1006-00003 · Crestline Packaging Solutions LLC · Diligence/Lease & Property Review

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MEMORANDUM

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

TO: Beatrice Holloway, Partner; Harrison Caldwell, Of Counsel

FROM: Grace Nakamura, Associate

DATE: September 2, 2022

RE: Environmental Lease and VRDP Certificate Review — Weirton Warehouse & Distribution Center, 600 Commerce Way, Weirton, WV 26062 (Allegheny Chemical Coatings, Inc. Lease with Northern Panhandle Realty Corp.)

MATTER NO.: 1006-00003

CLIENT: Crestline Packaging Solutions LLC

I. Executive Summary

This memorandum analyzes the environmental implications of the lease between Allegheny Chemical Coatings, Inc. ("ACC") and Northern Panhandle Realty Corp. ("NPRC") for the warehouse and distribution facility located at 600 Commerce Way, Weirton, WV 26062, Hancock County, West Virginia (Parcel ID: 07-0304-0012-0000) (the "Weirton Facility" or the "Property"). This analysis is undertaken in connection with the proposed acquisition by our client, Crestline Packaging Solutions LLC ("Crestline"), of 100% of the outstanding common stock of ACC (the "Transaction").

The Weirton Facility is an approximately 65,000 square-foot warehouse with approximately 2,000 square feet of associated office space situated on 3.1 acres. ACC uses the facility exclusively for finished goods storage and distribution, and no manufacturing operations are conducted on-site. Importantly, the facility does not generate hazardous waste and is not classified as a generator under the Resource Conservation and Recovery Act ("RCRA") or its West Virginia analogs.

The Property was constructed in 2016 on a remediated brownfield parcel — formerly associated with Weirton Steel manufacturing operations — which received a West Virginia Voluntary Remediation and Redevelopment Program ("VRDP") Certificate of Completion issued by the West Virginia Department of Environmental Protection ("WV DEP") in September 2015. The VRDP Certificate is conditioned on ongoing maintenance of engineering and institutional controls, including an impervious cap (comprised of the building slab, parking areas, and other impervious surfaces) and a deed restriction recorded in the Hancock County land records.

TerraVerde Environmental Consulting LLC ("TerraVerde") prepared a Phase I Environmental Site Assessment ("Phase I ESA") dated August 25, 2022 in accordance with ASTM E1527-21 for the Weirton Facility. The Phase I ESA identified one Controlled Recognized Environmental Condition ("CREC") related to the VRDP site and the ongoing engineering and institutional controls associated with it. TerraVerde also noted a de minimis condition consisting of a minor hydraulic fluid stain on the warehouse floor, encompassing approximately four square feet, which does not rise to the level of a Recognized Environmental Condition ("REC"). No RECs or Historical Recognized Environmental Conditions ("HRECs") were identified. TerraVerde did not recommend a Phase II subsurface investigation, and we concur with that recommendation for the reasons discussed in Section VI.B.5 below.

Our review has yielded the following key findings:

(1) The lease between ACC and NPRC (the "Lease") is a double-net lease that is effectively silent on environmental obligations beyond a general covenant requiring the tenant to comply with all applicable laws, including environmental laws. This creates significant ambiguity as to which party bears responsibility for maintaining VRDP engineering and institutional controls — obligations that are ongoing, that require affirmative action, and that carry meaningful consequences if neglected.

(2) A deed restriction recorded at the Hancock County Clerk's Office, Book 487, Page 89, imposes ongoing obligations on the Property that run with the land and are binding on successors, assigns, and occupants. The deed restriction prohibits excavation or disturbance of the engineered cap without prior WV DEP approval, restricts use to commercial and industrial purposes, requires maintenance of engineering control integrity, mandates periodic reporting to WV DEP, and grants WV DEP the right of access for inspection.

(3) Crestline, as successor tenant post-acquisition (through its ownership of ACC), may inherit practical compliance responsibilities under the deed restriction and the VRDP Certificate's conditions even though ACC is not a party to the original VRDP enrollment and is not the property owner. The general compliance-with-law covenant in the Lease, if construed broadly, could be interpreted to impose affirmative environmental obligations on the tenant that go beyond the typical tenant's expectations in a warehousing context.

Based on the foregoing, we assign an overall risk rating of low to moderate to the Weirton Facility from an environmental perspective. The environmental conditions at the site are managed, the VRDP Certificate appears to be in good standing, and there is no indication of current contamination or environmental noncompliance. However, the contractual gap in the Lease regarding environmental obligations warrants attention. We recommend the following actions: (a) inclusion of specific environmental representations regarding the VRDP Certificate and deed restriction in the Stock Purchase Agreement ("SPA"); (b) environmental indemnification provisions covering costs arising from any reopening of the VRDP Certificate or failure of engineering or institutional controls attributable to pre-closing conditions; and (c) negotiation of a lease amendment or side letter with NPRC to clarify the allocation of environmental control obligations between landlord and tenant.

II. Scope and Purpose

The purpose of this memorandum is to analyze the environmental provisions — and, critically, the absence thereof — in the Lease governing the Weirton Facility, and to assess the environmental implications for Crestline in connection with its proposed acquisition of 100% of the outstanding common stock of ACC. The proposed purchase price is $94.5 million, and the Transaction is structured as a stock purchase. As a result, Crestline will acquire ACC as a going concern, and ACC will remain the tenant under the Lease by operation of law. Unlike an asset purchase, a stock acquisition does not involve an "assignment" of the Lease; rather, the tenant entity itself continues in existence, and the change in the tenant's equity ownership does not constitute a transfer of the leasehold interest in the traditional sense. This distinction has important implications for the analysis of the Lease's assignment and change-of-control provisions, as discussed in Section IV.A below.

This memorandum focuses specifically on the Weirton Facility and should be read in conjunction with the following companion work product:

• Phase I ESA Review Memorandum — Weirton (prepared by Rafael Dominguez, Associate), which provides a detailed review of TerraVerde's Phase I ESA findings, data gap analysis, and consultant performance evaluation;

• Comprehensive Environmental Diligence Summary Memorandum (draft dated October 22, 2022), which consolidates environmental findings across all ACC facilities subject to the Transaction, including the Clarksburg, Parkersburg, and Charleston locations, and provides an aggregate environmental risk assessment and liability estimate; and

• PLL Policy Term Sheet Review and Comment Letter, which addresses the indicative terms for Pollution Legal Liability insurance and the treatment of known conditions across the portfolio.

In preparing this memorandum, we reviewed the following sources:

1. Lease Agreement between ACC (Tenant) and Northern Panhandle Realty Corp. (Landlord) dated March 1, 2018 (the "Lease"), together with all exhibits and amendments thereto in the possession of Seller's counsel;

2. WV VRDP Certificate of Completion dated September 2015, issued by the West Virginia Department of Environmental Protection for the Weirton Property;

3. Deed restriction recorded at the Hancock County Clerk's Office, Book 487, Page 89, governing use, maintenance, and transfer obligations for the Property;

4. TerraVerde Environmental Consulting LLC, Phase I Environmental Site Assessment — Weirton Warehouse & Distribution Center, 600 Commerce Way, Weirton, WV 26062, dated August 25, 2022 (the "Phase I ESA"); and

5. Publicly available WV DEP VRDP program records, including the online VRDP project database and available correspondence files.

We have not independently verified the factual representations contained in the Phase I ESA or the Lease, nor have we conducted an independent title search beyond reviewing the recorded deed restriction referenced above. Our analysis is based on the documents provided and the publicly available records reviewed as of the date of this memorandum. Additional documents have been requested from Seller's counsel, Hargrove, Dalton & Speer LLP (Franklin Speer and Megan Trask), as detailed in Section VI.B.4 below.

III. Property Background and Environmental History

A. Property Description

The Weirton Facility is located at 600 Commerce Way, Weirton, WV 26062, in Hancock County, West Virginia. The property is identified by Hancock County Parcel ID 07-0304-0012-0000. The following table summarizes the key property characteristics:

The facility is situated in a commercial and light-industrial corridor on the northern edge of Weirton, proximate to US Route 22 and within approximately three miles of the Pennsylvania state line. The surrounding area is characterized by a mix of commercial and industrial properties, including several other parcels that were historically associated with Weirton Steel operations. The Property is served by municipal water and sewer. According to the Phase I ESA, the topography is relatively flat, and the Property is not located within a FEMA-designated 100-year floodplain.

ACC's operations at the Weirton Facility are limited to the receipt, storage, and distribution of finished goods — specifically, packaged industrial coatings and related products. No manufacturing, blending, mixing, or formulation of chemical products occurs at the Weirton Facility. ACC does not generate hazardous waste at this location and does not maintain a RCRA generator identification number for this site. Materials stored at the facility are finished, packaged products in sealed containers, primarily paints, primers, and industrial coatings, which are received by truck and stored on racking systems within the warehouse before redistribution to customers and downstream facilities.

B. Historical Use and Brownfield Remediation

The Property occupies a parcel that was formerly associated with the steel manufacturing operations of Granite Harbor & Co., one of the largest integrated steelmakers in the United States until its bankruptcy in 2003 and subsequent acquisition by Sterling Reach & Co. (later Pinnacle Group). The broader Weirton Steel complex encompassed thousands of acres in the Weirton area, and the environmental legacy of decades of steel manufacturing — including coke production, blast furnace operations, rolling mills, and associated waste disposal — is well documented in both federal and state regulatory records.

The specific parcel on which the Weirton Facility now sits was used for various ancillary purposes during the steelmaking era. While the Phase I ESA does not provide a comprehensive operational history of this specific parcel's use during the Weirton Steel period, it identifies the site as part of the broader Weirton Steel footprint and notes that soil and groundwater contamination consistent with historical steelmaking operations was present on the parcel prior to remediation. The nature and extent of that contamination are documented in the VRDP application and remediation records, which we have requested from Seller's counsel as described in Section VI.B.4 below, but which have not yet been produced.

Following the decline and closure of Weirton Steel operations, portions of the former steel complex were designated for redevelopment. The subject parcel was enrolled in the West Virginia Voluntary Remediation and Redevelopment Program ("VRDP") pursuant to W. Va. Code § 22-22-1 et seq. The VRDP, discussed in greater detail in Section V below, provides a streamlined process for the investigation and remediation of contaminated properties under WV DEP oversight, culminating in the issuance of a Certificate of Completion that provides certain liability protections to the enrollee and its successors.

Remediation activities were conducted at the Property under the VRDP, and a Certificate of Completion was issued by WV DEP in September 2015. The remediation approach included the installation of engineering controls in the form of an impervious cap designed to prevent direct contact with residual contamination in soil beneath the surface. The cap is comprised of the building slab, parking areas, sidewalks, and other impervious cover that collectively blanket the developed portions of the parcel. Institutional controls, in the form of a deed restriction recorded in the Hancock County land records, were also established to restrict future use and require ongoing maintenance of the cap.

Northern Panhandle Realty Corp. subsequently constructed the warehouse facility on the remediated parcel in 2016, with the building slab itself serving as a component of the engineering cap required by the VRDP Certificate of Completion. The facility was completed and became operational in late 2016 or early 2017. ACC entered into the Lease with NPRC on March 1, 2018 and has occupied the facility as a tenant since that date.

C. Deed Restriction

A deed restriction was recorded at the Hancock County Clerk's Office, Book 487, Page 89 (the "Deed Restriction"). The Deed Restriction runs with the land and is binding on all successors, assigns, and occupants of the Property. Based on our review of the Deed Restriction as described in the Phase I ESA and in publicly available WV DEP VRDP program records, the Deed Restriction contains the following key provisions:

(i) Prohibition on Cap Disturbance. No person shall excavate, disturb, penetrate, or otherwise compromise the integrity of the engineered cap — including the building slab, parking surfaces, sidewalks, and other impervious cover — without obtaining prior written approval from WV DEP. This prohibition extends to construction activities, utility installation, foundation work, and any other ground-disturbing activity that could compromise the cap's function as a barrier to direct contact with residual contamination in underlying soils.

