance obligations, including periodic inspection and maintenance of the cap, restrictions on subsurface disturbance, and periodic reporting to WV DEP.

Assessment of Complexity: The Weirton facility presents a low operational environmental risk, as no manufacturing or chemical handling activities occur on-site. However, the property's history as a remediated brownfield with ongoing VRDP engineering and institutional controls creates a unique set of compliance obligations that will transfer with occupancy. The lessee — and, by extension, Crestline as the successor to ACC's lease — bears responsibility for maintaining the integrity of the engineering controls and complying with the institutional control requirements. Failure to maintain these controls could result in regulatory action or loss of the VRDP liability protection. Additionally, the lease's silence on environmental obligations beyond general legal compliance creates allocation ambiguity that should be addressed, either through a lease amendment or through appropriate provisions in the SPA.

Diligence Plan: TerraVerde will conduct a Phase I ESA at the Weirton facility with a target completion date of late August 2022. C&H will obtain and review the complete VRDP Certificate of Completion, the recorded deed restriction, and all engineering and institutional control documentation, including any monitoring reports and maintenance logs filed with WV DEP. C&H will also analyze the lease to assess the allocation of environmental responsibilities and evaluate whether a lease amendment or side letter with the landlord is advisable. A Phase II investigation is not anticipated given the warehouse-only nature of operations and the existing VRDP completion status.

VI. Regulatory Compliance Review — Scope

In addition to the Phase I and Phase II site assessment activities described above, C&H will conduct a comprehensive multi-media regulatory compliance review across all four ACC operating facilities. The objective of this review is to identify any instances of regulatory noncompliance, pending or threatened enforcement actions, consent orders, outstanding violations, or other regulatory matters that could give rise to liability for Crestline following the closing of the Transaction. The regulatory compliance review will encompass the following areas:

RCRA / Hazardous Waste. C&H will review generator status verification for all four facilities, with particular attention to the McKeesport facility (which is classified as a Large Quantity Generator subject to the most stringent RCRA requirements). We will review hazardous waste manifests, biennial reports, waste analysis records, land disposal restriction (LDR) notifications, contingency plans, and personnel training records. We will also review the history of regulatory inspections at each facility, including any notices of violation, compliance orders, or penalty assessments issued by EPA Region III (for Pennsylvania facilities), EPA Region III (for West Virginia facilities), PA DEP, or WV DEP.

Clean Air Act. C&H will review compliance with the Title V Operating Permit at the McKeesport facility, including semi-annual monitoring reports, annual compliance certifications, and deviation reports. At the Charleroi and Clarksburg facilities, we will review compliance with the applicable state-only operating permits and registration permits. We will give particular attention to the pending permit modification application for the new regenerative thermal oxidizer on Line 4 at the McKeesport facility, which was submitted to PA DEP in March 2022 and remains pending. We will evaluate the status of that application, any conditions or requirements that PA DEP may impose, and the capital cost and timeline implications for Crestline. Additionally, we will analyze HAP emissions at the McKeesport facility to confirm that current emissions calculations are accurate and that the facility is not at risk of exceeding permit limitations or triggering additional regulatory requirements (such as Maximum Achievable Control Technology, or MACT, standards for relevant source categories).

Clean Water Act / NPDES. We will review compliance with the NPDES stormwater discharge permit at the McKeesport facility, including all Discharge Monitoring Reports (DMRs) submitted to PA DEP for the preceding five years, Stormwater Pollution Prevention Plan (SWPPP) documentation, and any reported exceedances of permit effluent limits. We will evaluate whether any exceedances have resulted in enforcement action or whether corrective measures are ongoing. For the other three facilities, we will confirm the absence of NPDES permitting obligations and review any applicable stormwater general permit coverage.

EPCRA / TRI / Tier II. We will review the McKeesport facility's compliance with community right-to-know reporting requirements under the Emergency Planning and Community Right-to-Know Act, including Tier II chemical inventory reports filed with the Allegheny County Local Emergency Planning Committee (LEPC) and the Pennsylvania SERC, as well as TRI Form R filings for toluene, xylene, and any other reportable chemicals. We will verify that reporting thresholds have been accurately calculated, that reports have been timely filed, and that no discrepancies exist between reported quantities and actual emissions or releases.

TSCA. We will conduct a PCB equipment survey at all four facilities to identify any PCB-containing electrical equipment (transformers, capacitors, ballasts) and evaluate compliance with 40 C.F.R. Part 761 requirements. We will also review ACC's compliance with Chemical Data Reporting (CDR) requirements under TSCA Section 8(a) and Section 5 pre-manufacture notification requirements, to the extent applicable to ACC's product lines.

CERCLA / Superfund. We will conduct a National Priorities List (NPL) status check for all four ACC properties and surrounding areas. We note that the McKeesport facility is located within approximately 0.5 miles of the former Irwin Iron & Steel Superfund site, which was listed on the NPL in 1989, for which a Record of Decision (ROD) was issued in 1996, and at which construction of the selected remedy was completed in 2004. We will evaluate whether ACC has received or could receive any notice of potential liability under CERCLA Section 107 in connection with this or any other Superfund site, and whether ACC has been identified as a potentially responsible party (PRP) at any CERCLA site.

Asbestos and Lead-Based Paint. As discussed in the McKeesport facility section above, we will review existing asbestos surveys, Operations and Maintenance (O&M) plans, and lead-based paint surveys and management-in-place programs. We will evaluate compliance with OSHA asbestos regulations (29 C.F.R. § 1910.1001 and 29 C.F.R. § 1926.1101), EPA NESHAP for asbestos (40 C.F.R. Part 61, Subpart M), and EPA and HUD lead-based paint regulations. Updated condition assessments will be obtained if existing surveys are outdated or incomplete.

Spill and Release History. We will conduct a comprehensive review of all reportable releases across all four ACC facilities, including CERCLA Section 103 releases, EPCRA Section 304 releases, and state-reportable spills. We will review all enforcement actions, Notices of Violation, consent orders, administrative penalty assessments, and any civil or criminal proceedings related to environmental matters. We will also review ACC's internal spill logs and environmental incident reports.

To facilitate this regulatory compliance review, C&H will issue a formal Environmental Document Request List to Seller's counsel, Hargrove, Dalton & Speer LLP, to the attention of Franklin Speer, Esq., requesting all relevant environmental records, permits, compliance reports, spill logs, remediation files, surveys, and regulatory correspondence in ACC's possession or control. This request will be transmitted within the next several days, with a target delivery date of July 25, 2022.

VII. Transaction Document Support — Environmental Provisions

C&H's environmental team will prepare and negotiate the environmental-specific provisions of the Stock Purchase Agreement. The environmental provisions will be among the most critical elements of the SPA given the stock-purchase structure and the nature and extent of ACC's environmental profile. The environmental transaction support will encompass the following:

Environmental Representations and Warranties. We will draft comprehensive environmental representations and warranties for inclusion in Article IV of the SPA. These representations will address, among other things: (i) compliance with Environmental Laws; (ii) possession and validity of all required Environmental Permits; (iii) absence of pending or threatened Environmental Claims, proceedings, or investigations; (iv) disclosure of all known releases of Hazardous Substances; (v) absence of obligations under any consent decree, order, or agreement with any Governmental Authority relating to environmental matters; (vi) disclosure of all environmental assessments, audits, studies, reports, and correspondence in ACC's possession; and (vii) accuracy and completeness of the environmental disclosure schedules. The scope and specificity of these representations will be informed by the findings of the Phase I and Phase II investigations and the regulatory compliance review.

Special Environmental Indemnification Provisions. Given the magnitude of potential environmental liabilities — particularly at the McKeesport facility with its pre-1987 industrial history and legacy contamination — we anticipate that environmental indemnification will warrant treatment separate from the general indemnification provisions of the SPA. We will draft a dedicated environmental indemnification provision with appropriate escrow mechanics to secure the seller's indemnification obligations. We will also negotiate tailored survival periods for environmental representations and warranties, which typically extend significantly beyond the standard survival periods applicable to non-environmental representations, given the latent nature of many environmental liabilities. Industry practice in transactions of this nature typically provides for environmental representation survival periods of six to ten years, or until the expiration of applicable statutes of limitation or repose.

Environmental Disclosure Schedules. We will prepare or review the environmental disclosure schedules to the SPA, ensuring that all identified environmental conditions, liabilities, and exceptions to the environmental representations are accurately and completely disclosed.

Throughout this process, C&H's environmental team will coordinate closely with the broader M&A deal team to ensure that environmental findings are appropriately reflected in purchase price adjustment mechanisms, including any post-closing purchase price adjustments, holdbacks, or escrow arrangements that may be warranted based on quantified or estimated environmental liabilities.

