Contract analysis

I. Purpose of Memorandum This memorandum documents the decision to change the status of Matter No. HRW-SPIN-001 (Engagement No. 1003-00005) from "Active" to "Dormant," effective as of August 29, 2022. The matter is being designated as dormant rather than closed in order to preserve the possibility of reactivation at the client's election, and to ensure that all work product, diligence files, correspondence, and relat

II. Engagement Background A. Client and Key Parties

1. Client. The client in this engagement is Harrowgate Private Equity Fund IV, L.P., a Delaware limited partnership formed under the Delaware Revised Uniform Limited Partnership Act. Harrowgate's Employer Identification Number is 84-3291067. Its registered address is 1209 Orange Street, Wilmington, Delaware 19801 (c/o Crowne Albany Corporation, as registered agent). Its principal office is located at 600 Lexington Av

2. General Partner The general partner of HPE Fund IV is Harrowgate Capital Partners IV GP LLC, a Delaware limited liability company (EIN 84-3291104). As general partner, Harrowgate Capital Partners IV GP LLC has the authority to act on behalf of the fund in connection with investment decisions, portfolio company governance, and the retention of advisors, including Calderwood & Harkness.

3. Investment Advisor / Manager The investment advisor and manager of HPE Fund IV is Harrowgate Capital Advisors LLC, a Delaware limited liability company (EIN 83-2756891), which provides investment advisory services to the fund and manages the fund's day-to-day operations. The key principals of Harrowgate Capital Advisors LLC relevant to this engagement are as follows: • Marcus Adler — Founding Partner & Chairman. M

4. Portfolio Company (Distributing Corporation) Veldran Industries Holdings, Inc. is a Delaware corporation (EIN 86-1920347) incorporated on March 14, 2019. Its registered address is 1209 Orange Street, Wilmington, Delaware 19801. Its principal office is located at 2400 Commerce Park Drive, Suite 500, Charlotte, North Carolina 28217. Veldran is a diversified industrial company operating in two principal business segm

5. HPE Fund IV Ownership of Veldran HPE Fund IV holds approximately 62.4% of the outstanding common stock of Veldran, representing 46,488,000 of 74,500,000 shares of Veldran common stock outstanding. HPE Fund IV's shares are held through Harrowgate Veldran Holdings LLC (EIN 86-1483920), a Delaware limited liability company that is a wholly owned subsidiary of HPE Fund IV. Harrowgate Veldran Holdings LLC was formed fo

6. Controlled Corporation (SpinCo) Meridian Flow Technologies, Inc. was the planned name for the controlled corporation that would receive the assets and liabilities of the Precision Flow Solutions Division and whose common stock would be distributed to Veldran shareholders in the Spin-Off. Meridian was planned as a Delaware corporation but had not yet been incorporated as of the date of dormancy. The planned princip

7. Other Significant Shareholders of Veldran The other significant shareholders of Veldran relevant to this engagement are as follows: • Prescott Capital Management LP (Managing Partner: Andrew Kessler) — holder of approximately 14.8% of the outstanding Veldran common stock (11,026,000 shares). Prescott initially acquired 15,500,000 shares at $40.00 per share as a co-investor alongside HPE Fund IV in September 2019,

1. Kestrel Acquisition (June 7, 2019) On June 7, 2019, Veldran acquired Kestrel Precision Controls, Inc. ("Kestrel"), a Georgia corporation (EIN 58-2847193, founded February 12, 2003), from Rennick Industrial Partners Fund II LP (EIN 82-3017564) for $295 million in an all-cash taxable stock acquisition. Kestrel was a manufacturer of precision flow control valves and actuators, and at the time of acquisition, Kestrel

2. HPE Fund IV Acquisition of Veldran (September 20, 2019) On September 20, 2019, HPE Fund IV acquired 62.4% of the outstanding common stock of Veldran (46,488,000 shares at $40.00 per share, for a total purchase price of $1,859,520,000) through a negotiated tender offer followed by a short-form merger squeeze-out of the prior controlling shareholder, Greystone Partners Fund III LP (EIN 81-2683910). The acquisition w

