1006-00003 · Crestline Packaging Solutions LLC · Diligence/Phase I Reviews

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PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP ATTORNEYS AT LAW

INTERNAL MEMORANDUM

TO: Beatrice Holloway, Partner Harrison Caldwell, Of Counsel

FROM: Grace Nakamura, Associate

DATE: August 25, 2022

RE: Review of Phase I Environmental Site Assessment — Charleroi Specialty Coatings Plant, 450 Industrial Park Road, Charleroi, PA 15022 (Allegheny Chemical Coatings, Inc.)

MATTER NO.: 1006-00003

This memorandum is a privileged and confidential attorney work product prepared in anticipation of litigation and in connection with the rendering of legal advice to our client, Crestline Packaging Solutions LLC. This memorandum is not intended for distribution beyond the individuals identified in the Distribution section herein and should not be disclosed to any third party without the prior written approval of the Responsible Partner.

I. Executive Summary

This memorandum presents Calderwood & Harkness LLP's ("C&H" or the "Firm") review and analysis of the Phase I Environmental Site Assessment ("Phase I ESA") prepared by TerraVerde Environmental Consulting LLC ("TerraVerde") for the Charleroi Specialty Coatings Plant located at 450 Industrial Park Road, Charleroi, Washington County, Pennsylvania 15022 (the "Property" or the "Charleroi Facility"). The Phase I ESA is one of four facility-specific environmental assessments commissioned as part of the environmental due diligence program for the proposed acquisition described below.

The Phase I ESA was dated August 18, 2022, and was prepared in accordance with the ASTM E1527-21 standard, "Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process." The report was authored by Kevin O'Malley, P.G., Project Manager, under the supervision of Dr. Nina Sorensen, P.E., CHMM, Principal-in-Charge at TerraVerde. Mr. O'Malley is a Pennsylvania-licensed Professional Geologist, and Dr. Sorensen holds both a Professional Engineer license in the Commonwealth of Pennsylvania and a Certified Hazardous Materials Manager credential. Both professionals have executed appropriate declarations regarding their qualifications and independence, which are appended to the Phase I ESA report.

The Phase I ESA was conducted as part of the comprehensive environmental due diligence undertaken in connection with the proposed acquisition by Crestline Packaging Solutions LLC ("Crestline" or "CPS") of one hundred percent (100%) of the outstanding common stock of Allegheny Chemical Coatings, Inc. ("ACC" or the "Target") at a proposed purchase price of Ninety-Four Million Five Hundred Thousand Dollars ($94,500,000.00) (the "Transaction"). The Transaction is structured as a stock purchase and is expected to close in the fourth quarter of 2022, subject to the satisfaction of customary conditions, including environmental due diligence.

Conclusion: TerraVerde identified no Recognized Environmental Conditions ("RECs"), no Controlled Recognized Environmental Conditions ("CRECs"), and no Historical Recognized Environmental Conditions ("HRECs") at the Charleroi Facility. No de minimis conditions or business environmental risks beyond the scope of the ASTM standard were noted. The site presents a low environmental risk profile. C&H concurs with TerraVerde's conclusions and finds the Phase I ESA to be thorough, methodologically sound, and compliant with applicable standards.

Recommendation: Based upon our review of the Phase I ESA and the considerations set forth in this memorandum, no Phase II Environmental Site Assessment is recommended for the Charleroi Facility. No further environmental investigation of any kind is warranted for this property at this time. The Charleroi Facility does not contribute to the estimated environmental liability exposure across the ACC portfolio of operating facilities.

II. Purpose and Scope of Review

Calderwood & Harkness LLP was engaged by Crestline Packaging Solutions LLC to serve as outside counsel for the Transaction, with specific responsibility for, among other things, conducting environmental due diligence oversight in connection with the proposed acquisition of ACC. The engagement is governed by the Engagement Letter dated July 19, 2022, executed by James Prentice, Partner, on behalf of the Firm and accepted by Margaret Chen, General Counsel, on behalf of Crestline. All work product generated in connection with this engagement is tracked under Matter No. 1006-00003.

The scope of C&H's environmental due diligence mandate encompasses review and analysis of Phase I ESAs for all four ACC operating facilities, which are as follows:

1. McKeesport Main Plant (corporate headquarters and primary solvent-based manufacturing facility), McKeesport, Allegheny County, Pennsylvania;

2. Charleroi Specialty Coatings Plant (water-based and UV-curable coatings manufacturing), Charleroi, Washington County, Pennsylvania;

3. Clarksburg Resin Blending Facility (resin blending and intermediate chemical processing), Clarksburg, Harrison County, West Virginia; and

4. Weirton Warehouse & Distribution Center (finished goods warehousing and distribution), Weirton, Hancock County, West Virginia.

This memorandum addresses only the Charleroi Facility. Separate memoranda have been or will be prepared for each of the remaining three facilities, and a comprehensive environmental diligence summary memorandum will synthesize findings across all four sites for purposes of informing the Transaction structure, purchase price allocation, and negotiation of the environmental provisions in the definitive Stock Purchase Agreement.

The review was conducted by Grace Nakamura, Lead Associate in the Firm's Real Estate Practice Group, in coordination with Harrison Caldwell, Of Counsel in the Firm's Environmental and Land Use Practice Group, and under the overall direction of Beatrice Holloway, Responsible Partner in the Firm's Mergers and Acquisitions Practice Group. Mr. Caldwell provided substantive environmental regulatory expertise, particularly with respect to the evaluation of RCRA compliance status, Clean Air Act permitting, and the applicability of CERCLA liability protections. The undersigned bears primary responsibility for the analysis and recommendations set forth herein.

C&H's review of the Phase I ESA for the Charleroi Facility encompasses the following elements:

(i) Evaluation of the adequacy and completeness of TerraVerde's Phase I ESA methodology, including whether the assessment was conducted in conformity with the requirements of ASTM E1527-21 and the implementing regulations for "all appropriate inquiries" under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9601(35)(B), and 40 C.F.R. Part 312;

(ii) Assessment of whether TerraVerde's findings, conclusions, and opinions are consistent with the data presented in the Phase I ESA report and with the requirements of the ASTM standard;

(iii) Identification of any data gaps, limitations, or deficiencies in TerraVerde's information gathering or analysis that might affect the reliability of the Phase I ESA conclusions; and

(iv) Recommendations regarding the need for further environmental investigation, including whether a Phase II Environmental Site Assessment (subsurface investigation) or other supplemental assessment is warranted for the Charleroi Facility.

This memorandum does not constitute a comprehensive regulatory compliance audit of the Charleroi Facility. Separate RCRA Compliance Review and Clean Air Act Compliance Review memoranda are being prepared under separate cover by Harrison Caldwell and Rafael Dominguez, respectively, and should be consulted for detailed analysis of the Target's regulatory compliance posture at each facility.

III. Property Description

A. Location and Identification

The Charleroi Specialty Coatings Plant is located at 450 Industrial Park Road, Charleroi, Washington County, Pennsylvania 15022. The Property is situated within the Charleroi Industrial Park, a planned industrial development area located approximately two miles southeast of the Borough of Charleroi's central business district and approximately thirty miles south of Pittsburgh along the Monongahela River corridor.

The key identifying information for the Property is set forth below:

The Property is located in a mixed industrial and agricultural area. Adjoining properties include light industrial facilities to the north and east (within the Charleroi Industrial Park), undeveloped wooded land to the south, and agricultural parcels to the west. The Monongahela River is located approximately 1.5 miles to the northwest of the Property. Topography at the site is generally flat to gently sloping, with an elevation of approximately 1,020 feet above mean sea level. The property is not located within a FEMA-designated 100-year floodplain.

B. Improvements. The Property is improved with a modern industrial facility comprising the following principal structures:

• Manufacturing Building: Approximately 92,000 square feet of enclosed manufacturing space, consisting of a single-story, pre-engineered steel-frame structure on a concrete slab-on-grade foundation. The manufacturing building houses coating production lines, raw material storage areas, mixing and batching operations, quality control testing stations, packaging lines, and finished product staging areas.

• Office and Laboratory Wing: Approximately 4,500 square feet of attached office and laboratory space, located at the north end of the manufacturing building. This wing includes administrative offices, a technical laboratory for quality control and product development, employee break rooms, and restroom facilities.

• Ancillary Improvements: The Property also includes paved parking areas (approximately 60 spaces), paved truck loading and unloading docks (four bays), an enclosed waste storage shed (approximately 400 square feet), an on-site stormwater detention basin, and perimeter fencing with gated access.

The facility was constructed in 2003 by ACC as a purpose-built specialty coatings manufacturing plant. All structures on the Property were constructed new at that time; there are no pre-existing structures or remnants of prior improvements on the site. Building construction materials are consistent with post-2000 commercial and industrial practices, and the facility was designed and built in compliance with then-current building codes, environmental regulations, and industry standards for chemical manufacturing operations.

C. Current Operations

The Charleroi Facility is dedicated to the manufacturing of water-based and ultraviolet-curable ("UV-curable") specialty coatings for industrial and packaging applications. The facility operates on a two-shift basis, Monday through Friday, with occasional weekend production runs. Approximately 85 employees work at the Charleroi Facility.

The principal chemical feedstocks and materials used on-site include acrylate monomers and oligomers, water-based acrylic and polyurethane resins, photoinitiators for UV-curing applications, pigment dispersions, surfactants, defoamers, and minor quantities of isocyanate-based crosslinkers used in two-component coating systems. The facility does not utilize chlorinated solvents, and its operations are distinct from the solvent-based coating manufacturing conducted at the McKeesport Main Plant. Because the Charleroi Facility processes primarily non-solvent-based and water-reducible formulations, its environmental risk profile is significantly lower than that of the McKeesport facility, which relies extensively on volatile organic solvents including toluene, xylene, methyl ethyl ketone, and methyl isobutyl ketone.

Hazardous waste generation at the Charleroi Facility is limited and consists primarily of off-specification product, residual coating materials, and cleaning solvents from equipment maintenance. The facility operates as a Small Quantity Generator under RCRA, generating between 220 and 2,200 pounds of hazardous waste per calendar month on average.

D. Ownership. The Property is owned in fee simple by Allegheny Chemical Coatings, Inc. ACC acquired the parcel as raw, undeveloped agricultural land in 2003 from Fallowfield Farm Associates, a Pennsylvania general partnership, pursuant to a deed recorded in the Washington County Recorder of Deeds Office at Deed Book Volume 4218, Page 331 (recorded April 14, 2003). At the time of acquisition, the parcel was unimproved and had been used exclusively for crop farming. ACC developed the Property and constructed the current facility during 2003, with manufacturing operations commencing in early 2004.

