Contract analysis

From: Christine Yeung <cyeung@harrowgatecapital.com> To: Leonard Cross <lcross@calderwoodharkness.com> Cc: Diana Fenn <dfenn@harrowgatecapital.com> Date: Mon, 22 Aug 2022 04:47:00 -0000 Subject: Re: Proposed Spin-Off of Meridian Flow Technologies — Indefinite Pause

Following our August 15 conference call — which included Marcus Adler, Diana, Tobias, and me from Harrowgate; Jonathan Caldecott and Philip from Veldran; you, Sylvia Hartwell, and Garrett Simmons from Calderwood & Harkness; and Priya from Whitfield & Gage — and subsequent internal discussions here at Harrowgate, I am writing to inform you that Harrowgate has determined to pause indefinitely the proposed pro rata spin

Three principal considerations drove this determination. First, deteriorating industrial-sector equity valuations during mid-2022 make the timing of the spin-off, and any potential post-spin capital markets activity, unattractive. Samuel Ng at Brackenridge & Co. has similarly advised that current market conditions are unfavorable for the separation. Second, as you flagged in your July 22 email and as we discussed at

With that context, I would ask that Calderwood & Harkness take the following steps:

1. **Suspend active work** on the matter (engagement number 1003-00005 / matter code HRW-SPIN-001) effective immediately.

2. **Preserve all work product** so that the engagement can be reactivated efficiently if and when Harrowgate determines to proceed. This includes the draft tax opinion letter circulated on August 5; the analysis memoranda (the comprehensive § 355 analysis, the § 355(b) active trade or business / Kestrel analysis, the § 355(e) plan analysis, the business purpose memorandum, and the device test analysis); the draft Re

3. **Provide a summary of unbilled work-in-progress (WIP)** through the date of this email, in addition to the $310,000 already billed across the two interim invoices (Invoice #22-7831-001 for $165,000 dated June 15, 2022 and Invoice #22-7831-002 for $145,000 dated August 1, 2022).

We will advise Calderwood & Harkness when we are ready to reactivate, and the timing will depend on market developments and further strategic assessment on our end. To be clear, no draft opinion or other deliverable issued to date should be treated as reflecting a concluded view, consistent with the draft nature of all materials produced in the engagement so far.

I want to thank you, Sylvia, Garrett, and Leila Nazari for your thorough and diligent work over the past several months. We recognize the complexity of the tax analysis, particularly the § 355(e) plan-risk assessment given the September 2019 acquisition and the § 355(b) issues surrounding Kestrel Precision Controls. We very much hope to reengage when circumstances are more favorable. Priya at Whitfield & Gage will be

Christine Yeung General Counsel Harrowgate Capital Advisors LLC 600 Lexington Avenue, 38th Floor New York, NY 10022