III. Reasons for Dormancy The client's decision to pause the proposed Spin-Off indefinitely, and the corresponding decision to mark this matter dormant, was the product of multiple converging factors. While the immediate catalyst was the client's business judgment regarding market conditions and timing, the decision was significantly influenced by unresolved legal and factual issues that Calderwood & Harkness had ide

IV. Status of Work Product at Dormancy A. Timeline of Key Milestones The following is a chronological summary of key milestones in the engagement from opening through dormancy: B. Completed Work Product The following work product was completed (in the sense of having been drafted to at least a first-draft stage) during the engagement and is preserved in the firm's document management system under Matter Code HRW-SPIN

1. Comprehensive § 355 Analysis Memorandum — First draft, dated May 20, 2022. This memorandum provides an overview of all of the requirements for tax-free treatment under IRC § 355 and identifies the key issues and risk areas specific to the proposed Spin-Off. It served as the framework document for the more detailed issue-specific memoranda listed below. 2. § 355(b) Active Trade or Business Analysis Memorandum — Kes

3. Continuity of Interest / IRC § 368(a)(1)(D) Reorganization Analysis Memorandum — Dated June 15, 2022. This memorandum analyzes whether the Contribution qualifies as a reorganization under IRC § 368(a)(1)(D), including analysis of the continuity of interest and continuity of business enterprise requirements, the "substantially all" requirement under IRC § 354(b)(1)(A), and the distribution requirement under IRC § 3

6. Business Purpose Memorandum — First draft, dated July 18, 2022. This memorandum evaluates the business purposes articulated for the Spin-Off against the requirements of Treasury Regulation § 1.355-2(b) and identifies the concerns regarding the potential characterization of the articulated purposes as primarily shareholder-level rather than corporate-level.

7. State and Local Tax Considerations Summary Memorandum — Dated July 20, 2022. This memorandum summarizes the state and local income, franchise, and transfer tax implications of the Spin-Off in key jurisdictions, including Delaware, North Carolina, Georgia, New York, and other states in which Veldran and the Precision Flow Solutions Division have significant operations or filing obligations.

8. Device Test Analysis Memorandum — Dated July 25, 2022. This memorandum analyzes whether the proposed Distribution would be "used principally as a device for the distribution of the earnings and profits of the distributing corporation, the controlled corporation, or both" within the meaning of IRC § 355(a)(1)(B) and Treasury Regulation § 1.355-2(d).

9. Draft Tax Matters Provisions for Separation Agreement — Dated July 28, 2022. These provisions were drafted for insertion into the Separation and Distribution Agreement being prepared by Whitfield & Gage and Thornapple McCord, and address the allocation of tax liabilities, tax indemnification, cooperation on tax matters, and restrictions on post-spin actions that could affect the tax-free nature of the Spin-Off.

10. Credit Agreement Spin-Off Covenant Analysis Memorandum — Dated August 2, 2022. This memorandum analyzes the restrictive covenants in the credit agreement governing Veldran's First Lien Term Loan B as they relate to the proposed Spin-Off.

11. Indenture Spin-Off Covenant Analysis Memorandum — Dated August 3, 2022. This memorandum analyzes the covenants in the indenture governing Veldran's 6.250% Senior Unsecured Notes due 2027 as they relate to the proposed Spin-Off.

12. Draft Tax Sharing Agreement — Outline and Key Terms — Dated August 4, 2022. This document sets forth an outline and summary of key terms for the proposed Tax Sharing Agreement between Veldran and Meridian, which would govern the allocation of pre-spin tax liabilities, the preparation and filing of pre-spin and straddle-period tax returns, and indemnification obligations.

