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

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MEMORANDUM

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum has been prepared by counsel for Crestline Packaging Solutions LLC in connection with the proposed acquisition of Allegheny Chemical Coatings, Inc. and is protected by the attorney-client privilege and the work product doctrine. This document should not be disclosed to any third party without the express written consent of Calderwood & Harkness LLP.

TO: Beatrice Holloway, Responsible Partner Harrison Caldwell, Of Counsel (Environmental & Land Use)

FROM: Rafael Dominguez, Associate (Real Estate)

DATE: September 2, 2022

RE: Phase I Environmental Site Assessment Review — Weirton Warehouse & Distribution Center, 600 Commerce Way, Weirton, WV 26062 (ACC Facility 4)

MATTER: Crestline Packaging Solutions LLC — Acquisition of Allegheny Chemical Coatings, Inc. (Matter No. 1006-00003)

I. EXECUTIVE SUMMARY

This memorandum presents Calderwood & Harkness LLP's review and analysis of the Phase I Environmental Site Assessment ("Phase I ESA") prepared by TerraVerde Environmental Consulting LLC ("TerraVerde") for the Weirton Warehouse & Distribution Center, located at 600 Commerce Way, Weirton, West Virginia 26062, Hancock County, West Virginia (Hancock County Parcel ID: 07-0304-0012-0000) (the "Property" or "Weirton facility"). The Phase I ESA was prepared under the direction of Kevin O'Malley, P.G., Project Manager, with Dr. Nina Sorensen, P.E., CHMM, serving as Principal-in-Charge, and is dated August 25, 2022. TerraVerde conducted the assessment in conformance with the current edition of the ASTM International Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process, ASTM E1527-21 (the "Standard").

The Weirton facility is one of four Allegheny Chemical Coatings, Inc. ("ACC") operating facilities currently under review as part of the comprehensive environmental due diligence program undertaken in connection with Crestline Packaging Solutions LLC's ("Crestline") proposed acquisition of one hundred percent (100%) of the outstanding common stock of ACC (the "Transaction"). The other three facilities under parallel review include the McKeesport Main Plant (Allegheny County, Pennsylvania), the Charleroi Specialty Coatings Plant (Washington County, Pennsylvania), and the Clarksburg Resin Blending Facility (Harrison County, West Virginia). Each facility is the subject of a separate Phase I ESA and corresponding legal review memorandum.

The principal finding of TerraVerde's Phase I ESA for the Weirton facility is as follows:

• One Controlled Recognized Environmental Condition ("CREC"): The Property is a remediated brownfield site operating under the West Virginia Voluntary Remediation and Redevelopment Program ("VRDP"), administered by the West Virginia Department of Environmental Protection ("WV DEP"). The WV DEP issued a Certificate of Completion for the Property in September 2015, confirming that remediation had been completed in accordance with the approved remedial action plan. The Property remains subject to ongoing engineering controls (an engineered cap consisting of the building slab, paved surfaces, and maintained clean soil cover) and institutional controls (a deed restriction recorded at the Hancock County Clerk's Office, Book 487, Page 89, restricting the property to commercial/industrial use and requiring maintenance of the engineering controls in perpetuity or until WV DEP issues a modification or release). Residual contamination remains in subsurface soils beneath the engineered cap, but no exposure pathway exists so long as the cap remains intact and the use restrictions are honored.

In addition, TerraVerde identified one de minimis condition: a minor hydraulic fluid stain on the warehouse floor, approximately four (4) square feet in area, likely attributable to a forklift hydraulic line leak. TerraVerde classified this condition as de minimis and not rising to the level of a Recognized Environmental Condition ("REC") under ASTM E1527-21. The stain is entirely on the concrete warehouse floor, which itself forms part of the engineered cap, and there is no evidence of any release to soil or groundwater.

Notably, TerraVerde identified no RECs and no Historical Recognized Environmental Conditions ("HRECs") at the Weirton facility. The absence of any REC is a significant positive finding and distinguishes the Weirton facility from the McKeesport Main Plant, which presents materially greater environmental risk.

Recommendation: Based on our review, no Phase II Environmental Site Assessment is recommended for the Weirton facility. The sole environmental finding — the CREC associated with the VRDP-remediated brownfield — relates to a condition that has been addressed to the satisfaction of the applicable regulatory authority, and the ongoing controls are being maintained. Conducting a Phase II subsurface investigation would require disturbance of the engineered cap, which is prohibited without prior WV DEP approval and would be counterproductive to the VRDP controls. However, Crestline should be mindful of the ongoing VRDP compliance obligations that will transfer with occupancy in a stock acquisition structure, and these obligations should be addressed in the environmental representations and warranties in the Stock Purchase Agreement ("SPA") and in Crestline's post-closing facility management protocols.

II. PURPOSE AND SCOPE OF REVIEW

Calderwood & Harkness LLP was engaged by Crestline Packaging Solutions LLC, through its General Counsel, Derek Huang, pursuant to the engagement letter dated July 19, 2022, to conduct environmental due diligence in connection with the proposed Transaction. The scope of our engagement encompasses the review and legal analysis of Phase I ESAs (and, where warranted, Phase II ESAs) for each of ACC's four operating facilities, together with the assessment of environmental risk, the evaluation of applicable regulatory programs and compliance obligations, the review of relevant lease provisions and real property instruments, and the preparation of recommendations for the transaction documentation.

This memorandum specifically analyzes TerraVerde's Phase I ESA findings for the Weirton Warehouse & Distribution Center and provides Calderwood & Harkness's legal assessment of the environmental conditions at the Property, the associated risk profile, and the implications for the proposed stock purchase transaction. The Phase I ESA for the Weirton facility was commissioned by Crestline under the direction of Calderwood & Harkness. TerraVerde Environmental Consulting LLC was retained as the environmental consultant for all four facility assessments. For the Weirton assessment, Kevin O'Malley, P.G., served as Project Manager and conducted the site reconnaissance, records review, and interviews. Dr. Nina Sorensen, P.E., CHMM, served as Principal-in-Charge and provided senior technical oversight and quality assurance review.

This memorandum should be read in conjunction with the parallel Phase I ESA review memoranda prepared for the McKeesport Main Plant (Allegheny County, Pennsylvania), the Charleroi Specialty Coatings Plant (Washington County, Pennsylvania), and the Clarksburg Resin Blending Facility (Harrison County, West Virginia). Collectively, these four memoranda form the basis for the environmental risk assessment summary that will be incorporated into the overall due diligence report to be delivered to Crestline's transaction team. Additionally, a separate memorandum analyzing the Weirton lease environmental provisions and VRDP Certificate of Completion in greater detail has been prepared and should be reviewed alongside this memorandum (see Weirton Lease and VRDP Certificate Review memorandum, prepared concurrently).

Our review is based upon the information contained in the Phase I ESA report, the supporting documentation obtained from the data room maintained by ACC's counsel (Whitfield & Burrows LLP), publicly available regulatory databases, and the recorded instruments identified in Section IV below. We have not independently verified the factual assertions made in the Phase I ESA, nor have we conducted any independent environmental testing, sampling, or field investigation. Our analysis and recommendations are subject to the assumptions and limitations stated herein and in TerraVerde's Phase I ESA report.

III. PROPERTY DESCRIPTION AND CURRENT OPERATIONS

A. Property Identification

The subject property is identified as follows:

The Property is situated within a commercial/industrial area along Commerce Way in the City of Weirton, a community in Hancock County in the Northern Panhandle of West Virginia. The surrounding land uses include light industrial and commercial operations, consistent with the area's historical association with the Weirton Steel operations and the broader economic redevelopment of the Weirton Steel brownfield complex. The Property is served by municipal water and sewer and is accessible from U.S. Route 22 via Commerce Way.

The improvements on the Property consist of a single-story, pre-engineered metal warehouse building of approximately 65,000 square feet, with an attached two-story office component of approximately 2,000 square feet. The building was constructed in 2016, approximately one year following the issuance of the VRDP Certificate of Completion. As discussed in Section IV below, the building slab was designed and constructed to serve as a component of the engineered cap required under the VRDP. The remainder of the site consists of paved truck courts, parking areas, and limited landscaped areas with maintained clean soil cover, all of which also function as components of the engineered cap.

B. Ownership and Tenancy

The Property is owned in fee simple by Northern Panhandle Realty Corp. ("NPRC"), a West Virginia corporation. Susan Delvecchio serves as President of NPRC. NPRC acquired the Property following the completion of the VRDP remediation and the issuance of the Certificate of Completion, and developed the warehouse facility in 2016 for commercial leasing purposes.

ACC occupies the Property under a commercial lease executed on March 1, 2018, with a ten-year term expiring February 28, 2028 (the "Weirton Lease"). The lease is structured as a double-net lease, under which ACC, as tenant, is responsible for property taxes, insurance, and maintenance of the interior of the premises, while NPRC, as landlord, retains responsibility for structural repairs and certain common area maintenance obligations.

Of particular significance to this review, the Weirton Lease is notably silent on environmental obligations beyond a general covenant requiring the tenant to comply with all applicable laws, ordinances, rules, and regulations in its use and occupancy of the premises. The lease does not contain any express environmental indemnification provisions running from the landlord to the tenant or from the tenant to the landlord with respect to pre-existing environmental conditions, including the VRDP-related conditions. This absence is noteworthy when contrasted with the lease for the Clarksburg Resin Blending Facility (Mountainview Properties LLC, as landlord), which contains express tenant remediation obligations and an environmental indemnification provision. The implications of the Weirton Lease's silence on environmental matters are discussed further in Section VII below.

C. Current Operations

The Weirton facility functions exclusively as a finished goods storage and distribution center for ACC's coated products. No manufacturing, processing, blending, mixing, or other industrial production activities are conducted at the site. The facility serves as a distribution hub for ACC products shipped to customers in the Ohio Valley and mid-Atlantic region, including customers in West Virginia, Ohio, western Pennsylvania, and portions of Virginia and Maryland.

The operational profile of the Weirton facility is significant from an environmental perspective because it substantially limits the potential for on-site generation, use, storage, or release of hazardous substances. Specifically:

• No hazardous waste is generated on-site. The Weirton facility is not a Resource Conservation and Recovery Act ("RCRA") hazardous waste generator, and no EPA Identification Number has been assigned to the facility for generator activities.

• No chemicals of concern are used or stored at the facility in quantities that would trigger reporting thresholds under the Emergency Planning and Community Right-to-Know Act ("EPCRA"), Section 302 or Section 313, or under any analogous West Virginia reporting requirements.

• The materials stored at the facility consist of finished, packaged coated products in sealed containers, ready for distribution. These products are not classified as hazardous waste under RCRA and do not present a material risk of release during normal warehousing and distribution operations.

• The primary equipment operated at the facility consists of forklifts and other material handling equipment, loading dock systems, and standard office equipment. The forklift fleet includes both electric and propane-powered units. The minor hydraulic fluid stain noted in the Phase I ESA (discussed in Section V.B below) is attributable to the forklift operations.

The limited operational scope of the Weirton facility distinguishes it from the McKeesport Main Plant and the Charleroi Specialty Coatings Plant, both of which involve active manufacturing operations with associated chemical use, waste generation, and emissions.

IV. ENVIRONMENTAL HISTORY OF THE PROPERTY

A. Pre-Development History (Former Weirton Steel Parcel)

Understanding the environmental history of the Property is essential to evaluating the CREC identified in the Phase I ESA. The Property at 600 Commerce Way was historically part of a larger parcel associated with the former Granite Harbor & Co. operations. Weirton Steel was one of the largest integrated steel producers in the United States and operated an extensive steelmaking complex in the City of Weirton for much of the twentieth century. The Weirton Steel operations encompassed thousands of acres along the Ohio River and included blast furnaces, coke ovens, rolling mills, tin plate mills, and various ancillary industrial operations.