(ii) Use Restriction. The Property is restricted to commercial and/or industrial use. Residential use, including but not limited to single-family dwellings, multi-family housing, schools, daycare facilities, and similar sensitive uses, is expressly prohibited. This use restriction is consistent with the risk-based remediation approach employed under the VRDP, which evaluated exposure pathways based on a commercial/industrial land-use scenario.

(iii) Maintenance of Engineering Controls. The property owner is required to maintain the integrity of the engineering controls (i.e., the impervious cap) in good condition and repair. Any cracking, deterioration, settlement, or other compromise of the cap must be promptly reported to WV DEP and repaired in accordance with WV DEP requirements.

(iv) Periodic Reporting. The property owner or its designee is required to submit periodic certifications to WV DEP confirming the integrity and functioning of the engineering controls. Based on standard VRDP practice, these certifications are typically required on an annual or biennial basis, though the specific frequency and format are determined by the conditions of the individual Certificate of Completion.

(v) WV DEP Right of Access. WV DEP retains the right to enter the Property at reasonable times for the purpose of inspecting and monitoring the engineering controls and confirming compliance with the Deed Restriction and the VRDP Certificate of Completion conditions.

(vi) Transfer Notification and Disclosure. Upon any sale, transfer, or change in occupancy of the Property, the property owner must provide prior written notice to WV DEP and must disclose the existence and terms of the Deed Restriction to all prospective purchasers, lessees, and other transferees. The Deed Restriction must be referenced in all instruments of conveyance.

The Deed Restriction is a critical component of the institutional controls that underpin the VRDP Certificate of Completion. Its continued effectiveness is a condition of the Certificate, and any failure to comply with its terms could provide grounds for WV DEP to reopen the Certificate and require additional investigation or remediation. The implications of the Deed Restriction for the Lease and for Crestline's position as successor tenant are discussed in Sections IV and V below.

D. Phase I ESA Findings (TerraVerde, August 25, 2022)

TerraVerde's Phase I ESA, dated August 25, 2022, was prepared in accordance with ASTM E1527-21 and the EPA's "All Appropriate Inquiries" rule (40 C.F.R. Part 312). The Phase I ESA included a records review, site reconnaissance, interviews with ACC facility personnel, and a review of historical sources including aerial photographs, fire insurance maps, and regulatory databases. The Phase I ESA's principal findings are summarized below.

Controlled Recognized Environmental Condition (CREC). The Phase I ESA identified one CREC: the VRDP site with ongoing engineering and institutional controls. Under ASTM E1527-21, a CREC is defined as a recognized environmental condition resulting from a past release of hazardous substances or petroleum products that has been addressed to the satisfaction of the applicable regulatory authority with hazardous substances or petroleum products allowed to remain in place subject to the implementation of a required control. The CREC at the Weirton Facility fits squarely within this definition — residual contamination from historical steel manufacturing operations remains in soil beneath the engineered cap, and the VRDP Certificate of Completion was issued on the condition that the cap and deed restriction remain in effect and are properly maintained.

De Minimis Condition. TerraVerde noted a minor hydraulic fluid stain on the warehouse floor encompassing approximately four square feet, located in the vicinity of a forklift charging station. TerraVerde characterized this as a de minimis condition that does not rise to the level of a REC, and we concur with this assessment. The stain appears to be the result of a minor operational drip from forklift hydraulic equipment and is confined to the concrete slab surface. There is no indication of penetration through the slab or any release to the subsurface environment. We recommend that ACC clean the stain as a matter of good housekeeping, but we do not consider it to present a material environmental risk.

No RECs or HRECs. Beyond the CREC, the Phase I ESA identified no RECs or HRECs at the Property. No evidence of underground storage tanks, aboveground storage tanks (other than small containers of forklift fuel), floor drains connected to unpermitted discharges, or other conditions of environmental concern was identified during the site reconnaissance.

Phase II Investigation. TerraVerde did not recommend a Phase II subsurface investigation at the Weirton Facility. We concur with this recommendation, as discussed in greater detail in Section VI.B.5 below.

A detailed review and evaluation of TerraVerde's Phase I ESA methodology, completeness, and conclusions is provided in the Phase I ESA Review Memorandum — Weirton prepared by Rafael Dominguez.

IV. Lease Analysis

A. Lease Summary — Key Terms

The Lease was entered into on March 1, 2018 between NPRC, as landlord, and ACC, as tenant. The following table summarizes the key terms of the Lease as relevant to this environmental review:

Assignment and Change of Control. Section 12.1 of the Lease provides that the tenant may not assign the Lease or sublet the premises, in whole or in part, without the prior written consent of the landlord, which consent shall not be unreasonably withheld, conditioned, or delayed. Critically, the Lease does not contain a separate change-of-control provision that would be triggered by a change in the equity ownership of the tenant entity. In a stock purchase transaction, the tenant entity — ACC — continues in existence as the same legal entity and remains the tenant under the Lease. There is no "assignment" of the leasehold interest in the traditional sense because the Lease itself is not being transferred to a new party. Accordingly, unless the Lease contains an express provision treating a change in equity ownership as an assignment or otherwise requiring landlord consent upon a change of control (which it does not), the Transaction should not trigger the assignment or consent provisions of the Lease.

We note, however, that some courts have looked beyond the form of a transaction to its substance, and in certain jurisdictions a court might characterize a stock acquisition as a de facto assignment if the practical effect is to transfer control of the leasehold to a new party. West Virginia case law on this issue is limited, but the weight of authority in most jurisdictions supports the position that a stock acquisition does not constitute an assignment of the tenant's lease absent an express change-of-control provision. Nevertheless, as a matter of prudence and to preserve the landlord-tenant relationship, the transaction team should consider whether to notify NPRC of the Transaction and to seek an informal acknowledgment or estoppel certificate confirming that the Transaction does not trigger the Lease's assignment provisions.

Renewal Options. Section 14.1 of the Lease provides ACC with one five-year renewal option, exercisable by written notice to the landlord not less than twelve months prior to the expiration of the initial term. If exercised, the renewal term would extend the Lease through February 28, 2033, at a base rent equal to the then-prevailing fair market rent as determined by the process set forth in Section 14.2. The renewal option is relevant to post-closing planning because the initial lease term expires on February 28, 2028 — approximately five years and six months from the originally targeted closing date. If Crestline intends to continue operating the Weirton Facility beyond the initial term, it will need to exercise the renewal option within the required notice period or negotiate a new lease. Either scenario presents an opportunity to incorporate explicit environmental provisions into the lease terms, as recommended in Section VI.B.3 below.

B. Environmental Provisions — Analysis of Gaps

The Lease is fundamentally inadequate in its treatment of environmental matters, particularly in light of the Property's brownfield history, the VRDP Certificate conditions, and the ongoing engineering and institutional control obligations associated with the Deed Restriction. The Lease contains no dedicated environmental article, section, or exhibit. The only provision that addresses environmental obligations, even indirectly, is Section 8.3, which sets forth a general covenant requiring the tenant to comply with all applicable federal, state, and local laws, ordinances, regulations, and governmental orders, including environmental laws, in its use and occupancy of the premises. This provision is a standard "comply with law" covenant found in virtually all commercial leases and, standing alone, is insufficient to allocate the specific environmental responsibilities arising from the VRDP controls.

The Lease is silent on the following matters, each of which is relevant to the ongoing environmental management of the Property:

(i) Maintenance of VRDP Engineering Controls. The Lease does not address which party — landlord or tenant — is responsible for maintaining the integrity of the engineered cap (building slab, parking surfaces, and other impervious cover) that serves as the primary engineering control under the VRDP Certificate of Completion. Under a double-net lease structure, the landlord is typically responsible for structural maintenance, which could arguably encompass the building slab. However, the parking surfaces and other impervious areas that form part of the cap are not clearly within the scope of the landlord's structural maintenance obligation, and the Lease does not expressly address this issue.

(ii) Periodic Reporting to WV DEP. The Lease does not allocate responsibility for preparing and submitting the periodic engineering control certifications required by the VRDP Certificate of Completion and the Deed Restriction. As the property owner, NPRC is the party primarily obligated to submit these certifications. However, NPRC may require the cooperation of the tenant — as the occupant with day-to-day control over the facility — to inspect and assess the condition of the engineering controls. The Lease does not address this potential need for cooperation or provide a mechanism for the tenant to participate in or receive copies of the periodic reporting.

(iii) Cost of Repair or Replacement of Engineering Controls. The Lease does not address which party bears the cost of repairing or replacing engineering controls if they are damaged or deteriorated. This is a potentially significant exposure. If, for example, a section of the parking lot surface cracks or settles, exposing underlying soils that may contain residual contamination, the cost of repair could be substantial — and the question of who pays is left entirely to inference from the general lease provisions.

(iv) Pre-Existing Contamination and Legacy Conditions. The Lease contains no acknowledgment of the Property's brownfield history, the existence of residual contamination beneath the cap, or the VRDP Certificate of Completion. There is no provision allocating liability for pre-existing contamination to the landlord (as property owner and the party that developed the site on a remediated brownfield) or releasing the tenant from responsibility for conditions that predate the Lease.

(v) Environmental Indemnification. The Lease does not contain an environmental indemnification provision in favor of the tenant. This means that if the tenant incurs costs related to pre-existing contamination — for example, if WV DEP requires additional investigation or remediation, or if a third party brings an environmental claim related to historic contamination — the tenant has no contractual right to seek indemnification from the landlord. The Lease's general indemnification provision (Section 15.1) is a standard mutual indemnity that applies to claims arising from each party's negligence or willful misconduct, but it is not tailored to environmental liabilities and would not clearly cover costs arising from pre-existing contamination or regulatory compliance obligations.

(vi) Environmental Insurance. The Lease does not require either party to maintain environmental insurance, such as a Pollution Legal Liability policy, for the Property. While PLL insurance is not universally required in commercial leases, it is a prudent risk management tool for properties with known environmental conditions, and its absence from the Lease is noted.

(vii) VRDP Certificate and Deed Restriction Compliance. The Lease does not contain any provision requiring the landlord to maintain compliance with the VRDP Certificate of Completion or the Deed Restriction, or to notify the tenant if the Certificate is reopened, modified, or revoked by WV DEP. Similarly, the Lease does not require the landlord to provide the tenant with copies of WV DEP correspondence, inspection reports, or periodic certifications related to the VRDP.

(viii) Additional Remediation or Modification of Controls. The Lease does not allocate responsibility for costs if WV DEP requires additional remediation or modification of the engineering or institutional controls — for example, if changes in regulatory standards render the existing remedy no longer protective, or if newly discovered contamination necessitates supplemental investigation or cleanup.

The environmental gaps in the Lease are notable when contrasted with the lease for the Clarksburg facility, which ACC holds with Mountainview Properties LLC. The Clarksburg lease includes an explicit environmental article (Article XI) that: (a) requires the tenant to remediate any contamination caused by the tenant's operations; (b) indemnifies the landlord against environmental claims arising from the tenant's use of the premises; and (c) provides the landlord with a right to conduct environmental assessments at the tenant's expense if contamination is suspected. While the Clarksburg lease's environmental provisions are landlord-favorable and do not address pre-existing contamination in the tenant's favor, they at least demonstrate the parties' recognition that environmental matters warrant specific contractual attention. The Weirton Lease lacks even this basic level of environmental specificity, despite the fact that the Weirton Property has a significantly more complex environmental history than the Clarksburg facility.