VIII. Environmental Insurance Evaluation

In parallel with the diligence review, C&H will evaluate the availability and desirability of a Pollution Legal Liability ("PLL") insurance policy to serve as a risk transfer mechanism for identified and unknown environmental liabilities. PLL insurance can play an important role in a transaction of this nature by (a) providing a financial backstop against environmental cleanup costs and third-party claims that may arise post-closing, (b) satisfying lender requirements where identified RECs cannot be fully resolved prior to closing, and (c) bridging gaps between buyer and seller in the negotiation of environmental risk allocation in the SPA.

C&H recommends engaging Whitfield & Calder Insurance Advisors LLC as the environmental insurance broker for this Transaction. Whitfield & Calder is a specialty environmental insurance brokerage firm with its principal office at 227 West Monroe Street, Suite 1800, Chicago, IL 60606. The engagement would be led by the following professionals:

• Douglas Whitfield, Senior Vice President — Doug is one of the most experienced environmental insurance brokers in the Midwest and has placed PLL policies in numerous M&A transactions in the chemicals, manufacturing, and industrial sectors.

• Lauren Petrov, Account Executive — Lauren will manage the day-to-day coordination of the insurance marketing process, including preparation of the submission package, carrier negotiations, and policy placement.

Timing. The PLL insurance evaluation will commence once Phase I ESA results are available and can be compiled into a submission package for potential insurance carriers. We anticipate that the submission package, which will include Phase I reports, available Phase II data, regulatory compliance summaries, and a narrative description of operations and environmental risk, will be ready for distribution to carriers by late September or early October 2022. Carrier underwriting and quotation typically requires four to six weeks from receipt of a complete submission, which aligns with the overall Transaction timeline targeting a November 30, 2022 closing.

We note that Commonwealth National Bank's commitment letter for the Credit Facilities permits acceptable PLL insurance as an alternative to the requirement that all RECs identified in the Phase I ESAs be "adequately addressed" prior to closing. Accordingly, PLL insurance may serve the dual purposes of (i) satisfying lender conditions and (ii) bridging any remaining gap between buyer and seller on contractual environmental risk allocation in the SPA. In our experience, PLL policies in transactions of this nature and size range typically carry premiums in the range of $75,000 to $200,000 for a ten-year policy term, with policy limits tailored to the identified risk profile. We will provide a more precise estimate once the PLL evaluation is underway.

Whitfield & Calder Fees. Whitfield & Calder is typically compensated through insurance carrier commissions and does not charge a direct brokerage fee to the insured. Accordingly, no direct fee to Crestline is anticipated in connection with the environmental insurance placement.

IX. Timeline and Key Milestones

Set forth below is the anticipated schedule for the environmental diligence workstream, from the engagement opening date of July 19, 2022, through the targeted closing date of November 30, 2022:

We note that the foregoing timeline is subject to several important caveats and contingencies. Timely execution of the schedule is dependent on, among other factors: (i) receipt of environmental records and documents from Seller in response to the Environmental Document Request List within a reasonable time frame (we will request a two-week response period); (ii) TerraVerde's ability to schedule and complete field activities at all four facilities within the anticipated windows, which may be affected by site access coordination, weather conditions, or other logistical factors; (iii) laboratory turnaround times for Phase II analytical samples, which are typically two to three weeks for standard analytical methods (EPA SW-846 Methods 8260, 8270, 6010, etc.) but may be longer for specialized analyses; and (iv) the pace of SPA negotiations and the responsiveness of Seller and Seller's counsel. We will monitor progress against the schedule closely and will communicate promptly if any delays or adjustments are anticipated.

X. Budget Estimate

Calderwood & Harkness Legal Fees

The estimated C&H legal fees for the environmental diligence workstream are in the range of $175,000 to $250,000, based on the hourly rates set forth in the engagement letter dated July 19, 2022. For reference, the applicable hourly rates are as follows:

The budget range reflects the inherent uncertainty in the scope of work at this stage of the diligence process. The actual fees incurred will depend on several key variables, including: (a) the number of facilities requiring Phase II investigation and the complexity of the environmental conditions encountered; (b) the nature and severity of any regulatory compliance issues identified during the compliance review; (c) the extent and complexity of negotiations with Seller's counsel on the environmental provisions of the SPA; and (d) whether the PLL insurance evaluation proceeds and, if so, the level of C&H involvement in policy negotiation and placement.

The low end of the range ($175,000) assumes Phase II investigation at one facility only (McKeesport), no significant regulatory compliance issues, relatively straightforward SPA negotiation on environmental provisions, and limited C&H involvement in the PLL insurance process. The high end of the range ($250,000) assumes Phase II investigations at two or more facilities, complex regulatory compliance issues requiring detailed analysis and potential engagement with regulatory agencies, extended and contentious negotiations on environmental risk allocation in the SPA, and active C&H involvement in the PLL insurance evaluation and placement.

The budget estimate does not include C&H disbursements, which are estimated at $3,000 to $5,000 for Westmark Data Systems and other legal research services, travel expenses for site visits and meetings, courier and delivery charges, and recording and search fees associated with environmental lien and deed restriction research.

TerraVerde Environmental Consulting Fees

TerraVerde will be retained directly by Crestline under a separate engagement agreement, and TerraVerde's fees are outside the scope of C&H's budget. Based on preliminary scoping discussions with TerraVerde, the estimated consulting fees are as follows:

• Phase I ESAs: Estimated at approximately $4,500 per facility × 4 facilities = $18,000 total for Phase I assessments across the portfolio.

• Phase II Investigations: Costs are highly dependent on the number of sites requiring investigation and the scope of work at each site, including the number of soil borings, monitoring well installations, soil vapor sampling points, and analytical parameters. Based on TerraVerde's preliminary estimates, Phase II investigation costs are estimated in the range of $35,000 to $75,000 per facility, depending on scope.

• Total Estimated TerraVerde Range: $18,000 (Phase I only at all four facilities, no Phase II required) to approximately $168,000 (Phase I at all four facilities plus Phase II investigations at two facilities at the higher end of the per-facility range).

Whitfield & Calder Insurance Advisors Fees

As noted in Section VIII above, Whitfield & Calder Insurance Advisors LLC is typically compensated through insurance carrier commissions. No direct brokerage fee to Crestline is anticipated.

Billing and Invoicing

C&H will provide monthly invoices with detailed time entries in accordance with the terms of the engagement letter. We will monitor actual fees against the budget on an ongoing basis and will promptly inform you of any developments — such as unanticipated Phase II investigation needs, complex regulatory issues, or protracted SPA negotiations — that may cause the budget to trend toward or exceed the high end of the estimated range.

XI. Coordination and Communication Protocol

Effective coordination and clear communication among the numerous parties involved in this diligence effort are essential to the timely and successful completion of the workstream. To that end, we propose the following coordination and communication protocols:

Primary Day-to-Day Contact (C&H). Harrison Caldwell, Of Counsel, will serve as the primary day-to-day contact for the environmental diligence workstream. Harrison can be reached at (216) 555-8425 (direct) or hcaldwell@calderwoodharkness.com.

Client-Side Primary Contacts. Derek Huang, General Counsel, CPS, will serve as the primary client contact for legal and transactional matters related to the environmental workstream. Patricia Okonkwo, Vice President of Environmental Health & Safety, CPS, will serve as the primary client contact for technical environmental matters, including coordination of site access, review of technical data, and interface with CPS's internal EHS team.

Consultant Coordination. C&H will coordinate with TerraVerde through regular check-in calls (anticipated to be weekly during active fieldwork periods) and will attend or participate in key fieldwork activities, including initial site visits, Phase II mobilization and oversight, and any meetings with regulatory agencies. Harrison Caldwell will serve as the primary C&H liaison with TerraVerde's team.

Periodic Status Updates. C&H will provide periodic status updates on the environmental diligence workstream to Derek Huang and Patricia Okonkwo. During periods of active diligence activity, we anticipate providing updates on a weekly or bi-weekly basis, as appropriate. Copies of status updates will be provided to Vanessa Moretti, Deal Partner at Briarwood Capital Partners LP, and Hugh Bancroft, Operating Partner at Briarwood Capital Partners LP, as appropriate and as directed by the client.

Privilege and Confidentiality. All environmental diligence work product prepared by C&H will be prepared and maintained under the protections of the attorney-client privilege and the work product doctrine. TerraVerde's environmental reports and assessments, while ultimately addressed to Crestline as the client, will be prepared at the direction of counsel to preserve privilege to the maximum extent permissible under applicable law. We will include appropriate privilege legends on all work product, and we advise that distribution of privileged materials be limited to those individuals with a need to know in order to preserve the privilege.

Environmental Diligence Status Tracker. C&H will maintain an internal Environmental Diligence Status Tracker that catalogs all pending action items, document requests, deliverables, and milestone dates. This tracker will be shared with the client team on a regular basis and will serve as the central reference point for monitoring progress against the timeline set forth in Section IX above.