No prior owners of the Property conducted industrial, commercial, or waste disposal operations on the site. The chain of title, as reviewed by TerraVerde through publicly available records and confirmed through C&H's independent title search, reflects agricultural ownership and use extending back through the period covered by available records. There are no environmental liens, activity and use limitations, or institutional controls recorded against the Property.

IV. Summary of TerraVerde Phase I ESA Findings

A. Methodology. TerraVerde conducted the Phase I ESA for the Charleroi Facility in accordance with ASTM E1527-21, "Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process," which is the current edition of the standard and is consistent with the regulatory requirements for "all appropriate inquiries" under CERCLA Section 101(35)(B) and the implementing regulations at 40 C.F.R. Part 312. The assessment was initiated on August 1, 2022, with site reconnaissance conducted on August 16, 2022, and the final report issued on August 18, 2022.

The assessment comprised the following principal components:

Records Review. TerraVerde conducted a comprehensive review of reasonably ascertainable federal, state, tribal, and local environmental records within the search radii prescribed by ASTM E1527-21 and 40 C.F.R. § 312.26. The database search was performed by Penrose Solutions ("EDR"), an industry-standard database vendor, through its Radius Map Report with GeoCheck service (EDR Report No. 6741928.2s, dated August 4, 2022). The database search covered all standard federal and state databases required by ASTM E1527-21, including but not limited to the National Priorities List (NPL), CERCLIS/SEMS, RCRA CORRACTS, RCRA TSD, RCRA Generators, ERNS, state hazardous waste databases, state landfill and solid waste databases, UST and LUST registries, brownfield inventories, state voluntary cleanup program lists, and institutional and engineering control registries.

Historical Sources Review. TerraVerde reviewed available historical sources to evaluate the prior uses of the Property and surrounding area. Sources consulted included historical aerial photographs from 1951, 1958, 1967, 1971, 1980, 1990, 1994, 2002, 2006, 2010, 2015, and 2020 (obtained through EDR and the Penn Pilot historical aerial photograph program); USGS topographic maps from 1905, 1932, 1951, 1969, 1979, and 1993; Trelwick fire insurance maps (searched but not available for this area); city and telephone directory listings (reviewed for the period 1960–present); and local building permit and land use records obtained from Fallowfield Township and the Charleroi Industrial Park Authority.

Site Reconnaissance. A physical inspection of the Property and its immediate surroundings was conducted by Kevin O'Malley, P.G., on August 16, 2022. The site reconnaissance included an inspection of all accessible interior and exterior areas of the facility, observation of chemical storage and handling areas, review of waste management practices, inspection of the perimeter of the Property, and observation of adjoining properties from the Property boundary and from public rights-of-way. Weather conditions during the inspection were clear with temperatures in the mid-70s°F, and all areas of the Property were accessible.

Interviews. TerraVerde conducted interviews with the following individuals knowledgeable about the Property and its operations:

• Carl Johannsen, Environmental Health and Safety ("EHS") Manager, ACC (on-site, August 16, 2022);

• Diane Pulaski, Vice President of Operations, ACC (by telephone, August 15, 2022);

• Thomas Wendt, former Plant Manager, Charleroi Facility (2004–2018) (by telephone, August 12, 2022); and

• Charleroi Industrial Park Authority (written inquiry, response received August 10, 2022).

Evaluation of Adjoining Properties. TerraVerde evaluated properties adjoining the Charleroi Facility for potential environmental concerns that could affect the subject property, through both the EDR database search and visual observation during the site reconnaissance.

B. Environmental Records Review

TerraVerde's review of federal and state environmental databases yielded the following results with respect to the Charleroi Facility:

Federal and State Database Searches. The Charleroi Facility does not appear on any federal or state hazardous waste, contamination, cleanup, or enforcement lists within the applicable ASTM E1527-21 search radii. Specifically, the Property was not identified on the following databases: the National Priorities List (NPL); CERCLIS/SEMS (Superfund Enterprise Management System); RCRA CORRACTS (Corrective Action facilities); RCRA TSD (Treatment, Storage, and Disposal facilities); the Emergency Response Notification System (ERNS); the Pennsylvania Priority List of Hazardous Sites; the Pennsylvania Hazardous Sites Cleanup Act List; the UST and LUST (Leaking Underground Storage Tank) databases maintained by the Pennsylvania Department of Environmental Protection ("PA DEP"); the Pennsylvania brownfield or Act 2 Land Recycling Program inventories; or any other state equivalent lists searched by EDR.

EPA Identification. The Charleroi Facility holds EPA Identification Number PAD-112-583-667, under which it is registered as a Small Quantity Generator ("SQG") of hazardous waste pursuant to the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. §§ 6901–6992k. The facility's SQG status is reflected in the RCRA Generators database maintained by the U.S. Environmental Protection Agency ("EPA"). No violations, enforcement actions, compliance orders, consent agreements, or other regulatory actions were identified in association with this EPA ID number in the database search. The facility's RCRA compliance history, as reflected in the EPA's RCRAInfo database, is clean.

Adjoining and Nearby Properties. No adjoining or nearby properties were identified in the database search as presenting environmental concerns to the Charleroi Facility. There are no NPL sites within the one-mile ASTM search radius, no RCRA CORRACTS or TSD facilities within the one-mile radius, no LUST sites within the half-mile radius, and no state-listed contaminated sites within the applicable search distances that would present a potential for upgradient or cross-gradient migration of contamination toward the Property. The nearest listed environmental site identified in the EDR report is a closed LUST facility located approximately 0.8 miles to the northwest (a former gasoline station), which is listed as having received a closure determination from PA DEP in 2015 and does not present a concern to the Charleroi Facility given the distance, topographic position, and inferred groundwater flow direction.

C. Historical Use Review

TerraVerde's review of historical sources provided a comprehensive picture of the Property's prior uses:

Pre-2003 (Agricultural Use). The Property was used exclusively as agricultural land, specifically for crop farming, throughout the entire period covered by available historical records. Historical aerial photographs from 1951 through 2002 consistently depict the Property as open farmland with cultivated fields. No structures, buildings, or improvements of any kind are visible on the Property in aerial photographs predating 2003. There is no evidence in any historical source of dumping, filling, excavation, waste disposal, or any industrial or commercial activity on the Property prior to its acquisition by ACC. The topographic maps reviewed corroborate the agricultural characterization of the Property and surrounding area throughout the twentieth century.

Trelwick Fire Insurance Maps. No Trelwick fire insurance maps were available for the area encompassing the Property. This absence is consistent with the rural and suburban character of the Property's location and the lack of prior industrial or dense commercial development in the immediate vicinity. TerraVerde appropriately noted this as a non-issue rather than a data gap, given the clear and consistent evidence from aerial photographs and other sources confirming the Property's agricultural history.

2003 to Present (ACC Ownership and Operations). ACC purchased the raw agricultural parcel in 2003 and commenced construction of the current specialty coatings manufacturing facility that same year. The 2006 aerial photograph, the earliest post-construction photograph reviewed, shows the completed facility in substantially its current configuration. The Property has been used continuously for water-based and UV-curable coatings manufacturing since operations commenced in early 2004. No changes in use, expansions involving environmental concern, or modifications to the facility's environmental profile are documented in the historical record since construction.

TerraVerde concluded that the Property is a greenfield development with no historical industrial use prior to ACC's operations, and C&H concurs with this conclusion. The absence of prior industrial, commercial, or waste disposal activity on the Property significantly reduces the likelihood of pre-existing soil or groundwater contamination and is a material factor in the overall low-risk assessment of this facility.

D. Site Reconnaissance Observations

Kevin O'Malley's site reconnaissance on August 16, 2022, yielded the following observations:

General Facility Condition. Buildings and grounds were observed to be in good to excellent condition. The manufacturing building, office wing, and ancillary structures appeared well-maintained, with no evidence of deferred maintenance, structural deterioration, or neglect. Paved surfaces, including parking areas and truck aprons, were in good condition with no significant cracking, staining, or deterioration. Landscaping and grounds maintenance appeared current and adequate.

Surface and Subsurface Indicators. No evidence of stressed vegetation, stained soil, surface discoloration, or unusual odors was observed anywhere on the Property. No evidence of surface impoundments, lagoons, pits, ponds, or other surface features associated with waste disposal or chemical release was observed. The stormwater detention basin in the southeastern portion of the Property appeared to be functioning as designed, with no evidence of oily sheen, discoloration, or contamination.

Underground and Aboveground Storage. No underground storage tanks ("USTs") are present on the Property, and no evidence of former USTs — such as vent pipes, fill ports, concrete pads, or tank excavation scarring — was observed during the site reconnaissance. ACC personnel confirmed during interviews that no USTs have ever been installed on the Property. Aboveground chemical storage was observed in appropriate secondary containment systems, including chemical tote storage on spill-containment pallets and bulk liquid storage tanks within curbed containment areas with adequate capacity. All observed containment systems appeared intact and in good condition.

Waste Management. The enclosed waste storage shed, located on the east side of the manufacturing building, was observed to be clean, organized, and in compliance with applicable SQG requirements. Waste containers were properly labeled, closed, and in good condition. Accumulation start dates were posted and within regulatory timeframes. No evidence of leakage, spillage, or improper waste management practices was observed.

Building Materials. Given that the facility was constructed in 2003, well after the regulatory phase-out periods for asbestos-containing building materials (generally pre-1980s) and lead-based paint (residential properties constructed before 1978), no suspect asbestos-containing materials or lead-based paint were observed or are expected to be present in the facility. TerraVerde's visual assessment during the site reconnaissance confirmed the absence of materials commonly associated with asbestos or lead-based paint. Additionally, no PCB-containing electrical equipment (such as older-vintage transformers or capacitors) was identified on the Property; all observed electrical equipment appeared to be of modern manufacture.

Floor Drains and Discharge Points. Manufacturing area floor drains were observed to be connected to appropriate collection and treatment systems. No floor drains were identified as being connected to storm sewers or sanitary sewers without proper permitting and pretreatment. Stormwater discharge is managed through the facility's stormwater management system and detention basin under general permit coverage.

E. Vapor Intrusion Screening

TerraVerde assessed the potential for vapor intrusion at the Charleroi Facility in accordance with the guidance provided in ASTM E1527-21 and determined that no vapor intrusion concern exists at the Property. This determination was based on the following factors:

• No historical use of chlorinated solvents or other volatile organic compounds known to present vapor intrusion risks has occurred at the Property. The facility's operations involve primarily water-based and UV-curable coatings, and chlorinated solvents such as trichloroethylene ("TCE"), perchloroethylene ("PCE"), and related compounds have never been used or stored at the Charleroi Facility.

