Contract analysis

Section 1: Matter Information This memorandum documents the opening of a new client matter within the Tax Department of Calderwood & Harkness LLP. The engagement relates to the rendering of a tax opinion in connection with a proposed corporate spin-off transaction, as described in detail in Section 4 below. All information contained herein has been compiled for internal administrative and conflicts-management purpose

Section 2: Responsible Attorneys The following attorneys have been designated as the engagement team for Matter HRW-SPIN-001. Staffing may be adjusted during the course of the engagement at the discretion of the Responsible Partner. Responsible Partner — Leonard Cross Title: Partner, Tax Department (Partner since 2010) Practice Focus: Corporate spin-offs, divisive reorganizations, and mergers and acquisitions tax. Mr

Section 3: Client Information Client Name: Harrowgate Private Equity Fund IV, L.P. Short Name / Billing Name: HPE Fund IV / Harrowgate Entity Type: Delaware limited partnership, formed under the Delaware Revised Uniform Limited Partnership Act EIN: 84-3291067 Registered Address: 1209 Orange Street, Wilmington, Delaware 19801 (c/o Crowne Albany Corporation, registered agent) Principal Office: 600 Lexington Avenue, 38t

Section 4: Matter Description 4.1 Overview of Engagement Calderwood & Harkness LLP has been engaged by Harrowgate Private Equity Fund IV, L.P. ("HPE Fund IV" or the "Client") to render a tax opinion at the "should" level of comfort (the second-highest level of confidence in the hierarchy of tax opinion standards) addressing the federal income tax consequences of the proposed pro rata spin-off of the Precision Flow So

§ 355(b) Active Trade or Business — The Kestrel Acquisition 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) in a fully taxable stock acquisition for a purchase price of $295 million. Kestrel is engaged in the design and manufacture of high-precision flow-contr

§ 355(e) Anti-Morris Trust — Plan Analysis IRC § 355(e) provides that if a distribution otherwise qualifying under § 355(a) is part of a "plan (or series of related transactions)" pursuant to which one or more persons acquire, directly or indirectly, stock representing a 50-percent or greater interest in the distributing corporation or any controlled corporation, the distributing corporation must recognize gain on th

Section 355(a)(1) requires, as interpreted by the Treasury Regulations and the case law (principally Gregory v. Helvering, 293 U.S. 465 (1935)), that a distribution be motivated by one or more substantial corporate-level business purposes. Harrowgate and Veldran have articulated the following corporate-level business purposes for the Spin-Off: (i) enabling each of Veldran (post-Spin) and Meridian to pursue independen

Section 5: Related Parties and Affiliated Entities The following entities were identified and screened during the matter-opening process. All entities listed below were included in the conflicts check described in Section 7 of this memorandum. All of the foregoing entities have been entered into the firm's new-matter and conflicts-management system as parties associated with Matter HRW-SPIN-001. Any additional entiti

Section 6: Other Counsel and Advisors The following law firms, financial advisors, and other professional service providers have been identified as participants in the proposed transaction. The engagement team will coordinate with these parties as described below. Whitfield & Gage LLP will serve as the primary coordinating counsel for the Spin-Off and will be responsible for drafting the principal transaction documen

Section 7: Conflict Check A comprehensive conflict check has been completed and cleared in advance of the opening of this engagement. The conflict check was conducted in accordance with the firm's standard conflicts-clearance procedures and encompassed all parties identified in Sections 5 and 6 of this memorandum, including the Client, the Distributing Corporation, the planned Controlled Corporation, all affiliated e

Section 8: Billing Arrangements Fee Structure: This engagement will be billed on an hourly basis at the firm's standard rates for 2022, as set forth below, subject to any alternative fee arrangements or rate accommodations agreed upon in the executed engagement letter. Estimated Total Fees: The total professional fees for this engagement are estimated to be in the range of $850,000 to $1,200,000, reflecting the antic

Section 9: Anticipated Work Plan and Timeline The following work plan sets forth the anticipated milestones and deliverables for the engagement, organized by month. The work plan is subject to adjustment based on the pace of the transaction, the availability of information from the Client, Veldran management, and third-party advisors, and any changes to the anticipated transaction timeline. April 2022 • Engagement op

Section 10: Special Considerations / Notes The following special considerations have been identified in connection with this engagement and are noted here for the reference of the engagement team and firm administration. Dual Representation. Calderwood & Harkness LLP will serve as tax counsel to both Harrowgate Private Equity Fund IV, L.P. (as the PE sponsor and controlling shareholder of Veldran) and Veldran Industr

Section 11: Approvals and Signatures This New Matter Opening Memorandum has been prepared by the Lead Associate identified below and has been reviewed and approved by the Responsible Partner and Billing Partner for Matter HRW-SPIN-001. Prepared By: Garrett Simmons Senior Associate, Tax Department Calderwood & Harkness LLP Reviewed and Approved By: LEONARD CROSS Partner, Tax Department Calderwood & Harkness LLP Respon