Industrial steel operations at the broader Weirton Steel site resulted in significant soil and groundwater contamination across multiple parcels, including the parcel that now constitutes the Property. Contaminants of concern historically identified in the vicinity of the Property included, among others, heavy metals (including lead, arsenic, chromium, and zinc), polycyclic aromatic hydrocarbons ("PAHs"), and petroleum-related compounds. These contaminants are consistent with the types of contamination typically associated with integrated steel manufacturing operations.

Following the decline and eventual cessation of Weirton Steel operations, portions of the former steel complex were targeted for brownfield redevelopment. The parcel that now constitutes the Property was among those parcels identified for remediation and redevelopment under the West Virginia Voluntary Remediation and Redevelopment Program.

B. VRDP Certificate of Completion

The parcel was enrolled in the West Virginia Voluntary Remediation and Redevelopment Program ("VRDP"), codified at W. Va. Code §§ 22-22-1 et seq., and administered by the WV DEP's Division of Land Restoration. The VRDP is a voluntary cleanup program that provides a framework for the investigation, remediation, and redevelopment of contaminated properties, with liability protections for participants who complete the remediation process in accordance with an approved remedial action plan.

Remediation activities at the Property were conducted pursuant to an approved remedial action plan and were completed to the satisfaction of the WV DEP. In September 2015, the WV DEP issued a Certificate of Completion for the Property, confirming that the remediation had been completed in accordance with the approved plan and that the Property was suitable for commercial and industrial redevelopment use, subject to specified ongoing engineering and institutional controls.

The Certificate of Completion is a critical instrument for purposes of this Transaction. Under the VRDP statute, the Certificate provides liability protection to the parties enrolled in the VRDP, as well as to subsequent purchasers, tenants, lenders, and other parties who did not cause or contribute to the contamination, provided that the engineering and institutional controls established as conditions of the Certificate are maintained. See W. Va. Code § 22-22-12. This liability protection is a significant benefit that runs with the Property and would be available to Crestline (through ACC, as tenant) following the closing of the Transaction, so long as compliance with the controls is maintained.

A copy of the Certificate of Completion was obtained from the data room and is attached hereto as Attachment B.

C. Engineering Controls

As a condition of the VRDP Certificate of Completion, an engineered cap was established over the Property to prevent direct contact exposure to residual contamination remaining in subsurface soils. The engineered cap consists of the following components:

(a) The building slab of the warehouse facility, which was designed and constructed in 2016 to meet the specifications of the VRDP-approved cap design and provides a continuous impervious barrier over the footprint of the building;

(b) Paved surfaces, including the truck courts, loading areas, parking areas, and access drives, which provide impervious cover over the developed portions of the site outside the building footprint; and

(c) Maintained clean soil cover on any unpaved areas of the Property, including landscaped areas and vegetated buffers, with a minimum specified thickness of clean imported fill sufficient to prevent direct contact with underlying residual contamination.

The integrity of the engineered cap must be maintained as a continuing condition of the VRDP Certificate of Completion. Any breach, penetration, excavation, trenching, drilling, or other disturbance of the cap requires prior written approval from the WV DEP and must be conducted in accordance with appropriate health and safety protocols, including a site-specific health and safety plan addressing potential exposure to subsurface contaminants. Following any approved disturbance, the cap must be restored to its original condition or to a condition approved by the WV DEP.

The cap maintenance requirement is a perpetual obligation, or until such time as the WV DEP issues a modification or release of the engineering controls, and applies to the property owner, tenants, and all successors and assigns.

D. Institutional Controls (Deed Restriction)

In conjunction with the VRDP Certificate of Completion, a deed restriction was recorded at the Hancock County Clerk's Office, Book 487, Page 89 (the "Deed Restriction"). The Deed Restriction constitutes the institutional control component of the VRDP remedy and imposes the following key requirements and limitations:

(a) Land Use Restriction: The Property is restricted to commercial and/or industrial use. Residential use of the Property, including but not limited to single-family dwellings, multi-family dwellings, assisted living facilities, day care centers, schools, and similar residential or sensitive receptor uses, is expressly prohibited.

(b) Cap Maintenance Obligation: The property owner and all occupants of the Property are required to maintain the integrity of the engineering controls (the engineered cap) as described in the VRDP Certificate of Completion and the approved remedial action plan. No activity that could compromise the integrity of the cap shall be undertaken without prior written approval of the WV DEP.

(c) WV DEP Notification Requirements: The property owner is required to provide written notice to the WV DEP prior to (i) any change in use of the Property, (ii) any transfer of ownership of the Property, (iii) any modification of the lease or tenancy arrangements affecting the Property, or (iv) any proposed activity that could result in disturbance of the engineered cap.

(d) Runs with the Land: The Deed Restriction runs with the land and is binding upon all successors, assigns, heirs, lessees, and sublessees of the property owner, in perpetuity or until the WV DEP issues a written modification or release of the restriction.

A copy of the recorded Deed Restriction was obtained from the data room and is attached hereto as Attachment C. The Deed Restriction was reviewed for form and substance and appears to be consistent with standard WV DEP VRDP institutional controls.

E. Post-Remediation Development

The warehouse building was constructed in 2016, approximately one year following the issuance of the VRDP Certificate of Completion. Construction was conducted in accordance with VRDP requirements, including the design and installation of the building slab as a component of the engineered cap. TerraVerde's review of available construction records indicates that the construction activities were coordinated with the WV DEP and that appropriate health and safety protocols were followed during site preparation and foundation work, which necessarily involved limited subsurface disturbance within the cap restoration framework.

Since the completion of construction and the commencement of ACC's tenancy in March 2018, no environmental incidents, reportable releases, or regulatory violations have been documented at the Property. ACC's use of the facility for finished goods warehousing and distribution is fully consistent with the land use restrictions imposed by the Deed Restriction and the VRDP Certificate of Completion.

V. PHASE I ESA FINDINGS — DETAILED ANALYSIS

A. Controlled Recognized Environmental Condition (CREC)

CREC-1: VRDP Site with Ongoing Engineering and Institutional Controls

TerraVerde identified one Controlled Recognized Environmental Condition at the Property. This is the sole finding of environmental significance in the Phase I ESA. Under the ASTM E1527-21 Standard, a CREC is defined as follows:

A controlled recognized environmental condition is a recognized environmental condition resulting from a past release of hazardous substances or petroleum products that has been addressed to the satisfaction of the applicable regulatory authority (e.g., as evidenced by the issuance of a no further action letter or equivalent, or meeting risk-based criteria established by regulatory authority), with hazardous substances or petroleum products allowed to remain in place subject to the implementation of required controls (e.g., property use restrictions, activity and use limitations, institutional controls, or engineering controls).

The CREC at the Weirton facility arises from the following facts and circumstances:

The Property was historically part of the former Weirton Steel industrial complex. Industrial operations at the broader site resulted in contamination of subsurface soils with heavy metals, PAHs, and petroleum-related compounds. The parcel was enrolled in the WV VRDP, and remediation was conducted pursuant to an approved remedial action plan. The WV DEP issued a Certificate of Completion in September 2015, confirming that the remediation was complete and the Property was suitable for commercial/industrial reuse, subject to ongoing engineering controls (the engineered cap) and institutional controls (the Deed Restriction recorded at Book 487, Page 89, Hancock County Clerk's Office).

Residual contamination remains in subsurface soils beneath the engineered cap. The contamination has not been fully removed; rather, it has been managed to levels deemed acceptable by the WV DEP for commercial/industrial use, provided the cap remains intact and the use restrictions are honored. The presence of residual contamination beneath the cap, combined with the requirement for ongoing activity and use limitations, distinguishes this finding from a "no further action" scenario and is the basis for the CREC classification rather than an HREC classification.

The Property is suitable for its current commercial/industrial warehouse and distribution use. No exposure pathway to the residual subsurface contamination exists so long as the engineered cap remains intact and the deed restriction limiting use to commercial/industrial purposes is honored. TerraVerde observed no evidence of any breach or deterioration of the engineered cap during the site reconnaissance conducted on August 18, 2022. The building slab, paved surfaces, and clean soil cover areas were all observed to be in good condition.

This finding is entirely consistent with the Property's status as a brownfield redevelopment site and does not represent an immediate or active environmental liability, provided the engineering and institutional controls remain in compliance. The CREC classification is a standard and expected finding for properties with VRDP or similar voluntary cleanup program completions where residual contamination remains in place under managed controls.

B. De Minimis Conditions

Minor Hydraulic Fluid Stain

During TerraVerde's site reconnaissance on August 18, 2022, the assessor observed a minor hydraulic fluid stain on the concrete floor of the warehouse, in the vicinity of the forklift staging area near the southeast loading docks. The stain was approximately four (4) square feet in area and appeared to be of recent origin, consistent with a leak from a forklift hydraulic line. Hydraulic fluid was not actively leaking at the time of the site visit, and facility personnel indicated that a work order for repair of the affected forklift had been submitted.

TerraVerde classified this observation as a de minimis condition that does not rise to the level of a REC under ASTM E1527-21. The Standard recognizes that certain conditions, by their nature, are not significant enough to warrant identification as RECs, even though they may involve the presence of petroleum products or other materials. The hydraulic fluid stain is de minimis for the following reasons:

(a) The volume of hydraulic fluid involved is negligible — the stain area is approximately four square feet with no measurable depth or pooling.

(b) The stain is located entirely on the concrete warehouse floor, which is part of the engineered cap. There is no evidence of any penetration through the concrete slab or any release to subsurface soils or groundwater.

(c) The condition is readily addressable through routine housekeeping cleanup measures (e.g., application of absorbent material, cleaning with appropriate degreasing agents, and repair of the forklift hydraulic line).

(d) The condition does not represent a material threat of release of hazardous substances to the environment.

TerraVerde recommended routine housekeeping cleanup of the stain, and no further investigation is warranted. We concur with TerraVerde's classification and recommendation.

C. Findings Not Identified

The Phase I ESA did not identify any of the following conditions at the Weirton facility:

No Recognized Environmental Conditions (RECs): TerraVerde did not identify any recognized environmental conditions at the Property. No evidence was found of any unaddressed release or material threat of release of hazardous substances or petroleum products into structures on the Property, or into the ground, groundwater, or surface water of the Property, that would constitute a REC under ASTM E1527-21. This is a significant positive finding and indicates that the current operations at the facility have not resulted in any environmental contamination requiring investigation or remediation.

No Historical Recognized Environmental Conditions (HRECs): TerraVerde did not identify any historical recognized environmental conditions at the Property. Under the Standard, an HREC is 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, without any subjection to required activity and use limitations. The prior contamination at the Property has been addressed through the VRDP; however, because activity and use limitations remain in place (the engineering controls and institutional controls described in Section IV above), the condition is properly classified as a CREC rather than an HREC. If the WV DEP were to release the Property from the engineering and institutional controls in the future (indicating that the remaining contamination no longer poses a risk even without the controls), the classification could theoretically be reclassified as an HREC. However, no such release is anticipated, and the condition is appropriately classified as a CREC at this time.

VI. REGULATORY STATUS REVIEW

TerraVerde conducted a comprehensive regulatory database review as part of the Phase I ESA, utilizing standard federal and state environmental database sources. Calderwood & Harkness has reviewed TerraVerde's regulatory findings and supplemented them with our own review of publicly available records. The regulatory status of the Weirton facility is summarized below.

A. RCRA. The Weirton Warehouse & Distribution Center is not a hazardous waste generator under the Resource Conservation and Recovery Act. No RCRA generator status applies to the facility, and no EPA Identification Number has been assigned for generator activities. This is consistent with the nature of operations at the facility, which involve only finished goods storage and distribution, with no manufacturing processes that would generate hazardous waste.