• No subsurface contamination sources, including soil contamination or contaminated groundwater plumes, were identified on-site or from adjoining or nearby properties that could serve as a source for vapor intrusion into the facility's buildings.

• No nearby dry cleaners, degreasing operations, or other facilities with known chlorinated solvent use were identified within the applicable search area.

TerraVerde concluded that the vapor intrusion pathway assessment was not applicable to the Charleroi Facility and that no vapor intrusion concern was identified. C&H concurs with this determination.

F. Findings — RECs, CRECs, HRECs

The central conclusions of TerraVerde's Phase I ESA for the Charleroi Facility are as follows:

Recognized Environmental Conditions (RECs): None identified. A REC is defined under ASTM E1527-21 as the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property: (1) due to a release to the environment; (2) under conditions indicative of a release to the environment; or (3) under conditions that pose a material threat of a future release to the environment. TerraVerde found no conditions at the Charleroi Facility meeting any element of this definition.

Controlled Recognized Environmental Conditions (CRECs): None identified. A CREC is defined as a REC 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 required controls. No such conditions exist at the Property.

Historical Recognized Environmental Conditions (HRECs): None identified. An HREC is defined as a past release of hazardous substances or petroleum products that has occurred in connection with the property and has been addressed to the satisfaction of the applicable regulatory authority or meeting unrestricted use criteria without subjecting the property to required controls. No historical releases have been documented at the Property.

De Minimis Conditions: None noted by TerraVerde. No conditions were observed that, while not rising to the level of a REC, warranted notation as de minimis environmental concerns.

Business Environmental Risks: TerraVerde did not identify any business environmental risks beyond the scope of the ASTM standard. While the ASTM standard does not require evaluation of business environmental risks (such as regulatory compliance status, potential future regulatory changes, or operational liability), TerraVerde noted the absence of any such concerns as an additional observation. C&H notes that a full evaluation of regulatory compliance and business environmental risks is being conducted separately as part of the broader environmental due diligence program for the Transaction.

V. Regulatory Compliance Observations

While a comprehensive regulatory compliance review is being conducted separately for each ACC facility — and the results of those reviews will be set forth in the RCRA Compliance Review Memorandum and Clean Air Act Compliance Review Memorandum, each under separate cover and authored by Harrison Caldwell and Rafael Dominguez, respectively — the Phase I ESA for the Charleroi Facility corroborates the following regulatory compliance data points that are relevant to the environmental risk assessment:

RCRA Status. The Charleroi Facility holds EPA Identification Number PAD-112-583-667 and is classified as a Small Quantity Generator ("SQG") of hazardous waste under 40 C.F.R. § 262.16. SQG status reflects the facility's use of predominantly water-based coating formulations, which generate comparatively limited volumes and lower toxicity of hazardous waste relative to solvent-based operations such as those conducted at the McKeesport Main Plant (classified as a Large Quantity Generator). The SQG classification imposes specific regulatory obligations regarding waste accumulation quantities and timeframes, container management, emergency preparedness, and reporting, but permits a less burdensome compliance framework than Large Quantity Generator status. As of the date of the Phase I ESA, no RCRA violations, enforcement actions, or compliance deficiencies were identified at the Charleroi Facility.

Air Permit Status. The Charleroi Facility operates under Pennsylvania Department of Environmental Protection State-Only Operating Permit No. 63-00982. The facility is classified as a minor source of air emissions under the Clean Air Act, meaning its potential emissions of criteria pollutants and hazardous air pollutants fall below the major source thresholds established by the applicable regulations. The facility is not subject to Title V operating permit requirements. TerraVerde's report indicates that the facility was compliant with the terms and conditions of its air operating permit as of the date of the Phase I ESA.

Water Discharge. No individual National Pollutant Discharge Elimination System ("NPDES") permit is held specifically for the Charleroi Facility. Stormwater discharges from the facility are managed through the site's engineered stormwater management system and detention basin under general permit coverage consistent with Pennsylvania's NPDES Stormwater Discharges Associated with Industrial Activity general permit (PAG-03). No process wastewater is discharged directly from the facility. The facility does not operate a wastewater treatment system; sanitary wastewater is directed to the municipal sanitary sewer system.

Spill and Release History. No history of spills, releases, or reportable quantity exceedances was identified at the Charleroi Facility in TerraVerde's records review or interviews. Carl Johannsen, ACC's EHS Manager, confirmed during his interview that no spill incidents requiring regulatory reporting have occurred at the Charleroi Facility since operations commenced in 2004. No records of emergency response notifications, spill cleanup activities, or contamination assessments were identified.

Enforcement and Regulatory Proceedings. No enforcement actions, consent orders, administrative orders, compliance schedules, notices of violation, or other regulatory proceedings involving the Charleroi Facility were identified in TerraVerde's database search, records review, or interviews with ACC personnel and regulatory authorities. The facility's compliance history is clean across all environmental media.

VI. C&H Assessment and Analysis

A. Adequacy of the Phase I ESA

C&H has reviewed the TerraVerde Phase I ESA for the Charleroi Facility and concludes that the assessment was conducted in accordance with ASTM E1527-21 and satisfies the requirements for "all appropriate inquiries" under CERCLA Section 101(35)(B) and the implementing regulations at 40 C.F.R. Part 312. This conclusion is based on the following evaluation:

Scope of Records Review. TerraVerde's records review encompassed all standard federal and state environmental databases required by ASTM E1527-21, Section 8.2, and was conducted using an established and reliable database vendor (EDR). The search radii employed were consistent with those specified in the ASTM standard. The records review was comprehensive and did not omit any required database or category of records.

Historical Research. TerraVerde's historical sources review was thorough and well-documented. The range of aerial photographs reviewed (1951 through 2020) provides adequate temporal coverage to evaluate the Property's historical uses throughout the relevant period. The absence of Trelwick fire insurance maps was appropriately addressed and does not constitute a data gap given the consistent and clear evidence from aerial photographs and other sources. Local records, including township building permits and industrial park authority documentation, were consulted as supplemental sources. The historical research provides a high degree of confidence in the determination that the Property was used exclusively for agriculture prior to ACC's development.

Site Reconnaissance. The site reconnaissance was conducted by a qualified environmental professional, was appropriately documented in the Phase I ESA report with narrative descriptions and supporting photographs, and covered all accessible areas of the Property and its immediate surroundings. The reconnaissance was conducted under favorable weather conditions and without access limitations.

Interviews. TerraVerde conducted interviews with appropriate individuals, including current and former facility management personnel and local government representatives, in accordance with ASTM E1527-21, Section 10. The interview responses were consistent with the findings from the records review, historical research, and site reconnaissance, and provided additional corroboration of the Property's clean environmental history and current compliance status.

Data Gaps. No data gaps or limitations were identified by TerraVerde in its Phase I ESA report, and C&H's independent review has not identified any data gaps or limitations that would affect the reliability of TerraVerde's conclusions. All required components of the ASTM standard were addressed, and the information obtained was sufficient to form opinions regarding the identification of RECs, CRECs, and HRECs at the Property.

B. Risk Assessment

The Charleroi Facility presents a low environmental risk profile. This assessment is based on the cumulative consideration of the following factors, each of which independently supports the low-risk conclusion and which, taken together, establish a high degree of confidence in the environmental condition of the Property:

(i) Greenfield Development. The Property was developed from raw agricultural land with no prior industrial, commercial, or waste disposal use. This eliminates the most common source of pre-existing contamination at industrial properties — namely, legacy contamination from prior owners or operators — and substantially reduces the likelihood of encountering unexpected environmental liabilities.

(ii) Modern Construction. The facility was constructed in 2003, incorporating modern environmental controls, containment systems, and building materials. Construction in the post-regulatory era means that the facility was designed and built in compliance with contemporary environmental standards, including secondary containment requirements, stormwater management regulations, and building material restrictions. The 2003 construction date also eliminates concerns regarding asbestos-containing materials, lead-based paint, and PCB-containing equipment, all of which are associated primarily with older facilities.

(iii) Low-Risk Manufacturing Operations. The Charleroi Facility's operations involve primarily water-based and UV-curable coatings, which generate significantly lower volumes and toxicity of hazardous waste compared to solvent-based coating operations. The absence of chlorinated solvents is particularly significant, as chlorinated solvent contamination is among the most prevalent and costly forms of industrial contamination in the United States and is frequently encountered at chemical manufacturing facilities with historical operations.

(iv) Favorable Regulatory Classification. The facility's SQG status under RCRA and its minor source status under the Clean Air Act reflect the relatively benign environmental profile of its operations. These classifications are consistent with the water-based focus of the Charleroi Facility's manufacturing processes and confirm that the facility does not generate large volumes of hazardous waste or significant air emissions.

(v) Absence of USTs, ACMs, LBP, and PCBs. No underground storage tanks have ever been present on the Property, eliminating a common source of soil and groundwater contamination. No asbestos-containing materials, lead-based paint, or PCB-containing equipment were identified, eliminating potential building material-related liabilities.

(vi) Clean Compliance History. The facility has no history of spills, releases, enforcement actions, or regulatory non-compliance of any kind. This clean track record, extending over nearly two decades of continuous operation, provides strong evidence that the facility's environmental management practices have been effective and that no undetected contamination is likely to have occurred.

(vii) No Adjoining Property Concerns. No adjoining or nearby properties present environmental concerns to the Charleroi Facility, and no potential for cross-boundary contamination migration was identified.

C. Comparison to Other ACC Facilities

To place the Charleroi Facility's environmental profile in proper context within the overall ACC portfolio, C&H has compared its Phase I ESA findings to those for the other three ACC operating facilities:

McKeesport Main Plant. The McKeesport Main Plant, ACC's corporate headquarters and primary solvent-based manufacturing facility, was identified with two RECs and one HREC in its Phase I ESA dated August 15, 2022. The RECs relate to (1) documented soil contamination associated with a former underground solvent storage tank area, and (2) the presence of residual contamination in groundwater beneath the facility from historical solvent releases. The HREC relates to a 1992 petroleum release that was remediated under PA DEP oversight and received a closure determination in 1997. A Phase II Environmental Site Assessment has been recommended and commenced for the McKeesport facility, and the results are expected to inform the environmental liability allocation in the Transaction.