13. First Draft Tax Opinion Letter — Dated August 5, 2022. This draft opinion letter was circulated to Christine Yeung and Priya Chandrasekar and was prominently marked as a draft not for reliance. It contains open placeholders, qualifications, and unresolved issues (including the business purpose issue and the Section 355(e) plan analysis). It reflects the state of the analysis as of its date and should not be treat

14. Internal Comments Compilation on Draft Opinion — Dated August 10, 2022. This document compiles the comments and markup provided by Leonard Cross and Sylvia Hartwell on the first draft tax opinion letter. These comments were not incorporated into the draft prior to dormancy.

15. Representation Letter — First draft dated May 6, 2022; second draft (redline against first draft) dated July 11, 2022. The Representation Letter sets forth the factual representations to be provided by Veldran and Harrowgate in support of the tax opinion, including representations regarding business purposes, the Section 355(e) plan analysis, the active trade or business requirement, the absence of a device, and

16. Tax Diligence Information Request Lists — Initial request dated April 25, 2022; supplemental Kestrel-specific request dated May 16, 2022. These documents itemize the information and documentation requested from Veldran management and its advisors in connection with Calderwood & Harkness's tax diligence review.

17. Diligence Tracker Spreadsheet — Last updated August 29, 2022. This spreadsheet tracks the status of all diligence items requested, received, and outstanding.

18. Conference Call Memoranda and Correspondence File — Includes memoranda summarizing key conference calls (including the April 18, 2022 kick-off call and the August 15, 2022 business purpose call) and all significant email correspondence among the engagement team, the client, and other advisors. C. Outstanding / Incomplete Items The following items were outstanding or incomplete at the time of dormancy and would ne

1. Business Purpose Articulation. The business purposes for the Spin-Off, as currently articulated, are insufficient to support a "should" level tax opinion. The concern described in Section III.A above — namely, that the articulated purposes are primarily driven by HPE Fund IV's fund-level objectives rather than genuine corporate-level interests of Veldran — was not resolved. Resolution would require either the deve

3. Representation Letter. The second draft of the Representation Letter was circulated on July 11, 2022, but was not finalized or executed by Veldran or Harrowgate. Finalization of the Representation Letter is a prerequisite to the delivery of any tax opinion.

4. Tax Opinion. The first draft of the tax opinion letter was circulated on August 5, 2022, but it contains open placeholders and qualifications, and internal comments from Leonard Cross and Sylvia Hartwell (compiled August 10, 2022) have not been incorporated. The draft opinion is not in final form and should not be relied upon by any person for any purpose.

5. Tax Sharing Agreement. The Tax Sharing Agreement between Veldran and Meridian remains at the outline and key terms stage. A full-form agreement has not been drafted.

6. Outstanding Diligence Items. The diligence tracker spreadsheet, last updated August 29, 2022, reflects that certain items requested from Veldran management remain outstanding, including (without limitation): (a) certain historical Veldran state income tax returns for the 2019 and 2020 tax years for several jurisdictions; (b) detailed schedules and documentation of intercompany transactions between the Engineered C

7. Meridian Incorporation. Meridian Flow Technologies, Inc. (SpinCo) was never incorporated. No certificate of incorporation was filed, no shares of stock were issued, and no organizational resolutions were adopted. Incorporation of SpinCo is a prerequisite to the Contribution and Distribution.

8. Lender and Trustee Consents. Neither the credit agreement consent/amendment process with the Term Loan B lender group (through Ashfield National Bank) nor the indenture waiver/consent process with the Senior Unsecured Noteholders (through Colton Trust Company) was formally initiated. These processes would need to be commenced and completed before the Spin-Off could proceed.

V. Work Product Preservation Instructions All memoranda, draft opinions, draft transaction documents (including the draft Representation Letter, draft Tax Matters provisions, and draft Tax Sharing Agreement outline), correspondence (including emails), diligence materials, the diligence tracker spreadsheet, conference call memoranda, time records, billing records, and all other materials relating to this engagement ar

VI. Billing and Financial Summary A. Hourly Rates (2022) The applicable hourly rates for the timekeepers on this engagement during the 2022 billing year are a