No RCRA violations, enforcement actions, compliance orders, or consent agreements were identified for the Weirton facility in TerraVerde's regulatory database review. The facility does not appear on the RCRIS (Resource Conservation and Recovery Information System) database or the FINDS (Facility Index System) database in connection with any generator, transporter, or treatment, storage, or disposal facility status.

B. Air Permits

No air permit or air emission registration is required for the Weirton facility. The facility does not operate any emission sources that would trigger permitting requirements under the Clean Air Act, the West Virginia Air Pollution Control Act, or the WV DEP's Division of Air Quality regulations. The absence of manufacturing or processing operations at the facility eliminates the potential for air emissions associated with industrial coating, blending, or other chemical processes.

C. Water/NPDES Permits

No National Pollutant Discharge Elimination System ("NPDES") permit or other water discharge permit was identified for the Weirton facility. The facility does not discharge process wastewater or any other industrial wastewater to surface waters or publicly owned treatment works beyond ordinary sanitary sewage.

Stormwater at the Property is managed through site grading, curbing, and stormwater infrastructure (including catch basins, storm drains, and detention/retention features) installed during the 2016 construction of the facility. TerraVerde did not identify any stormwater discharge issues or violations. The stormwater management system was designed and installed in accordance with applicable WV DEP construction stormwater permit requirements and local Hancock County stormwater regulations.

D. CERCLA/Superfund. The Property is not listed on the National Priorities List ("NPL") under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601 et seq. No CERCLA activity, including preliminary assessments, site inspections, remedial investigations, or removal actions, was identified in connection with this specific parcel. While the broader former Weirton Steel complex has been the subject of various environmental investigations and cleanup activities over the years, the specific parcel constituting the Property was addressed through the state VRDP rather than through federal CERCLA action. The VRDP Certificate of Completion provides the applicable framework for liability protection at this Property.

E. WV DEP Status

The Property's VRDP status is current and in good standing. TerraVerde's regulatory database review and direct inquiry with the WV DEP's Division of Land Restoration confirmed that no pending enforcement actions, compliance orders, notices of violation, or administrative proceedings were identified in connection with the Property. The Certificate of Completion issued in September 2015 remains in effect, and the WV DEP has not issued any notices of noncompliance with the engineering or institutional controls.

The Property does not appear on any WV DEP lists of known or suspected contaminated sites requiring investigation or remediation beyond its current VRDP status.

F. Spill/Release History

No reportable spills or releases have been documented at the Weirton facility since its construction in 2016 or during ACC's tenancy commencing March 2018. TerraVerde's review of the WV DEP's spill/release database, the National Response Center's records, and ACC's internal environmental records (obtained from the data room) did not identify any spill reports, release notifications, or emergency response actions associated with the Property. This clean spill/release history is consistent with the limited operational scope of the facility (finished goods warehousing and distribution only).

VII. LEASE CONSIDERATIONS AND SUCCESSOR OBLIGATIONS

A. Lease Environmental Provisions

The Weirton Lease between ACC, as tenant, and Northern Panhandle Realty Corp., as landlord, was executed on March 1, 2018, for a ten-year term expiring February 28, 2028. As noted in Section III.B above, the lease is structured as a double-net lease. Calderwood & Harkness has reviewed the environmental and use restriction provisions of the Weirton Lease in connection with this Phase I ESA review. A more detailed analysis of the lease provisions is contained in the separate Weirton Lease and VRDP Certificate Review memorandum.

The Weirton Lease is notable for its relative silence on environmental matters. The lease contains a general covenant requiring the tenant to comply with all applicable laws, ordinances, rules, and regulations in its use and occupancy of the premises, which would encompass compliance with the VRDP engineering and institutional controls as a matter of general legal obligation. However, the lease does not contain any of the following provisions that are commonly found in commercial leases for properties with known environmental conditions:

(a) No express allocation of responsibility for pre-existing environmental conditions (including the VRDP-related conditions);

(b) No environmental indemnification provision running from the landlord to the tenant, or from the tenant to the landlord, with respect to pre-existing contamination or VRDP compliance obligations;

(c) No express obligation on the part of the tenant to maintain the engineering controls (cap) or to comply with the deed restriction, beyond the general "comply with applicable law" covenant;

(d) No requirement that the tenant notify the landlord (or the WV DEP) of any activities that could affect the integrity of the cap or the VRDP controls; and

(e) No requirement that the tenant obtain the landlord's consent or the WV DEP's approval prior to undertaking any subsurface disturbance at the Property.

This stands in contrast to the lease for the Clarksburg Resin Blending Facility, where the landlord (Mountainview Properties LLC) negotiated express tenant remediation obligations and an environmental indemnification provision. The absence of specific environmental provisions in the Weirton Lease creates a degree of ambiguity regarding the allocation of responsibility for any future environmental issues that may arise at the Property. However, the practical significance of this gap is mitigated by the fact that the current environmental risk at the Weirton facility is minimal, given the nature of operations (distribution only, no hazardous materials usage or waste generation), the VRDP Certificate of Completion, and the maintained engineering and institutional controls.

B. VRDP Compliance Obligations as Successor Occupant

Because the proposed Transaction is structured as a stock acquisition — in which Crestline will acquire one hundred percent of the outstanding common stock of ACC — Crestline will effectively step into ACC's shoes as the tenant under the existing Weirton Lease. The tenant entity (ACC) itself will not change; rather, its ownership will transfer from the current shareholders to Crestline. As a result, Crestline will inherit ACC's responsibility for maintaining compliance with the VRDP institutional and engineering controls during ACC's continued occupancy of the Property.

The key VRDP compliance obligations applicable to ACC as the occupant of the Property include the following:

(a) Cap Maintenance: ACC must maintain the integrity of the engineered cap, including the building slab, paved surfaces, and clean soil cover areas. This includes promptly repairing any damage to the cap (e.g., cracks in the building slab, deterioration of paved surfaces, erosion of clean soil cover areas) that could compromise the cap's function as a barrier to direct contact exposure.

(b) Prohibition on Subsurface Disturbance: ACC may not conduct any excavation, trenching, drilling, boring, or other subsurface disturbance at the Property without prior written approval from the WV DEP. This restriction applies to all activities that could penetrate the engineered cap, including routine maintenance activities such as utility repairs, foundation modifications, and landscaping activities involving soil disturbance.

(c) Land Use Restrictions: ACC may not use the Property for residential purposes or any other use prohibited by the Deed Restriction. The current use (warehouse and distribution) is consistent with the restriction.

(d) WV DEP Notification: Although the notification requirements in the Deed Restriction are primarily directed to the property owner (NPRC), ACC should be aware of the requirement that the WV DEP be notified of changes in ownership, tenancy, or proposed modifications to the site. As discussed in Section VII.C below, Crestline should confirm whether the stock-level change of control triggers any notification obligation.

Failure to maintain the engineering and institutional controls could have significant consequences. Under the VRDP statute, loss of compliance with the required controls could result in the loss of the liability protection provided by the Certificate of Completion. See W. Va. Code § 22-22-12. In such a scenario, the occupant of the Property could potentially be exposed to cleanup obligations under state or federal environmental law, including potential CERCLA liability for the residual contamination remaining in subsurface soils. Additionally, the WV DEP could pursue enforcement action against the property owner or occupant for failure to maintain the controls.

These obligations should be addressed in the Transaction documentation in two ways. First, the environmental representations and warranties in Article IV, Section 4.18 of the draft Stock Purchase Agreement should include specific representations regarding ACC's compliance with the VRDP controls during its tenancy, as discussed in Section X.A below. Second, Crestline's environmental, health, and safety ("EHS") team — specifically Patricia Okonkwo, Vice President of Environmental Health & Safety — should be briefed on the VRDP compliance obligations and should incorporate the cap maintenance requirements and land-use restrictions into Crestline's post-closing facility management protocols for the Weirton facility.

C. Landlord Notification Considerations

The Deed Restriction recorded at Book 487, Page 89, Hancock County Clerk's Office, imposes notification requirements on the property owner (NPRC) with respect to certain changes affecting the Property, including transfers of ownership and modifications to tenancy arrangements. Given the stock purchase structure of the Transaction, the tenant entity (ACC) will not change — ACC will remain the tenant under the Weirton Lease. The change of control will occur at the shareholder level, with Crestline replacing the current ACC shareholders as the owner of ACC's stock.

The question arises whether the stock-level change of control of the tenant constitutes a "change in tenancy" or other event triggering notification to the WV DEP under the Deed Restriction. In our preliminary assessment, the stock-level change of control does not alter the identity of the tenant (ACC remains ACC), and therefore may not technically trigger the notification requirement. However, the Deed Restriction's language regarding "modifications to tenancy arrangements" is arguably broad enough to encompass a change of control of the tenant entity, and the WV DEP may take the position that such a change warrants notification.

We recommend that Crestline confirm with Susan Delvecchio (President, NPRC) and, if appropriate, directly with the WV DEP, whether the stock-level change of control would trigger any notification requirement under the Deed Restriction. As a matter of prudent practice, and to preserve the cooperative relationship with the WV DEP that is essential to maintaining the VRDP liability protections, we further recommend that Crestline consider providing voluntary notice to the WV DEP of the change of control, even if such notice is not strictly required. Such notice would demonstrate Crestline's awareness of and commitment to the VRDP compliance obligations and would help establish a positive relationship with the regulatory agency going forward.

VIII. RISK ASSESSMENT

A. Risk Rating

Overall Environmental Risk: Low

Based on Calderwood & Harkness's review of TerraVerde's Phase I ESA, the regulatory status of the Property, the VRDP Certificate of Completion and associated controls, and the current operational profile of the Weirton facility, we assign an overall environmental risk rating of Low to the Weirton Warehouse & Distribution Center.

This risk rating is based on the following considerations:

(a) The sole environmental condition of note is the CREC associated with the VRDP-remediated brownfield. This condition has been addressed to the satisfaction of the WV DEP, and the ongoing engineering and institutional controls are being maintained.

(b) The VRDP Certificate of Completion provides significant statutory liability protection to the property owner, tenants, and successors, provided the controls are maintained. This liability protection substantially mitigates the risk associated with the residual subsurface contamination.

(c) No manufacturing operations are conducted at the facility. No hazardous waste is generated on-site. No chemicals of concern are used or stored in reportable quantities. The operational profile of the facility — finished goods warehousing and distribution — presents minimal potential for the generation of new environmental contamination.

(d) The de minimis hydraulic fluid stain on the warehouse floor presents no material environmental risk and is readily addressable through routine housekeeping measures.

(e) No RECs or HRECs were identified. The regulatory record for the Property is clean, with no violations, enforcement actions, or reportable spills/releases.

B. Financial Exposure

No remediation cost exposure is anticipated for the Weirton facility, provided the engineering and institutional controls remain intact and the facility continues to be used for its current purpose as a warehouse and distribution center. The VRDP Certificate of Completion effectively resolves the historical contamination issue for the Property's current use, and no additional investigation or remediation is required so long as the controls are maintained.

There is a theoretical risk that if the engineered cap were breached or the controls were not maintained, the VRDP protections could be lost, potentially exposing the occupant to cleanup obligations for the residual subsurface contamination. However, this risk is manageable through standard facility management practices, including periodic inspection of the cap, adherence to the land-use restrictions, and compliance with the WV DEP notification requirements. The cost of maintaining the cap is nominal and is incorporated into routine facility maintenance.

In the preliminary environmental liability estimates prepared for the Transaction, no allocation to the environmental liability range of $1.925 million to $4.345 million across all four ACC facilities has been attributed to the Weirton facility. The entirety of the estimated environmental liability range is attributed to the McKeesport Main Plant and, to a lesser extent, the Clarksburg Resin Blending Facility, where active environmental conditions requiring further investigation and potential remediation have been identified. The Weirton facility, along with the Charleroi facility, contributes a de minimis or zero environmental liability allocation to the Transaction.