Clarksburg Resin Blending Facility. The Clarksburg Resin Blending Facility was identified with one CREC and one REC in its Phase I ESA dated August 22, 2022. The CREC relates to legacy diesel fuel contamination from a former fuel oil UST that was remediated under West Virginia Department of Environmental Protection oversight, with residual contamination allowed to remain in place subject to institutional controls recorded against the property. The REC relates to observed staining and discoloration of soil and concrete in the outdoor drum storage area, suggesting a potential release of hazardous substances that has not been investigated. Phase II investigation has been recommended for the Clarksburg facility.

Weirton Warehouse & Distribution Center. The Weirton Warehouse was identified with one CREC in its Phase I ESA dated August 25, 2022. The CREC relates to the property's enrollment in the West Virginia Voluntary Remediation and Redevelopment Program ("VRDP") in connection with residual contamination from historical manufacturing operations conducted by a prior owner, with remediation completed and a Certificate of Completion issued subject to certain land use restrictions. No RECs were identified at the Weirton facility.

Comparative Summary. Of the four ACC operating facilities, the Charleroi Specialty Coatings Plant presents the cleanest environmental profile by a significant margin. It is the only facility in the ACC portfolio with no RECs, CRECs, or HRECs identified. The Charleroi Facility's superior environmental condition is attributable to its greenfield origin, its relatively modern construction, and its focus on lower-risk manufacturing processes. This comparative analysis is relevant to the allocation of environmental risk and liability across the ACC portfolio in the Transaction, as discussed in Section VII below.

VII. Implications for the Transaction

The Phase I ESA findings for the Charleroi Facility have the following implications for the proposed acquisition of ACC by Crestline:

Environmental Liability Exposure. The Charleroi Facility does not contribute to the environmental liability exposure in the proposed acquisition. The estimated environmental liability range of $1,925,000 (low-end estimate) to $4,345,000 (high-end estimate) across all ACC facilities — as developed by C&H in coordination with TerraVerde and reflected in the Environmental Diligence Status Tracker — is attributable entirely to the McKeesport, Clarksburg, and Weirton facilities. No remediation costs, compliance costs, or other environmental liabilities are attributed to the Charleroi Facility. This allocation is consistent with the facility's clean Phase I ESA, its clean compliance history, and the absence of any identified conditions that would require remediation or corrective action.

Transaction Protections. No environmental escrow, specific indemnification, or insurance allocation is required with respect to the Charleroi Facility specifically. The environmental provisions being negotiated in the Stock Purchase Agreement — including the environmental escrow of $2.5 million, the special indemnification for known environmental conditions, and the Pollution Legal Liability insurance policy — are designed to address the environmental risks identified at the McKeesport, Clarksburg, and Weirton facilities. The Charleroi Facility does not require facility-specific protections beyond the standard environmental representations, warranties, and indemnification provisions that will apply to all ACC-owned properties under the definitive agreement.

Lender Requirements. The Phase I ESA findings for the Charleroi Facility satisfy the environmental diligence condition imposed by Commonwealth National Bank, N.A. in its commitment letter dated July 8, 2022, which provides senior secured financing for the Transaction. The commitment letter requires Phase I ESAs on all Target real property, with no unaddressed Recognized Environmental Conditions at any facility. The Charleroi Phase I ESA satisfies this requirement, as no RECs were identified. No additional environmental investigation or remediation is required to satisfy the lender's environmental diligence condition with respect to this facility.

Stock Purchase Agreement. No additional representations, warranties, or disclosure schedule items are anticipated for the Charleroi Facility beyond the standard environmental representations set forth in Article IV, Section 4.18 of the draft Stock Purchase Agreement. The environmental disclosure schedule (Schedule 4.18) will include facility-specific disclosures for the McKeesport, Clarksburg, and Weirton facilities but is not expected to require any entries relating to the Charleroi Facility. The standard environmental representation — that the Target is in material compliance with all Environmental Laws with respect to the Property and that there are no pending or threatened Environmental Claims relating to the Property — can be made without qualification as to the Charleroi Facility based on the findings of the Phase I ESA and C&H's review thereof.

CERCLA Liability Protection. The completion of a Phase I ESA meeting ASTM E1527-21 and "all appropriate inquiries" standards is a prerequisite for Crestline's ability to assert the innocent landowner, contiguous property owner, or bona fide prospective purchaser defenses under CERCLA in the event that contamination is subsequently discovered at the Property. While C&H does not believe any such contamination is likely to exist at the Charleroi Facility, the completion of a conforming Phase I ESA preserves Crestline's CERCLA defenses as a matter of prudent transactional practice.

VIII. Recommendation

Based on our comprehensive review of TerraVerde's Phase I Environmental Site Assessment for the Charleroi Specialty Coatings Plant, and the analysis set forth in this memorandum, C&H makes the following recommendations:

No Phase II Environmental Site Assessment is recommended for the Charleroi Facility. The complete absence of Recognized Environmental Conditions, Controlled Recognized Environmental Conditions, and Historical Recognized Environmental Conditions — combined with the Property's greenfield history, modern construction, low-risk manufacturing operations, and unblemished compliance record — does not warrant subsurface investigation or any form of intrusive environmental sampling at this property. A Phase II ESA at the Charleroi Facility would impose unnecessary costs and delays without a reasonable basis for expecting it to yield information material to the Transaction.

No further environmental investigation of any kind is recommended for this property at this time. C&H does not believe that additional records review, historical research, site reconnaissance, or specialized assessments (such as asbestos surveys, lead-based paint inspections, or vapor intrusion investigations) are necessary or appropriate for the Charleroi Facility. All relevant environmental conditions have been adequately evaluated through TerraVerde's Phase I ESA, and no data gaps or unresolved questions remain.

Inclusion in Insurance Underwriting Package. C&H recommends that the Charleroi Phase I ESA be included in the environmental diligence package transmitted to Whitfield & Calder Insurance Advisors LLC ("WCIA") for the Pollution Legal Liability ("PLL") insurance underwriting submission. WCIA has been engaged by Crestline to obtain PLL coverage for the Transaction, and the PLL underwriter will require Phase I ESAs for all ACC facilities as standard documentation for risk assessment and premium calculation purposes. Although the Charleroi Facility does not present identifiable pollution risks, its inclusion in the complete diligence package provides the underwriter with a full picture of the ACC facility portfolio and may contribute positively to the overall risk assessment, potentially supporting a more favorable premium for the PLL policy.

C&H will continue to monitor the environmental diligence program for the Transaction and will provide updated analysis as Phase II ESA results become available for the McKeesport and Clarksburg facilities. The comprehensive Environmental Diligence Summary Memorandum, currently in draft form, will synthesize findings and recommendations across all four ACC facilities and will serve as the definitive environmental due diligence report for the Transaction.

IX. Attachments and References

Attachment A:

TerraVerde Environmental Consulting LLC, Phase I Environmental Site Assessment, 450 Industrial Park Road, Charleroi, Washington County, Pennsylvania 15022, dated August 18, 2022. Prepared by Kevin O'Malley, P.G., Project Manager; supervised by Dr. Nina Sorensen, P.E., CHMM, Principal-in-Charge. TerraVerde Project No. TV-22-1487. Original report provided by TerraVerde to Crestline Packaging Solutions LLC, with copy transmitted to Calderwood & Harkness LLP on August 19, 2022. Retained in Matter No. 1006-00003 files (hard copy and electronic).

Cross-References:

The following related memoranda and work product documents are part of the environmental due diligence program for the ACC acquisition and should be consulted in conjunction with this memorandum:

• Phase I ESA Review Memorandum — McKeesport Main Plant, McKeesport, PA (separate memorandum, dated August 22, 2022)

• Phase I ESA Review Memorandum — Clarksburg Resin Blending Facility, Clarksburg, WV (separate memorandum, dated August 28, 2022)

• Phase I ESA Review Memorandum — Weirton Warehouse & Distribution Center, Weirton, WV (separate memorandum, dated August 30, 2022)

• RCRA Compliance Review Memorandum — All ACC Facilities (under separate cover, H. Caldwell)

• Clean Air Act Compliance Review Memorandum — All ACC Facilities (under separate cover, R. Dominguez)

• Environmental Diligence Status Tracker — Matter No. 1006-00003 (last updated October 28, 2022)

• Comprehensive Environmental Diligence Summary Memorandum (draft dated October 22, 2022)

X. Distribution

This memorandum has been distributed to the following individuals:

File Copy: Matter No. 1006-00003 (hard copy and electronic)

This memorandum is intended solely for the use of the individuals identified above in their capacity as members of the Calderwood & Harkness deal team for the Crestline/ACC Transaction. Distribution to any other person, including any representative of Crestline Packaging Solutions LLC, requires the prior written approval of Beatrice Holloway, Responsible Partner.

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This document was prepared by Calderwood & Harkness LLP in anticipation of litigation and in connection with the rendering of legal advice to Crestline Packaging Solutions LLC. It is protected from disclosure by the attorney work product doctrine and the attorney-client privilege. Unauthorized disclosure, copying, or distribution is strictly prohibited.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Name: Grace Nakamura

Title: Associate, Real Estate Practice Group

Reviewed by: ________

Name: Harrison Caldwell

Title: Of Counsel, Environmental & Land Use Practice Group

Date: ________

Identifier	Detail
Street Address	450 Industrial Park Road, Charleroi, PA 15022
Municipality	Charleroi Borough / Fallowfield Township
County	Washington County, Pennsylvania
Tax Parcel ID	120-015-00-03-0018-00
Total Acreage	8.7 acres
Latitude / Longitude	Approx. 40.1355° N / 79.8932° W
USGS Quad	Charleroi, PA 7.5-minute quadrangle
Zoning Classification	I-2 (General Industrial)
Facility	RECs	CRECs	HRECs	Phase II Recommended
McKeesport Main Plant	2	0	1	Yes
Charleroi Specialty Coatings	0	0	0	No
Clarksburg Resin Blending	1	1	0	Yes
Weirton Warehouse	0	1	0	No
Recipient	Title / Role
Beatrice Holloway	Partner, Mergers & Acquisitions, Calderwood & Harkness LLP
Harrison Caldwell	Of Counsel, Environmental & Land Use, Calderwood & Harkness LLP
James Prentice	Partner, Mergers & Acquisitions, Calderwood & Harkness LLP
Rafael Dominguez	Associate, Environmental & Land Use, Calderwood & Harkness LLP
Simone Estrada	Paralegal, Mergers & Acquisitions, Calderwood & Harkness LLP