XII. Immediate Next Steps

To ensure prompt commencement of the environmental diligence workstream, the following immediate action items are identified:

1. Environmental Document Request List. C&H will finalize and transmit the Environmental Document Request List to Hargrove, Dalton & Speer LLP (Franklin Speer) by July 25, 2022. The request list will be comprehensive and will cover all environmental records, permits, reports, surveys, and correspondence relevant to the four ACC facilities.

2. TerraVerde Engagement. C&H will finalize the TerraVerde engagement scope and assist Crestline in executing the TerraVerde engagement agreement. We will confirm Phase I ESA fieldwork scheduling for all four facilities, targeting completion by mid-to-late August 2022.

3. Internal Environmental Files. We request that Derek Huang and Patricia Okonkwo provide C&H with any existing internal environmental files, reports, memoranda, or correspondence related to ACC that Crestline may already possess from preliminary due diligence or initial management discussions. Early access to any such materials will enable us to focus our diligence efforts more efficiently and to identify potential areas of concern at the outset.

4. Kickoff Call. C&H will schedule an initial kickoff call with the full diligence team — including Derek Huang, Patricia Okonkwo, Harrison Caldwell, Grace Nakamura, Dr. Nina Sorensen (TerraVerde), and Kevin O'Malley (TerraVerde) — for the week of July 25, 2022. The purpose of the kickoff call will be to confirm the diligence plan, discuss site access logistics, review the document request list, and establish regular communication cadences.

XIII. Closing

We are fully prepared to proceed with the environmental diligence workstream in accordance with the plan set forth in this letter, and we are confident in the C&H and TerraVerde team's ability to deliver thorough, commercially informed environmental diligence within the targeted timeline. The environmental analysis will be a critical input to Crestline's investment decision and to the negotiation of the Stock Purchase Agreement, and we are committed to providing actionable, risk-quantified deliverables that serve Crestline's objectives in this Transaction.

We ask that you review the foregoing diligence plan and budget range and confirm your approval to proceed. If you have any questions, comments, or proposed modifications to the plan, please do not hesitate to contact Beatrice Holloway at (216) 555-8410 or bholloway@calderwoodharkness.com, or Harrison Caldwell at (216) 555-8425 or hcaldwell@calderwoodharkness.com. We look forward to working with you and the full Crestline team on this important engagement.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Beatrice Holloway Partner 1900 Euclid Avenue, Suite 3200 Cleveland, OH 44115 Telephone: (216) 555-8410

Email: bholloway@calderwoodharkness.com

cc:

Patricia Okonkwo, Vice President, Environmental Health & Safety, Crestline Packaging Solutions LLC

Vanessa Moretti, Deal Partner, Briarwood Capital Partners LP

Harrison Caldwell, Of Counsel, Calderwood & Harkness LLP

James Prentice, Partner, Calderwood & Harkness LLP

Grace Nakamura, Associate, Calderwood & Harkness LLP

Enclosures: None. Environmental Document Request List to follow under separate cover.

Target Date	Milestone
July 25, 2022	Environmental Document Request List transmitted to Seller's counsel (Hargrove, Dalton & Speer LLP, attn: Franklin Speer)
Late July 2022	TerraVerde engagement confirmed and executed; Phase I ESA fieldwork scheduling confirmed for all four ACC facilities
August 15–25, 2022	Phase I ESAs completed for all four facilities (McKeesport, Charleroi, Clarksburg, Weirton); draft reports delivered by TerraVerde to C&H
Late August 2022	C&H review and analysis of Phase I ESA reports; identification of RECs and determination of Phase II scope requirements
Early September 2022	Phase II scope(s) of work developed and approved by C&H for facilities with identified RECs; landlord consent obtained from Mountainview Properties LLC (Clarksburg) and/or Northern Panhandle Realty Corp. (Weirton) if subsurface investigation required at leased properties
September–October 2022	Phase II field investigations and sampling conducted at identified facilities; concurrent regulatory compliance review completed across all four facilities
Late September 2022	PLL insurance evaluation commenced; environmental data compiled and submission package transmitted to Whitfield & Calder for distribution to carriers
October 2022	Phase II laboratory analytical results received and analyzed by TerraVerde and C&H (standard laboratory turnaround: 2–3 weeks from sample receipt)
Mid-October 2022	Draft environmental representations, warranties, and indemnification provisions prepared by C&H and submitted to M&A deal team for incorporation into SPA negotiation
Late October 2022	Comprehensive Environmental Diligence Summary Memorandum finalized and delivered to Crestline, with copies to Briarwood Capital Partners
November 2022	Environmental escrow and indemnification negotiations completed with Seller's counsel; PLL insurance bound (if applicable and if terms are acceptable)
November 30, 2022	Targeted closing of the Transaction
Professional	Rate
Partner (Holloway)	$895/hr
Of Counsel (Caldwell)	$725/hr
Lead Associate (Nakamura)	$625/hr
Working Associate (Dominguez)	$495/hr
Paralegal (Estrada)	$275/hr

CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED COMMUNICATION
CALDERWOOD & HARKNESS LLP Attorneys at Law
1900 Euclid Avenue, Suite 3200 Cleveland, OH 44115 Telephone: (216) 555-8400 Facsimile: (216) 555-8401 www.calderwoodharkness.com
July 21, 2022
Derek Huang, Esq. General Counsel Crestline Packaging Solutions LLC 4100 Riverside Commerce Drive, Suite 300 Dayton, OH 45402
Re: Environmental Due Diligence Plan — Proposed Acquisition of Allegheny Chemical Coatings, Inc. C&H Matter No. 1006-00003
Dear Derek:
I. Introduction and Purpose
Pursuant to the engagement letter dated July 19, 2022, by and between Calderwood & Harkness LLP ("C&H" or the "Firm") and Crestline Packaging Solutions LLC ("Crestline" or "CPS"), C&H has been retained to conduct environmental due diligence in connection with Crestline's proposed acquisition (the "Transaction") of one hundred percent (100%) of the outstanding common stock of Allegheny Chemical Coatings, Inc. ("ACC"), a Pennsylvania corporation headquartered at 2200 Iron Works Boulevard, McKeesport, PA 15132. ACC is a manufacturer and distributor of industrial coatings, specialty resins, and related chemical products, operating four facilities across Pennsylvania and West Virginia.
The purpose of this letter is to set forth the scope, timeline, budget, and coordination plan for the environmental diligence workstream associated with the Transaction. This letter is intended to serve as a comprehensive roadmap for the environmental diligence effort and to facilitate coordination among the various advisors and stakeholders involved. We recognize the importance of proceeding expeditiously and methodically, and we have structured the plan set forth herein to achieve both objectives.
The environmental diligence workstream is being conducted in parallel with — but independent of — the financial and accounting diligence being performed by Pendleton & Cascade Insurance Brokers (Robert Feinstein, engagement partner) and the broader M&A transaction negotiation led by Beatrice Holloway (responsible partner) and James Prentice (billing partner) of our firm. We will, of course, coordinate closely with all members of the deal team to ensure that environmental findings are integrated into the overall transaction analysis and reflected appropriately in the definitive transaction documents.
As you are aware, the Transaction is structured as a stock purchase, with a proposed purchase price of $94.5 million, representing a multiple of approximately 7.0x ACC's fiscal year 2021 EBITDA of $13.5 million. Because the Transaction is structured as a stock acquisition rather than an asset acquisition, Crestline will, as a matter of law, succeed to all of ACC's environmental liabilities and obligations — whether known or unknown, disclosed or undisclosed, contingent or accrued, and whether arising under federal, state, or local law. This includes, without limitation, liabilities arising from historical contamination, regulatory noncompliance, pending or threatened enforcement actions, and remediation obligations, as well as ongoing compliance obligations under existing permits, consent orders, and institutional or engineering controls.
We cannot overstate the importance of this structural point. Unlike an asset purchase, where the buyer may selectively exclude contaminated parcels, environmentally impaired operations, or specific liabilities from the scope of acquired assets, a stock purchase provides no such flexibility. The corporate entity — with all of its historical liabilities attached — is the subject of the acquisition. Accordingly, thorough environmental diligence is not merely advisable; it is critical to protecting Crestline's investment, informing purchase price negotiations, and establishing an appropriate contractual risk allocation framework in the Stock Purchase Agreement (the "SPA").
We also note that Commonwealth National Bank, N.A. ("CNB"), acting through Victoria Chen, Managing Director, as agent bank for the proposed $65 million senior secured term loan and $20 million revolving credit facility (together, the "Credit Facilities"), has conditioned its lending commitment on satisfactory environmental diligence. Specifically, CNB's commitment letter requires Phase I Environmental Site Assessments on all target real property, with the further requirement that no unaddressed Recognized Environmental Conditions ("RECs") remain at closing, or, in the alternative, that acceptable Pollution Legal Liability ("PLL") insurance be obtained to backstop identified environmental risks to the lender's satisfaction. The environmental diligence plan set forth herein has been designed to satisfy these lender conditions while simultaneously serving Crestline's own need for a complete understanding of ACC's environmental risk profile.
II. Calderwood & Harkness Engagement Team
The following professionals have been assigned to the environmental diligence workstream within the broader Transaction engagement team:
Beatrice Holloway — Responsible Partner (M&A). Beatrice serves as the responsible partner for the overall Transaction and will provide high-level supervision of the environmental diligence workstream, ensuring alignment between environmental findings and the broader deal strategy and negotiation posture.
James Prentice — Billing Partner (M&A). James serves as the billing partner for the engagement and will oversee all budgetary matters, invoicing, and client billing in accordance with the terms of the engagement letter.
Harrison Caldwell — Of Counsel (Environmental & Land Use). Harrison will serve as the lead for all environmental technical analysis, including review of Phase I and Phase II Environmental Site Assessment reports, regulatory compliance review across all four ACC facilities, environmental insurance evaluation, and preparation of environmental provisions for the SPA. Harrison brings over twenty years of experience in environmental transactional diligence, Superfund liability allocation, and environmental regulatory counseling for manufacturing clients. His standard hourly rate is $725.
Grace Nakamura — Lead Associate (Real Estate). Grace will conduct property-level analysis, review all real property leases at ACC's leased facilities for environmental provisions, draft and review environmental document requests, and assist Harrison with regulatory compliance analysis. Grace's standard hourly rate is $625.
Rafael Dominguez — Working Associate (Real Estate). Rafael will support the workstream through regulatory compliance research, environmental lien searches, review of publicly available environmental databases, and preparation of memoranda on state-specific regulatory requirements (particularly Pennsylvania's Act 2 Land Recycling Program and West Virginia's Voluntary Remediation and Redevelopment Program). Rafael's standard hourly rate is $495.
Simone Estrada — Paralegal. Simone will manage the document repository for all environmental diligence materials, coordinate document production tracking, assist with preparation of the Environmental Document Request List, and provide administrative coordination among the C&H team, TerraVerde, and client contacts. Simone's standard hourly rate is $275.
Harrison Caldwell will serve as the primary day-to-day contact for the environmental diligence workstream and should be contacted directly with any questions, requests, or updates related to environmental matters. On the client side, we understand that Patricia Okonkwo, Vice President of Environmental Health & Safety at CPS, will serve as the primary technical contact for environmental diligence matters. We look forward to working closely with Patricia and her team throughout this process.
III. Environmental Consultant — TerraVerde Environmental Consulting LLC
Calderwood & Harkness recommends, and has been coordinating with, TerraVerde Environmental Consulting LLC ("TerraVerde"), an Ohio limited liability company based at 1350 Polaris Parkway, Suite 220, Columbus, OH 43240, to serve as the environmental consulting firm for the Transaction. TerraVerde has extensive experience in transactional environmental diligence for manufacturing, chemicals, and industrial clients, and C&H has worked with TerraVerde on numerous prior engagements with consistently excellent results.
The TerraVerde engagement team will be led by the following professionals:
• Principal-in-Charge: Dr. Nina Sorensen, P.E., CHMM — Dr. Sorensen holds a Ph.D. in Environmental Engineering from Carnegie Mellon University and is both a licensed Professional Engineer and a Certified Hazardous Materials Manager. She will provide senior technical oversight of all Phase I and Phase II assessment work.
• Project Manager: Kevin O'Malley, P.G. — Mr. O'Malley is a licensed Professional Geologist and will manage the day-to-day execution of field investigations, including scheduling, field oversight, data analysis, and report preparation.
TerraVerde will conduct all Phase I and Phase II Environmental Site Assessments under the direction and oversight of Calderwood & Harkness. All Phase I ESAs will be conducted in strict conformance with the ASTM E1527-21 standard (Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process), which is the current edition of the ASTM Phase I standard and satisfies the "All Appropriate Inquiries" requirements under 40 C.F.R. Part 312, necessary to establish the innocent landowner, contiguous property owner, and bona fide prospective purchaser protections under CERCLA.
Any Phase II ESAs deemed necessary following the Phase I assessments will be conducted in conformance with the ASTM E1903-19 standard (Standard Practice for Environmental Site Assessments: Phase II Environmental Site Assessment Process), as supplemented by applicable state-specific guidance. For facilities located in Pennsylvania, Phase II work will be conducted with reference to the Pennsylvania Department of Environmental Protection's Land Recycling Program ("Act 2") guidance, including the applicable Statewide Health Standards and Site-Specific Standards under 25 Pa. Code Chapter 250. For facilities located in West Virginia, Phase II work will be conducted with reference to the West Virginia Department of Environmental Protection's Voluntary Remediation and Redevelopment Program ("VRDP") under W. Va. Code §§ 22-22-1 et seq. and related program guidance documents.
TerraVerde will be retained directly by Crestline under a separate engagement agreement to be negotiated between Crestline and TerraVerde. C&H will review the proposed engagement agreement and will approve all TerraVerde scopes of work, sampling and analysis plans, and deliverables prior to execution. This structure ensures that the environmental consulting work product benefits from attorney oversight and direction while maintaining appropriate contractual accountability between Crestline and its consultant.
IV. Scope of Environmental Diligence — Overview
The environmental diligence workstream encompasses six principal components, each of which is described in greater detail in the sections that follow:
1. Phase I Environmental Site Assessments at all four ACC operating facilities, conducted by TerraVerde in conformance with ASTM E1527-21, to identify Recognized Environmental Conditions, Controlled Recognized Environmental Conditions, and Historical Recognized Environmental Conditions at each property.
2. Phase II Subsurface Investigations at facilities where Phase I ESA results identify one or more RECs warranting further evaluation. Phase II investigations will include soil borings, groundwater sampling, soil vapor testing, and/or other assessment methods as appropriate to characterize the nature and extent of identified conditions.