Implications of the "Comply with Law" Covenant. The general covenant in Section 8.3 requiring the tenant to comply with all applicable laws, including environmental laws, raises an important interpretive question in the context of the VRDP controls. If this covenant is construed broadly, it could be read to require the tenant to comply with the Deed Restriction's requirements as an "occupant" of the Property — including, potentially, the obligation to maintain the integrity of the engineering controls during the tenant's occupancy. Under this interpretation, the tenant could be deemed responsible for ensuring that the cap is not compromised during its operations, and for reporting any damage to the cap to WV DEP.

Conversely, a narrower reading of the covenant would limit the tenant's obligation to compliance with environmental laws that are directly applicable to the tenant's own operations — such as proper storage and handling of materials, waste disposal, and reporting obligations — and would not extend to the property-owner-specific obligations imposed by the Deed Restriction and the VRDP Certificate. Under this interpretation, the maintenance and reporting obligations would remain with NPRC as the property owner and the party to whom the VRDP Certificate was issued.

The correct interpretation likely falls somewhere between these poles. As a practical matter, the tenant exercises day-to-day operational control over the facility and is the party most likely to cause or discover damage to the engineering cap. A court or regulatory agency could reasonably conclude that the tenant has an obligation to avoid damaging the cap and to report any damage it observes, even if the affirmative maintenance and periodic reporting obligations remain with the property owner. This ambiguity is precisely the type of gap that should be resolved through a lease amendment or side letter, as recommended in Section VI.B.3 below.

C. Implications for Crestline as Successor Tenant

As noted above, the Transaction is structured as a stock purchase. Crestline will acquire all of the outstanding common stock of ACC, and ACC will continue in existence as a wholly owned subsidiary of Crestline (or its designated acquisition subsidiary). ACC will remain the tenant under the Lease, and the Lease will continue in full force and effect by its terms. No assignment of the Lease will occur, and — in the absence of a change-of-control provision in the Lease — no landlord consent should be required.

As successor owner of ACC, Crestline will be bound, through ACC, by all terms and conditions of the Lease, including the general compliance-with-law covenant in Section 8.3. Crestline will also inherit any practical compliance responsibilities that the Deed Restriction imposes on "occupants" of the Property, as discussed above.

The following risks are specific to Crestline's position as successor tenant at the Weirton Facility:

(i) Cap Damage During Occupancy. If the engineering cap is damaged during ACC's ongoing occupancy — whether by forklift operations, loading dock modifications, utility installation, or other activities — it is unclear under the Lease whether the tenant or the landlord bears the cost of repair, the obligation to notify WV DEP, and any liability arising from the release of contamination. Warehouse and distribution operations involve regular heavy equipment use, truck loading and unloading, and periodic facility maintenance, any of which could potentially damage paved surfaces or the building slab. Although the risk of a catastrophic breach of the cap is low in the normal course of warehouse operations, the possibility of localized damage (e.g., cracking of parking surfaces, settlement around loading docks, or penetrations for utility connections) is not negligible over the remaining lease term.

(ii) Regulatory Action by WV DEP. If WV DEP determines that the engineering controls are no longer functioning as intended, or if changes in regulatory standards or the discovery of previously unknown contamination trigger a requirement for additional investigation or remediation, the Lease does not allocate the resulting costs between landlord and tenant. In such a scenario, the property owner would be the primary party obligated to respond to WV DEP, but the tenant could face operational disruptions, relocation costs, or direct regulatory demands (e.g., requirements to provide access for investigation or to modify operations to accommodate remediation activities). The Lease does not provide for any rent abatement, cost reimbursement, or termination right in the event of such regulatory action.

(iii) Lease Expiration and Renewal. The Lease expires on February 28, 2028, approximately five years and six months from the currently targeted closing date. If Crestline intends to continue using the Weirton Facility beyond the initial term, it will need to exercise the renewal option under Section 14.1 or negotiate a new lease with NPRC. Either scenario presents an opportunity — and, indeed, a necessity — to incorporate explicit environmental provisions into the lease terms. If the Transaction closes as currently structured, we recommend that the exercise of the renewal option be accompanied by a negotiated amendment that addresses the environmental gaps identified in this memorandum. If a new lease is negotiated at or before expiration, environmental provisions should be a core component of the negotiated terms.

(iv) Absence of Contractual Recourse. The absence of any environmental indemnity from NPRC to ACC in the Lease means that Crestline (through ACC) has no contractual recourse against NPRC for environmental costs arising from pre-existing conditions beneath the cap. In the event that the VRDP Certificate is reopened or the cap requires major repair, the costs would be borne by ACC (and, indirectly, by Crestline) unless a separate indemnification is negotiated or the costs can be allocated to NPRC through other legal theories (e.g., contribution claims under CERCLA or state environmental statutes). The viability of such alternative theories is uncertain and would depend on the specific facts and circumstances at the time.

V. VRDP Certificate of Completion — Legal Framework and Ongoing Obligations

A. West Virginia VRDP Statutory Framework

The West Virginia Voluntary Remediation and Redevelopment Program is established by W. Va. Code § 22-22-1 et seq. (the "VRDP Act"). The VRDP Act was enacted in 1996 to encourage the voluntary cleanup and productive reuse of contaminated properties in West Virginia by providing a streamlined regulatory process, limited liability protection, and other incentives for parties willing to investigate and remediate environmental contamination under WV DEP oversight.

The VRDP is administered by WV DEP's Division of Land Restoration. Participation in the program is voluntary; any person who owns, controls, or is otherwise responsible for a contaminated property may apply to enroll the property in the VRDP, provided the property is not subject to an existing WV DEP enforcement order or a CERCLA listing (with certain exceptions). The enrollee submits a Voluntary Remediation Agreement ("VRA") to WV DEP, outlining the proposed investigation and remediation plan, and pays applicable fees. WV DEP reviews and approves the VRA, after which the enrollee implements the approved remediation activities.

The remediation standard under the VRDP is risk-based, meaning that the cleanup is designed to reduce risks to acceptable levels for the intended future use of the property rather than to achieve universal background concentrations. This risk-based approach permits the use of engineering controls (e.g., caps, barriers, containment systems) and institutional controls (e.g., deed restrictions, activity and use limitations) as components of the remedy, provided they are adequate to protect human health and the environment for the intended use scenario.

Upon successful completion of the approved remediation — including the establishment of any required engineering and institutional controls — WV DEP issues a Certificate of Completion. The Certificate of Completion provides the enrollee and its successors with a release from further liability to the State of West Virginia for the contamination that was addressed by the remediation, subject to compliance with any conditions specified in the Certificate (including the maintenance of engineering and institutional controls).

Importantly, the Certificate of Completion is not absolute and is not equivalent to a "no further action" determination in all respects. The VRDP Act and WV DEP regulations provide that a Certificate of Completion may be reopened or revoked under certain circumstances, including:

(1) Fraud or Misrepresentation. If the Certificate was obtained through fraud, material misrepresentation, or knowing failure to disclose material information in the VRDP application or remediation reports.

(2) Previously Unknown Contamination. If contamination not addressed by the approved remediation is subsequently discovered at the property — for example, contamination from a previously unknown source or at a depth or location not investigated during the VRDP process.

(3) Failure to Comply with Controls. If the enrollee or its successors fail to maintain compliance with the engineering or institutional controls required by the Certificate — for example, if the cap is breached and not repaired, or if the deed restriction is modified or removed without WV DEP approval.

(4) Change in Regulatory Standards. If changes in applicable environmental standards render the approved remedy no longer protective of human health and the environment — for example, if a constituent of concern is reclassified as more hazardous or if acceptable risk levels are revised downward.

The possibility of Certificate reopening is an inherent feature of the VRDP and of risk-based remediation programs generally. While the risk of reopening is typically low for properties with well-maintained controls and stable regulatory frameworks, it is not zero, and it represents a contingent liability that should be accounted for in the Transaction analysis.

B. Certificate of Completion — September 2015

The VRDP Certificate of Completion for the Weirton Property was issued by WV DEP in September 2015. Based on our review of the Certificate as described in the Phase I ESA and publicly available records, the Certificate was issued following the completion of remediation activities that included soil management, grading, and the installation of the engineering cap. The Certificate confirmed that the remediation was conducted in accordance with the approved VRA and that the property met applicable risk-based cleanup standards for commercial/industrial use, subject to the continued maintenance of the specified engineering and institutional controls.

The Certificate inures to the benefit of successors and assigns of the property owner, provided they maintain compliance with the specified controls. This means that NPRC — as the current property owner — and any future owner of the Property benefit from the liability release provided by the Certificate, so long as the cap is maintained and the Deed Restriction remains in effect.

The original enrollee in the VRDP is believed to be NPRC or a predecessor or affiliate entity that was involved in the site's post-remediation redevelopment. We have not yet confirmed the identity of the original enrollee from the VRDP program records, and this is among the items requested from Seller's counsel as described in Section VI.B.4 below. Confirming the identity of the original enrollee is relevant because the liability release provided by the Certificate extends to the enrollee and its "successors and assigns," and any ambiguity in the chain of succession could affect the scope of the Certificate's protection.

C. Ongoing Compliance Obligations

The VRDP Certificate of Completion imposes the following ongoing obligations, which must be satisfied to maintain the Certificate's validity and the associated liability protection:

Engineering Controls. The impervious cap — consisting of the building slab, parking surfaces, sidewalks, and other impervious cover — must be maintained in good condition. The cap functions as the primary barrier to direct contact with residual contamination in underlying soils. Any breach of the cap, whether through cracking, deterioration, excavation, or any other means, compromises the protective function of the engineering control and must be reported to WV DEP and repaired. The repair must be conducted in a manner that restores the cap's integrity and must be completed in accordance with WV DEP's requirements, which may include the submission of a repair plan and post-repair verification.

Institutional Controls. The Deed Restriction recorded at the Hancock County Clerk's Office must remain in effect for as long as residual contamination remains in place. Any modification, subordination, or removal of the Deed Restriction requires prior written approval from WV DEP. The Deed Restriction serves as the primary institutional control, ensuring that the Property's use remains consistent with the risk-based cleanup standards (i.e., commercial/industrial use only) and that the engineering controls are maintained.

Periodic Reporting. The property owner or its designee is required to submit periodic certifications to WV DEP confirming the integrity and functioning of the engineering controls. These certifications typically include a visual inspection of the cap and impervious surfaces, documentation of any cracks, deterioration, or damage, and a statement by a qualified professional confirming that the engineering controls remain protective. The frequency and format of the periodic certifications are determined by the specific conditions of the Certificate of Completion; based on standard VRDP practice, annual or biennial certification is typical.

WV DEP Access. WV DEP retains the right to enter the Property at reasonable times, upon reasonable notice, for the purpose of inspecting and monitoring the engineering controls, conducting environmental sampling if warranted, and confirming compliance with the Certificate of Completion and the Deed Restriction. The property owner — and, by extension, any tenant or occupant — is obligated to cooperate with WV DEP inspections and to provide access as requested.

Notification of Transfer. The property owner must notify WV DEP of any sale, transfer, or change in occupancy of the Property. The notification must be provided prior to or contemporaneously with the transfer and must include disclosure of the Deed Restriction and the VRDP Certificate of Completion to the prospective purchaser, lessee, or other transferee. This notification requirement is significant in the context of the Transaction: although the Transaction is a stock acquisition (not a property transfer), the change in the ultimate beneficial ownership of the tenant entity may arguably trigger the notification requirement, particularly if WV DEP interprets "change in occupancy" broadly. We recommend confirming with WV DEP whether the Transaction triggers this notification requirement, or alternatively, confirming that NPRC provided the required notification when ACC initially commenced occupancy in 2018.