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP ATTORNEYS AT LAW
INTERNAL MEMORANDUM
TO: Beatrice Holloway, Partner Harrison Caldwell, Of Counsel
FROM: Grace Nakamura, Associate
DATE: August 25, 2022
RE: Review of Phase I Environmental Site Assessment — Charleroi Specialty Coatings Plant, 450 Industrial Park Road, Charleroi, PA 15022 (Allegheny Chemical Coatings, Inc.)
MATTER NO.: 1006-00003
This memorandum is a privileged and confidential attorney work product prepared in anticipation of litigation and in connection with the rendering of legal advice to our client, Crestline Packaging Solutions LLC. This memorandum is not intended for distribution beyond the individuals identified in the Distribution section herein and should not be disclosed to any third party without the prior written approval of the Responsible Partner.
I. Executive Summary
This memorandum presents Calderwood & Harkness LLP's ("C&H" or the "Firm") review and analysis of the Phase I Environmental Site Assessment ("Phase I ESA") prepared by TerraVerde Environmental Consulting LLC ("TerraVerde") for the Charleroi Specialty Coatings Plant located at 450 Industrial Park Road, Charleroi, Washington County, Pennsylvania 15022 (the "Property" or the "Charleroi Facility"). The Phase I ESA is one of four facility-specific environmental assessments commissioned as part of the environmental due diligence program for the proposed acquisition described below.
The Phase I ESA was dated August 18, 2022, and was prepared in accordance with the ASTM E1527-21 standard, "Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process." The report was authored by Kevin O'Malley, P.G., Project Manager, under the supervision of Dr. Nina Sorensen, P.E., CHMM, Principal-in-Charge at TerraVerde. Mr. O'Malley is a Pennsylvania-licensed Professional Geologist, and Dr. Sorensen holds both a Professional Engineer license in the Commonwealth of Pennsylvania and a Certified Hazardous Materials Manager credential. Both professionals have executed appropriate declarations regarding their qualifications and independence, which are appended to the Phase I ESA report.
The Phase I ESA was conducted as part of the comprehensive environmental due diligence undertaken in connection with the proposed acquisition by Crestline Packaging Solutions LLC ("Crestline" or "CPS") of one hundred percent (100%) of the outstanding common stock of Allegheny Chemical Coatings, Inc. ("ACC" or the "Target") at a proposed purchase price of Ninety-Four Million Five Hundred Thousand Dollars ($94,500,000.00) (the "Transaction"). The Transaction is structured as a stock purchase and is expected to close in the fourth quarter of 2022, subject to the satisfaction of customary conditions, including environmental due diligence.
Conclusion: TerraVerde identified no Recognized Environmental Conditions ("RECs"), no Controlled Recognized Environmental Conditions ("CRECs"), and no Historical Recognized Environmental Conditions ("HRECs") at the Charleroi Facility. No de minimis conditions or business environmental risks beyond the scope of the ASTM standard were noted. The site presents a low environmental risk profile. C&H concurs with TerraVerde's conclusions and finds the Phase I ESA to be thorough, methodologically sound, and compliant with applicable standards.
Recommendation: Based upon our review of the Phase I ESA and the considerations set forth in this memorandum, no Phase II Environmental Site Assessment is recommended for the Charleroi Facility. No further environmental investigation of any kind is warranted for this property at this time. The Charleroi Facility does not contribute to the estimated environmental liability exposure across the ACC portfolio of operating facilities.
II. Purpose and Scope of Review
Calderwood & Harkness LLP was engaged by Crestline Packaging Solutions LLC to serve as outside counsel for the Transaction, with specific responsibility for, among other things, conducting environmental due diligence oversight in connection with the proposed acquisition of ACC. The engagement is governed by the Engagement Letter dated July 19, 2022, executed by James Prentice, Partner, on behalf of the Firm and accepted by Margaret Chen, General Counsel, on behalf of Crestline. All work product generated in connection with this engagement is tracked under Matter No. 1006-00003.
The scope of C&H's environmental due diligence mandate encompasses review and analysis of Phase I ESAs for all four ACC operating facilities, which are as follows:
1.  McKeesport Main Plant (corporate headquarters and primary solvent-based manufacturing facility), McKeesport, Allegheny County, Pennsylvania;
2.  Charleroi Specialty Coatings Plant (water-based and UV-curable coatings manufacturing), Charleroi, Washington County, Pennsylvania;
3.  Clarksburg Resin Blending Facility (resin blending and intermediate chemical processing), Clarksburg, Harrison County, West Virginia; and
4.  Weirton Warehouse & Distribution Center (finished goods warehousing and distribution), Weirton, Hancock County, West Virginia.
This memorandum addresses only the Charleroi Facility. Separate memoranda have been or will be prepared for each of the remaining three facilities, and a comprehensive environmental diligence summary memorandum will synthesize findings across all four sites for purposes of informing the Transaction structure, purchase price allocation, and negotiation of the environmental provisions in the definitive Stock Purchase Agreement.
The review was conducted by Grace Nakamura, Lead Associate in the Firm's Real Estate Practice Group, in coordination with Harrison Caldwell, Of Counsel in the Firm's Environmental and Land Use Practice Group, and under the overall direction of Beatrice Holloway, Responsible Partner in the Firm's Mergers and Acquisitions Practice Group. Mr. Caldwell provided substantive environmental regulatory expertise, particularly with respect to the evaluation of RCRA compliance status, Clean Air Act permitting, and the applicability of CERCLA liability protections. The undersigned bears primary responsibility for the analysis and recommendations set forth herein.
C&H's review of the Phase I ESA for the Charleroi Facility encompasses the following elements:
(i) Evaluation of the adequacy and completeness of TerraVerde's Phase I ESA methodology, including whether the assessment was conducted in conformity with the requirements of ASTM E1527-21 and the implementing regulations for "all appropriate inquiries" under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9601(35)(B), and 40 C.F.R. Part 312;
(ii) Assessment of whether TerraVerde's findings, conclusions, and opinions are consistent with the data presented in the Phase I ESA report and with the requirements of the ASTM standard;
(iii) Identification of any data gaps, limitations, or deficiencies in TerraVerde's information gathering or analysis that might affect the reliability of the Phase I ESA conclusions; and
(iv) Recommendations regarding the need for further environmental investigation, including whether a Phase II Environmental Site Assessment (subsurface investigation) or other supplemental assessment is warranted for the Charleroi Facility.
This memorandum does not constitute a comprehensive regulatory compliance audit of the Charleroi Facility. Separate RCRA Compliance Review and Clean Air Act Compliance Review memoranda are being prepared under separate cover by Harrison Caldwell and Rafael Dominguez, respectively, and should be consulted for detailed analysis of the Target's regulatory compliance posture at each facility.
III. Property Description
A. Location and Identification
The Charleroi Specialty Coatings Plant is located at 450 Industrial Park Road, Charleroi, Washington County, Pennsylvania 15022. The Property is situated within the Charleroi Industrial Park, a planned industrial development area located approximately two miles southeast of the Borough of Charleroi's central business district and approximately thirty miles south of Pittsburgh along the Monongahela River corridor.
The key identifying information for the Property is set forth below:
The Property is located in a mixed industrial and agricultural area. Adjoining properties include light industrial facilities to the north and east (within the Charleroi Industrial Park), undeveloped wooded land to the south, and agricultural parcels to the west. The Monongahela River is located approximately 1.5 miles to the northwest of the Property. Topography at the site is generally flat to gently sloping, with an elevation of approximately 1,020 feet above mean sea level. The property is not located within a FEMA-designated 100-year floodplain.
B. Improvements.  The Property is improved with a modern industrial facility comprising the following principal structures:
•  Manufacturing Building: Approximately 92,000 square feet of enclosed manufacturing space, consisting of a single-story, pre-engineered steel-frame structure on a concrete slab-on-grade foundation. The manufacturing building houses coating production lines, raw material storage areas, mixing and batching operations, quality control testing stations, packaging lines, and finished product staging areas.
•  Office and Laboratory Wing: Approximately 4,500 square feet of attached office and laboratory space, located at the north end of the manufacturing building. This wing includes administrative offices, a technical laboratory for quality control and product development, employee break rooms, and restroom facilities.
•  Ancillary Improvements: The Property also includes paved parking areas (approximately 60 spaces), paved truck loading and unloading docks (four bays), an enclosed waste storage shed (approximately 400 square feet), an on-site stormwater detention basin, and perimeter fencing with gated access.
The facility was constructed in 2003 by ACC as a purpose-built specialty coatings manufacturing plant. All structures on the Property were constructed new at that time; there are no pre-existing structures or remnants of prior improvements on the site. Building construction materials are consistent with post-2000 commercial and industrial practices, and the facility was designed and built in compliance with then-current building codes, environmental regulations, and industry standards for chemical manufacturing operations.
C. Current Operations
The Charleroi Facility is dedicated to the manufacturing of water-based and ultraviolet-curable ("UV-curable") specialty coatings for industrial and packaging applications. The facility operates on a two-shift basis, Monday through Friday, with occasional weekend production runs. Approximately 85 employees work at the Charleroi Facility.
The principal chemical feedstocks and materials used on-site include acrylate monomers and oligomers, water-based acrylic and polyurethane resins, photoinitiators for UV-curing applications, pigment dispersions, surfactants, defoamers, and minor quantities of isocyanate-based crosslinkers used in two-component coating systems. The facility does not utilize chlorinated solvents, and its operations are distinct from the solvent-based coating manufacturing conducted at the McKeesport Main Plant. Because the Charleroi Facility processes primarily non-solvent-based and water-reducible formulations, its environmental risk profile is significantly lower than that of the McKeesport facility, which relies extensively on volatile organic solvents including toluene, xylene, methyl ethyl ketone, and methyl isobutyl ketone.
Hazardous waste generation at the Charleroi Facility is limited and consists primarily of off-specification product, residual coating materials, and cleaning solvents from equipment maintenance. The facility operates as a Small Quantity Generator under RCRA, generating between 220 and 2,200 pounds of hazardous waste per calendar month on average.
D. Ownership.  The Property is owned in fee simple by Allegheny Chemical Coatings, Inc. ACC acquired the parcel as raw, undeveloped agricultural land in 2003 from Fallowfield Farm Associates, a Pennsylvania general partnership, pursuant to a deed recorded in the Washington County Recorder of Deeds Office at Deed Book Volume 4218, Page 331 (recorded April 14, 2003). At the time of acquisition, the parcel was unimproved and had been used exclusively for crop farming. ACC developed the Property and constructed the current facility during 2003, with manufacturing operations commencing in early 2004.
No prior owners of the Property conducted industrial, commercial, or waste disposal operations on the site. The chain of title, as reviewed by TerraVerde through publicly available records and confirmed through C&H's independent title search, reflects agricultural ownership and use extending back through the period covered by available records. There are no environmental liens, activity and use limitations, or institutional controls recorded against the Property.