3. Regulatory Compliance Review across all four facilities, encompassing federal, state, and local environmental regulatory programs, including but not limited to the Resource Conservation and Recovery Act (RCRA), the Clean Air Act (CAA), the Clean Water Act/National Pollutant Discharge Elimination System (CWA/NPDES), the Emergency Planning and Community Right-to-Know Act and Toxics Release Inventory (EPCRA/TRI), the Toxic Substances Control Act (TSCA), the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA/Superfund), and applicable asbestos and lead-based paint regulations.
4. Environmental Representations, Warranties, and Indemnification Analysis and Drafting for incorporation into the Stock Purchase Agreement, tailored to address the specific environmental risks identified through the diligence process and to allocate those risks appropriately between buyer and seller.
5. Evaluation of Environmental Insurance Options, including the availability, terms, coverage scope, and cost of a Pollution Legal Liability ("PLL") insurance policy to backstop identified and unknown environmental risks, with a view toward satisfying both lender requirements and buyer risk management objectives.
6. Preparation of a Comprehensive Environmental Diligence Summary Memorandum synthesizing all findings from the foregoing workstreams, including facility-by-facility risk ratings, estimated environmental liabilities, and actionable recommendations for transaction structuring and post-closing environmental management.
Each of these components is designed to provide Crestline, its management team, its board, and its equity sponsor, Briarwood Capital Partners LP, with the information necessary to make informed decisions regarding the Transaction and to negotiate appropriate protections in the definitive documentation.
V. Target Facilities — Description and Diligence Plan
ACC operates four facilities across Pennsylvania and West Virginia. Below, we provide a detailed description of each facility, its environmental profile, and the specific diligence plan for each.
A. Facility 1 — McKeesport Main Plant (Headquarters)
Address: 2200 Iron Works Boulevard, McKeesport, PA 15132
County: Allegheny County, Pennsylvania
Parcel ID: 0383-M-00125-0000-00
Acreage: 14.3 acres, consisting of approximately 185,000 square feet of manufacturing space and approximately 12,000 square feet of office space in multiple interconnected buildings
Operations: This is ACC's primary manufacturing facility and corporate headquarters. Operations include solvent-based and epoxy coating manufacturing, raw material mixing and blending, product filling and packaging, quality control laboratory testing, and warehousing of raw materials and finished goods. The facility operates two shifts, five days per week, with approximately 145 full-time employees.
Ownership: Fee simple. The property has been owned by ACC since 1987, when ACC acquired it from Keystone Metalworks, Inc. (now defunct) through a bankruptcy sale under 11 U.S.C. § 363.
Known Environmental History: The McKeesport facility has the most significant and complex environmental history in ACC's portfolio. Prior to ACC's acquisition, the property was operated as a steel fabrication facility by Keystone Metalworks from approximately 1952 through 1986. Steel fabrication operations involved cutting, welding, grinding, surface treatment, and coating of structural steel components, and are associated with the use and release of various hazardous substances.
Following ACC's acquisition of the property, three 10,000-gallon underground storage tanks (USTs) used for storage of No. 2 fuel oil and waste solvents were identified and removed in 1993. Soil sampling conducted during UST removal activities identified contamination in surrounding soils, and ACC filed with the Pennsylvania Department of Environmental Protection (PA DEP) under the Land Recycling and Environmental Remediation Standards Act (Act 2, 35 P.S. §§ 6026.101–6026.908) in 1994. Following a period of remedial investigation and remediation activities, PA DEP issued a No Further Action ("NFA") letter under the Statewide Health Standard in May 2001. C&H will obtain and review the complete Act 2 administrative file, including the remedial investigation report, cleanup plan, and NFA letter, to confirm the scope and terms of the closure and any continuing obligations.
Chemicals of Concern: The principal chemicals of concern at this facility include volatile organic compounds (VOCs) — specifically toluene, xylene, methyl ethyl ketone (MEK), and ethylbenzene — associated with current solvent-based coating manufacturing operations and historical releases. Additionally, heavy metals, particularly chromium and lead, are chemicals of concern due to their use in legacy pigment operations and the property's prior steel fabrication history.
Regulatory Profile:
• RCRA: Large Quantity Generator (LQG) of hazardous waste. EPA Identification Number PAD-098-721-445. ACC generates hazardous waste at this facility including spent solvents (D001 — ignitable waste; F003 and F005 — spent non-halogenated and halogenated solvents), waste paints and coatings, and waste containing chromium (D007) and lead (D008). The facility is subject to full LQG requirements, including 90-day accumulation area management, biennial reporting, contingency planning, and personnel training requirements.
• Clean Air Act: Title V Operating Permit issued by PA DEP, Permit No. TV-0383-0125, issued June 1, 2019, and expiring May 31, 2024. The facility is classified as a major source for Hazardous Air Pollutants (HAPs), with combined HAP emissions of approximately 38.2 tons per year, which exceeds the 25-ton-per-year major source threshold under Section 112 of the Clean Air Act. The facility is subject to the National Emission Standards for Hazardous Air Pollutants (NESHAP) for miscellaneous surface coating operations. We note that ACC submitted a permit modification application in March 2022 for the installation and operation of a new regenerative thermal oxidizer (RTO) on production Line 4, which is pending review by PA DEP. The status and terms of this pending modification will be reviewed as part of our regulatory compliance analysis.
• Clean Water Act / NPDES: The facility operates under NPDES Stormwater Individual Permit No. PA0025631 for discharge of stormwater from the facility's loading and storage areas. There is no process wastewater discharge; all process wastewater is collected and disposed of as hazardous waste.
• EPCRA / TRI: The facility is a TRI reporter under Section 313 of EPCRA, reporting releases and transfers of toluene and xylene on EPA Form R filings. The facility also files Tier II reports with the Allegheny County Local Emergency Planning Committee (LEPC) and the State Emergency Response Commission (SERC).
Assessment of Complexity: The McKeesport facility represents the highest-risk property in ACC's portfolio from an environmental perspective. The combination of extensive current chemical handling operations, legacy industrial use (steel fabrication, 1952–1986), prior UST releases and remediation, ongoing major source air emissions, and LQG hazardous waste generation creates a multi-dimensional environmental risk profile. Although a PA DEP NFA letter was obtained in 2001, the scope and terms of that closure must be carefully evaluated, particularly with respect to any residual contamination, vapor intrusion pathways, and potential reopener conditions. We anticipate that this facility will require thorough Phase I investigation and, if additional RECs are identified beyond those addressed by the 2001 NFA letter, a Phase II subsurface investigation.
Diligence Plan: TerraVerde will conduct a Phase I ESA at the McKeesport facility with a target completion date of mid-August 2022. The Phase I ESA results will be reviewed and analyzed by C&H (Caldwell and Nakamura). Based on the Phase I findings, a Phase II scope of work will be developed if RECs are identified that warrant further evaluation, with a target commencement date for Phase II fieldwork of early-to-mid September 2022. In parallel with the Phase I/Phase II assessment process, C&H will conduct a comprehensive regulatory compliance review encompassing RCRA, CAA (including the pending thermal oxidizer permit modification), CWA/NPDES, EPCRA/TRI, and applicable asbestos and lead-based paint regulations.
Asbestos and Lead-Based Paint: Based on preliminary information from ACC, asbestos-containing materials (ACM) have been identified in the McKeesport facility, including pipe insulation throughout the manufacturing building and vinyl floor tiles in certain production areas. Lead-based paint (LBP) has been identified in the office building, which was originally constructed circa 1955. ACC reportedly maintains management-in-place programs for both ACM and LBP. C&H will review the existing asbestos and lead-based paint surveys, management-in-place plans, and O&M programs, and will evaluate whether updated condition assessments are necessary. We will also obtain abatement cost estimates to inform potential remediation budgets and purchase price considerations.
B. Facility 2 — Charleroi Specialty Coatings Plant
Address: 450 Industrial Park Road, Charleroi, PA 15022
County: Washington County, Pennsylvania
Parcel ID: 120-015-00-03-0018-00
Acreage: 8.7 acres, consisting of approximately 92,000 square feet of manufacturing space and approximately 4,500 square feet of combined office and laboratory space
Operations: The Charleroi facility is ACC's center for water-based and UV-curable coatings production. This represents ACC's growth platform and newer product line, reflecting the broader industry trend toward lower-VOC formulations. Operations include water-based resin blending, UV-curable coating formulation, quality assurance testing, and packaging.
Ownership: Fee simple. The property has been owned by ACC since 2003, when the facility was constructed on a greenfield site.
Known Environmental History: The Charleroi facility was a greenfield development on former agricultural land. Prior to ACC's acquisition and construction, the property was used for crop farming and had no history of industrial use. No underground storage tanks have been present on the property, and no environmental releases or remediation activities have been reported.
Chemicals of Concern: The chemicals of concern at this facility are limited primarily to acrylates, isocyanates (used in minor quantities in certain UV-curable formulations), and water-based resins. The environmental risk profile is comparatively low relative to the McKeesport facility, as the facility does not use or store large quantities of organic solvents and does not handle heavy metals in significant concentrations.
Regulatory Profile:
• RCRA: Small Quantity Generator (SQG) of hazardous waste. EPA Identification Number PAD-112-583-667. Waste generation consists primarily of off-specification product and rinse water containing acrylate residues.
• Clean Air Act: PA DEP State-Only Operating Permit No. 63-00982. The facility is classified as a minor source and is not subject to Title V permitting requirements. The facility has maintained compliance with its permit conditions.
• The facility does not hold an NPDES permit and does not have reportable TRI quantities.
Assessment of Complexity: The Charleroi facility presents a low environmental risk profile. The greenfield development history, absence of legacy industrial use, newer construction, and low-hazard chemical profile all contribute to a favorable outlook. We expect the Phase I ESA to result in a finding of no RECs.