D. Risk That VRDP Obligations Transfer to Tenant/Occupant

While the VRDP Certificate of Completion and the Deed Restriction are primarily obligations of the property owner — NPRC — certain practical responsibilities may fall on the tenant or occupant of the Property, both as a matter of regulatory practice and as a matter of contractual interpretation.

First, the tenant, as the party exercising day-to-day operational control over the facility, is the party most likely to cause damage to the engineering cap. Forklift operations, truck traffic, loading dock activities, and routine facility maintenance all involve the potential for impacts to paved surfaces and the building slab. If the tenant causes damage to the cap, the tenant may be directly responsible for the resulting environmental consequences, irrespective of the Lease allocation, under applicable environmental laws.

Second, the general compliance-with-law covenant in Section 8.3 of the Lease, if construed broadly, may be interpreted to require the tenant to maintain the engineering controls during its occupancy. While this interpretation is not certain, it is plausible, and a court or regulatory agency could rely on it to impose maintenance obligations on the tenant.

Third, WV DEP may look to the occupant of the Property, in addition to the property owner, for cooperation with inspections, access requests, and compliance monitoring. As a practical matter, WV DEP inspectors will interact with on-site personnel — ACC's employees — rather than with NPRC's management, and WV DEP may expect the occupant to facilitate inspections and to report any observed damage to the engineering controls.

Fourth, and most significantly, in a worst-case scenario — if the cap is breached and residual contamination migrates or is released to the surface environment, to stormwater, or to groundwater — both the property owner and the tenant/occupant could face liability under applicable environmental laws, including the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et seq., and its West Virginia analogs. CERCLA liability is strict, joint, and several, and attaches to broad categories of "responsible parties," including current owners and operators of a facility where hazardous substances have been released. A tenant exercising operational control over a contaminated property may qualify as an "operator" under CERCLA, exposing it to direct federal environmental liability regardless of the Lease's allocation of environmental obligations.

The absence of any environmental indemnity from NPRC to ACC in the Lease means that ACC — and, post-closing, Crestline through its ownership of ACC — has no contractual recourse against NPRC for environmental costs arising from pre-existing conditions beneath the cap. This gap is significant and should be addressed through the mechanisms recommended in Section VI below.

VI. Risk Assessment and Recommendations

A. Overall Risk Rating

Based on the foregoing analysis, we assign an overall environmental risk rating of low to moderate to the Weirton Facility. This rating reflects the following considerations:

• The Property is a remediated brownfield with a valid VRDP Certificate of Completion issued by WV DEP in September 2015. The Certificate is currently in good standing, and no information has come to our attention suggesting that WV DEP has initiated any action to reopen, modify, or revoke the Certificate.

• The engineering controls (impervious cap) are intact and functioning as designed, based on the observations documented in TerraVerde's Phase I ESA. The institutional controls (Deed Restriction) are recorded and in effect.

• The Phase I ESA identified no RECs at the Property. The single CREC — the VRDP site with ongoing controls — is an inherent feature of the Property's brownfield status and is appropriately managed through the existing engineering and institutional controls.

• The de minimis hydraulic fluid stain identified in the Phase I ESA does not represent a material environmental risk and can be addressed through routine housekeeping measures.

• ACC's operations at the Weirton Facility are limited to finished goods storage and distribution, with no manufacturing, no hazardous waste generation, and no processes that would be expected to create new environmental conditions.

• The primary risks are contractual, not physical — the silence of the Lease on environmental obligations creates ambiguity that could expose Crestline (through ACC) to unexpected costs or liabilities in the event of engineering control failure, WV DEP regulatory action, or discovery of previously unknown contamination.

B. Recommendations

1. SPA Environmental Representations

The draft Stock Purchase Agreement (Article IV, Section 4.18 — Environmental Matters) should include specific representations and warranties from the Sellers regarding the Weirton Facility's environmental status. The following representations should be included:

(a) The existence and validity of the VRDP Certificate of Completion dated September 2015, and confirmation that the Certificate has not been reopened, modified, revoked, or challenged by WV DEP or any other governmental authority;

(b) Compliance with all conditions of the VRDP Certificate of Completion and the Deed Restriction during the period of ACC's occupancy of the Property, including maintenance of engineering controls and submission of all required periodic certifications to WV DEP;

(c) No receipt of notice from WV DEP or any other governmental authority of any actual or threatened violation of the VRDP Certificate of Completion or the Deed Restriction, or any proposed reopening, modification, or revocation of the Certificate;

(d) No damage to, breach of, or compromise of the engineering controls (impervious cap) during ACC's tenancy at the Property, and no knowledge of any such damage, breach, or compromise;

(e) Disclosure of all correspondence between ACC, NPRC, or their respective agents and WV DEP regarding the Weirton Property, the VRDP Certificate, or the Deed Restriction; and

(f) Confirmation that, to Sellers' knowledge, NPRC has complied with all transfer notification and disclosure requirements under the VRDP Certificate and the Deed Restriction.

These representations should survive closing for a period consistent with the general survival period for environmental representations in the SPA (currently proposed at three years, subject to ongoing negotiation with Seller's counsel).

2. Environmental Indemnification

The environmental indemnification provisions in the SPA should expressly cover costs arising from the following Weirton-specific scenarios:

(a) A reopening or revocation of the VRDP Certificate of Completion, to the extent attributable to pre-closing conditions, Seller's acts or omissions, or any fraud or misrepresentation in the original VRDP application;

(b) Failure of engineering or institutional controls, to the extent attributable to pre-closing conditions or Seller's acts or omissions during the pre-closing period;

(c) discovery of previously unknown contamination at the Property not addressed by the VRDP remediation, to the extent such contamination arose from conditions existing prior to the closing; and

(d) Any claim, demand, or enforcement action by WV DEP or any third party related to pre-existing contamination at the Property.

These indemnification obligations should be included within the scope of the environmental liability estimates feeding into the $4.0 million proposed environmental escrow that is currently under discussion with Seller's counsel. We note that the Weirton-specific estimated cost contribution to the environmental escrow is relatively low — the CREC is managed, no remediation is currently required, and no RECs were identified. However, the contingent nature of the VRDP obligations warrants inclusion in the aggregate environmental risk pool, and we recommend maintaining a modest contingency allocation within the escrow to address the possibility of Certificate reopening or engineering control failure at the Weirton Facility.

3. Lease Amendment or Side Letter

We recommend that Crestline negotiate a lease amendment or, alternatively, a standalone side letter agreement with NPRC (Susan Delvecchio, President) to clarify the allocation of environmental obligations under the Lease. The amendment or side letter should address the following:

(a) Allocation of Engineering Control Maintenance. The amendment should expressly allocate the obligation to maintain the VRDP engineering controls (impervious cap, including building slab, parking surfaces, and other impervious cover) to the landlord, as the property owner and the party to whom the VRDP Certificate was issued. The landlord should be required to maintain the engineering controls in good condition and repair, to conduct periodic inspections, and to bear the cost of any repair or replacement of the cap, except to the extent that damage is directly caused by the tenant's negligent or willful acts.

(b) Environmental Indemnification. The landlord should indemnify the tenant against environmental costs, liabilities, and claims arising from pre-existing contamination at the Property — that is, contamination that existed prior to the construction of the warehouse in 2016 and that is the subject of the VRDP remediation. This indemnification should cover investigation costs, remediation costs, third-party claims, government response costs, fines and penalties, and associated legal fees, to the extent arising from pre-existing contamination and not from the tenant's own operations.

(c) Scope of Compliance-with-Law Covenant. The amendment should clarify that the tenant's compliance-with-law obligation under Section 8.3 of the Lease does not extend to the costs of remediating pre-existing contamination or repairing engineering controls absent damage caused by the tenant's negligent or willful acts. The tenant's environmental obligations should be limited to compliance with environmental laws applicable to the tenant's own operations at the facility (e.g., proper storage and handling of materials, waste disposal, spill response, and reporting).

(d) Information Sharing. The landlord should be required to provide the tenant with copies of all WV DEP correspondence, inspection reports, periodic certification submissions, and other documents related to the VRDP Certificate and the Deed Restriction, promptly upon receipt or submission. The landlord should also notify the tenant promptly of any WV DEP inspection, inquiry, enforcement action, or proposed modification of the Certificate or Deed Restriction.

(e) Cooperation with Inspections. The amendment should establish a protocol for WV DEP inspections of the Property, requiring the landlord to provide advance notice to the tenant and requiring the tenant to cooperate with inspections and to provide access to the premises as necessary.

We recommend that the obligation to cooperate in obtaining this lease amendment or side letter be included as a Seller covenant or condition in the SPA, with the Sellers required to use commercially reasonable efforts to negotiate and execute the amendment prior to or concurrently with closing. If the amendment cannot be obtained prior to closing, the SPA should require the Sellers to cooperate in obtaining it post-closing, and the environmental indemnification provisions in the SPA should be structured to provide Crestline with adequate protection in the interim.

4. Due Diligence Follow-Up Items

The following documents and information have been requested, or should be requested, from Seller's counsel (Hargrove, Dalton & Speer LLP, Attention: Franklin Speer and Megan Trask) in connection with the Weirton Facility:

(a) All correspondence between ACC, NPRC, or their respective agents and WV DEP regarding the VRDP Certificate of Completion since its issuance in September 2015, including but not limited to inspection reports, notices, inquiries, and enforcement-related communications;

(b) All periodic engineering control certification reports submitted to WV DEP since the issuance of the VRDP Certificate, including the most recent certification, to confirm that periodic reporting obligations are current;

(c) Any notice of change in occupancy, transfer, or other notification submitted to WV DEP in connection with ACC's commencement of occupancy at the Weirton Facility in 2018, or at any time thereafter;

(d) The complete VRDP application file and remediation records for the Property, including the Voluntary Remediation Agreement, remediation work plans, investigation reports, sampling data, risk assessments, and the final remediation report submitted to WV DEP in support of the Certificate of Completion. These records are needed to assess the nature, extent, and location of residual contamination beneath the cap and to evaluate the adequacy of the remediation and the likelihood of Certificate reopening.

In addition, we recommend that the transaction team confirm directly with NPRC, or through Seller's counsel, that: (i) all periodic engineering control certifications are current and have been timely submitted to WV DEP; (ii) no WV DEP enforcement actions, inspections, or inquiries are pending or anticipated with respect to the Property; and (iii) NPRC has no knowledge of any damage to or compromise of the engineering controls that has not been previously disclosed.

5. Phase II Investigation — Not Recommended

Consistent with TerraVerde's recommendation in the Phase I ESA and the analysis in the Phase I ESA Review Memorandum — Weirton prepared by Rafael Dominguez, we do not recommend a Phase II subsurface investigation at the Weirton Facility at this time. This recommendation is based on the following considerations:

• The engineering cap is intact and functioning as designed, and there is no indication of a release of contamination to the surface environment.

• The VRDP Certificate of Completion is in good standing, and the existing engineering and institutional controls appear adequate to manage the residual contamination beneath the cap.

• The Deed Restriction expressly prohibits excavation or disturbance of the cap without prior WV DEP approval. Conducting a Phase II subsurface investigation — which would involve soil borings, test pits, or other intrusive sampling techniques — would necessarily penetrate the cap and would require both landlord consent (under the Lease) and WV DEP approval (under the Deed Restriction). Disturbing the cap without authorization could jeopardize the VRDP Certificate and expose the parties to regulatory consequences.

• The risk of creating new exposure pathways by penetrating the cap outweighs the incremental informational value of subsurface data, particularly given the existing VRDP remediation records (which we have requested and which should document the nature and extent of residual contamination).

• No RECs were identified that would warrant further investigation.