IV. Summary of TerraVerde Phase I ESA Findings
A. Methodology.  TerraVerde conducted the Phase I ESA for the Charleroi Facility in accordance with ASTM E1527-21, "Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process," which is the current edition of the standard and is consistent with the regulatory requirements for "all appropriate inquiries" under CERCLA Section 101(35)(B) and the implementing regulations at 40 C.F.R. Part 312. The assessment was initiated on August 1, 2022, with site reconnaissance conducted on August 16, 2022, and the final report issued on August 18, 2022.
The assessment comprised the following principal components:
Records Review. TerraVerde conducted a comprehensive review of reasonably ascertainable federal, state, tribal, and local environmental records within the search radii prescribed by ASTM E1527-21 and 40 C.F.R. § 312.26. The database search was performed by Penrose Solutions ("EDR"), an industry-standard database vendor, through its Radius Map Report with GeoCheck service (EDR Report No. 6741928.2s, dated August 4, 2022). The database search covered all standard federal and state databases required by ASTM E1527-21, including but not limited to the National Priorities List (NPL), CERCLIS/SEMS, RCRA CORRACTS, RCRA TSD, RCRA Generators, ERNS, state hazardous waste databases, state landfill and solid waste databases, UST and LUST registries, brownfield inventories, state voluntary cleanup program lists, and institutional and engineering control registries.
Historical Sources Review. TerraVerde reviewed available historical sources to evaluate the prior uses of the Property and surrounding area. Sources consulted included historical aerial photographs from 1951, 1958, 1967, 1971, 1980, 1990, 1994, 2002, 2006, 2010, 2015, and 2020 (obtained through EDR and the Penn Pilot historical aerial photograph program); USGS topographic maps from 1905, 1932, 1951, 1969, 1979, and 1993; Trelwick fire insurance maps (searched but not available for this area); city and telephone directory listings (reviewed for the period 1960–present); and local building permit and land use records obtained from Fallowfield Township and the Charleroi Industrial Park Authority.
Site Reconnaissance. A physical inspection of the Property and its immediate surroundings was conducted by Kevin O'Malley, P.G., on August 16, 2022. The site reconnaissance included an inspection of all accessible interior and exterior areas of the facility, observation of chemical storage and handling areas, review of waste management practices, inspection of the perimeter of the Property, and observation of adjoining properties from the Property boundary and from public rights-of-way. Weather conditions during the inspection were clear with temperatures in the mid-70s°F, and all areas of the Property were accessible.
Interviews. TerraVerde conducted interviews with the following individuals knowledgeable about the Property and its operations:
•  Carl Johannsen, Environmental Health and Safety ("EHS") Manager, ACC (on-site, August 16, 2022);
•  Diane Pulaski, Vice President of Operations, ACC (by telephone, August 15, 2022);
•  Thomas Wendt, former Plant Manager, Charleroi Facility (2004–2018) (by telephone, August 12, 2022); and
•  Charleroi Industrial Park Authority (written inquiry, response received August 10, 2022).
Evaluation of Adjoining Properties. TerraVerde evaluated properties adjoining the Charleroi Facility for potential environmental concerns that could affect the subject property, through both the EDR database search and visual observation during the site reconnaissance.
B. Environmental Records Review
TerraVerde's review of federal and state environmental databases yielded the following results with respect to the Charleroi Facility:
Federal and State Database Searches. The Charleroi Facility does not appear on any federal or state hazardous waste, contamination, cleanup, or enforcement lists within the applicable ASTM E1527-21 search radii. Specifically, the Property was not identified on the following databases: the National Priorities List (NPL); CERCLIS/SEMS (Superfund Enterprise Management System); RCRA CORRACTS (Corrective Action facilities); RCRA TSD (Treatment, Storage, and Disposal facilities); the Emergency Response Notification System (ERNS); the Pennsylvania Priority List of Hazardous Sites; the Pennsylvania Hazardous Sites Cleanup Act List; the UST and LUST (Leaking Underground Storage Tank) databases maintained by the Pennsylvania Department of Environmental Protection ("PA DEP"); the Pennsylvania brownfield or Act 2 Land Recycling Program inventories; or any other state equivalent lists searched by EDR.
EPA Identification. The Charleroi Facility holds EPA Identification Number PAD-112-583-667, under which it is registered as a Small Quantity Generator ("SQG") of hazardous waste pursuant to the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. §§ 6901–6992k. The facility's SQG status is reflected in the RCRA Generators database maintained by the U.S. Environmental Protection Agency ("EPA"). No violations, enforcement actions, compliance orders, consent agreements, or other regulatory actions were identified in association with this EPA ID number in the database search. The facility's RCRA compliance history, as reflected in the EPA's RCRAInfo database, is clean.
Adjoining and Nearby Properties. No adjoining or nearby properties were identified in the database search as presenting environmental concerns to the Charleroi Facility. There are no NPL sites within the one-mile ASTM search radius, no RCRA CORRACTS or TSD facilities within the one-mile radius, no LUST sites within the half-mile radius, and no state-listed contaminated sites within the applicable search distances that would present a potential for upgradient or cross-gradient migration of contamination toward the Property. The nearest listed environmental site identified in the EDR report is a closed LUST facility located approximately 0.8 miles to the northwest (a former gasoline station), which is listed as having received a closure determination from PA DEP in 2015 and does not present a concern to the Charleroi Facility given the distance, topographic position, and inferred groundwater flow direction.
C. Historical Use Review
TerraVerde's review of historical sources provided a comprehensive picture of the Property's prior uses:
Pre-2003 (Agricultural Use). The Property was used exclusively as agricultural land, specifically for crop farming, throughout the entire period covered by available historical records. Historical aerial photographs from 1951 through 2002 consistently depict the Property as open farmland with cultivated fields. No structures, buildings, or improvements of any kind are visible on the Property in aerial photographs predating 2003. There is no evidence in any historical source of dumping, filling, excavation, waste disposal, or any industrial or commercial activity on the Property prior to its acquisition by ACC. The topographic maps reviewed corroborate the agricultural characterization of the Property and surrounding area throughout the twentieth century.
Trelwick Fire Insurance Maps. No Trelwick fire insurance maps were available for the area encompassing the Property. This absence is consistent with the rural and suburban character of the Property's location and the lack of prior industrial or dense commercial development in the immediate vicinity. TerraVerde appropriately noted this as a non-issue rather than a data gap, given the clear and consistent evidence from aerial photographs and other sources confirming the Property's agricultural history.
2003 to Present (ACC Ownership and Operations). ACC purchased the raw agricultural parcel in 2003 and commenced construction of the current specialty coatings manufacturing facility that same year. The 2006 aerial photograph, the earliest post-construction photograph reviewed, shows the completed facility in substantially its current configuration. The Property has been used continuously for water-based and UV-curable coatings manufacturing since operations commenced in early 2004. No changes in use, expansions involving environmental concern, or modifications to the facility's environmental profile are documented in the historical record since construction.
TerraVerde concluded that the Property is a greenfield development with no historical industrial use prior to ACC's operations, and C&H concurs with this conclusion. The absence of prior industrial, commercial, or waste disposal activity on the Property significantly reduces the likelihood of pre-existing soil or groundwater contamination and is a material factor in the overall low-risk assessment of this facility.
D. Site Reconnaissance Observations
Kevin O'Malley's site reconnaissance on August 16, 2022, yielded the following observations:
General Facility Condition. Buildings and grounds were observed to be in good to excellent condition. The manufacturing building, office wing, and ancillary structures appeared well-maintained, with no evidence of deferred maintenance, structural deterioration, or neglect. Paved surfaces, including parking areas and truck aprons, were in good condition with no significant cracking, staining, or deterioration. Landscaping and grounds maintenance appeared current and adequate.
Surface and Subsurface Indicators. No evidence of stressed vegetation, stained soil, surface discoloration, or unusual odors was observed anywhere on the Property. No evidence of surface impoundments, lagoons, pits, ponds, or other surface features associated with waste disposal or chemical release was observed. The stormwater detention basin in the southeastern portion of the Property appeared to be functioning as designed, with no evidence of oily sheen, discoloration, or contamination.
Underground and Aboveground Storage. No underground storage tanks ("USTs") are present on the Property, and no evidence of former USTs — such as vent pipes, fill ports, concrete pads, or tank excavation scarring — was observed during the site reconnaissance. ACC personnel confirmed during interviews that no USTs have ever been installed on the Property. Aboveground chemical storage was observed in appropriate secondary containment systems, including chemical tote storage on spill-containment pallets and bulk liquid storage tanks within curbed containment areas with adequate capacity. All observed containment systems appeared intact and in good condition.
Waste Management. The enclosed waste storage shed, located on the east side of the manufacturing building, was observed to be clean, organized, and in compliance with applicable SQG requirements. Waste containers were properly labeled, closed, and in good condition. Accumulation start dates were posted and within regulatory timeframes. No evidence of leakage, spillage, or improper waste management practices was observed.
Building Materials. Given that the facility was constructed in 2003, well after the regulatory phase-out periods for asbestos-containing building materials (generally pre-1980s) and lead-based paint (residential properties constructed before 1978), no suspect asbestos-containing materials or lead-based paint were observed or are expected to be present in the facility. TerraVerde's visual assessment during the site reconnaissance confirmed the absence of materials commonly associated with asbestos or lead-based paint. Additionally, no PCB-containing electrical equipment (such as older-vintage transformers or capacitors) was identified on the Property; all observed electrical equipment appeared to be of modern manufacture.
Floor Drains and Discharge Points. Manufacturing area floor drains were observed to be connected to appropriate collection and treatment systems. No floor drains were identified as being connected to storm sewers or sanitary sewers without proper permitting and pretreatment. Stormwater discharge is managed through the facility's stormwater management system and detention basin under general permit coverage.
E. Vapor Intrusion Screening
TerraVerde assessed the potential for vapor intrusion at the Charleroi Facility in accordance with the guidance provided in ASTM E1527-21 and determined that no vapor intrusion concern exists at the Property. This determination was based on the following factors:
•  No historical use of chlorinated solvents or other volatile organic compounds known to present vapor intrusion risks has occurred at the Property. The facility's operations involve primarily water-based and UV-curable coatings, and chlorinated solvents such as trichloroethylene ("TCE"), perchloroethylene ("PCE"), and related compounds have never been used or stored at the Charleroi Facility.