C. Comparison to Other ACC Facilities

To provide context for the Weirton facility's environmental risk profile within the broader Transaction, the following comparative summary is offered:

The Weirton facility presents the lowest environmental risk profile of the four ACC facilities under review, alongside the Charleroi facility. By contrast, the McKeesport Main Plant presents the most significant environmental concerns, with two RECs and one HREC, Phase II investigation results showing exceedances of applicable residential and non-residential soil screening standards for multiple contaminants, and a preliminary remediation cost estimate that constitutes the majority of the Transaction's aggregate environmental liability range. The Clarksburg facility presents a moderate risk profile, with one CREC (similar to Weirton) and one REC related to a suspected release from an underground storage tank, with a Phase II investigation currently pending.

The Charleroi facility, like Weirton, presents a clean environmental profile with no RECs, CRECs, or HRECs and no Phase II investigation recommended.

IX. PHASE II RECOMMENDATION

No Phase II Environmental Site Assessment is recommended for the Weirton Warehouse & Distribution Center.

This recommendation is based on the following rationale:

1. The sole environmental finding at the Property is the CREC related to the VRDP-remediated brownfield. This condition has been addressed through the VRDP to the satisfaction of the WV DEP, and regulatory approval of the remediation has been documented by the Certificate of Completion issued in September 2015. The nature and extent of the residual subsurface contamination were characterized during the VRDP investigation and remediation process, and the WV DEP determined that the contamination is adequately managed through the engineering and institutional controls. A Phase II investigation at this time would not yield new information that would materially alter the risk assessment for the Property.

2. A Phase II subsurface investigation would require physical disturbance of the engineered cap — including soil borings, test pits, or other invasive sampling techniques that would penetrate the building slab, paved surfaces, or clean soil cover. Such disturbance is expressly prohibited without prior written approval from the WV DEP under both the VRDP Certificate of Completion and the Deed Restriction. Conducting a Phase II investigation would therefore require regulatory approval that may not be forthcoming (given the absence of any regulatory basis for additional investigation), and the physical disturbance itself would be counterproductive to the VRDP controls that are designed to prevent exposure to the residual contamination.

3. No RECs were identified at the Property that would warrant further investigation under ASTM E1527-21. The Standard contemplates that Phase II investigation is appropriate when RECs are identified that suggest the presence of contamination requiring further characterization. In the absence of any REC, there is no basis under the Standard for recommending a Phase II investigation.

4. The de minimis hydraulic fluid stain on the warehouse floor does not warrant subsurface investigation. The stain is entirely on the concrete surface, there is no evidence of any release to the subsurface, and the condition is readily addressable through routine housekeeping cleanup.

We note that a draft landlord consent letter for a Phase II investigation at the Weirton facility was prepared in advance by this firm as part of the standard due diligence protocol for all four ACC facilities. In light of the determination that Phase II is not recommended for the Weirton facility, the draft landlord consent letter is not being transmitted to Northern Panhandle Realty Corp. and will be retained in the matter file.

X. TRANSACTION DOCUMENT RECOMMENDATIONS

A. Environmental Representations and Warranties

The environmental representations and warranties in Article IV, Section 4.18 of the draft Stock Purchase Agreement (dated August 12, 2022), as currently drafted, should be supplemented to address the VRDP-related conditions at the Weirton facility. Specifically, we recommend the following:

1. VRDP Disclosure: The VRDP Certificate of Completion (September 2015) and the associated Deed Restriction (Book 487, Page 89, Hancock County Clerk's Office) should be identified as scheduled items on the disclosure schedules to the environmental representations. The current draft of Schedule 4.18 does not specifically reference these instruments, and they should be added to ensure full disclosure and to prevent any claim that the VRDP conditions constitute a breach of ACC's environmental representations.

2. VRDP Compliance Representation: ACC should represent and warrant that, during its tenancy at the Weirton facility (commencing March 1, 2018), it has maintained compliance with all VRDP engineering and institutional controls applicable to the Property, including the cap maintenance requirements and the land-use restrictions imposed by the Deed Restriction.

3. No Subsurface Disturbance Representation: ACC should represent and warrant that it has not conducted, authorized, or permitted any subsurface disturbance (including excavation, trenching, drilling, or boring) at the Weirton Property without prior written approval from the WV DEP, and that no such disturbance has occurred during ACC's tenancy to the knowledge of ACC's officers and management.

4. No Environmental Releases Representation: ACC should represent and warrant that no releases of hazardous substances or petroleum products have occurred at the Weirton Property during ACC's occupancy, and that no environmental incidents requiring reporting to any governmental authority have occurred at the Property during ACC's tenancy.

These representations should be qualified by ACC's knowledge to the extent appropriate and should be subject to the standard survival and indemnification provisions of the SPA. We will coordinate with Harrison Caldwell on the specific drafting of these provisions in connection with the next revision of the SPA.

B. Post-Closing Compliance

Following the closing of the Transaction, Crestline will assume responsibility for ACC's ongoing VRDP compliance obligations at the Weirton facility through its ownership of ACC. To ensure seamless compliance, we recommend the following post-closing actions:

1. EHS Briefing: Patricia Okonkwo, Vice President of Environmental Health & Safety for Crestline, should be briefed on the VRDP compliance obligations applicable to the Weirton facility, including the cap maintenance requirements, the prohibition on subsurface disturbance, and the land-use restrictions imposed by the Deed Restriction. This briefing should occur prior to closing or immediately following closing, and should include a review of the Certificate of Completion, the Deed Restriction, and the relevant portions of TerraVerde's Phase I ESA.

2. Facility Management Integration: The VRDP compliance obligations should be incorporated into Crestline's post-closing facility management program for the Weirton facility. This should include standard operating procedures for cap maintenance and inspection, protocols for responding to any cap damage or deterioration, and procedures for obtaining WV DEP approval prior to any activities that could affect the cap.

3. Periodic Cap Inspections: Periodic inspection of the integrity of the engineered cap should be incorporated into routine facility audits. We recommend that cap inspections be conducted at least annually and that the results be documented and retained in the facility's environmental compliance files.

4. Employee Training: Facility personnel at the Weirton warehouse should be trained on the VRDP requirements, including the prohibition on unauthorized subsurface disturbance, to prevent inadvertent violations.

C. Lease Analysis Cross-Reference

A separate memorandum analyzing the environmental provisions (or absence thereof) in the Weirton Lease, together with a detailed review of the VRDP Certificate of Completion and the Deed Restriction, has been prepared concurrently with this memorandum. That memorandum addresses, among other things, the allocation of environmental responsibilities between the landlord (NPRC) and the tenant (ACC) under the existing lease framework, the potential need for a lease amendment or side letter to clarify environmental obligations, and the implications of the Deed Restriction's notification requirements for the Transaction. Please refer to the Weirton Lease and VRDP Certificate Review memorandum for the detailed lease analysis.

XI. CONCLUSION

The Weirton Warehouse & Distribution Center presents a low environmental risk profile among the four ACC operating facilities under review in connection with Crestline's proposed acquisition of Allegheny Chemical Coatings, Inc. The sole environmental finding of significance is a Controlled Recognized Environmental Condition related to the Property's history as a remediated brownfield site under the West Virginia Voluntary Remediation and Redevelopment Program. The WV DEP issued a Certificate of Completion in September 2015, confirming that remediation was completed to regulatory satisfaction, and ongoing engineering controls (the engineered cap) and institutional controls (the Deed Restriction recorded at Book 487, Page 89, Hancock County Clerk's Office) are maintained and in compliance. The VRDP Certificate provides significant liability protection to current and future occupants, provided the controls remain in place.

A de minimis hydraulic fluid stain of approximately four square feet on the warehouse floor was noted by TerraVerde as a de minimis condition that does not constitute a Recognized Environmental Condition under ASTM E1527-21. No Recognized Environmental Conditions and no Historical Recognized Environmental Conditions were identified at the Weirton facility.

No Phase II Environmental Site Assessment is recommended for this facility. Crestline should ensure that the VRDP compliance obligations are appropriately addressed in the environmental representations and warranties in the Stock Purchase Agreement, disclosed on the applicable schedules, and incorporated into Crestline's post-closing facility management protocols under the direction of Patricia Okonkwo, VP of Environmental Health & Safety.

This memorandum, together with the parallel Phase I ESA review memoranda for the other three ACC facilities and the Weirton Lease and VRDP Certificate Review memorandum, forms part of the comprehensive environmental due diligence record for the Transaction.

Please contact me with any questions or if you require any additional analysis. I am available to discuss the findings and recommendations in this memorandum at your convenience.

Rafael Dominguez Associate, Real Estate Practice Group Calderwood & Harkness LLP Direct: (412) 555-0147 rdominguez@calderwoodharkness.com

XII. ATTACHMENTS AND REFERENCES

Attachments. Attachment A: TerraVerde Environmental Consulting LLC, Phase I Environmental Site Assessment, Weirton Warehouse & Distribution Center, 600 Commerce Way, Weirton, WV 26062, dated August 25, 2022 (Kevin O'Malley, P.G., Project Manager; Dr. Nina Sorensen, P.E., CHMM, Principal-in-Charge)

Attachment B: West Virginia Department of Environmental Protection, Voluntary Remediation and Redevelopment Program, Certificate of Completion, 600 Commerce Way, Weirton, WV 26062 (September 2015) [copy obtained from ACC data room]

Attachment C: Deed Restriction, recorded at Hancock County Clerk's Office, Book 487, Page 89, Hancock County, West Virginia [copy obtained from ACC data room]

Attachment D: Lease Agreement between Northern Panhandle Realty Corp. (Landlord) and Allegheny Chemical Coatings, Inc. (Tenant), dated March 1, 2018, for premises at 600 Commerce Way, Weirton, WV 26062 [excerpt — environmental provisions and use restrictions only]

Cross-References. The following related memoranda and documents should be reviewed in conjunction with this memorandum:

• Phase I ESA Review Memorandum — McKeesport Main Plant (Allegheny County, PA)

• Phase I ESA Review Memorandum — Charleroi Specialty Coatings Plant (Washington County, PA)

• Phase I ESA Review Memorandum — Clarksburg Resin Blending Facility (Harrison County, WV)

• Weirton Lease and VRDP Certificate Review Memorandum

• Environmental Due Diligence Summary and Risk Assessment (aggregate, all four ACC facilities) (in preparation)

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum is a privileged and confidential communication prepared by Calderwood & Harkness LLP in its capacity as legal counsel to Crestline Packaging Solutions LLC. It is protected by the attorney-client privilege and the attorney work product doctrine. It is not intended for distribution to, or reliance by, any third party without the express written consent of Calderwood & Harkness LLP. The opinions and recommendations contained herein are based on the information available as of the date of this memorandum and are subject to change based on additional information, developments, or analysis.