We note that a draft landlord consent letter for the Weirton Facility was prepared by our office in anticipation of a potential Phase II investigation, but the letter was not sent in light of the determ

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
TO: Beatrice Holloway, Partner; Harrison Caldwell, Of Counsel
FROM: Grace Nakamura, Associate
DATE: September 2, 2022
RE: Environmental Lease and VRDP Certificate Review — Weirton Warehouse & Distribution Center, 600 Commerce Way, Weirton, WV 26062 (Allegheny Chemical Coatings, Inc. Lease with Northern Panhandle Realty Corp.)
MATTER NO.: 1006-00003
CLIENT: Crestline Packaging Solutions LLC
I. Executive Summary
This memorandum analyzes the environmental implications of the lease between Allegheny Chemical Coatings, Inc. ("ACC") and Northern Panhandle Realty Corp. ("NPRC") for the warehouse and distribution facility located at 600 Commerce Way, Weirton, WV 26062, Hancock County, West Virginia (Parcel ID: 07-0304-0012-0000) (the "Weirton Facility" or the "Property"). This analysis is undertaken in connection with the proposed acquisition by our client, Crestline Packaging Solutions LLC ("Crestline"), of 100% of the outstanding common stock of ACC (the "Transaction").
The Weirton Facility is an approximately 65,000 square-foot warehouse with approximately 2,000 square feet of associated office space situated on 3.1 acres. ACC uses the facility exclusively for finished goods storage and distribution, and no manufacturing operations are conducted on-site. Importantly, the facility does not generate hazardous waste and is not classified as a generator under the Resource Conservation and Recovery Act ("RCRA") or its West Virginia analogs.
The Property was constructed in 2016 on a remediated brownfield parcel — formerly associated with Weirton Steel manufacturing operations — which received a West Virginia Voluntary Remediation and Redevelopment Program ("VRDP") Certificate of Completion issued by the West Virginia Department of Environmental Protection ("WV DEP") in September 2015. The VRDP Certificate is conditioned on ongoing maintenance of engineering and institutional controls, including an impervious cap (comprised of the building slab, parking areas, and other impervious surfaces) and a deed restriction recorded in the Hancock County land records.
TerraVerde Environmental Consulting LLC ("TerraVerde") prepared a Phase I Environmental Site Assessment ("Phase I ESA") dated August 25, 2022 in accordance with ASTM E1527-21 for the Weirton Facility. The Phase I ESA identified one Controlled Recognized Environmental Condition ("CREC") related to the VRDP site and the ongoing engineering and institutional controls associated with it. TerraVerde also noted a de minimis condition consisting of a minor hydraulic fluid stain on the warehouse floor, encompassing approximately four square feet, which does not rise to the level of a Recognized Environmental Condition ("REC"). No RECs or Historical Recognized Environmental Conditions ("HRECs") were identified. TerraVerde did not recommend a Phase II subsurface investigation, and we concur with that recommendation for the reasons discussed in Section VI.B.5 below.
Our review has yielded the following key findings:
(1) The lease between ACC and NPRC (the "Lease") is a double-net lease that is effectively silent on environmental obligations beyond a general covenant requiring the tenant to comply with all applicable laws, including environmental laws. This creates significant ambiguity as to which party bears responsibility for maintaining VRDP engineering and institutional controls — obligations that are ongoing, that require affirmative action, and that carry meaningful consequences if neglected.
(2) A deed restriction recorded at the Hancock County Clerk's Office, Book 487, Page 89, imposes ongoing obligations on the Property that run with the land and are binding on successors, assigns, and occupants. The deed restriction prohibits excavation or disturbance of the engineered cap without prior WV DEP approval, restricts use to commercial and industrial purposes, requires maintenance of engineering control integrity, mandates periodic reporting to WV DEP, and grants WV DEP the right of access for inspection.
(3) Crestline, as successor tenant post-acquisition (through its ownership of ACC), may inherit practical compliance responsibilities under the deed restriction and the VRDP Certificate's conditions even though ACC is not a party to the original VRDP enrollment and is not the property owner. The general compliance-with-law covenant in the Lease, if construed broadly, could be interpreted to impose affirmative environmental obligations on the tenant that go beyond the typical tenant's expectations in a warehousing context.
Based on the foregoing, we assign an overall risk rating of low to moderate to the Weirton Facility from an environmental perspective. The environmental conditions at the site are managed, the VRDP Certificate appears to be in good standing, and there is no indication of current contamination or environmental noncompliance. However, the contractual gap in the Lease regarding environmental obligations warrants attention. We recommend the following actions: (a) inclusion of specific environmental representations regarding the VRDP Certificate and deed restriction in the Stock Purchase Agreement ("SPA"); (b) environmental indemnification provisions covering costs arising from any reopening of the VRDP Certificate or failure of engineering or institutional controls attributable to pre-closing conditions; and (c) negotiation of a lease amendment or side letter with NPRC to clarify the allocation of environmental control obligations between landlord and tenant.
II. Scope and Purpose
The purpose of this memorandum is to analyze the environmental provisions — and, critically, the absence thereof — in the Lease governing the Weirton Facility, and to assess the environmental implications for Crestline in connection with its proposed acquisition of 100% of the outstanding common stock of ACC. The proposed purchase price is $94.5 million, and the Transaction is structured as a stock purchase. As a result, Crestline will acquire ACC as a going concern, and ACC will remain the tenant under the Lease by operation of law. Unlike an asset purchase, a stock acquisition does not involve an "assignment" of the Lease; rather, the tenant entity itself continues in existence, and the change in the tenant's equity ownership does not constitute a transfer of the leasehold interest in the traditional sense. This distinction has important implications for the analysis of the Lease's assignment and change-of-control provisions, as discussed in Section IV.A below.
This memorandum focuses specifically on the Weirton Facility and should be read in conjunction with the following companion work product:
• Phase I ESA Review Memorandum — Weirton (prepared by Rafael Dominguez, Associate), which provides a detailed review of TerraVerde's Phase I ESA findings, data gap analysis, and consultant performance evaluation;
• Comprehensive Environmental Diligence Summary Memorandum (draft dated October 22, 2022), which consolidates environmental findings across all ACC facilities subject to the Transaction, including the Clarksburg, Parkersburg, and Charleston locations, and provides an aggregate environmental risk assessment and liability estimate; and
• PLL Policy Term Sheet Review and Comment Letter, which addresses the indicative terms for Pollution Legal Liability insurance and the treatment of known conditions across the portfolio.
In preparing this memorandum, we reviewed the following sources:
1. Lease Agreement between ACC (Tenant) and Northern Panhandle Realty Corp. (Landlord) dated March 1, 2018 (the "Lease"), together with all exhibits and amendments thereto in the possession of Seller's counsel;
2. WV VRDP Certificate of Completion dated September 2015, issued by the West Virginia Department of Environmental Protection for the Weirton Property;
3. Deed restriction recorded at the Hancock County Clerk's Office, Book 487, Page 89, governing use, maintenance, and transfer obligations for the Property;
4. TerraVerde Environmental Consulting LLC, Phase I Environmental Site Assessment — Weirton Warehouse & Distribution Center, 600 Commerce Way, Weirton, WV 26062, dated August 25, 2022 (the "Phase I ESA"); and
5. Publicly available WV DEP VRDP program records, including the online VRDP project database and available correspondence files.
We have not independently verified the factual representations contained in the Phase I ESA or the Lease, nor have we conducted an independent title search beyond reviewing the recorded deed restriction referenced above. Our analysis is based on the documents provided and the publicly available records reviewed as of the date of this memorandum. Additional documents have been requested from Seller's counsel, Hargrove, Dalton & Speer LLP (Franklin Speer and Megan Trask), as detailed in Section VI.B.4 below.
III. Property Background and Environmental History
A. Property Description
The Weirton Facility is located at 600 Commerce Way, Weirton, WV 26062, in Hancock County, West Virginia. The property is identified by Hancock County Parcel ID 07-0304-0012-0000. The following table summarizes the key property characteristics:
The facility is situated in a commercial and light-industrial corridor on the northern edge of Weirton, proximate to US Route 22 and within approximately three miles of the Pennsylvania state line. The surrounding area is characterized by a mix of commercial and industrial properties, including several other parcels that were historically associated with Weirton Steel operations. The Property is served by municipal water and sewer. According to the Phase I ESA, the topography is relatively flat, and the Property is not located within a FEMA-designated 100-year floodplain.
ACC's operations at the Weirton Facility are limited to the receipt, storage, and distribution of finished goods — specifically, packaged industrial coatings and related products. No manufacturing, blending, mixing, or formulation of chemical products occurs at the Weirton Facility. ACC does not generate hazardous waste at this location and does not maintain a RCRA generator identification number for this site. Materials stored at the facility are finished, packaged products in sealed containers, primarily paints, primers, and industrial coatings, which are received by truck and stored on racking systems within the warehouse before redistribution to customers and downstream facilities.
B. Historical Use and Brownfield Remediation
The Property occupies a parcel that was formerly associated with the steel manufacturing operations of Granite Harbor & Co., one of the largest integrated steelmakers in the United States until its bankruptcy in 2003 and subsequent acquisition by Sterling Reach & Co. (later Pinnacle Group). The broader Weirton Steel complex encompassed thousands of acres in the Weirton area, and the environmental legacy of decades of steel manufacturing — including coke production, blast furnace operations, rolling mills, and associated waste disposal — is well documented in both federal and state regulatory records.
The specific parcel on which the Weirton Facility now sits was used for various ancillary purposes during the steelmaking era. While the Phase I ESA does not provide a comprehensive operational history of this specific parcel's use during the Weirton Steel period, it identifies the site as part of the broader Weirton Steel footprint and notes that soil and groundwater contamination consistent with historical steelmaking operations was present on the parcel prior to remediation. The nature and extent of that contamination are documented in the VRDP application and remediation records, which we have requested from Seller's counsel as described in Section VI.B.4 below, but which have not yet been produced.
Following the decline and closure of Weirton Steel operations, portions of the former steel complex were designated for redevelopment. The subject parcel was enrolled in the West Virginia Voluntary Remediation and Redevelopment Program ("VRDP") pursuant to W. Va. Code § 22-22-1 et seq. The VRDP, discussed in greater detail in Section V below, provides a streamlined process for the investigation and remediation of contaminated properties under WV DEP oversight, culminating in the issuance of a Certificate of Completion that provides certain liability protections to the enrollee and its successors.
Remediation activities were conducted at the Property under the VRDP, and a Certificate of Completion was issued by WV DEP in September 2015. The remediation approach included the installation of engineering controls in the form of an impervious cap designed to prevent direct contact with residual contamination in soil beneath the surface. The cap is comprised of the building slab, parking areas, sidewalks, and other impervious cover that collectively blanket the developed portions of the parcel. Institutional controls, in the form of a deed restriction recorded in the Hancock County land records, were also established to restrict future use and require ongoing maintenance of the cap.
Northern Panhandle Realty Corp. subsequently constructed the warehouse facility on the remediated parcel in 2016, with the building slab itself serving as a component of the engineering cap required by the VRDP Certificate of Completion. The facility was completed and became operational in late 2016 or early 2017. ACC entered into the Lease with NPRC on March 1, 2018 and has occupied the facility as a tenant since that date.
C. Deed Restriction
A deed restriction was recorded at the Hancock County Clerk's Office, Book 487, Page 89 (the "Deed Restriction"). The Deed Restriction runs with the land and is binding on all successors, assigns, and occupants of the Property. Based on our review of the Deed Restriction as described in the Phase I ESA and in publicly available WV DEP VRDP program records, the Deed Restriction contains the following key provisions:
(i) Prohibition on Cap Disturbance. No person shall excavate, disturb, penetrate, or otherwise compromise the integrity of the engineered cap — including the building slab, parking surfaces, sidewalks, and other impervious cover — without obtaining prior written approval from WV DEP. This prohibition extends to construction activities, utility installation, foundation work, and any other ground-disturbing activity that could compromise the cap's function as a barrier to direct contact with residual contamination in underlying soils.
(ii) Use Restriction. The Property is restricted to commercial and/or industrial use. Residential use, including but not limited to single-family dwellings, multi-family housing, schools, daycare facilities, and similar sensitive uses, is expressly prohibited. This use restriction is consistent with the risk-based remediation approach employed under the VRDP, which evaluated exposure pathways based on a commercial/industrial land-use scenario.
