Contract analysis

From: Leila Nazari <lnazari@calderwoodharkness.com> To: Harold Weiss <hweiss@pembertonrathbone.com> Cc: Garrett Simmons <gsimmons@calderwoodharkness.com> Date: Mon, 09 May 2022 10:23:00 -0000 Subject: Veldran Industries Holdings / Kestrel Precision Controls — Request for Historical Tax Returns and Related Documents

I hope this email finds you well. My name is Leila Nazari, and I am an associate in the Tax Department at Calderwood & Harkness LLP. Our firm has been engaged by Harrowgate Private Equity Fund IV, L.P. in connection with a tax advisory matter involving Veldran Industries Holdings, Inc. ("Veldran") and its subsidiary, Kestrel Precision Controls, Inc. ("Kestrel").

We understand that Pemberton Rathbone LLP serves as the independent auditors and tax-return preparers for Veldran and Kestrel. Philip Crundell, General Counsel of Veldran, has authorized the sharing of the materials described below with Calderwood & Harkness in connection with this engagement. If Pemberton Rathbone requires a separate written authorization or direction letter from Veldran before releasing these docum

As part of our work on this matter, we would appreciate your assistance in assembling and providing the following documents and information:

**1. Federal Income Tax Returns — Veldran Industries Holdings, Inc.**

Federal income tax returns (Form 1120 or applicable consolidated return) for Veldran Industries Holdings, Inc. (EIN: 86-1920347) for tax years 2017 through 2021, together with all schedules and attachments filed with each return. We understand that Veldran was incorporated on March 14, 2019, in Delaware, and accordingly may not have filed returns for the 2017 and 2018 tax years. If a predecessor entity filed returns

**2. Federal Income Tax Returns — Kestrel Precision Controls, Inc.**

Federal income tax returns (Form 1120 or applicable form) for Kestrel Precision Controls, Inc. (EIN: 58-2847193) for tax years 2017 through 2021, together with all schedules and attachments. We understand that Kestrel was organized in 2003 as a Georgia corporation and was acquired by Veldran on June 7, 2019, from Rennick Industrial Partners Fund II LP. We are requesting both pre-acquisition returns (i.e., tax years 2

- confirmation of whether Kestrel has been included in a consolidated federal income tax return group with Veldran since the June 2019 acquisition; - if so, the date on which Kestrel joined the consolidated group; and - any separate-company schedules, pro forma returns, or subsidiary detail prepared for Kestrel in connection with the consolidated filings.

State income tax returns for both Veldran and Kestrel for tax years 2017 through 2021 in all jurisdictions in which returns were filed. We are particularly interested in filings in Delaware, North Carolina, and Georgia, but we request returns for every jurisdiction in which either entity filed or was required to file during this period.

Copies of all federal and state tax elections made by or on behalf of Veldran and Kestrel during the 2017–2021 period. We would specifically request:

(a) Confirmation of whether a Section 338 election (including a Section 338(h)(10) election) was made, or considered and not made, in connection with the June 7, 2019 acquisition of Kestrel. If such an election was made, please provide copies of all related forms and statements.

(b) Any elections or affirmative opt-outs relating to Section 168(k) bonus depreciation for any tax year in the request period.

(c) Any applications for changes in accounting method (Form 3115) filed by or on behalf of either entity during the period, together with any IRS consent letters or acknowledgments received.

(d) Any other material tax elections affecting tax attributes, asset basis, or the characterization of income for either entity.

Copies of all extension requests (Form 7004 and any state equivalents) filed for Veldran and Kestrel for tax years 2017 through 2021.

**6. IRS and State Tax Authority Correspondence**

Copies of any and all correspondence received from or sent to the Internal Revenue Service concerning Veldran or Kestrel for tax years 2017 through 2021, including but not limited to audit notices, information document requests (IDRs), notices of proposed adjustment, 30-day and 90-day letters, closing agreements, and any private letter ruling requests or determinations. We also request copies of any correspondence fr

A schedule of all federal and state estimated tax payments made by or on behalf of Veldran and Kestrel for each tax year in the request period (2017–2021), including payment dates and amounts.

We are working under a timeline on this engagement, and it would be very helpful if these materials could be assembled and provided within approximately two to three weeks — that is, by late May or early June 2022. I understand that is an ambitious request given the volume of materials involved, so please do not hesitate to let me know if a different timeline is more realistic or if it would be helpful to prioritize

If you have any questions regarding this request, I am happy to discuss by phone at any time. I can be reached at (212) 506-4138 or at lnazari@calderwoodharkness.com. Garrett Simmons, who is copied on this email and serves as the lead associate on this matter, is also available to address any questions and can be reached at gsimmons@calderwoodharkness.com.

Thank you very much for your assistance, Mr. Weiss. I look forward to hearing from you.

**Leila Nazari** Associate, Tax Department Calderwood & Harkness LLP 1301 Avenue of the Americas, 40th Floor New York, NY 10019 T: (212) 506-4138 E: lnazari@calderwoodharkness.com

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