Attribute	Detail
Street Address	600 Commerce Way, Weirton, WV 26062
County	Hancock County, West Virginia
Parcel ID	07-0304-0012-0000
Total Acreage	3.1 acres
Improvements	Approximately 65,000 SF warehouse facility; approximately 2,000 SF attached office space
Year Constructed	2016
Zoning	Commercial/Industrial (consistent with VRDP deed restriction)
Facility	RECs	CRECs	HRECs	Phase II Recommended	Risk Rating
McKeesport Main Plant	2	0	1	Yes (completed)	High
Charleroi Specialty Coatings Plant	0	0	0	No	Low
Clarksburg Resin Blending Facility	1	1	0	Yes (pending)	Moderate
Weirton Warehouse & Distribution Center	0	1	0	No	Low

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum has been prepared by counsel for Crestline Packaging Solutions LLC in connection with the proposed acquisition of Allegheny Chemical Coatings, Inc. and is protected by the attorney-client privilege and the work product doctrine. This document should not be disclosed to any third party without the express written consent of Calderwood & Harkness LLP.
TO: Beatrice Holloway, Responsible Partner Harrison Caldwell, Of Counsel (Environmental & Land Use)
FROM: Rafael Dominguez, Associate (Real Estate)
DATE: September 2, 2022
RE: Phase I Environmental Site Assessment Review — Weirton Warehouse & Distribution Center, 600 Commerce Way, Weirton, WV 26062 (ACC Facility 4)
MATTER: Crestline Packaging Solutions LLC — Acquisition of Allegheny Chemical Coatings, Inc. (Matter No. 1006-00003)
I. EXECUTIVE SUMMARY
This memorandum presents Calderwood & Harkness LLP's review and analysis of the Phase I Environmental Site Assessment ("Phase I ESA") prepared by TerraVerde Environmental Consulting LLC ("TerraVerde") for the Weirton Warehouse & Distribution Center, located at 600 Commerce Way, Weirton, West Virginia 26062, Hancock County, West Virginia (Hancock County Parcel ID: 07-0304-0012-0000) (the "Property" or "Weirton facility"). The Phase I ESA was prepared under the direction of Kevin O'Malley, P.G., Project Manager, with Dr. Nina Sorensen, P.E., CHMM, serving as Principal-in-Charge, and is dated August 25, 2022. TerraVerde conducted the assessment in conformance with the current edition of the ASTM International Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process, ASTM E1527-21 (the "Standard").
The Weirton facility is one of four Allegheny Chemical Coatings, Inc. ("ACC") operating facilities currently under review as part of the comprehensive environmental due diligence program undertaken in connection with Crestline Packaging Solutions LLC's ("Crestline") proposed acquisition of one hundred percent (100%) of the outstanding common stock of ACC (the "Transaction"). The other three facilities under parallel review include the McKeesport Main Plant (Allegheny County, Pennsylvania), the Charleroi Specialty Coatings Plant (Washington County, Pennsylvania), and the Clarksburg Resin Blending Facility (Harrison County, West Virginia). Each facility is the subject of a separate Phase I ESA and corresponding legal review memorandum.
The principal finding of TerraVerde's Phase I ESA for the Weirton facility is as follows:
• One Controlled Recognized Environmental Condition ("CREC"): The Property is a remediated brownfield site operating under the West Virginia Voluntary Remediation and Redevelopment Program ("VRDP"), administered by the West Virginia Department of Environmental Protection ("WV DEP"). The WV DEP issued a Certificate of Completion for the Property in September 2015, confirming that remediation had been completed in accordance with the approved remedial action plan. The Property remains subject to ongoing engineering controls (an engineered cap consisting of the building slab, paved surfaces, and maintained clean soil cover) and institutional controls (a deed restriction recorded at the Hancock County Clerk's Office, Book 487, Page 89, restricting the property to commercial/industrial use and requiring maintenance of the engineering controls in perpetuity or until WV DEP issues a modification or release). Residual contamination remains in subsurface soils beneath the engineered cap, but no exposure pathway exists so long as the cap remains intact and the use restrictions are honored.
In addition, TerraVerde identified one de minimis condition: a minor hydraulic fluid stain on the warehouse floor, approximately four (4) square feet in area, likely attributable to a forklift hydraulic line leak. TerraVerde classified this condition as de minimis and not rising to the level of a Recognized Environmental Condition ("REC") under ASTM E1527-21. The stain is entirely on the concrete warehouse floor, which itself forms part of the engineered cap, and there is no evidence of any release to soil or groundwater.
Notably, TerraVerde identified no RECs and no Historical Recognized Environmental Conditions ("HRECs") at the Weirton facility. The absence of any REC is a significant positive finding and distinguishes the Weirton facility from the McKeesport Main Plant, which presents materially greater environmental risk.
Recommendation: Based on our review, no Phase II Environmental Site Assessment is recommended for the Weirton facility. The sole environmental finding — the CREC associated with the VRDP-remediated brownfield — relates to a condition that has been addressed to the satisfaction of the applicable regulatory authority, and the ongoing controls are being maintained. Conducting a Phase II subsurface investigation would require disturbance of the engineered cap, which is prohibited without prior WV DEP approval and would be counterproductive to the VRDP controls. However, Crestline should be mindful of the ongoing VRDP compliance obligations that will transfer with occupancy in a stock acquisition structure, and these obligations should be addressed in the environmental representations and warranties in the Stock Purchase Agreement ("SPA") and in Crestline's post-closing facility management protocols.
II. PURPOSE AND SCOPE OF REVIEW
Calderwood & Harkness LLP was engaged by Crestline Packaging Solutions LLC, through its General Counsel, Derek Huang, pursuant to the engagement letter dated July 19, 2022, to conduct environmental due diligence in connection with the proposed Transaction. The scope of our engagement encompasses the review and legal analysis of Phase I ESAs (and, where warranted, Phase II ESAs) for each of ACC's four operating facilities, together with the assessment of environmental risk, the evaluation of applicable regulatory programs and compliance obligations, the review of relevant lease provisions and real property instruments, and the preparation of recommendations for the transaction documentation.
This memorandum specifically analyzes TerraVerde's Phase I ESA findings for the Weirton Warehouse & Distribution Center and provides Calderwood & Harkness's legal assessment of the environmental conditions at the Property, the associated risk profile, and the implications for the proposed stock purchase transaction. The Phase I ESA for the Weirton facility was commissioned by Crestline under the direction of Calderwood & Harkness. TerraVerde Environmental Consulting LLC was retained as the environmental consultant for all four facility assessments. For the Weirton assessment, Kevin O'Malley, P.G., served as Project Manager and conducted the site reconnaissance, records review, and interviews. Dr. Nina Sorensen, P.E., CHMM, served as Principal-in-Charge and provided senior technical oversight and quality assurance review.
This memorandum should be read in conjunction with the parallel Phase I ESA review memoranda prepared for the McKeesport Main Plant (Allegheny County, Pennsylvania), the Charleroi Specialty Coatings Plant (Washington County, Pennsylvania), and the Clarksburg Resin Blending Facility (Harrison County, West Virginia). Collectively, these four memoranda form the basis for the environmental risk assessment summary that will be incorporated into the overall due diligence report to be delivered to Crestline's transaction team. Additionally, a separate memorandum analyzing the Weirton lease environmental provisions and VRDP Certificate of Completion in greater detail has been prepared and should be reviewed alongside this memorandum (see Weirton Lease and VRDP Certificate Review memorandum, prepared concurrently).
Our review is based upon the information contained in the Phase I ESA report, the supporting documentation obtained from the data room maintained by ACC's counsel (Whitfield & Burrows LLP), publicly available regulatory databases, and the recorded instruments identified in Section IV below. We have not independently verified the factual assertions made in the Phase I ESA, nor have we conducted any independent environmental testing, sampling, or field investigation. Our analysis and recommendations are subject to the assumptions and limitations stated herein and in TerraVerde's Phase I ESA report.
III. PROPERTY DESCRIPTION AND CURRENT OPERATIONS
A. Property Identification
The subject property is identified as follows:
The Property is situated within a commercial/industrial area along Commerce Way in the City of Weirton, a community in Hancock County in the Northern Panhandle of West Virginia. The surrounding land uses include light industrial and commercial operations, consistent with the area's historical association with the Weirton Steel operations and the broader economic redevelopment of the Weirton Steel brownfield complex. The Property is served by municipal water and sewer and is accessible from U.S. Route 22 via Commerce Way.
The improvements on the Property consist of a single-story, pre-engineered metal warehouse building of approximately 65,000 square feet, with an attached two-story office component of approximately 2,000 square feet. The building was constructed in 2016, approximately one year following the issuance of the VRDP Certificate of Completion. As discussed in Section IV below, the building slab was designed and constructed to serve as a component of the engineered cap required under the VRDP. The remainder of the site consists of paved truck courts, parking areas, and limited landscaped areas with maintained clean soil cover, all of which also function as components of the engineered cap.
B. Ownership and Tenancy
The Property is owned in fee simple by Northern Panhandle Realty Corp. ("NPRC"), a West Virginia corporation. Susan Delvecchio serves as President of NPRC. NPRC acquired the Property following the completion of the VRDP remediation and the issuance of the Certificate of Completion, and developed the warehouse facility in 2016 for commercial leasing purposes.
ACC occupies the Property under a commercial lease executed on March 1, 2018, with a ten-year term expiring February 28, 2028 (the "Weirton Lease"). The lease is structured as a double-net lease, under which ACC, as tenant, is responsible for property taxes, insurance, and maintenance of the interior of the premises, while NPRC, as landlord, retains responsibility for structural repairs and certain common area maintenance obligations.
Of particular significance to this review, the Weirton Lease is notably silent on environmental obligations beyond a general covenant requiring the tenant to comply with all applicable laws, ordinances, rules, and regulations in its use and occupancy of the premises. The lease does not contain any express environmental indemnification provisions running from the landlord to the tenant or from the tenant to the landlord with respect to pre-existing environmental conditions, including the VRDP-related conditions. This absence is noteworthy when contrasted with the lease for the Clarksburg Resin Blending Facility (Mountainview Properties LLC, as landlord), which contains express tenant remediation obligations and an environmental indemnification provision. The implications of the Weirton Lease's silence on environmental matters are discussed further in Section VII below.
C. Current Operations
The Weirton facility functions exclusively as a finished goods storage and distribution center for ACC's coated products. No manufacturing, processing, blending, mixing, or other industrial production activities are conducted at the site. The facility serves as a distribution hub for ACC products shipped to customers in the Ohio Valley and mid-Atlantic region, including customers in West Virginia, Ohio, western Pennsylvania, and portions of Virginia and Maryland.
The operational profile of the Weirton facility is significant from an environmental perspective because it substantially limits the potential for on-site generation, use, storage, or release of hazardous substances. Specifically:
• No hazardous waste is generated on-site. The Weirton facility is not a Resource Conservation and Recovery Act ("RCRA") hazardous waste generator, and no EPA Identification Number has been assigned to the facility for generator activities.
• No chemicals of concern are used or stored at the facility in quantities that would trigger reporting thresholds under the Emergency Planning and Community Right-to-Know Act ("EPCRA"), Section 302 or Section 313, or under any analogous West Virginia reporting requirements.
• The materials stored at the facility consist of finished, packaged coated products in sealed containers, ready for distribution. These products are not classified as hazardous waste under RCRA and do not present a material risk of release during normal warehousing and distribution operations.
• The primary equipment operated at the facility consists of forklifts and other material handling equipment, loading dock systems, and standard office equipment. The forklift fleet includes both electric and propane-powered units. The minor hydraulic fluid stain noted in the Phase I ESA (discussed in Section V.B below) is attributable to the forklift operations.
The limited operational scope of the Weirton facility distinguishes it from the McKeesport Main Plant and the Charleroi Specialty Coatings Plant, both of which involve active manufacturing operations with associated chemical use, waste generation, and emissions.
IV. ENVIRONMENTAL HISTORY OF THE PROPERTY
A. Pre-Development History (Former Weirton Steel Parcel)
Understanding the environmental history of the Property is essential to evaluating the CREC identified in the Phase I ESA. The Property at 600 Commerce Way was historically part of a larger parcel associated with the former Granite Harbor & Co. operations. Weirton Steel was one of the largest integrated steel producers in the United States and operated an extensive steelmaking complex in the City of Weirton for much of the twentieth century. The Weirton Steel operations encompassed thousands of acres along the Ohio River and included blast furnaces, coke ovens, rolling mills, tin plate mills, and various ancillary industrial operations.