(iii) Maintenance of Engineering Controls. The property owner is required to maintain the integrity of the engineering controls (i.e., the impervious cap) in good condition and repair. Any cracking, deterioration, settlement, or other compromise of the cap must be promptly reported to WV DEP and repaired in accordance with WV DEP requirements.
(iv) Periodic Reporting. The property owner or its designee is required to submit periodic certifications to WV DEP confirming the integrity and functioning of the engineering controls. Based on standard VRDP practice, these certifications are typically required on an annual or biennial basis, though the specific frequency and format are determined by the conditions of the individual Certificate of Completion.
(v) WV DEP Right of Access. WV DEP retains the right to enter the Property at reasonable times for the purpose of inspecting and monitoring the engineering controls and confirming compliance with the Deed Restriction and the VRDP Certificate of Completion conditions.
(vi) Transfer Notification and Disclosure. Upon any sale, transfer, or change in occupancy of the Property, the property owner must provide prior written notice to WV DEP and must disclose the existence and terms of the Deed Restriction to all prospective purchasers, lessees, and other transferees. The Deed Restriction must be referenced in all instruments of conveyance.
The Deed Restriction is a critical component of the institutional controls that underpin the VRDP Certificate of Completion. Its continued effectiveness is a condition of the Certificate, and any failure to comply with its terms could provide grounds for WV DEP to reopen the Certificate and require additional investigation or remediation. The implications of the Deed Restriction for the Lease and for Crestline's position as successor tenant are discussed in Sections IV and V below.
D. Phase I ESA Findings (TerraVerde, August 25, 2022)
TerraVerde's Phase I ESA, dated August 25, 2022, was prepared in accordance with ASTM E1527-21 and the EPA's "All Appropriate Inquiries" rule (40 C.F.R. Part 312). The Phase I ESA included a records review, site reconnaissance, interviews with ACC facility personnel, and a review of historical sources including aerial photographs, fire insurance maps, and regulatory databases. The Phase I ESA's principal findings are summarized below.
Controlled Recognized Environmental Condition (CREC). The Phase I ESA identified one CREC: the VRDP site with ongoing engineering and institutional controls. Under ASTM E1527-21, a CREC is defined as a recognized environmental condition resulting from a past release of hazardous substances or petroleum products that has been addressed to the satisfaction of the applicable regulatory authority with hazardous substances or petroleum products allowed to remain in place subject to the implementation of a required control. The CREC at the Weirton Facility fits squarely within this definition — residual contamination from historical steel manufacturing operations remains in soil beneath the engineered cap, and the VRDP Certificate of Completion was issued on the condition that the cap and deed restriction remain in effect and are properly maintained.
De Minimis Condition. TerraVerde noted a minor hydraulic fluid stain on the warehouse floor encompassing approximately four square feet, located in the vicinity of a forklift charging station. TerraVerde characterized this as a de minimis condition that does not rise to the level of a REC, and we concur with this assessment. The stain appears to be the result of a minor operational drip from forklift hydraulic equipment and is confined to the concrete slab surface. There is no indication of penetration through the slab or any release to the subsurface environment. We recommend that ACC clean the stain as a matter of good housekeeping, but we do not consider it to present a material environmental risk.
No RECs or HRECs. Beyond the CREC, the Phase I ESA identified no RECs or HRECs at the Property. No evidence of underground storage tanks, aboveground storage tanks (other than small containers of forklift fuel), floor drains connected to unpermitted discharges, or other conditions of environmental concern was identified during the site reconnaissance.
Phase II Investigation. TerraVerde did not recommend a Phase II subsurface investigation at the Weirton Facility. We concur with this recommendation, as discussed in greater detail in Section VI.B.5 below.
A detailed review and evaluation of TerraVerde's Phase I ESA methodology, completeness, and conclusions is provided in the Phase I ESA Review Memorandum — Weirton prepared by Rafael Dominguez.
IV. Lease Analysis
A. Lease Summary — Key Terms
The Lease was entered into on March 1, 2018 between NPRC, as landlord, and ACC, as tenant. The following table summarizes the key terms of the Lease as relevant to this environmental review:
Assignment and Change of Control. Section 12.1 of the Lease provides that the tenant may not assign the Lease or sublet the premises, in whole or in part, without the prior written consent of the landlord, which consent shall not be unreasonably withheld, conditioned, or delayed. Critically, the Lease does not contain a separate change-of-control provision that would be triggered by a change in the equity ownership of the tenant entity. In a stock purchase transaction, the tenant entity — ACC — continues in existence as the same legal entity and remains the tenant under the Lease. There is no "assignment" of the leasehold interest in the traditional sense because the Lease itself is not being transferred to a new party. Accordingly, unless the Lease contains an express provision treating a change in equity ownership as an assignment or otherwise requiring landlord consent upon a change of control (which it does not), the Transaction should not trigger the assignment or consent provisions of the Lease.
We note, however, that some courts have looked beyond the form of a transaction to its substance, and in certain jurisdictions a court might characterize a stock acquisition as a de facto assignment if the practical effect is to transfer control of the leasehold to a new party. West Virginia case law on this issue is limited, but the weight of authority in most jurisdictions supports the position that a stock acquisition does not constitute an assignment of the tenant's lease absent an express change-of-control provision. Nevertheless, as a matter of prudence and to preserve the landlord-tenant relationship, the transaction team should consider whether to notify NPRC of the Transaction and to seek an informal acknowledgment or estoppel certificate confirming that the Transaction does not trigger the Lease's assignment provisions.
Renewal Options. Section 14.1 of the Lease provides ACC with one five-year renewal option, exercisable by written notice to the landlord not less than twelve months prior to the expiration of the initial term. If exercised, the renewal term would extend the Lease through February 28, 2033, at a base rent equal to the then-prevailing fair market rent as determined by the process set forth in Section 14.2. The renewal option is relevant to post-closing planning because the initial lease term expires on February 28, 2028 — approximately five years and six months from the originally targeted closing date. If Crestline intends to continue operating the Weirton Facility beyond the initial term, it will need to exercise the renewal option within the required notice period or negotiate a new lease. Either scenario presents an opportunity to incorporate explicit environmental provisions into the lease terms, as recommended in Section VI.B.3 below.
B. Environmental Provisions — Analysis of Gaps
The Lease is fundamentally inadequate in its treatment of environmental matters, particularly in light of the Property's brownfield history, the VRDP Certificate conditions, and the ongoing engineering and institutional control obligations associated with the Deed Restriction. The Lease contains no dedicated environmental article, section, or exhibit. The only provision that addresses environmental obligations, even indirectly, is Section 8.3, which sets forth a general covenant requiring the tenant to comply with all applicable federal, state, and local laws, ordinances, regulations, and governmental orders, including environmental laws, in its use and occupancy of the premises. This provision is a standard "comply with law" covenant found in virtually all commercial leases and, standing alone, is insufficient to allocate the specific environmental responsibilities arising from the VRDP controls.
The Lease is silent on the following matters, each of which is relevant to the ongoing environmental management of the Property:
(i) Maintenance of VRDP Engineering Controls. The Lease does not address which party — landlord or tenant — is responsible for maintaining the integrity of the engineered cap (building slab, parking surfaces, and other impervious cover) that serves as the primary engineering control under the VRDP Certificate of Completion. Under a double-net lease structure, the landlord is typically responsible for structural maintenance, which could arguably encompass the building slab. However, the parking surfaces and other impervious areas that form part of the cap are not clearly within the scope of the landlord's structural maintenance obligation, and the Lease does not expressly address this issue.
(ii) Periodic Reporting to WV DEP. The Lease does not allocate responsibility for preparing and submitting the periodic engineering control certifications required by the VRDP Certificate of Completion and the Deed Restriction. As the property owner, NPRC is the party primarily obligated to submit these certifications. However, NPRC may require the cooperation of the tenant — as the occupant with day-to-day control over the facility — to inspect and assess the condition of the engineering controls. The Lease does not address this potential need for cooperation or provide a mechanism for the tenant to participate in or receive copies of the periodic reporting.
(iii) Cost of Repair or Replacement of Engineering Controls. The Lease does not address which party bears the cost of repairing or replacing engineering controls if they are damaged or deteriorated. This is a potentially significant exposure. If, for example, a section of the parking lot surface cracks or settles, exposing underlying soils that may contain residual contamination, the cost of repair could be substantial — and the question of who pays is left entirely to inference from the general lease provisions.
(iv) Pre-Existing Contamination and Legacy Conditions. The Lease contains no acknowledgment of the Property's brownfield history, the existence of residual contamination beneath the cap, or the VRDP Certificate of Completion. There is no provision allocating liability for pre-existing contamination to the landlord (as property owner and the party that developed the site on a remediated brownfield) or releasing the tenant from responsibility for conditions that predate the Lease.
(v) Environmental Indemnification. The Lease does not contain an environmental indemnification provision in favor of the tenant. This means that if the tenant incurs costs related to pre-existing contamination — for example, if WV DEP requires additional investigation or remediation, or if a third party brings an environmental claim related to historic contamination — the tenant has no contractual right to seek indemnification from the landlord. The Lease's general indemnification provision (Section 15.1) is a standard mutual indemnity that applies to claims arising from each party's negligence or willful misconduct, but it is not tailored to environmental liabilities and would not clearly cover costs arising from pre-existing contamination or regulatory compliance obligations.
(vi) Environmental Insurance. The Lease does not require either party to maintain environmental insurance, such as a Pollution Legal Liability policy, for the Property. While PLL insurance is not universally required in commercial leases, it is a prudent risk management tool for properties with known environmental conditions, and its absence from the Lease is noted.
(vii) VRDP Certificate and Deed Restriction Compliance. The Lease does not contain any provision requiring the landlord to maintain compliance with the VRDP Certificate of Completion or the Deed Restriction, or to notify the tenant if the Certificate is reopened, modified, or revoked by WV DEP. Similarly, the Lease does not require the landlord to provide the tenant with copies of WV DEP correspondence, inspection reports, or periodic certifications related to the VRDP.
(viii) Additional Remediation or Modification of Controls. The Lease does not allocate responsibility for costs if WV DEP requires additional remediation or modification of the engineering or institutional controls — for example, if changes in regulatory standards render the existing remedy no longer protective, or if newly discovered contamination necessitates supplemental investigation or cleanup.
The environmental gaps in the Lease are notable when contrasted with the lease for the Clarksburg facility, which ACC holds with Mountainview Properties LLC. The Clarksburg lease includes an explicit environmental article (Article XI) that: (a) requires the tenant to remediate any contamination caused by the tenant's operations; (b) indemnifies the landlord against environmental claims arising from the tenant's use of the premises; and (c) provides the landlord with a right to conduct environmental assessments at the tenant's expense if contamination is suspected. While the Clarksburg lease's environmental provisions are landlord-favorable and do not address pre-existing contamination in the tenant's favor, they at least demonstrate the parties' recognition that environmental matters warrant specific contractual attention. The Weirton Lease lacks even this basic level of environmental specificity, despite the fact that the Weirton Property has a significantly more complex environmental history than the Clarksburg facility.
Implications of the "Comply with Law" Covenant. The general covenant in Section 8.3 requiring the tenant to comply with all applicable laws, including environmental laws, raises an important interpretive question in the context of the VRDP controls. If this covenant is construed broadly, it could be read to require the tenant to comply with the Deed Restriction's requirements as an "occupant" of the Property — including, potentially, the obligation to maintain the integrity of the engineering controls during the tenant's occupancy. Under this interpretation, the tenant could be deemed responsible for ensuring that the cap is not compromised during its operations, and for reporting any damage to the cap to WV DEP.