Diligence Plan: TerraVerde will conduct a Phase I ESA at the Charleroi facility with a target completion date of mid-to-late August 2022. A Phase II investigation is not anticipated absent unexpected findings in the Phase I assessment.
C. Facility 3 — Clarksburg Resin Blending Facility
Address: 1875 Route 50 West, Clarksburg, WV 26301
County: Harrison County, West Virginia
Parcel ID: 04-0012-0056-0000
Acreage: 5.2 acres, consisting of approximately 48,000 square feet of warehouse and blending space and approximately 3,000 square feet of office space
Operations: The Clarksburg facility is used primarily for resin receipt, blending, and redistribution. Bulk resins are received by tank truck, blended to customer specifications, and shipped to end users and to ACC's other facilities. Manufacturing activity at this location is minimal; the facility functions principally as a blending and logistics hub.
Ownership: The Clarksburg facility is leased from Mountainview Properties LLC, a West Virginia limited liability company, with Gerald Boothe serving as Managing Member. The lease commenced January 1, 2015, for an initial term of fifteen (15) years, expiring December 31, 2029. The lease is structured as a triple-net lease. The environmental provisions of the lease require the tenant (ACC) to remediate any contamination caused by the tenant's operations during the lease term, but the lease allocates responsibility for pre-existing contamination to the landlord. The specific terms of the environmental provisions will be analyzed in detail by C&H as part of the diligence process.
Known Environmental History: The Clarksburg property has a notable environmental history related to prior tenant operations. Prior to ACC's tenancy, the property was operated as a trucking terminal by Valley Freight Lines Inc. (now dissolved) from approximately 1968 through 2012. During that period, one 15,000-gallon underground storage tank (UST) used for diesel fuel was installed and operated at the site. The UST was removed in 2012 by the prior tenant, and soil contamination consisting of diesel-range organics (DRO) was identified in soils surrounding the former UST location. The West Virginia Department of Environmental Protection (WV DEP) assigned Site ID No. WVUST-2012-04887 to the UST release case. A closure letter was issued by WV DEP in March 2013; however, the closure was issued with the acknowledgment that residual DRO concentrations in soil remained above West Virginia action levels at certain sample locations. Institutional controls were imposed as a condition of closure and have been recorded at the Harrison County Clerk's Office at Book 1245, Page 312. The institutional controls restrict certain land uses, including the installation of potable water wells and soil disturbance in specified areas without WV DEP approval.
Chemicals of Concern: Current chemicals of concern at the Clarksburg facility include epoxy resins, hardeners (amines), and solvents (principally acetone and methyl ethyl ketone). Additionally, legacy contamination consisting of diesel-range organics from the former trucking terminal operations remains a concern, as discussed above.
Regulatory Profile:
• RCRA: Conditionally Exempt Small Quantity Generator (CESQG). EPA Identification Number WVD-054-319-882. Waste generation is minimal and consists primarily of empty resin containers and small quantities of waste solvents.
• Clean Air Act: WV DEP Registration Permit R13-3201. The facility is classified as a minor source with no significant air emissions.
• The facility has maintained regulatory compliance across all applicable programs.
Assessment of Complexity: The Clarksburg facility presents a moderate level of environmental risk. While ACC's own operations at the facility are relatively low-risk, the legacy diesel contamination from the former trucking terminal and the associated institutional controls create potential complications. Moreover, the leased-property status of the facility introduces additional transactional complexity, as any Phase II investigation requiring subsurface intrusion will likely require landlord consent from Gerald Boothe / Mountainview Properties LLC. The lease's environmental allocation provisions — specifically the distinction between pre-existing contamination (landlord responsibility) and tenant-caused contamination (tenant responsibility) — will need to be carefully analyzed in the context of the Transaction, particularly regarding how these allocations transfer upon Crestline's assumption of the ACC lease.
Diligence Plan: TerraVerde will conduct a Phase I ESA at the Clarksburg facility with a target completion date of late August 2022. In parallel, C&H will conduct a thorough analysis of the lease's environmental provisions, assignment and consent requirements, and the implications of the institutional controls recorded against the property. If the Phase I ESA identifies RECs warranting Phase II investigation (which we consider likely given the known residual DRO contamination), landlord consent from Mountainview Properties LLC will need to be obtained prior to subsurface investigation. C&H will prepare a draft landlord consent letter for this purpose. Regulatory compliance review will proceed in parallel with the site assessment work.
D. Facility 4 — Weirton Warehouse & Distribution Center
Address: 600 Commerce Way, Weirton, WV 26062
County: Hancock County, West Virginia
Parcel ID: 07-0304-0012-0000
Acreage: 3.1 acres, consisting of approximately 65,000 square feet of warehouse space and approximately 2,000 square feet of office space
Operations: The Weirton facility is used exclusively for finished goods storage and distribution. No manufacturing, blending, or chemical processing activities are conducted at this location. The facility does not generate hazardous waste.
Ownership: The Weirton facility is leased from Northern Panhandle Realty Corp., a West Virginia corporation, with Susan Delvecchio serving as President. The lease commenced March 1, 2018, for an initial term of ten (10) years, expiring February 28, 2028. The lease is structured as a double-net lease. Notably, the lease is silent on environmental obligations beyond a general requirement that the tenant comply with all applicable laws and regulations. This silence creates potential ambiguity regarding the allocation of environmental responsibilities between landlord and tenant, which will need to be evaluated in the context of the Transaction.
Known Environmental History: The warehouse building was constructed in 2016 on a remediated brownfield site that was formerly part of the Weirton Steel Company's industrial complex. The property underwent environmental remediation under the West Virginia Voluntary Remediation and Redevelopment Program (VRDP, W. Va. Code §§ 22-22-1 et seq.), and a Certificate of Completion was issued by WV DEP in September 2015. As a condition of the VRDP Certificate of Completion, engineering controls (consisting of an engineered cap, including the warehouse building foundation and surrounding asphalt paving) and institutional controls were put in place to prevent exposure to residual subsurface contamination. A deed restriction reflecting these controls has been recorded at the Hancock County Clerk's Office at Book 487, Page 89. The engineering and institutional controls impose ongoing compliance obligations, including periodic inspection and maintenance of the cap, restrictions on subsurface disturbance, and periodic reporting to WV DEP.
Assessment of Complexity: The Weirton facility presents a low operational environmental risk, as no manufacturing or chemical handling activities occur on-site. However, the property's history as a remediated brownfield with ongoing VRDP engineering and institutional controls creates a unique set of compliance obligations that will transfer with occupancy. The lessee — and, by extension, Crestline as the successor to ACC's lease — bears responsibility for maintaining the integrity of the engineering controls and complying with the institutional control requirements. Failure to maintain these controls could result in regulatory action or loss of the VRDP liability protection. Additionally, the lease's silence on environmental obligations beyond general legal compliance creates allocation ambiguity that should be addressed, either through a lease amendment or through appropriate provisions in the SPA.
Diligence Plan: TerraVerde will conduct a Phase I ESA at the Weirton facility with a target completion date of late August 2022. C&H will obtain and review the complete VRDP Certificate of Completion, the recorded deed restriction, and all engineering and institutional control documentation, including any monitoring reports and maintenance logs filed with WV DEP. C&H will also analyze the lease to assess the allocation of environmental responsibilities and evaluate whether a lease amendment or side letter with the landlord is advisable. A Phase II investigation is not anticipated given the warehouse-only nature of operations and the existing VRDP completion status.
VI. Regulatory Compliance Review — Scope
In addition to the Phase I and Phase II site assessment activities described above, C&H will conduct a comprehensive multi-media regulatory compliance review across all four ACC operating facilities. The objective of this review is to identify any instances of regulatory noncompliance, pending or threatened enforcement actions, consent orders, outstanding violations, or other regulatory matters that could give rise to liability for Crestline following the closing of the Transaction. The regulatory compliance review will encompass the following areas:
RCRA / Hazardous Waste. C&H will review generator status verification for all four facilities, with particular attention to the McKeesport facility (which is classified as a Large Quantity Generator subject to the most stringent RCRA requirements). We will review hazardous waste manifests, biennial reports, waste analysis records, land disposal restriction (LDR) notifications, contingency plans, and personnel training records. We will also review the history of regulatory inspections at each facility, including any notices of violation, compliance orders, or penalty assessments issued by EPA Region III (for Pennsylvania facilities), EPA Region III (for West Virginia facilities), PA DEP, or WV DEP.
Clean Air Act. C&H will review compliance with the Title V Operating Permit at the McKeesport facility, including semi-annual monitoring reports, annual compliance certifications, and deviation reports. At the Charleroi and Clarksburg facilities, we will review compliance with the applicable state-only operating permits and registration permits. We will give particular attention to the pending permit modification application for the new regenerative thermal oxidizer on Line 4 at the McKeesport facility, which was submitted to PA DEP in March 2022 and remains pending. We will evaluate the status of that application, any conditions or requirements that PA DEP may impose, and the capital cost and timeline implications for Crestline. Additionally, we will analyze HAP emissions at the McKeesport facility to confirm that current emissions calculations are accurate and that the facility is not at risk of exceeding permit limitations or triggering additional regulatory requirements (such as Maximum Achievable Control Technology, or MACT, standards for relevant source categories).