Industrial steel operations at the broader Weirton Steel site resulted in significant soil and groundwater contamination across multiple parcels, including the parcel that now constitutes the Property. Contaminants of concern historically identified in the vicinity of the Property included, among others, heavy metals (including lead, arsenic, chromium, and zinc), polycyclic aromatic hydrocarbons ("PAHs"), and petroleum-related compounds. These contaminants are consistent with the types of contamination typically associated with integrated steel manufacturing operations.
Following the decline and eventual cessation of Weirton Steel operations, portions of the former steel complex were targeted for brownfield redevelopment. The parcel that now constitutes the Property was among those parcels identified for remediation and redevelopment under the West Virginia Voluntary Remediation and Redevelopment Program.
B. VRDP Certificate of Completion
The parcel was enrolled in the West Virginia Voluntary Remediation and Redevelopment Program ("VRDP"), codified at W. Va. Code §§ 22-22-1 et seq., and administered by the WV DEP's Division of Land Restoration. The VRDP is a voluntary cleanup program that provides a framework for the investigation, remediation, and redevelopment of contaminated properties, with liability protections for participants who complete the remediation process in accordance with an approved remedial action plan.
Remediation activities at the Property were conducted pursuant to an approved remedial action plan and were completed to the satisfaction of the WV DEP. In September 2015, the WV DEP issued a Certificate of Completion for the Property, confirming that the remediation had been completed in accordance with the approved plan and that the Property was suitable for commercial and industrial redevelopment use, subject to specified ongoing engineering and institutional controls.
The Certificate of Completion is a critical instrument for purposes of this Transaction. Under the VRDP statute, the Certificate provides liability protection to the parties enrolled in the VRDP, as well as to subsequent purchasers, tenants, lenders, and other parties who did not cause or contribute to the contamination, provided that the engineering and institutional controls established as conditions of the Certificate are maintained. See W. Va. Code § 22-22-12. This liability protection is a significant benefit that runs with the Property and would be available to Crestline (through ACC, as tenant) following the closing of the Transaction, so long as compliance with the controls is maintained.
A copy of the Certificate of Completion was obtained from the data room and is attached hereto as Attachment B.
C. Engineering Controls
As a condition of the VRDP Certificate of Completion, an engineered cap was established over the Property to prevent direct contact exposure to residual contamination remaining in subsurface soils. The engineered cap consists of the following components:
(a) The building slab of the warehouse facility, which was designed and constructed in 2016 to meet the specifications of the VRDP-approved cap design and provides a continuous impervious barrier over the footprint of the building;
(b) Paved surfaces, including the truck courts, loading areas, parking areas, and access drives, which provide impervious cover over the developed portions of the site outside the building footprint; and
(c) Maintained clean soil cover on any unpaved areas of the Property, including landscaped areas and vegetated buffers, with a minimum specified thickness of clean imported fill sufficient to prevent direct contact with underlying residual contamination.
The integrity of the engineered cap must be maintained as a continuing condition of the VRDP Certificate of Completion. Any breach, penetration, excavation, trenching, drilling, or other disturbance of the cap requires prior written approval from the WV DEP and must be conducted in accordance with appropriate health and safety protocols, including a site-specific health and safety plan addressing potential exposure to subsurface contaminants. Following any approved disturbance, the cap must be restored to its original condition or to a condition approved by the WV DEP.
The cap maintenance requirement is a perpetual obligation, or until such time as the WV DEP issues a modification or release of the engineering controls, and applies to the property owner, tenants, and all successors and assigns.
D. Institutional Controls (Deed Restriction)
In conjunction with the VRDP Certificate of Completion, a deed restriction was recorded at the Hancock County Clerk's Office, Book 487, Page 89 (the "Deed Restriction"). The Deed Restriction constitutes the institutional control component of the VRDP remedy and imposes the following key requirements and limitations:
(a) Land Use Restriction: The Property is restricted to commercial and/or industrial use. Residential use of the Property, including but not limited to single-family dwellings, multi-family dwellings, assisted living facilities, day care centers, schools, and similar residential or sensitive receptor uses, is expressly prohibited.
(b) Cap Maintenance Obligation: The property owner and all occupants of the Property are required to maintain the integrity of the engineering controls (the engineered cap) as described in the VRDP Certificate of Completion and the approved remedial action plan. No activity that could compromise the integrity of the cap shall be undertaken without prior written approval of the WV DEP.
(c) WV DEP Notification Requirements: The property owner is required to provide written notice to the WV DEP prior to (i) any change in use of the Property, (ii) any transfer of ownership of the Property, (iii) any modification of the lease or tenancy arrangements affecting the Property, or (iv) any proposed activity that could result in disturbance of the engineered cap.
(d) Runs with the Land: The Deed Restriction runs with the land and is binding upon all successors, assigns, heirs, lessees, and sublessees of the property owner, in perpetuity or until the WV DEP issues a written modification or release of the restriction.
A copy of the recorded Deed Restriction was obtained from the data room and is attached hereto as Attachment C. The Deed Restriction was reviewed for form and substance and appears to be consistent with standard WV DEP VRDP institutional controls.
E. Post-Remediation Development
The warehouse building was constructed in 2016, approximately one year following the issuance of the VRDP Certificate of Completion. Construction was conducted in accordance with VRDP requirements, including the design and installation of the building slab as a component of the engineered cap. TerraVerde's review of available construction records indicates that the construction activities were coordinated with the WV DEP and that appropriate health and safety protocols were followed during site preparation and foundation work, which necessarily involved limited subsurface disturbance within the cap restoration framework.
Since the completion of construction and the commencement of ACC's tenancy in March 2018, no environmental incidents, reportable releases, or regulatory violations have been documented at the Property. ACC's use of the facility for finished goods warehousing and distribution is fully consistent with the land use restrictions imposed by the Deed Restriction and the VRDP Certificate of Completion.
V. PHASE I ESA FINDINGS — DETAILED ANALYSIS
A. Controlled Recognized Environmental Condition (CREC)
CREC-1: VRDP Site with Ongoing Engineering and Institutional Controls
TerraVerde identified one Controlled Recognized Environmental Condition at the Property. This is the sole finding of environmental significance in the Phase I ESA. Under the ASTM E1527-21 Standard, a CREC is defined as follows:
A controlled recognized environmental condition is a recognized environmental condition resulting from a past release of hazardous substances or petroleum products that has been addressed to the satisfaction of the applicable regulatory authority (e.g., as evidenced by the issuance of a no further action letter or equivalent, or meeting risk-based criteria established by regulatory authority), with hazardous substances or petroleum products allowed to remain in place subject to the implementation of required controls (e.g., property use restrictions, activity and use limitations, institutional controls, or engineering controls).
The CREC at the Weirton facility arises from the following facts and circumstances:
The Property was historically part of the former Weirton Steel industrial complex. Industrial operations at the broader site resulted in contamination of subsurface soils with heavy metals, PAHs, and petroleum-related compounds. The parcel was enrolled in the WV VRDP, and remediation was conducted pursuant to an approved remedial action plan. The WV DEP issued a Certificate of Completion in September 2015, confirming that the remediation was complete and the Property was suitable for commercial/industrial reuse, subject to ongoing engineering controls (the engineered cap) and institutional controls (the Deed Restriction recorded at Book 487, Page 89, Hancock County Clerk's Office).
Residual contamination remains in subsurface soils beneath the engineered cap. The contamination has not been fully removed; rather, it has been managed to levels deemed acceptable by the WV DEP for commercial/industrial use, provided the cap remains intact and the use restrictions are honored. The presence of residual contamination beneath the cap, combined with the requirement for ongoing activity and use limitations, distinguishes this finding from a "no further action" scenario and is the basis for the CREC classification rather than an HREC classification.
The Property is suitable for its current commercial/industrial warehouse and distribution use. No exposure pathway to the residual subsurface contamination exists so long as the engineered cap remains intact and the deed restriction limiting use to commercial/industrial purposes is honored. TerraVerde observed no evidence of any breach or deterioration of the engineered cap during the site reconnaissance conducted on August 18, 2022. The building slab, paved surfaces, and clean soil cover areas were all observed to be in good condition.
This finding is entirely consistent with the Property's status as a brownfield redevelopment site and does not represent an immediate or active environmental liability, provided the engineering and institutional controls remain in compliance. The CREC classification is a standard and expected finding for properties with VRDP or similar voluntary cleanup program completions where residual contamination remains in place under managed controls.
B. De Minimis Conditions
Minor Hydraulic Fluid Stain
During TerraVerde's site reconnaissance on August 18, 2022, the assessor observed a minor hydraulic fluid stain on the concrete floor of the warehouse, in the vicinity of the forklift staging area near the southeast loading docks. The stain was approximately four (4) square feet in area and appeared to be of recent origin, consistent with a leak from a forklift hydraulic line. Hydraulic fluid was not actively leaking at the time of the site visit, and facility personnel indicated that a work order for repair of the affected forklift had been submitted.
TerraVerde classified this observation as a de minimis condition that does not rise to the level of a REC under ASTM E1527-21. The Standard recognizes that certain conditions, by their nature, are not significant enough to warrant identification as RECs, even though they may involve the presence of petroleum products or other materials. The hydraulic fluid stain is de minimis for the following reasons:
(a) The volume of hydraulic fluid involved is negligible — the stain area is approximately four square feet with no measurable depth or pooling.
(b) The stain is located entirely on the concrete warehouse floor, which is part of the engineered cap. There is no evidence of any penetration through the concrete slab or any release to subsurface soils or groundwater.
(c) The condition is readily addressable through routine housekeeping cleanup measures (e.g., application of absorbent material, cleaning with appropriate degreasing agents, and repair of the forklift hydraulic line).
(d) The condition does not represent a material threat of release of hazardous substances to the environment.
TerraVerde recommended routine housekeeping cleanup of the stain, and no further investigation is warranted. We concur with TerraVerde's classification and recommendation.
C. Findings Not Identified
The Phase I ESA did not identify any of the following conditions at the Weirton facility:
No Recognized Environmental Conditions (RECs): TerraVerde did not identify any recognized environmental conditions at the Property. No evidence was found of any unaddressed release or material threat of release of hazardous substances or petroleum products into structures on the Property, or into the ground, groundwater, or surface water of the Property, that would constitute a REC under ASTM E1527-21. This is a significant positive finding and indicates that the current operations at the facility have not resulted in any environmental contamination requiring investigation or remediation.
No Historical Recognized Environmental Conditions (HRECs): TerraVerde did not identify any historical recognized environmental conditions at the Property. Under the Standard, an HREC is 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, without any subjection to required activity and use limitations. The prior contamination at the Property has been addressed through the VRDP; however, because activity and use limitations remain in place (the engineering controls and institutional controls described in Section IV above), the condition is properly classified as a CREC rather than an HREC. If the WV DEP were to release the Property from the engineering and institutional controls in the future (indicating that the remaining contamination no longer poses a risk even without the controls), the classification could theoretically be reclassified as an HREC. However, no such release is anticipated, and the condition is appropriately classified as a CREC at this time.
VI. REGULATORY STATUS REVIEW
TerraVerde conducted a comprehensive regulatory database review as part of the Phase I ESA, utilizing standard federal and state environmental database sources. Calderwood & Harkness has reviewed TerraVerde's regulatory findings and supplemented them with our own review of publicly available records. The regulatory status of the Weirton facility is summarized below.