Conversely, a narrower reading of the covenant would limit the tenant's obligation to compliance with environmental laws that are directly applicable to the tenant's own operations — such as proper storage and handling of materials, waste disposal, and reporting obligations — and would not extend to the property-owner-specific obligations imposed by the Deed Restriction and the VRDP Certificate. Under this interpretation, the maintenance and reporting obligations would remain with NPRC as the property owner and the party to whom the VRDP Certificate was issued.
The correct interpretation likely falls somewhere between these poles. As a practical matter, the tenant exercises day-to-day operational control over the facility and is the party most likely to cause or discover damage to the engineering cap. A court or regulatory agency could reasonably conclude that the tenant has an obligation to avoid damaging the cap and to report any damage it observes, even if the affirmative maintenance and periodic reporting obligations remain with the property owner. This ambiguity is precisely the type of gap that should be resolved through a lease amendment or side letter, as recommended in Section VI.B.3 below.
C. Implications for Crestline as Successor Tenant
As noted above, the Transaction is structured as a stock purchase. Crestline will acquire all of the outstanding common stock of ACC, and ACC will continue in existence as a wholly owned subsidiary of Crestline (or its designated acquisition subsidiary). ACC will remain the tenant under the Lease, and the Lease will continue in full force and effect by its terms. No assignment of the Lease will occur, and — in the absence of a change-of-control provision in the Lease — no landlord consent should be required.
As successor owner of ACC, Crestline will be bound, through ACC, by all terms and conditions of the Lease, including the general compliance-with-law covenant in Section 8.3. Crestline will also inherit any practical compliance responsibilities that the Deed Restriction imposes on "occupants" of the Property, as discussed above.
The following risks are specific to Crestline's position as successor tenant at the Weirton Facility:
(i) Cap Damage During Occupancy. If the engineering cap is damaged during ACC's ongoing occupancy — whether by forklift operations, loading dock modifications, utility installation, or other activities — it is unclear under the Lease whether the tenant or the landlord bears the cost of repair, the obligation to notify WV DEP, and any liability arising from the release of contamination. Warehouse and distribution operations involve regular heavy equipment use, truck loading and unloading, and periodic facility maintenance, any of which could potentially damage paved surfaces or the building slab. Although the risk of a catastrophic breach of the cap is low in the normal course of warehouse operations, the possibility of localized damage (e.g., cracking of parking surfaces, settlement around loading docks, or penetrations for utility connections) is not negligible over the remaining lease term.
(ii) Regulatory Action by WV DEP. If WV DEP determines that the engineering controls are no longer functioning as intended, or if changes in regulatory standards or the discovery of previously unknown contamination trigger a requirement for additional investigation or remediation, the Lease does not allocate the resulting costs between landlord and tenant. In such a scenario, the property owner would be the primary party obligated to respond to WV DEP, but the tenant could face operational disruptions, relocation costs, or direct regulatory demands (e.g., requirements to provide access for investigation or to modify operations to accommodate remediation activities). The Lease does not provide for any rent abatement, cost reimbursement, or termination right in the event of such regulatory action.
(iii) Lease Expiration and Renewal. The Lease expires on February 28, 2028, approximately five years and six months from the currently targeted closing date. If Crestline intends to continue using the Weirton Facility beyond the initial term, it will need to exercise the renewal option under Section 14.1 or negotiate a new lease with NPRC. Either scenario presents an opportunity — and, indeed, a necessity — to incorporate explicit environmental provisions into the lease terms. If the Transaction closes as currently structured, we recommend that the exercise of the renewal option be accompanied by a negotiated amendment that addresses the environmental gaps identified in this memorandum. If a new lease is negotiated at or before expiration, environmental provisions should be a core component of the negotiated terms.
(iv) Absence of Contractual Recourse. The absence of any environmental indemnity from NPRC to ACC in the Lease means that Crestline (through ACC) has no contractual recourse against NPRC for environmental costs arising from pre-existing conditions beneath the cap. In the event that the VRDP Certificate is reopened or the cap requires major repair, the costs would be borne by ACC (and, indirectly, by Crestline) unless a separate indemnification is negotiated or the costs can be allocated to NPRC through other legal theories (e.g., contribution claims under CERCLA or state environmental statutes). The viability of such alternative theories is uncertain and would depend on the specific facts and circumstances at the time.
V. VRDP Certificate of Completion — Legal Framework and Ongoing Obligations
A. West Virginia VRDP Statutory Framework
The West Virginia Voluntary Remediation and Redevelopment Program is established by W. Va. Code § 22-22-1 et seq. (the "VRDP Act"). The VRDP Act was enacted in 1996 to encourage the voluntary cleanup and productive reuse of contaminated properties in West Virginia by providing a streamlined regulatory process, limited liability protection, and other incentives for parties willing to investigate and remediate environmental contamination under WV DEP oversight.
The VRDP is administered by WV DEP's Division of Land Restoration. Participation in the program is voluntary; any person who owns, controls, or is otherwise responsible for a contaminated property may apply to enroll the property in the VRDP, provided the property is not subject to an existing WV DEP enforcement order or a CERCLA listing (with certain exceptions). The enrollee submits a Voluntary Remediation Agreement ("VRA") to WV DEP, outlining the proposed investigation and remediation plan, and pays applicable fees. WV DEP reviews and approves the VRA, after which the enrollee implements the approved remediation activities.
The remediation standard under the VRDP is risk-based, meaning that the cleanup is designed to reduce risks to acceptable levels for the intended future use of the property rather than to achieve universal background concentrations. This risk-based approach permits the use of engineering controls (e.g., caps, barriers, containment systems) and institutional controls (e.g., deed restrictions, activity and use limitations) as components of the remedy, provided they are adequate to protect human health and the environment for the intended use scenario.
Upon successful completion of the approved remediation — including the establishment of any required engineering and institutional controls — WV DEP issues a Certificate of Completion. The Certificate of Completion provides the enrollee and its successors with a release from further liability to the State of West Virginia for the contamination that was addressed by the remediation, subject to compliance with any conditions specified in the Certificate (including the maintenance of engineering and institutional controls).
Importantly, the Certificate of Completion is not absolute and is not equivalent to a "no further action" determination in all respects. The VRDP Act and WV DEP regulations provide that a Certificate of Completion may be reopened or revoked under certain circumstances, including:
(1) Fraud or Misrepresentation. If the Certificate was obtained through fraud, material misrepresentation, or knowing failure to disclose material information in the VRDP application or remediation reports.
(2) Previously Unknown Contamination. If contamination not addressed by the approved remediation is subsequently discovered at the property — for example, contamination from a previously unknown source or at a depth or location not investigated during the VRDP process.
(3) Failure to Comply with Controls. If the enrollee or its successors fail to maintain compliance with the engineering or institutional controls required by the Certificate — for example, if the cap is breached and not repaired, or if the deed restriction is modified or removed without WV DEP approval.
(4) Change in Regulatory Standards. If changes in applicable environmental standards render the approved remedy no longer protective of human health and the environment — for example, if a constituent of concern is reclassified as more hazardous or if acceptable risk levels are revised downward.
The possibility of Certificate reopening is an inherent feature of the VRDP and of risk-based remediation programs generally. While the risk of reopening is typically low for properties with well-maintained controls and stable regulatory frameworks, it is not zero, and it represents a contingent liability that should be accounted for in the Transaction analysis.
B. Certificate of Completion — September 2015
The VRDP Certificate of Completion for the Weirton Property was issued by WV DEP in September 2015. Based on our review of the Certificate as described in the Phase I ESA and publicly available records, the Certificate was issued following the completion of remediation activities that included soil management, grading, and the installation of the engineering cap. The Certificate confirmed that the remediation was conducted in accordance with the approved VRA and that the property met applicable risk-based cleanup standards for commercial/industrial use, subject to the continued maintenance of the specified engineering and institutional controls.
The Certificate inures to the benefit of successors and assigns of the property owner, provided they maintain compliance with the specified controls. This means that NPRC — as the current property owner — and any future owner of the Property benefit from the liability release provided by the Certificate, so long as the cap is maintained and the Deed Restriction remains in effect.
The original enrollee in the VRDP is believed to be NPRC or a predecessor or affiliate entity that was involved in the site's post-remediation redevelopment. We have not yet confirmed the identity of the original enrollee from the VRDP program records, and this is among the items requested from Seller's counsel as described in Section VI.B.4 below. Confirming the identity of the original enrollee is relevant because the liability release provided by the Certificate extends to the enrollee and its "successors and assigns," and any ambiguity in the chain of succession could affect the scope of the Certificate's protection.
C. Ongoing Compliance Obligations
The VRDP Certificate of Completion imposes the following ongoing obligations, which must be satisfied to maintain the Certificate's validity and the associated liability protection:
Engineering Controls. The impervious cap — consisting of the building slab, parking surfaces, sidewalks, and other impervious cover — must be maintained in good condition. The cap functions as the primary barrier to direct contact with residual contamination in underlying soils. Any breach of the cap, whether through cracking, deterioration, excavation, or any other means, compromises the protective function of the engineering control and must be reported to WV DEP and repaired. The repair must be conducted in a manner that restores the cap's integrity and must be completed in accordance with WV DEP's requirements, which may include the submission of a repair plan and post-repair verification.
Institutional Controls. The Deed Restriction recorded at the Hancock County Clerk's Office must remain in effect for as long as residual contamination remains in place. Any modification, subordination, or removal of the Deed Restriction requires prior written approval from WV DEP. The Deed Restriction serves as the primary institutional control, ensuring that the Property's use remains consistent with the risk-based cleanup standards (i.e., commercial/industrial use only) and that the engineering controls are maintained.
Periodic Reporting. The property owner or its designee is required to submit periodic certifications to WV DEP confirming the integrity and functioning of the engineering controls. These certifications typically include a visual inspection of the cap and impervious surfaces, documentation of any cracks, deterioration, or damage, and a statement by a qualified professional confirming that the engineering controls remain protective. The frequency and format of the periodic certifications are determined by the specific conditions of the Certificate of Completion; based on standard VRDP practice, annual or biennial certification is typical.
WV DEP Access. WV DEP retains the right to enter the Property at reasonable times, upon reasonable notice, for the purpose of inspecting and monitoring the engineering controls, conducting environmental sampling if warranted, and confirming compliance with the Certificate of Completion and the Deed Restriction. The property owner — and, by extension, any tenant or occupant — is obligated to cooperate with WV DEP inspections and to provide access as requested.
Notification of Transfer. The property owner must notify WV DEP of any sale, transfer, or change in occupancy of the Property. The notification must be provided prior to or contemporaneously with the transfer and must include disclosure of the Deed Restriction and the VRDP Certificate of Completion to the prospective purchaser, lessee, or other transferee. This notification requirement is significant in the context of the Transaction: although the Transaction is a stock acquisition (not a property transfer), the change in the ultimate beneficial ownership of the tenant entity may arguably trigger the notification requirement, particularly if WV DEP interprets "change in occupancy" broadly. We recommend confirming with WV DEP whether the Transaction triggers this notification requirement, or alternatively, confirming that NPRC provided the required notification when ACC initially commenced occupancy in 2018.
D. Risk That VRDP Obligations Transfer to Tenant/Occupant
While the VRDP Certificate of Completion and the Deed Restriction are primarily obligations of the property owner — NPRC — certain practical responsibilities may fall on the tenant or occupant of the Property, both as a matter of regulatory practice and as a matter of contractual interpretation.