•  No subsurface contamination sources, including soil contamination or contaminated groundwater plumes, were identified on-site or from adjoining or nearby properties that could serve as a source for vapor intrusion into the facility's buildings.
•  No nearby dry cleaners, degreasing operations, or other facilities with known chlorinated solvent use were identified within the applicable search area.
TerraVerde concluded that the vapor intrusion pathway assessment was not applicable to the Charleroi Facility and that no vapor intrusion concern was identified. C&H concurs with this determination.
F. Findings — RECs, CRECs, HRECs
The central conclusions of TerraVerde's Phase I ESA for the Charleroi Facility are as follows:
Recognized Environmental Conditions (RECs): None identified. A REC is defined under ASTM E1527-21 as the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property: (1) due to a release to the environment; (2) under conditions indicative of a release to the environment; or (3) under conditions that pose a material threat of a future release to the environment. TerraVerde found no conditions at the Charleroi Facility meeting any element of this definition.
Controlled Recognized Environmental Conditions (CRECs): None identified. A CREC is defined as a REC 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 required controls. No such conditions exist at the Property.
Historical Recognized Environmental Conditions (HRECs): None identified. An HREC is defined as a past release of hazardous substances or petroleum products that has occurred in connection with the property and has been addressed to the satisfaction of the applicable regulatory authority or meeting unrestricted use criteria without subjecting the property to required controls. No historical releases have been documented at the Property.
De Minimis Conditions: None noted by TerraVerde. No conditions were observed that, while not rising to the level of a REC, warranted notation as de minimis environmental concerns.
Business Environmental Risks: TerraVerde did not identify any business environmental risks beyond the scope of the ASTM standard. While the ASTM standard does not require evaluation of business environmental risks (such as regulatory compliance status, potential future regulatory changes, or operational liability), TerraVerde noted the absence of any such concerns as an additional observation. C&H notes that a full evaluation of regulatory compliance and business environmental risks is being conducted separately as part of the broader environmental due diligence program for the Transaction.
V. Regulatory Compliance Observations
While a comprehensive regulatory compliance review is being conducted separately for each ACC facility — and the results of those reviews will be set forth in the RCRA Compliance Review Memorandum and Clean Air Act Compliance Review Memorandum, each under separate cover and authored by Harrison Caldwell and Rafael Dominguez, respectively — the Phase I ESA for the Charleroi Facility corroborates the following regulatory compliance data points that are relevant to the environmental risk assessment:
RCRA Status. The Charleroi Facility holds EPA Identification Number PAD-112-583-667 and is classified as a Small Quantity Generator ("SQG") of hazardous waste under 40 C.F.R. § 262.16. SQG status reflects the facility's use of predominantly water-based coating formulations, which generate comparatively limited volumes and lower toxicity of hazardous waste relative to solvent-based operations such as those conducted at the McKeesport Main Plant (classified as a Large Quantity Generator). The SQG classification imposes specific regulatory obligations regarding waste accumulation quantities and timeframes, container management, emergency preparedness, and reporting, but permits a less burdensome compliance framework than Large Quantity Generator status. As of the date of the Phase I ESA, no RCRA violations, enforcement actions, or compliance deficiencies were identified at the Charleroi Facility.
Air Permit Status. The Charleroi Facility operates under Pennsylvania Department of Environmental Protection State-Only Operating Permit No. 63-00982. The facility is classified as a minor source of air emissions under the Clean Air Act, meaning its potential emissions of criteria pollutants and hazardous air pollutants fall below the major source thresholds established by the applicable regulations. The facility is not subject to Title V operating permit requirements. TerraVerde's report indicates that the facility was compliant with the terms and conditions of its air operating permit as of the date of the Phase I ESA.
Water Discharge. No individual National Pollutant Discharge Elimination System ("NPDES") permit is held specifically for the Charleroi Facility. Stormwater discharges from the facility are managed through the site's engineered stormwater management system and detention basin under general permit coverage consistent with Pennsylvania's NPDES Stormwater Discharges Associated with Industrial Activity general permit (PAG-03). No process wastewater is discharged directly from the facility. The facility does not operate a wastewater treatment system; sanitary wastewater is directed to the municipal sanitary sewer system.
Spill and Release History. No history of spills, releases, or reportable quantity exceedances was identified at the Charleroi Facility in TerraVerde's records review or interviews. Carl Johannsen, ACC's EHS Manager, confirmed during his interview that no spill incidents requiring regulatory reporting have occurred at the Charleroi Facility since operations commenced in 2004. No records of emergency response notifications, spill cleanup activities, or contamination assessments were identified.
Enforcement and Regulatory Proceedings. No enforcement actions, consent orders, administrative orders, compliance schedules, notices of violation, or other regulatory proceedings involving the Charleroi Facility were identified in TerraVerde's database search, records review, or interviews with ACC personnel and regulatory authorities. The facility's compliance history is clean across all environmental media.
VI. C&H Assessment and Analysis
A. Adequacy of the Phase I ESA
C&H has reviewed the TerraVerde Phase I ESA for the Charleroi Facility and concludes that the assessment was conducted in accordance with ASTM E1527-21 and satisfies the requirements for "all appropriate inquiries" under CERCLA Section 101(35)(B) and the implementing regulations at 40 C.F.R. Part 312. This conclusion is based on the following evaluation:
Scope of Records Review. TerraVerde's records review encompassed all standard federal and state environmental databases required by ASTM E1527-21, Section 8.2, and was conducted using an established and reliable database vendor (EDR). The search radii employed were consistent with those specified in the ASTM standard. The records review was comprehensive and did not omit any required database or category of records.
Historical Research. TerraVerde's historical sources review was thorough and well-documented. The range of aerial photographs reviewed (1951 through 2020) provides adequate temporal coverage to evaluate the Property's historical uses throughout the relevant period. The absence of Trelwick fire insurance maps was appropriately addressed and does not constitute a data gap given the consistent and clear evidence from aerial photographs and other sources. Local records, including township building permits and industrial park authority documentation, were consulted as supplemental sources. The historical research provides a high degree of confidence in the determination that the Property was used exclusively for agriculture prior to ACC's development.
Site Reconnaissance. The site reconnaissance was conducted by a qualified environmental professional, was appropriately documented in the Phase I ESA report with narrative descriptions and supporting photographs, and covered all accessible areas of the Property and its immediate surroundings. The reconnaissance was conducted under favorable weather conditions and without access limitations.
Interviews. TerraVerde conducted interviews with appropriate individuals, including current and former facility management personnel and local government representatives, in accordance with ASTM E1527-21, Section 10. The interview responses were consistent with the findings from the records review, historical research, and site reconnaissance, and provided additional corroboration of the Property's clean environmental history and current compliance status.
Data Gaps. No data gaps or limitations were identified by TerraVerde in its Phase I ESA report, and C&H's independent review has not identified any data gaps or limitations that would affect the reliability of TerraVerde's conclusions. All required components of the ASTM standard were addressed, and the information obtained was sufficient to form opinions regarding the identification of RECs, CRECs, and HRECs at the Property.
B. Risk Assessment
The Charleroi Facility presents a low environmental risk profile. This assessment is based on the cumulative consideration of the following factors, each of which independently supports the low-risk conclusion and which, taken together, establish a high degree of confidence in the environmental condition of the Property:
(i) Greenfield Development. The Property was developed from raw agricultural land with no prior industrial, commercial, or waste disposal use. This eliminates the most common source of pre-existing contamination at industrial properties — namely, legacy contamination from prior owners or operators — and substantially reduces the likelihood of encountering unexpected environmental liabilities.
(ii) Modern Construction. The facility was constructed in 2003, incorporating modern environmental controls, containment systems, and building materials. Construction in the post-regulatory era means that the facility was designed and built in compliance with contemporary environmental standards, including secondary containment requirements, stormwater management regulations, and building material restrictions. The 2003 construction date also eliminates concerns regarding asbestos-containing materials, lead-based paint, and PCB-containing equipment, all of which are associated primarily with older facilities.
(iii) Low-Risk Manufacturing Operations. The Charleroi Facility's operations involve primarily water-based and UV-curable coatings, which generate significantly lower volumes and toxicity of hazardous waste compared to solvent-based coating operations. The absence of chlorinated solvents is particularly significant, as chlorinated solvent contamination is among the most prevalent and costly forms of industrial contamination in the United States and is frequently encountered at chemical manufacturing facilities with historical operations.
(iv) Favorable Regulatory Classification. The facility's SQG status under RCRA and its minor source status under the Clean Air Act reflect the relatively benign environmental profile of its operations. These classifications are consistent with the water-based focus of the Charleroi Facility's manufacturing processes and confirm that the facility does not generate large volumes of hazardous waste or significant air emissions.
(v) Absence of USTs, ACMs, LBP, and PCBs. No underground storage tanks have ever been present on the Property, eliminating a common source of soil and groundwater contamination. No asbestos-containing materials, lead-based paint, or PCB-containing equipment were identified, eliminating potential building material-related liabilities.
(vi) Clean Compliance History. The facility has no history of spills, releases, enforcement actions, or regulatory non-compliance of any kind. This clean track record, extending over nearly two decades of continuous operation, provides strong evidence that the facility's environmental management practices have been effective and that no undetected contamination is likely to have occurred.
(vii) No Adjoining Property Concerns. No adjoining or nearby properties present environmental concerns to the Charleroi Facility, and no potential for cross-boundary contamination migration was identified.
C. Comparison to Other ACC Facilities
To place the Charleroi Facility's environmental profile in proper context within the overall ACC portfolio, C&H has compared its Phase I ESA findings to those for the other three ACC operating facilities:
McKeesport Main Plant. The McKeesport Main Plant, ACC's corporate headquarters and primary solvent-based manufacturing facility, was identified with two RECs and one HREC in its Phase I ESA dated August 15, 2022. The RECs relate to (1) documented soil contamination associated with a former underground solvent storage tank area, and (2) the presence of residual contamination in groundwater beneath the facility from historical solvent releases. The HREC relates to a 1992 petroleum release that was remediated under PA DEP oversight and received a closure determination in 1997. A Phase II Environmental Site Assessment has been recommended and commenced for the McKeesport facility, and the results are expected to inform the environmental liability allocation in the Transaction.
Clarksburg Resin Blending Facility. The Clarksburg Resin Blending Facility was identified with one CREC and one REC in its Phase I ESA dated August 22, 2022. The CREC relates to legacy diesel fuel contamination from a former fuel oil UST that was remediated under West Virginia Department of Environmental Protection oversight, with residual contamination allowed to remain in place subject to institutional controls recorded against the property. The REC relates to observed staining and discoloration of soil and concrete in the outdoor drum storage area, suggesting a potential release of hazardous substances that has not been investigated. Phase II investigation has been recommended for the Clarksburg facility.
Weirton Warehouse & Distribution Center. The Weirton Warehouse was identified with one CREC in its Phase I ESA dated August 25, 2022. The CREC relates to the property's enrollment in the West Virginia Voluntary Remediation and Redevelopment Program ("VRDP") in connection with residual contamination from historical manufacturing operations conducted by a prior owner, with remediation completed and a Certificate of Completion issued subject to certain land use restrictions. No RECs were identified at the Weirton facility.
Comparative Summary. Of the four ACC operating facilities, the Charleroi Specialty Coatings Plant presents the cleanest environmental profile by a significant margin. It is the only facility in the ACC portfolio with no RECs, CRECs, or HRECs identified. The Charleroi Facility's superior environmental condition is attributable to its greenfield origin, its relatively modern construction, and its focus on lower-risk manufacturing processes. This comparative analysis is relevant to the allocation of environmental risk and liability across the ACC portfolio in the Transaction, as discussed in Section VII below.
VII. Implications for the Transaction
The Phase I ESA findings for the Charleroi Facility have the following implications for the proposed acquisition of ACC by Crestline:
Environmental Liability Exposure. The Charleroi Facility does not contribute to the environmental liability exposure in the proposed acquisition. The estimated environmental liability range of $1,925,000 (low-end estimate) to $4,345,000 (high-end estimate) across all ACC facilities — as developed by C&H in coordination with TerraVerde and reflected in the Environmental Diligence Status Tracker — is attributable entirely to the McKeesport, Clarksburg, and Weirton facilities. No remediation costs, compliance costs, or other environmental liabilities are attributed to the Charleroi Facility. This allocation is consistent with the facility's clean Phase I ESA, its clean compliance history, and the absence of any identified conditions that would require remediation or corrective action.
Transaction Protections. No environmental escrow, specific indemnification, or insurance allocation is required with respect to the Charleroi Facility specifically. The environmental provisions being negotiated in the Stock Purchase Agreement — including the environmental escrow of $2.5 million, the special indemnification for known environmental conditions, and the Pollution Legal Liability insurance policy — are designed to address the environmental risks identified at the McKeesport, Clarksburg, and Weirton facilities. The Charleroi Facility does not require facility-specific protections beyond the standard environmental representations, warranties, and indemnification provisions that will apply to all ACC-owned properties under the definitive agreement.
Lender Requirements. The Phase I ESA findings for the Charleroi Facility satisfy the environmental diligence condition imposed by Commonwealth National Bank, N.A. in its commitment letter dated July 8, 2022, which provides senior secured financing for the Transaction. The commitment letter requires Phase I ESAs on all Target real property, with no unaddressed Recognized Environmental Conditions at any facility. The Charleroi Phase I ESA satisfies this requirement, as no RECs were identified. No additional environmental investigation or remediation is required to satisfy the lender's environmental diligence condition with respect to this facility.
Stock Purchase Agreement. No additional representations, warranties, or disclosure schedule items are anticipated for the Charleroi Facility beyond the standard environmental representations set forth in Article IV, Section 4.18 of the draft Stock Purchase Agreement. The environmental disclosure schedule (Schedule 4.18) will include facility-specific disclosures for the McKeesport, Clarksburg, and Weirton facilities but is not expected to require any entries relating to the Charleroi Facility. The standard environmental representation — that the Target is in material compliance with all Environmental Laws with respect to the Property and that there are no pending or threatened Environmental Claims relating to the Property — can be made without qualification as to the Charleroi Facility based on the findings of the Phase I ESA and C&H's review thereof.
CERCLA Liability Protection. The completion of a Phase I ESA meeting ASTM E1527-21 and "all appropriate inquiries" standards is a prerequisite for Crestline's ability to assert the innocent landowner, contiguous property owner, or bona fide prospective purchaser defenses under CERCLA in the event that contamination is subsequently discovered at the Property. While C&H does not believe any such contamination is likely to exist at the Charleroi Facility, the completion of a conforming Phase I ESA preserves Crestline's CERCLA defenses as a matter of prudent transactional practice.
VIII. Recommendation
Based on our comprehensive review of TerraVerde's Phase I Environmental Site Assessment for the Charleroi Specialty Coatings Plant, and the analysis set forth in this memorandum, C&H makes the following recommendations:
No Phase II Environmental Site Assessment is recommended for the Charleroi Facility. The complete absence of Recognized Environmental Conditions, Controlled Recognized Environmental Conditions, and Historical Recognized Environmental Conditions — combined with the Property's greenfield history, modern construction, low-risk manufacturing operations, and unblemished compliance record — does not warrant subsurface investigation or any form of intrusive environmental sampling at this property. A Phase II ESA at the Charleroi Facility would impose unnecessary costs and delays without a reasonable basis for expecting it to yield information material to the Transaction.
No further environmental investigation of any kind is recommended for this property at this time. C&H does not believe that additional records review, historical research, site reconnaissance, or specialized assessments (such as asbestos surveys, lead-based paint inspections, or vapor intrusion investigations) are necessary or appropriate for the Charleroi Facility. All relevant environmental conditions have been adequately evaluated through TerraVerde's Phase I ESA, and no data gaps or unresolved questions remain.
Inclusion in Insurance Underwriting Package. C&H recommends that the Charleroi Phase I ESA be included in the environmental diligence package transmitted to Whitfield & Calder Insurance Advisors LLC ("WCIA") for the Pollution Legal Liability ("PLL") insurance underwriting submission. WCIA has been engaged by Crestline to obtain PLL coverage for the Transaction, and the PLL underwriter will require Phase I ESAs for all ACC facilities as standard documentation for risk assessment and premium calculation purposes. Although the Charleroi Facility does not present identifiable pollution risks, its inclusion in the complete diligence package provides the underwriter with a full picture of the ACC facility portfolio and may contribute positively to the overall risk assessment, potentially supporting a more favorable premium for the PLL policy.
C&H will continue to monitor the environmental diligence program for the Transaction and will provide updated analysis as Phase II ESA results become available for the McKeesport and Clarksburg facilities. The comprehensive Environmental Diligence Summary Memorandum, currently in draft form, will synthesize findings and recommendations across all four ACC facilities and will serve as the definitive environmental due diligence report for the Transaction.
IX. Attachments and References
Attachment A:
TerraVerde Environmental Consulting LLC, Phase I Environmental Site Assessment, 450 Industrial Park Road, Charleroi, Washington County, Pennsylvania 15022, dated August 18, 2022. Prepared by Kevin O'Malley, P.G., Project Manager; supervised by Dr. Nina Sorensen, P.E., CHMM, Principal-in-Charge. TerraVerde Project No. TV-22-1487. Original report provided by TerraVerde to Crestline Packaging Solutions LLC, with copy transmitted to Calderwood & Harkness LLP on August 19, 2022. Retained in Matter No. 1006-00003 files (hard copy and electronic).
Cross-References:
The following related memoranda and work product documents are part of the environmental due diligence program for the ACC acquisition and should be consulted in conjunction with this memorandum:
•  Phase I ESA Review Memorandum — McKeesport Main Plant, McKeesport, PA (separate memorandum, dated August 22, 2022)
•  Phase I ESA Review Memorandum — Clarksburg Resin Blending Facility, Clarksburg, WV (separate memorandum, dated August 28, 2022)
•  Phase I ESA Review Memorandum — Weirton Warehouse & Distribution Center, Weirton, WV (separate memorandum, dated August 30, 2022)
•  RCRA Compliance Review Memorandum — All ACC Facilities (under separate cover, H. Caldwell)
•  Clean Air Act Compliance Review Memorandum — All ACC Facilities (under separate cover, R. Dominguez)
•  Environmental Diligence Status Tracker — Matter No. 1006-00003 (last updated October 28, 2022)
•  Comprehensive Environmental Diligence Summary Memorandum (draft dated October 22, 2022)
X. Distribution
This memorandum has been distributed to the following individuals:
File Copy: Matter No. 1006-00003 (hard copy and electronic)
This memorandum is intended solely for the use of the individuals identified above in their capacity as members of the Calderwood & Harkness deal team for the Crestline/ACC Transaction. Distribution to any other person, including any representative of Crestline Packaging Solutions LLC, requires the prior written approval of Beatrice Holloway, Responsible Partner.
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This document was prepared by Calderwood & Harkness LLP in anticipation of litigation and in connection with the rendering of legal advice to Crestline Packaging Solutions LLC. It is protected from disclosure by the attorney work product doctrine and the attorney-client privilege. Unauthorized disclosure, copying, or distribution is strictly prohibited.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Name: Grace Nakamura
Title: Associate, Real Estate Practice Group
Reviewed by: ________
Name: Harrison Caldwell
Title: Of Counsel, Environmental & Land Use Practice Group
Date: ________
Identifier | Detail
Street Address | 450 Industrial Park Road, Charleroi, PA 15022
Municipality | Charleroi Borough / Fallowfield Township
County | Washington County, Pennsylvania
Tax Parcel ID | 120-015-00-03-0018-00
Total Acreage | 8.7 acres
Latitude / Longitude | Approx. 40.1355° N / 79.8932° W
USGS Quad | Charleroi, PA 7.5-minute quadrangle
Zoning Classification | I-2 (General Industrial)
Facility | RECs | CRECs | HRECs | Phase II Recommended
McKeesport Main Plant | 2 | 0 | 1 | Yes
Charleroi Specialty Coatings | 0 | 0 | 0 | No
Clarksburg Resin Blending | 1 | 1 | 0 | Yes
Weirton Warehouse | 0 | 1 | 0 | No
Recipient | Title / Role
Beatrice Holloway | Partner, Mergers & Acquisitions, Calderwood & Harkness LLP
Harrison Caldwell | Of Counsel, Environmental & Land Use, Calderwood & Harkness LLP
James Prentice | Partner, Mergers & Acquisitions, Calderwood & Harkness LLP
Rafael Dominguez | Associate, Environmental & Land Use, Calderwood & Harkness LLP
Simone Estrada | Paralegal, Mergers & Acquisitions, Calderwood & Harkness LLP

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP ATTORNEYS AT LAW

INTERNAL MEMORANDUM

MATTER NO.: 1006-00003

CALDERWOOD & HARKNESS LLP

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Parties

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