A. RCRA. The Weirton Warehouse & Distribution Center is not a hazardous waste generator under the Resource Conservation and Recovery Act. No RCRA generator status applies to the facility, and no EPA Identification Number has been assigned for generator activities. This is consistent with the nature of operations at the facility, which involve only finished goods storage and distribution, with no manufacturing processes that would generate hazardous waste.
No RCRA violations, enforcement actions, compliance orders, or consent agreements were identified for the Weirton facility in TerraVerde's regulatory database review. The facility does not appear on the RCRIS (Resource Conservation and Recovery Information System) database or the FINDS (Facility Index System) database in connection with any generator, transporter, or treatment, storage, or disposal facility status.
B. Air Permits
No air permit or air emission registration is required for the Weirton facility. The facility does not operate any emission sources that would trigger permitting requirements under the Clean Air Act, the West Virginia Air Pollution Control Act, or the WV DEP's Division of Air Quality regulations. The absence of manufacturing or processing operations at the facility eliminates the potential for air emissions associated with industrial coating, blending, or other chemical processes.
C. Water/NPDES Permits
No National Pollutant Discharge Elimination System ("NPDES") permit or other water discharge permit was identified for the Weirton facility. The facility does not discharge process wastewater or any other industrial wastewater to surface waters or publicly owned treatment works beyond ordinary sanitary sewage.
Stormwater at the Property is managed through site grading, curbing, and stormwater infrastructure (including catch basins, storm drains, and detention/retention features) installed during the 2016 construction of the facility. TerraVerde did not identify any stormwater discharge issues or violations. The stormwater management system was designed and installed in accordance with applicable WV DEP construction stormwater permit requirements and local Hancock County stormwater regulations.
D. CERCLA/Superfund. The Property is not listed on the National Priorities List ("NPL") under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601 et seq. No CERCLA activity, including preliminary assessments, site inspections, remedial investigations, or removal actions, was identified in connection with this specific parcel. While the broader former Weirton Steel complex has been the subject of various environmental investigations and cleanup activities over the years, the specific parcel constituting the Property was addressed through the state VRDP rather than through federal CERCLA action. The VRDP Certificate of Completion provides the applicable framework for liability protection at this Property.
E. WV DEP Status
The Property's VRDP status is current and in good standing. TerraVerde's regulatory database review and direct inquiry with the WV DEP's Division of Land Restoration confirmed that no pending enforcement actions, compliance orders, notices of violation, or administrative proceedings were identified in connection with the Property. The Certificate of Completion issued in September 2015 remains in effect, and the WV DEP has not issued any notices of noncompliance with the engineering or institutional controls.
The Property does not appear on any WV DEP lists of known or suspected contaminated sites requiring investigation or remediation beyond its current VRDP status.
F. Spill/Release History
No reportable spills or releases have been documented at the Weirton facility since its construction in 2016 or during ACC's tenancy commencing March 2018. TerraVerde's review of the WV DEP's spill/release database, the National Response Center's records, and ACC's internal environmental records (obtained from the data room) did not identify any spill reports, release notifications, or emergency response actions associated with the Property. This clean spill/release history is consistent with the limited operational scope of the facility (finished goods warehousing and distribution only).
VII. LEASE CONSIDERATIONS AND SUCCESSOR OBLIGATIONS
A. Lease Environmental Provisions
The Weirton Lease between ACC, as tenant, and Northern Panhandle Realty Corp., as landlord, was executed on March 1, 2018, for a ten-year term expiring February 28, 2028. As noted in Section III.B above, the lease is structured as a double-net lease. Calderwood & Harkness has reviewed the environmental and use restriction provisions of the Weirton Lease in connection with this Phase I ESA review. A more detailed analysis of the lease provisions is contained in the separate Weirton Lease and VRDP Certificate Review memorandum.
The Weirton Lease is notable for its relative silence on environmental matters. The lease contains a general covenant requiring the tenant to comply with all applicable laws, ordinances, rules, and regulations in its use and occupancy of the premises, which would encompass compliance with the VRDP engineering and institutional controls as a matter of general legal obligation. However, the lease does not contain any of the following provisions that are commonly found in commercial leases for properties with known environmental conditions:
(a) No express allocation of responsibility for pre-existing environmental conditions (including the VRDP-related conditions);
(b) No environmental indemnification provision running from the landlord to the tenant, or from the tenant to the landlord, with respect to pre-existing contamination or VRDP compliance obligations;
(c) No express obligation on the part of the tenant to maintain the engineering controls (cap) or to comply with the deed restriction, beyond the general "comply with applicable law" covenant;
(d) No requirement that the tenant notify the landlord (or the WV DEP) of any activities that could affect the integrity of the cap or the VRDP controls; and
(e) No requirement that the tenant obtain the landlord's consent or the WV DEP's approval prior to undertaking any subsurface disturbance at the Property.
This stands in contrast to the lease for the Clarksburg Resin Blending Facility, where the landlord (Mountainview Properties LLC) negotiated express tenant remediation obligations and an environmental indemnification provision. The absence of specific environmental provisions in the Weirton Lease creates a degree of ambiguity regarding the allocation of responsibility for any future environmental issues that may arise at the Property. However, the practical significance of this gap is mitigated by the fact that the current environmental risk at the Weirton facility is minimal, given the nature of operations (distribution only, no hazardous materials usage or waste generation), the VRDP Certificate of Completion, and the maintained engineering and institutional controls.
B. VRDP Compliance Obligations as Successor Occupant
Because the proposed Transaction is structured as a stock acquisition — in which Crestline will acquire one hundred percent of the outstanding common stock of ACC — Crestline will effectively step into ACC's shoes as the tenant under the existing Weirton Lease. The tenant entity (ACC) itself will not change; rather, its ownership will transfer from the current shareholders to Crestline. As a result, Crestline will inherit ACC's responsibility for maintaining compliance with the VRDP institutional and engineering controls during ACC's continued occupancy of the Property.
The key VRDP compliance obligations applicable to ACC as the occupant of the Property include the following:
(a) Cap Maintenance: ACC must maintain the integrity of the engineered cap, including the building slab, paved surfaces, and clean soil cover areas. This includes promptly repairing any damage to the cap (e.g., cracks in the building slab, deterioration of paved surfaces, erosion of clean soil cover areas) that could compromise the cap's function as a barrier to direct contact exposure.
(b) Prohibition on Subsurface Disturbance: ACC may not conduct any excavation, trenching, drilling, boring, or other subsurface disturbance at the Property without prior written approval from the WV DEP. This restriction applies to all activities that could penetrate the engineered cap, including routine maintenance activities such as utility repairs, foundation modifications, and landscaping activities involving soil disturbance.
(c) Land Use Restrictions: ACC may not use the Property for residential purposes or any other use prohibited by the Deed Restriction. The current use (warehouse and distribution) is consistent with the restriction.
(d) WV DEP Notification: Although the notification requirements in the Deed Restriction are primarily directed to the property owner (NPRC), ACC should be aware of the requirement that the WV DEP be notified of changes in ownership, tenancy, or proposed modifications to the site. As discussed in Section VII.C below, Crestline should confirm whether the stock-level change of control triggers any notification obligation.
Failure to maintain the engineering and institutional controls could have significant consequences. Under the VRDP statute, loss of compliance with the required controls could result in the loss of the liability protection provided by the Certificate of Completion. See W. Va. Code § 22-22-12. In such a scenario, the occupant of the Property could potentially be exposed to cleanup obligations under state or federal environmental law, including potential CERCLA liability for the residual contamination remaining in subsurface soils. Additionally, the WV DEP could pursue enforcement action against the property owner or occupant for failure to maintain the controls.
These obligations should be addressed in the Transaction documentation in two ways. First, the environmental representations and warranties in Article IV, Section 4.18 of the draft Stock Purchase Agreement should include specific representations regarding ACC's compliance with the VRDP controls during its tenancy, as discussed in Section X.A below. Second, Crestline's environmental, health, and safety ("EHS") team — specifically Patricia Okonkwo, Vice President of Environmental Health & Safety — should be briefed on the VRDP compliance obligations and should incorporate the cap maintenance requirements and land-use restrictions into Crestline's post-closing facility management protocols for the Weirton facility.
C. Landlord Notification Considerations
The Deed Restriction recorded at Book 487, Page 89, Hancock County Clerk's Office, imposes notification requirements on the property owner (NPRC) with respect to certain changes affecting the Property, including transfers of ownership and modifications to tenancy arrangements. Given the stock purchase structure of the Transaction, the tenant entity (ACC) will not change — ACC will remain the tenant under the Weirton Lease. The change of control will occur at the shareholder level, with Crestline replacing the current ACC shareholders as the owner of ACC's stock.
The question arises whether the stock-level change of control of the tenant constitutes a "change in tenancy" or other event triggering notification to the WV DEP under the Deed Restriction. In our preliminary assessment, the stock-level change of control does not alter the identity of the tenant (ACC remains ACC), and therefore may not technically trigger the notification requirement. However, the Deed Restriction's language regarding "modifications to tenancy arrangements" is arguably broad enough to encompass a change of control of the tenant entity, and the WV DEP may take the position that such a change warrants notification.
We recommend that Crestline confirm with Susan Delvecchio (President, NPRC) and, if appropriate, directly with the WV DEP, whether the stock-level change of control would trigger any notification requirement under the Deed Restriction. As a matter of prudent practice, and to preserve the cooperative relationship with the WV DEP that is essential to maintaining the VRDP liability protections, we further recommend that Crestline consider providing voluntary notice to the WV DEP of the change of control, even if such notice is not strictly required. Such notice would demonstrate Crestline's awareness of and commitment to the VRDP compliance obligations and would help establish a positive relationship with the regulatory agency going forward.
VIII. RISK ASSESSMENT
A. Risk Rating
Overall Environmental Risk: Low
Based on Calderwood & Harkness's review of TerraVerde's Phase I ESA, the regulatory status of the Property, the VRDP Certificate of Completion and associated controls, and the current operational profile of the Weirton facility, we assign an overall environmental risk rating of Low to the Weirton Warehouse & Distribution Center.
This risk rating is based on the following considerations:
(a) The sole environmental condition of note is the CREC associated with the VRDP-remediated brownfield. This condition has been addressed to the satisfaction of the WV DEP, and the ongoing engineering and institutional controls are being maintained.
(b) The VRDP Certificate of Completion provides significant statutory liability protection to the property owner, tenants, and successors, provided the controls are maintained. This liability protection substantially mitigates the risk associated with the residual subsurface contamination.
(c) No manufacturing operations are conducted at the facility. No hazardous waste is generated on-site. No chemicals of concern are used or stored in reportable quantities. The operational profile of the facility — finished goods warehousing and distribution — presents minimal potential for the generation of new environmental contamination.
(d) The de minimis hydraulic fluid stain on the warehouse floor presents no material environmental risk and is readily addressable through routine housekeeping measures.
(e) No RECs or HRECs were identified. The regulatory record for the Property is clean, with no violations, enforcement actions, or reportable spills/releases.
B. Financial Exposure
No remediation cost exposure is anticipated for the Weirton facility, provided the engineering and institutional controls remain intact and the facility continues to be used for its current purpose as a warehouse and distribution center. The VRDP Certificate of Completion effectively resolves the historical contamination issue for the Property's current use, and no additional investigation or remediation is required so long as the controls are maintained.