First, the tenant, as the party exercising day-to-day operational control over the facility, is the party most likely to cause damage to the engineering cap. Forklift operations, truck traffic, loading dock activities, and routine facility maintenance all involve the potential for impacts to paved surfaces and the building slab. If the tenant causes damage to the cap, the tenant may be directly responsible for the resulting environmental consequences, irrespective of the Lease allocation, under applicable environmental laws.
Second, the general compliance-with-law covenant in Section 8.3 of the Lease, if construed broadly, may be interpreted to require the tenant to maintain the engineering controls during its occupancy. While this interpretation is not certain, it is plausible, and a court or regulatory agency could rely on it to impose maintenance obligations on the tenant.
Third, WV DEP may look to the occupant of the Property, in addition to the property owner, for cooperation with inspections, access requests, and compliance monitoring. As a practical matter, WV DEP inspectors will interact with on-site personnel — ACC's employees — rather than with NPRC's management, and WV DEP may expect the occupant to facilitate inspections and to report any observed damage to the engineering controls.
Fourth, and most significantly, in a worst-case scenario — if the cap is breached and residual contamination migrates or is released to the surface environment, to stormwater, or to groundwater — both the property owner and the tenant/occupant could face liability under applicable environmental laws, including the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et seq., and its West Virginia analogs. CERCLA liability is strict, joint, and several, and attaches to broad categories of "responsible parties," including current owners and operators of a facility where hazardous substances have been released. A tenant exercising operational control over a contaminated property may qualify as an "operator" under CERCLA, exposing it to direct federal environmental liability regardless of the Lease's allocation of environmental obligations.
The absence of any environmental indemnity from NPRC to ACC in the Lease means that ACC — and, post-closing, Crestline through its ownership of ACC — has no contractual recourse against NPRC for environmental costs arising from pre-existing conditions beneath the cap. This gap is significant and should be addressed through the mechanisms recommended in Section VI below.
VI. Risk Assessment and Recommendations
A. Overall Risk Rating
Based on the foregoing analysis, we assign an overall environmental risk rating of low to moderate to the Weirton Facility. This rating reflects the following considerations:
• The Property is a remediated brownfield with a valid VRDP Certificate of Completion issued by WV DEP in September 2015. The Certificate is currently in good standing, and no information has come to our attention suggesting that WV DEP has initiated any action to reopen, modify, or revoke the Certificate.
• The engineering controls (impervious cap) are intact and functioning as designed, based on the observations documented in TerraVerde's Phase I ESA. The institutional controls (Deed Restriction) are recorded and in effect.
• The Phase I ESA identified no RECs at the Property. The single CREC — the VRDP site with ongoing controls — is an inherent feature of the Property's brownfield status and is appropriately managed through the existing engineering and institutional controls.
• The de minimis hydraulic fluid stain identified in the Phase I ESA does not represent a material environmental risk and can be addressed through routine housekeeping measures.
• ACC's operations at the Weirton Facility are limited to finished goods storage and distribution, with no manufacturing, no hazardous waste generation, and no processes that would be expected to create new environmental conditions.
• The primary risks are contractual, not physical — the silence of the Lease on environmental obligations creates ambiguity that could expose Crestline (through ACC) to unexpected costs or liabilities in the event of engineering control failure, WV DEP regulatory action, or discovery of previously unknown contamination.
B. Recommendations
1. SPA Environmental Representations
The draft Stock Purchase Agreement (Article IV, Section 4.18 — Environmental Matters) should include specific representations and warranties from the Sellers regarding the Weirton Facility's environmental status. The following representations should be included:
(a) The existence and validity of the VRDP Certificate of Completion dated September 2015, and confirmation that the Certificate has not been reopened, modified, revoked, or challenged by WV DEP or any other governmental authority;
(b) Compliance with all conditions of the VRDP Certificate of Completion and the Deed Restriction during the period of ACC's occupancy of the Property, including maintenance of engineering controls and submission of all required periodic certifications to WV DEP;
(c) No receipt of notice from WV DEP or any other governmental authority of any actual or threatened violation of the VRDP Certificate of Completion or the Deed Restriction, or any proposed reopening, modification, or revocation of the Certificate;
(d) No damage to, breach of, or compromise of the engineering controls (impervious cap) during ACC's tenancy at the Property, and no knowledge of any such damage, breach, or compromise;
(e) Disclosure of all correspondence between ACC, NPRC, or their respective agents and WV DEP regarding the Weirton Property, the VRDP Certificate, or the Deed Restriction; and
(f) Confirmation that, to Sellers' knowledge, NPRC has complied with all transfer notification and disclosure requirements under the VRDP Certificate and the Deed Restriction.
These representations should survive closing for a period consistent with the general survival period for environmental representations in the SPA (currently proposed at three years, subject to ongoing negotiation with Seller's counsel).
2. Environmental Indemnification
The environmental indemnification provisions in the SPA should expressly cover costs arising from the following Weirton-specific scenarios:
(a) A reopening or revocation of the VRDP Certificate of Completion, to the extent attributable to pre-closing conditions, Seller's acts or omissions, or any fraud or misrepresentation in the original VRDP application;
(b) Failure of engineering or institutional controls, to the extent attributable to pre-closing conditions or Seller's acts or omissions during the pre-closing period;
(c) discovery of previously unknown contamination at the Property not addressed by the VRDP remediation, to the extent such contamination arose from conditions existing prior to the closing; and
(d) Any claim, demand, or enforcement action by WV DEP or any third party related to pre-existing contamination at the Property.
These indemnification obligations should be included within the scope of the environmental liability estimates feeding into the $4.0 million proposed environmental escrow that is currently under discussion with Seller's counsel. We note that the Weirton-specific estimated cost contribution to the environmental escrow is relatively low — the CREC is managed, no remediation is currently required, and no RECs were identified. However, the contingent nature of the VRDP obligations warrants inclusion in the aggregate environmental risk pool, and we recommend maintaining a modest contingency allocation within the escrow to address the possibility of Certificate reopening or engineering control failure at the Weirton Facility.
3. Lease Amendment or Side Letter
We recommend that Crestline negotiate a lease amendment or, alternatively, a standalone side letter agreement with NPRC (Susan Delvecchio, President) to clarify the allocation of environmental obligations under the Lease. The amendment or side letter should address the following:
(a) Allocation of Engineering Control Maintenance. The amendment should expressly allocate the obligation to maintain the VRDP engineering controls (impervious cap, including building slab, parking surfaces, and other impervious cover) to the landlord, as the property owner and the party to whom the VRDP Certificate was issued. The landlord should be required to maintain the engineering controls in good condition and repair, to conduct periodic inspections, and to bear the cost of any repair or replacement of the cap, except to the extent that damage is directly caused by the tenant's negligent or willful acts.
(b) Environmental Indemnification. The landlord should indemnify the tenant against environmental costs, liabilities, and claims arising from pre-existing contamination at the Property — that is, contamination that existed prior to the construction of the warehouse in 2016 and that is the subject of the VRDP remediation. This indemnification should cover investigation costs, remediation costs, third-party claims, government response costs, fines and penalties, and associated legal fees, to the extent arising from pre-existing contamination and not from the tenant's own operations.
(c) Scope of Compliance-with-Law Covenant. The amendment should clarify that the tenant's compliance-with-law obligation under Section 8.3 of the Lease does not extend to the costs of remediating pre-existing contamination or repairing engineering controls absent damage caused by the tenant's negligent or willful acts. The tenant's environmental obligations should be limited to compliance with environmental laws applicable to the tenant's own operations at the facility (e.g., proper storage and handling of materials, waste disposal, spill response, and reporting).
(d) Information Sharing. The landlord should be required to provide the tenant with copies of all WV DEP correspondence, inspection reports, periodic certification submissions, and other documents related to the VRDP Certificate and the Deed Restriction, promptly upon receipt or submission. The landlord should also notify the tenant promptly of any WV DEP inspection, inquiry, enforcement action, or proposed modification of the Certificate or Deed Restriction.
(e) Cooperation with Inspections. The amendment should establish a protocol for WV DEP inspections of the Property, requiring the landlord to provide advance notice to the tenant and requiring the tenant to cooperate with inspections and to provide access to the premises as necessary.
We recommend that the obligation to cooperate in obtaining this lease amendment or side letter be included as a Seller covenant or condition in the SPA, with the Sellers required to use commercially reasonable efforts to negotiate and execute the amendment prior to or concurrently with closing. If the amendment cannot be obtained prior to closing, the SPA should require the Sellers to cooperate in obtaining it post-closing, and the environmental indemnification provisions in the SPA should be structured to provide Crestline with adequate protection in the interim.
4. Due Diligence Follow-Up Items
The following documents and information have been requested, or should be requested, from Seller's counsel (Hargrove, Dalton & Speer LLP, Attention: Franklin Speer and Megan Trask) in connection with the Weirton Facility:
(a) All correspondence between ACC, NPRC, or their respective agents and WV DEP regarding the VRDP Certificate of Completion since its issuance in September 2015, including but not limited to inspection reports, notices, inquiries, and enforcement-related communications;
(b) All periodic engineering control certification reports submitted to WV DEP since the issuance of the VRDP Certificate, including the most recent certification, to confirm that periodic reporting obligations are current;
(c) Any notice of change in occupancy, transfer, or other notification submitted to WV DEP in connection with ACC's commencement of occupancy at the Weirton Facility in 2018, or at any time thereafter;
(d) The complete VRDP application file and remediation records for the Property, including the Voluntary Remediation Agreement, remediation work plans, investigation reports, sampling data, risk assessments, and the final remediation report submitted to WV DEP in support of the Certificate of Completion. These records are needed to assess the nature, extent, and location of residual contamination beneath the cap and to evaluate the adequacy of the remediation and the likelihood of Certificate reopening.
In addition, we recommend that the transaction team confirm directly with NPRC, or through Seller's counsel, that: (i) all periodic engineering control certifications are current and have been timely submitted to WV DEP; (ii) no WV DEP enforcement actions, inspections, or inquiries are pending or anticipated with respect to the Property; and (iii) NPRC has no knowledge of any damage to or compromise of the engineering controls that has not been previously disclosed.
5. Phase II Investigation — Not Recommended
Consistent with TerraVerde's recommendation in the Phase I ESA and the analysis in the Phase I ESA Review Memorandum — Weirton prepared by Rafael Dominguez, we do not recommend a Phase II subsurface investigation at the Weirton Facility at this time. This recommendation is based on the following considerations:
• The engineering cap is intact and functioning as designed, and there is no indication of a release of contamination to the surface environment.
• The VRDP Certificate of Completion is in good standing, and the existing engineering and institutional controls appear adequate to manage the residual contamination beneath the cap.
• The Deed Restriction expressly prohibits excavation or disturbance of the cap without prior WV DEP approval. Conducting a Phase II subsurface investigation — which would involve soil borings, test pits, or other intrusive sampling techniques — would necessarily penetrate the cap and would require both landlord consent (under the Lease) and WV DEP approval (under the Deed Restriction). Disturbing the cap without authorization could jeopardize the VRDP Certificate and expose the parties to regulatory consequences.
• The risk of creating new exposure pathways by penetrating the cap outweighs the incremental informational value of subsurface data, particularly given the existing VRDP remediation records (which we have requested and which should document the nature and extent of residual contamination).
• No RECs were identified that would warrant further investigation.
We note that a draft landlord consent letter for the Weirton Facility was prepared by our office in anticipation of a potential Phase II investigation, but the letter was not sent in light of the determ

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