Clean Water Act / NPDES. We will review compliance with the NPDES stormwater discharge permit at the McKeesport facility, including all Discharge Monitoring Reports (DMRs) submitted to PA DEP for the preceding five years, Stormwater Pollution Prevention Plan (SWPPP) documentation, and any reported exceedances of permit effluent limits. We will evaluate whether any exceedances have resulted in enforcement action or whether corrective measures are ongoing. For the other three facilities, we will confirm the absence of NPDES permitting obligations and review any applicable stormwater general permit coverage.
EPCRA / TRI / Tier II. We will review the McKeesport facility's compliance with community right-to-know reporting requirements under the Emergency Planning and Community Right-to-Know Act, including Tier II chemical inventory reports filed with the Allegheny County Local Emergency Planning Committee (LEPC) and the Pennsylvania SERC, as well as TRI Form R filings for toluene, xylene, and any other reportable chemicals. We will verify that reporting thresholds have been accurately calculated, that reports have been timely filed, and that no discrepancies exist between reported quantities and actual emissions or releases.
TSCA. We will conduct a PCB equipment survey at all four facilities to identify any PCB-containing electrical equipment (transformers, capacitors, ballasts) and evaluate compliance with 40 C.F.R. Part 761 requirements. We will also review ACC's compliance with Chemical Data Reporting (CDR) requirements under TSCA Section 8(a) and Section 5 pre-manufacture notification requirements, to the extent applicable to ACC's product lines.
CERCLA / Superfund. We will conduct a National Priorities List (NPL) status check for all four ACC properties and surrounding areas. We note that the McKeesport facility is located within approximately 0.5 miles of the former Irwin Iron & Steel Superfund site, which was listed on the NPL in 1989, for which a Record of Decision (ROD) was issued in 1996, and at which construction of the selected remedy was completed in 2004. We will evaluate whether ACC has received or could receive any notice of potential liability under CERCLA Section 107 in connection with this or any other Superfund site, and whether ACC has been identified as a potentially responsible party (PRP) at any CERCLA site.
Asbestos and Lead-Based Paint. As discussed in the McKeesport facility section above, we will review existing asbestos surveys, Operations and Maintenance (O&M) plans, and lead-based paint surveys and management-in-place programs. We will evaluate compliance with OSHA asbestos regulations (29 C.F.R. § 1910.1001 and 29 C.F.R. § 1926.1101), EPA NESHAP for asbestos (40 C.F.R. Part 61, Subpart M), and EPA and HUD lead-based paint regulations. Updated condition assessments will be obtained if existing surveys are outdated or incomplete.
Spill and Release History. We will conduct a comprehensive review of all reportable releases across all four ACC facilities, including CERCLA Section 103 releases, EPCRA Section 304 releases, and state-reportable spills. We will review all enforcement actions, Notices of Violation, consent orders, administrative penalty assessments, and any civil or criminal proceedings related to environmental matters. We will also review ACC's internal spill logs and environmental incident reports.
To facilitate this regulatory compliance review, C&H will issue a formal Environmental Document Request List to Seller's counsel, Hargrove, Dalton & Speer LLP, to the attention of Franklin Speer, Esq., requesting all relevant environmental records, permits, compliance reports, spill logs, remediation files, surveys, and regulatory correspondence in ACC's possession or control. This request will be transmitted within the next several days, with a target delivery date of July 25, 2022.
VII. Transaction Document Support — Environmental Provisions
C&H's environmental team will prepare and negotiate the environmental-specific provisions of the Stock Purchase Agreement. The environmental provisions will be among the most critical elements of the SPA given the stock-purchase structure and the nature and extent of ACC's environmental profile. The environmental transaction support will encompass the following:
Environmental Representations and Warranties. We will draft comprehensive environmental representations and warranties for inclusion in Article IV of the SPA. These representations will address, among other things: (i) compliance with Environmental Laws; (ii) possession and validity of all required Environmental Permits; (iii) absence of pending or threatened Environmental Claims, proceedings, or investigations; (iv) disclosure of all known releases of Hazardous Substances; (v) absence of obligations under any consent decree, order, or agreement with any Governmental Authority relating to environmental matters; (vi) disclosure of all environmental assessments, audits, studies, reports, and correspondence in ACC's possession; and (vii) accuracy and completeness of the environmental disclosure schedules. The scope and specificity of these representations will be informed by the findings of the Phase I and Phase II investigations and the regulatory compliance review.
Special Environmental Indemnification Provisions. Given the magnitude of potential environmental liabilities — particularly at the McKeesport facility with its pre-1987 industrial history and legacy contamination — we anticipate that environmental indemnification will warrant treatment separate from the general indemnification provisions of the SPA. We will draft a dedicated environmental indemnification provision with appropriate escrow mechanics to secure the seller's indemnification obligations. We will also negotiate tailored survival periods for environmental representations and warranties, which typically extend significantly beyond the standard survival periods applicable to non-environmental representations, given the latent nature of many environmental liabilities. Industry practice in transactions of this nature typically provides for environmental representation survival periods of six to ten years, or until the expiration of applicable statutes of limitation or repose.
Environmental Disclosure Schedules. We will prepare or review the environmental disclosure schedules to the SPA, ensuring that all identified environmental conditions, liabilities, and exceptions to the environmental representations are accurately and completely disclosed.
Throughout this process, C&H's environmental team will coordinate closely with the broader M&A deal team to ensure that environmental findings are appropriately reflected in purchase price adjustment mechanisms, including any post-closing purchase price adjustments, holdbacks, or escrow arrangements that may be warranted based on quantified or estimated environmental liabilities.
VIII. Environmental Insurance Evaluation
In parallel with the diligence review, C&H will evaluate the availability and desirability of a Pollution Legal Liability ("PLL") insurance policy to serve as a risk transfer mechanism for identified and unknown environmental liabilities. PLL insurance can play an important role in a transaction of this nature by (a) providing a financial backstop against environmental cleanup costs and third-party claims that may arise post-closing, (b) satisfying lender requirements where identified RECs cannot be fully resolved prior to closing, and (c) bridging gaps between buyer and seller in the negotiation of environmental risk allocation in the SPA.
C&H recommends engaging Whitfield & Calder Insurance Advisors LLC as the environmental insurance broker for this Transaction. Whitfield & Calder is a specialty environmental insurance brokerage firm with its principal office at 227 West Monroe Street, Suite 1800, Chicago, IL 60606. The engagement would be led by the following professionals:
• Douglas Whitfield, Senior Vice President — Doug is one of the most experienced environmental insurance brokers in the Midwest and has placed PLL policies in numerous M&A transactions in the chemicals, manufacturing, and industrial sectors.
• Lauren Petrov, Account Executive — Lauren will manage the day-to-day coordination of the insurance marketing process, including preparation of the submission package, carrier negotiations, and policy placement.
Timing. The PLL insurance evaluation will commence once Phase I ESA results are available and can be compiled into a submission package for potential insurance carriers. We anticipate that the submission package, which will include Phase I reports, available Phase II data, regulatory compliance summaries, and a narrative description of operations and environmental risk, will be ready for distribution to carriers by late September or early October 2022. Carrier underwriting and quotation typically requires four to six weeks from receipt of a complete submission, which aligns with the overall Transaction timeline targeting a November 30, 2022 closing.
We note that Commonwealth National Bank's commitment letter for the Credit Facilities permits acceptable PLL insurance as an alternative to the requirement that all RECs identified in the Phase I ESAs be "adequately addressed" prior to closing. Accordingly, PLL insurance may serve the dual purposes of (i) satisfying lender conditions and (ii) bridging any remaining gap between buyer and seller on contractual environmental risk allocation in the SPA. In our experience, PLL policies in transactions of this nature and size range typically carry premiums in the range of $75,000 to $200,000 for a ten-year policy term, with policy limits tailored to the identified risk profile. We will provide a more precise estimate once the PLL evaluation is underway.
Whitfield & Calder Fees. Whitfield & Calder is typically compensated through insurance carrier commissions and does not charge a direct brokerage fee to the insured. Accordingly, no direct fee to Crestline is anticipated in connection with the environmental insurance placement.
IX. Timeline and Key Milestones
Set forth below is the anticipated schedule for the environmental diligence workstream, from the engagement opening date of July 19, 2022, through the targeted closing date of November 30, 2022:
We note that the foregoing timeline is subject to several important caveats and contingencies. Timely execution of the schedule is dependent on, among other factors: (i) receipt of environmental records and documents from Seller in response to the Environmental Document Request List within a reasonable time frame (we will request a two-week response period); (ii) TerraVerde's ability to schedule and complete field activities at all four facilities within the anticipated windows, which may be affected by site access coordination, weather conditions, or other logistical factors; (iii) laboratory turnaround times for Phase II analytical samples, which are typically two to three weeks for standard analytical methods (EPA SW-846 Methods 8260, 8270, 6010, etc.) but may be longer for specialized analyses; and (iv) the pace of SPA negotiations and the responsiveness of Seller and Seller's counsel. We will monitor progress against the schedule closely and will communicate promptly if any delays or adjustments are anticipated.
X. Budget Estimate
Calderwood & Harkness Legal Fees
The estimated C&H legal fees for the environmental diligence workstream are in the range of $175,000 to $250,000, based on the hourly rates set forth in the engagement letter dated July 19, 2022. For reference, the applicable hourly rates are as follows:
The budget range reflects the inherent uncertainty in the scope of work at this stage of the diligence process. The actual fees incurred will depend on several key variables, including: (a) the number of facilities requiring Phase II investigation and the complexity of the environmental conditions encountered; (b) the nature and severity of any regulatory compliance issues identified during the compliance review; (c) the extent and complexity of negotiations with Seller's counsel on the environmental provisions of the SPA; and (d) whether the PLL insurance evaluation proceeds and, if so, the level of C&H involvement in policy negotiation and placement.
The low end of the range ($175,000) assumes Phase II investigation at one facility only (McKeesport), no significant regulatory compliance issues, relatively straightforward SPA negotiation on environmental provisions, and limited C&H involvement in the PLL insurance process. The high end of the range ($250,000) assumes Phase II investigations at two or more facilities, complex regulatory compliance issues requiring detailed analysis and potential engagement with regulatory agencies, extended and contentious negotiations on environmental risk allocation in the SPA, and active C&H involvement in the PLL insurance evaluation and placement.
The budget estimate does not include C&H disbursements, which are estimated at $3,000 to $5,000 for Westmark Data Systems and other legal research services, travel expenses for site visits and meetings, courier and delivery charges, and recording and search fees associated with environmental lien and deed restriction research.
TerraVerde Environmental Consulting Fees
TerraVerde will be retained directly by Crestline under a separate engagement agreement, and TerraVerde's fees are outside the scope of C&H's budget. Based on preliminary scoping discussions with TerraVerde, the estimated consulting fees are as follows:
• Phase I ESAs: Estimated at approximately $4,500 per facility × 4 facilities = $18,000 total for Phase I assessments across the portfolio.
• Phase II Investigations: Costs are highly dependent on the number of sites requiring investigation and the scope of work at each site, including the number of soil borings, monitoring well installations, soil vapor sampling points, and analytical parameters. Based on TerraVerde's preliminary estimates, Phase II investigation costs are estimated in the range of $35,000 to $75,000 per facility, depending on scope.
• Total Estimated TerraVerde Range: $18,000 (Phase I only at all four facilities, no Phase II required) to approximately $168,000 (Phase I at all four facilities plus Phase II investigations at two facilities at the higher end of the per-facility range).
Whitfield & Calder Insurance Advisors Fees
As noted in Section VIII above, Whitfield & Calder Insurance Advisors LLC is typically compensated through insurance carrier commissions. No direct brokerage fee to Crestline is anticipated.
Billing and Invoicing
C&H will provide monthly invoices with detailed time entries in accordance with the terms of the engagement letter. We will monitor actual fees against the budget on an ongoing basis and will promptly inform you of any developments — such as unanticipated Phase II investigation needs, complex regulatory issues, or protracted SPA negotiations — that may cause the budget to trend toward or exceed the high end of the estimated range.
XI. Coordination and Communication Protocol
Effective coordination and clear communication among the numerous parties involved in this diligence effort are essential to the timely and successful completion of the workstream. To that end, we propose the following coordination and communication protocols:
Primary Day-to-Day Contact (C&H). Harrison Caldwell, Of Counsel, will serve as the primary day-to-day contact for the environmental diligence workstream. Harrison can be reached at (216) 555-8425 (direct) or hcaldwell@calderwoodharkness.com.
Client-Side Primary Contacts. Derek Huang, General Counsel, CPS, will serve as the primary client contact for legal and transactional matters related to the environmental workstream. Patricia Okonkwo, Vice President of Environmental Health & Safety, CPS, will serve as the primary client contact for technical environmental matters, including coordination of site access, review of technical data, and interface with CPS's internal EHS team.
Consultant Coordination. C&H will coordinate with TerraVerde through regular check-in calls (anticipated to be weekly during active fieldwork periods) and will attend or participate in key fieldwork activities, including initial site visits, Phase II mobilization and oversight, and any meetings with regulatory agencies. Harrison Caldwell will serve as the primary C&H liaison with TerraVerde's team.
Periodic Status Updates. C&H will provide periodic status updates on the environmental diligence workstream to Derek Huang and Patricia Okonkwo. During periods of active diligence activity, we anticipate providing updates on a weekly or bi-weekly basis, as appropriate. Copies of status updates will be provided to Vanessa Moretti, Deal Partner at Briarwood Capital Partners LP, and Hugh Bancroft, Operating Partner at Briarwood Capital Partners LP, as appropriate and as directed by the client.
Privilege and Confidentiality. All environmental diligence work product prepared by C&H will be prepared and maintained under the protections of the attorney-client privilege and the work product doctrine. TerraVerde's environmental reports and assessments, while ultimately addressed to Crestline as the client, will be prepared at the direction of counsel to preserve privilege to the maximum extent permissible under applicable law. We will include appropriate privilege legends on all work product, and we advise that distribution of privileged materials be limited to those individuals with a need to know in order to preserve the privilege.
Environmental Diligence Status Tracker. C&H will maintain an internal Environmental Diligence Status Tracker that catalogs all pending action items, document requests, deliverables, and milestone dates. This tracker will be shared with the client team on a regular basis and will serve as the central reference point for monitoring progress against the timeline set forth in Section IX above.
XII. Immediate Next Steps
To ensure prompt commencement of the environmental diligence workstream, the following immediate action items are identified:
1. Environmental Document Request List. C&H will finalize and transmit the Environmental Document Request List to Hargrove, Dalton & Speer LLP (Franklin Speer) by July 25, 2022. The request list will be comprehensive and will cover all environmental records, permits, reports, surveys, and correspondence relevant to the four ACC facilities.
2. TerraVerde Engagement. C&H will finalize the TerraVerde engagement scope and assist Crestline in executing the TerraVerde engagement agreement. We will confirm Phase I ESA fieldwork scheduling for all four facilities, targeting completion by mid-to-late August 2022.
3. Internal Environmental Files. We request that Derek Huang and Patricia Okonkwo provide C&H with any existing internal environmental files, reports, memoranda, or correspondence related to ACC that Crestline may already possess from preliminary due diligence or initial management discussions. Early access to any such materials will enable us to focus our diligence efforts more efficiently and to identify potential areas of concern at the outset.
4. Kickoff Call. C&H will schedule an initial kickoff call with the full diligence team — including Derek Huang, Patricia Okonkwo, Harrison Caldwell, Grace Nakamura, Dr. Nina Sorensen (TerraVerde), and Kevin O'Malley (TerraVerde) — for the week of July 25, 2022. The purpose of the kickoff call will be to confirm the diligence plan, discuss site access logistics, review the document request list, and establish regular communication cadences.
XIII. Closing
We are fully prepared to proceed with the environmental diligence workstream in accordance with the plan set forth in this letter, and we are confident in the C&H and TerraVerde team's ability to deliver thorough, commercially informed environmental diligence within the targeted timeline. The environmental analysis will be a critical input to Crestline's investment decision and to the negotiation of the Stock Purchase Agreement, and we are committed to providing actionable, risk-quantified deliverables that serve Crestline's objectives in this Transaction.
We ask that you review the foregoing diligence plan and budget range and confirm your approval to proceed. If you have any questions, comments, or proposed modifications to the plan, please do not hesitate to contact Beatrice Holloway at (216) 555-8410 or bholloway@calderwoodharkness.com, or Harrison Caldwell at (216) 555-8425 or hcaldwell@calderwoodharkness.com. We look forward to working with you and the full Crestline team on this important engagement.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Beatrice Holloway Partner 1900 Euclid Avenue, Suite 3200 Cleveland, OH 44115 Telephone: (216) 555-8410
Email: bholloway@calderwoodharkness.com
cc:
Patricia Okonkwo, Vice President, Environmental Health & Safety, Crestline Packaging Solutions LLC
Vanessa Moretti, Deal Partner, Briarwood Capital Partners LP
Harrison Caldwell, Of Counsel, Calderwood & Harkness LLP
James Prentice, Partner, Calderwood & Harkness LLP
Grace Nakamura, Associate, Calderwood & Harkness LLP
Enclosures: None. Environmental Document Request List to follow under separate cover.
Target Date | Milestone
July 25, 2022 | Environmental Document Request List transmitted to Seller's counsel (Hargrove, Dalton & Speer LLP, attn: Franklin Speer)
Late July 2022 | TerraVerde engagement confirmed and executed; Phase I ESA fieldwork scheduling confirmed for all four ACC facilities
August 15–25, 2022 | Phase I ESAs completed for all four facilities (McKeesport, Charleroi, Clarksburg, Weirton); draft reports delivered by TerraVerde to C&H
Late August 2022 | C&H review and analysis of Phase I ESA reports; identification of RECs and determination of Phase II scope requirements
Early September 2022 | Phase II scope(s) of work developed and approved by C&H for facilities with identified RECs; landlord consent obtained from Mountainview Properties LLC (Clarksburg) and/or Northern Panhandle Realty Corp. (Weirton) if subsurface investigation required at leased properties
September–October 2022 | Phase II field investigations and sampling conducted at identified facilities; concurrent regulatory compliance review completed across all four facilities
Late September 2022 | PLL insurance evaluation commenced; environmental data compiled and submission package transmitted to Whitfield & Calder for distribution to carriers
October 2022 | Phase II laboratory analytical results received and analyzed by TerraVerde and C&H (standard laboratory turnaround: 2–3 weeks from sample receipt)
Mid-October 2022 | Draft environmental representations, warranties, and indemnification provisions prepared by C&H and submitted to M&A deal team for incorporation into SPA negotiation
Late October 2022 | Comprehensive Environmental Diligence Summary Memorandum finalized and delivered to Crestline, with copies to Briarwood Capital Partners
November 2022 | Environmental escrow and indemnification negotiations completed with Seller's counsel; PLL insurance bound (if applicable and if terms are acceptable)
November 30, 2022 | Targeted closing of the Transaction
Professional | Rate
Partner (Holloway) | $895/hr
Of Counsel (Caldwell) | $725/hr
Lead Associate (Nakamura) | $625/hr
Working Associate (Dominguez) | $495/hr
Paralegal (Estrada) | $275/hr

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