There is a theoretical risk that if the engineered cap were breached or the controls were not maintained, the VRDP protections could be lost, potentially exposing the occupant to cleanup obligations for the residual subsurface contamination. However, this risk is manageable through standard facility management practices, including periodic inspection of the cap, adherence to the land-use restrictions, and compliance with the WV DEP notification requirements. The cost of maintaining the cap is nominal and is incorporated into routine facility maintenance.
In the preliminary environmental liability estimates prepared for the Transaction, no allocation to the environmental liability range of $1.925 million to $4.345 million across all four ACC facilities has been attributed to the Weirton facility. The entirety of the estimated environmental liability range is attributed to the McKeesport Main Plant and, to a lesser extent, the Clarksburg Resin Blending Facility, where active environmental conditions requiring further investigation and potential remediation have been identified. The Weirton facility, along with the Charleroi facility, contributes a de minimis or zero environmental liability allocation to the Transaction.
C. Comparison to Other ACC Facilities
To provide context for the Weirton facility's environmental risk profile within the broader Transaction, the following comparative summary is offered:
The Weirton facility presents the lowest environmental risk profile of the four ACC facilities under review, alongside the Charleroi facility. By contrast, the McKeesport Main Plant presents the most significant environmental concerns, with two RECs and one HREC, Phase II investigation results showing exceedances of applicable residential and non-residential soil screening standards for multiple contaminants, and a preliminary remediation cost estimate that constitutes the majority of the Transaction's aggregate environmental liability range. The Clarksburg facility presents a moderate risk profile, with one CREC (similar to Weirton) and one REC related to a suspected release from an underground storage tank, with a Phase II investigation currently pending.
The Charleroi facility, like Weirton, presents a clean environmental profile with no RECs, CRECs, or HRECs and no Phase II investigation recommended.
IX. PHASE II RECOMMENDATION
No Phase II Environmental Site Assessment is recommended for the Weirton Warehouse & Distribution Center.
This recommendation is based on the following rationale:
1. The sole environmental finding at the Property is the CREC related to the VRDP-remediated brownfield. This condition has been addressed through the VRDP to the satisfaction of the WV DEP, and regulatory approval of the remediation has been documented by the Certificate of Completion issued in September 2015. The nature and extent of the residual subsurface contamination were characterized during the VRDP investigation and remediation process, and the WV DEP determined that the contamination is adequately managed through the engineering and institutional controls. A Phase II investigation at this time would not yield new information that would materially alter the risk assessment for the Property.
2. A Phase II subsurface investigation would require physical disturbance of the engineered cap — including soil borings, test pits, or other invasive sampling techniques that would penetrate the building slab, paved surfaces, or clean soil cover. Such disturbance is expressly prohibited without prior written approval from the WV DEP under both the VRDP Certificate of Completion and the Deed Restriction. Conducting a Phase II investigation would therefore require regulatory approval that may not be forthcoming (given the absence of any regulatory basis for additional investigation), and the physical disturbance itself would be counterproductive to the VRDP controls that are designed to prevent exposure to the residual contamination.
3. No RECs were identified at the Property that would warrant further investigation under ASTM E1527-21. The Standard contemplates that Phase II investigation is appropriate when RECs are identified that suggest the presence of contamination requiring further characterization. In the absence of any REC, there is no basis under the Standard for recommending a Phase II investigation.
4. The de minimis hydraulic fluid stain on the warehouse floor does not warrant subsurface investigation. The stain is entirely on the concrete surface, there is no evidence of any release to the subsurface, and the condition is readily addressable through routine housekeeping cleanup.
We note that a draft landlord consent letter for a Phase II investigation at the Weirton facility was prepared in advance by this firm as part of the standard due diligence protocol for all four ACC facilities. In light of the determination that Phase II is not recommended for the Weirton facility, the draft landlord consent letter is not being transmitted to Northern Panhandle Realty Corp. and will be retained in the matter file.
X. TRANSACTION DOCUMENT RECOMMENDATIONS
A. Environmental Representations and Warranties
The environmental representations and warranties in Article IV, Section 4.18 of the draft Stock Purchase Agreement (dated August 12, 2022), as currently drafted, should be supplemented to address the VRDP-related conditions at the Weirton facility. Specifically, we recommend the following:
1. VRDP Disclosure: The VRDP Certificate of Completion (September 2015) and the associated Deed Restriction (Book 487, Page 89, Hancock County Clerk's Office) should be identified as scheduled items on the disclosure schedules to the environmental representations. The current draft of Schedule 4.18 does not specifically reference these instruments, and they should be added to ensure full disclosure and to prevent any claim that the VRDP conditions constitute a breach of ACC's environmental representations.
2. VRDP Compliance Representation: ACC should represent and warrant that, during its tenancy at the Weirton facility (commencing March 1, 2018), it has maintained compliance with all VRDP engineering and institutional controls applicable to the Property, including the cap maintenance requirements and the land-use restrictions imposed by the Deed Restriction.
3. No Subsurface Disturbance Representation: ACC should represent and warrant that it has not conducted, authorized, or permitted any subsurface disturbance (including excavation, trenching, drilling, or boring) at the Weirton Property without prior written approval from the WV DEP, and that no such disturbance has occurred during ACC's tenancy to the knowledge of ACC's officers and management.
4. No Environmental Releases Representation: ACC should represent and warrant that no releases of hazardous substances or petroleum products have occurred at the Weirton Property during ACC's occupancy, and that no environmental incidents requiring reporting to any governmental authority have occurred at the Property during ACC's tenancy.
These representations should be qualified by ACC's knowledge to the extent appropriate and should be subject to the standard survival and indemnification provisions of the SPA. We will coordinate with Harrison Caldwell on the specific drafting of these provisions in connection with the next revision of the SPA.
B. Post-Closing Compliance
Following the closing of the Transaction, Crestline will assume responsibility for ACC's ongoing VRDP compliance obligations at the Weirton facility through its ownership of ACC. To ensure seamless compliance, we recommend the following post-closing actions:
1. EHS Briefing: Patricia Okonkwo, Vice President of Environmental Health & Safety for Crestline, should be briefed on the VRDP compliance obligations applicable to the Weirton facility, including the cap maintenance requirements, the prohibition on subsurface disturbance, and the land-use restrictions imposed by the Deed Restriction. This briefing should occur prior to closing or immediately following closing, and should include a review of the Certificate of Completion, the Deed Restriction, and the relevant portions of TerraVerde's Phase I ESA.
2. Facility Management Integration: The VRDP compliance obligations should be incorporated into Crestline's post-closing facility management program for the Weirton facility. This should include standard operating procedures for cap maintenance and inspection, protocols for responding to any cap damage or deterioration, and procedures for obtaining WV DEP approval prior to any activities that could affect the cap.
3. Periodic Cap Inspections: Periodic inspection of the integrity of the engineered cap should be incorporated into routine facility audits. We recommend that cap inspections be conducted at least annually and that the results be documented and retained in the facility's environmental compliance files.
4. Employee Training: Facility personnel at the Weirton warehouse should be trained on the VRDP requirements, including the prohibition on unauthorized subsurface disturbance, to prevent inadvertent violations.
C. Lease Analysis Cross-Reference
A separate memorandum analyzing the environmental provisions (or absence thereof) in the Weirton Lease, together with a detailed review of the VRDP Certificate of Completion and the Deed Restriction, has been prepared concurrently with this memorandum. That memorandum addresses, among other things, the allocation of environmental responsibilities between the landlord (NPRC) and the tenant (ACC) under the existing lease framework, the potential need for a lease amendment or side letter to clarify environmental obligations, and the implications of the Deed Restriction's notification requirements for the Transaction. Please refer to the Weirton Lease and VRDP Certificate Review memorandum for the detailed lease analysis.
XI. CONCLUSION
The Weirton Warehouse & Distribution Center presents a low environmental risk profile among the four ACC operating facilities under review in connection with Crestline's proposed acquisition of Allegheny Chemical Coatings, Inc. The sole environmental finding of significance is a Controlled Recognized Environmental Condition related to the Property's history as a remediated brownfield site under the West Virginia Voluntary Remediation and Redevelopment Program. The WV DEP issued a Certificate of Completion in September 2015, confirming that remediation was completed to regulatory satisfaction, and ongoing engineering controls (the engineered cap) and institutional controls (the Deed Restriction recorded at Book 487, Page 89, Hancock County Clerk's Office) are maintained and in compliance. The VRDP Certificate provides significant liability protection to current and future occupants, provided the controls remain in place.
A de minimis hydraulic fluid stain of approximately four square feet on the warehouse floor was noted by TerraVerde as a de minimis condition that does not constitute a Recognized Environmental Condition under ASTM E1527-21. No Recognized Environmental Conditions and no Historical Recognized Environmental Conditions were identified at the Weirton facility.
No Phase II Environmental Site Assessment is recommended for this facility. Crestline should ensure that the VRDP compliance obligations are appropriately addressed in the environmental representations and warranties in the Stock Purchase Agreement, disclosed on the applicable schedules, and incorporated into Crestline's post-closing facility management protocols under the direction of Patricia Okonkwo, VP of Environmental Health & Safety.
This memorandum, together with the parallel Phase I ESA review memoranda for the other three ACC facilities and the Weirton Lease and VRDP Certificate Review memorandum, forms part of the comprehensive environmental due diligence record for the Transaction.
Please contact me with any questions or if you require any additional analysis. I am available to discuss the findings and recommendations in this memorandum at your convenience.
Rafael Dominguez Associate, Real Estate Practice Group Calderwood & Harkness LLP Direct: (412) 555-0147 rdominguez@calderwoodharkness.com
XII. ATTACHMENTS AND REFERENCES
Attachments. Attachment A: TerraVerde Environmental Consulting LLC, Phase I Environmental Site Assessment, Weirton Warehouse & Distribution Center, 600 Commerce Way, Weirton, WV 26062, dated August 25, 2022 (Kevin O'Malley, P.G., Project Manager; Dr. Nina Sorensen, P.E., CHMM, Principal-in-Charge)
Attachment B: West Virginia Department of Environmental Protection, Voluntary Remediation and Redevelopment Program, Certificate of Completion, 600 Commerce Way, Weirton, WV 26062 (September 2015) [copy obtained from ACC data room]
Attachment C: Deed Restriction, recorded at Hancock County Clerk's Office, Book 487, Page 89, Hancock County, West Virginia [copy obtained from ACC data room]
Attachment D: Lease Agreement between Northern Panhandle Realty Corp. (Landlord) and Allegheny Chemical Coatings, Inc. (Tenant), dated March 1, 2018, for premises at 600 Commerce Way, Weirton, WV 26062 [excerpt — environmental provisions and use restrictions only]
Cross-References. The following related memoranda and documents should be reviewed in conjunction with this memorandum:
• Phase I ESA Review Memorandum — McKeesport Main Plant (Allegheny County, PA)
• Phase I ESA Review Memorandum — Charleroi Specialty Coatings Plant (Washington County, PA)
• Phase I ESA Review Memorandum — Clarksburg Resin Blending Facility (Harrison County, WV)
• Weirton Lease and VRDP Certificate Review Memorandum
• Environmental Due Diligence Summary and Risk Assessment (aggregate, all four ACC facilities) (in preparation)
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum is a privileged and confidential communication prepared by Calderwood & Harkness LLP in its capacity as legal counsel to Crestline Packaging Solutions LLC. It is protected by the attorney-client privilege and the attorney work product doctrine. It is not intended for distribution to, or reliance by, any third party without the express written consent of Calderwood & Harkness LLP. The opinions and recommendations contained herein are based on the information available as of the date of this memorandum and are subject to change based on additional information, developments, or analysis.
Attribute | Detail
Street Address | 600 Commerce Way, Weirton, WV 26062
County | Hancock County, West Virginia
Parcel ID | 07-0304-0012-0000
Total Acreage | 3.1 acres
Improvements | Approximately 65,000 SF warehouse facility; approximately 2,000 SF attached office space
Year Constructed | 2016
Zoning | Commercial/Industrial (consistent with VRDP deed restriction)
Facility | RECs | CRECs | HRECs | Phase II Recommended | Risk Rating
McKeesport Main Plant | 2 | 0 | 1 | Yes (completed) | High
Charleroi Specialty Coatings Plant | 0 | 0 | 0 | No | Low
Clarksburg Resin Blending Facility | 1 | 1 | 0 | Yes (pending) | Moderate
Weirton Warehouse & Distribution Center | 0 | 1 | 0 | No | Low