Contract analysis

1. Veldran is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. Veldran was incorporated on March 14, 2019, and has at all times since its incorporation maintained its corporate existence and good standing under Delaware law.

2. Veldran's Employer Identification Number is 86-1920347. Veldran's registered address in Delaware is 1209 Orange Street, Wilmington, Delaware 19801. Veldran's principal executive office is located at 2400 Commerce Park Drive, Suite 500, Charlotte, North Carolina 28217.

3. Under Veldran's certificate of incorporation, as amended, Veldran is authorized to issue one hundred million (100,000,000) shares of common stock, par value $0.01 per share. As of the date hereof, seventy-four million five hundred thousand (74,500,000) shares of Veldran common stock are issued and outstanding.

4. Veldran has no other class of stock authorized, issued, or outstanding, including without limitation preferred stock, and there are no warrants, options, convertible instruments, or other securities outstanding that could result in the issuance of additional shares of Veldran capital stock, other than equity incentive plan awards (including stock options and restricted stock units) described in Schedule E hereto a

5. Veldran files its federal income tax returns as a C corporation (within the meaning of Section 1361(a)(2) of the Code). Veldran has never elected to be treated as an S corporation under Section 1362 of the Code. Veldran is not and has never been a regulated investment company within the meaning of Section 851 of the Code, a real estate investment trust within the meaning of Section 856 of the Code, a personal hold

6. Veldran is not a member of an affiliated group filing a consolidated federal income tax return (within the meaning of Section 1504(a) of the Code) with any entity other than its wholly owned subsidiaries, including Kestrel Precision Controls, Inc. Veldran is the common parent of an affiliated group that includes Kestrel as a member, and such group files a consolidated federal income tax return. B. Representations

7. Meridian Flow Technologies, Inc. ("Meridian") will be incorporated as a corporation under the laws of the State of Delaware prior to the Contribution. As of the date of this Representation Letter, Meridian has not yet been formed.

8. Meridian's planned registered address will be 1209 Orange Street, Wilmington, Delaware 19801. Meridian's planned principal executive office will be located at 7100 Northlake Parkway, Suite 300, Tucker, Georgia 30084, which is the current principal operating location of the Precision Flow Solutions Division.

9. Prior to the Contribution, Meridian will have no assets, no liabilities, and no operations of any kind. Meridian will be a newly formed, wholly owned subsidiary of Veldran, formed solely for the purpose of receiving the Contributed Business in the Contribution and serving as the Controlled Corporation in the Distribution.

10. Meridian will elect to be treated as a C corporation for federal income tax purposes from and after its date of formation. Meridian will not elect to be treated as an S corporation or as any other pass-through entity for federal income tax purposes.

11. Sandra Waverly, who currently serves as President of the Precision Flow Solutions Division of Veldran, will serve as the Chief Executive Officer of Meridian upon its formation and following the Distribution. Derek Okonkwo, who currently serves as Vice President of Finance of the Precision Flow Solutions Division of Veldran, will serve as the Chief Financial Officer of Meridian upon its formation and following the

12. HPE Fund IV is a limited partnership duly organized, validly existing, and in good standing under the laws of the State of Delaware (Employer Identification Number: 84-3291067). HPE Fund IV was formed pursuant to a limited partnership agreement dated as of May 14, 2018, as amended from time to time.

13. The general partner of HPE Fund IV is Harrowgate Capital Partners IV GP LLC, a Delaware limited liability company (Employer Identification Number: 84-3291104). The investment advisor and manager of HPE Fund IV is Harrowgate Capital Advisors LLC, a Delaware limited liability company (Employer Identification Number: 83-2756891).

14. HPE Fund IV holds approximately 62.4% of the outstanding common stock of Veldran, representing forty-six million four hundred eighty-eight thousand (46,488,000) shares of Veldran common stock, all of which are held through HPE Fund IV's wholly owned subsidiary, Harrowgate Veldran Holdings LLC ("HVH"), a Delaware limited liability company (Employer Identification Number: 86-1483920). HVH is treated as a disregarde

15. HPE Fund IV is a private equity fund with approximately Six Billion Eight Hundred Million Dollars ($6,800,000,000) in committed capital (vintage year 2018). HPE Fund IV's key principals are Marcus Adler (Founding Partner and Chairman), Diana Fenn (Managing Partner and Chief Investment Officer, who also serves as Chair of the Board of Directors of Veldran), Tobias Rourke (Partner, Head of Portfolio Operations), an

16. Prescott Capital Management LP ("Prescott"), a New York limited partnership (Employer Identification Number: 13-4928371), with a principal office at 277 Park Avenue, 42nd Floor, New York, New York 10172, holds approximately 14.8% of the outstanding common stock of Veldran, representing eleven million twenty-six thousand (11,026,000) shares of Veldran common stock. The managing partner of Prescott is Andrew Kessle

17. Prescott originally acquired fifteen million five hundred thousand (15,500,000) shares of Veldran common stock at Forty Dollars ($40.00) per share (aggregate consideration of Six Hundred Twenty Million Dollars ($620,000,000)) as a co-investor alongside HPE Fund IV in connection with the Veldran Acquisition on September 20, 2019. Following the Veldran Acquisition, Prescott subsequently sold four million four hundr

18. Veldran management stockholders, consisting of officers and directors of Veldran, collectively hold approximately 5.3% of the outstanding common stock of Veldran, representing approximately three million nine hundred forty-eight thousand five hundred (3,948,500) shares, consisting of shares acquired pursuant to equity incentive plans and stock purchase programs. The equity incentive plan awards (including vested

19. The remaining shares of Veldran common stock — approximately 17.5% of total outstanding shares, representing approximately thirteen million thirty-seven thousand five hundred (13,037,500) shares — are held by public and institutional investors and constitute the public float. SECTION III — REPRESENTATIONS REGARDING THE CAPITAL STRUCTURE OF VELDRAN The undersigned make the following representations regarding the c

20. As of the date hereof, Veldran has the following material indebtedness outstanding: (a) First Lien Term Loan B: One Billion One Hundred Million Dollars ($1,100,000,000) in aggregate principal amount outstanding under the Ashfield Credit Agreement, with Ashfield National Bank, N.A. serving as administrative agent. The First Lien Term Loan B was originally entered into on September 20, 2019 in connection with the f

21. Other than the First Lien Term Loan B and the Senior Notes described above, Veldran and its subsidiaries have no other material indebtedness outstanding as of the date hereof, except as may be disclosed in separate schedules provided to Tax Counsel. For purposes of this representation, "material indebtedness" means any indebtedness with an outstanding principal balance in excess of Ten Million Dollars ($10,000,00

22. As described in Section II.A above, Veldran has one hundred million (100,000,000) shares of common stock authorized and seventy-four million five hundred thousand (74,500,000) shares of common stock issued and outstanding.

23. Veldran has no preferred stock or other class of equity securities authorized or outstanding. There are no outstanding warrants, options, convertible debt instruments, or other securities or instruments that could result in the issuance of additional shares of Veldran capital stock, other than equity incentive plan awards (stock options and restricted stock units) as described in Schedule E hereto. Management sto

24. There is no shareholder agreement, voting agreement, registration rights agreement, or other contractual arrangement among or between any shareholders of Veldran that would affect the rights attaching to shares of Veldran common stock in connection with the Distribution, or that would restrict or otherwise affect the Distribution, except as may be disclosed in separate schedules provided to Tax Counsel or describ

25. In connection with the Spin-Off, Veldran will transfer to Meridian all of the assets and liabilities of the Precision Flow Solutions Division (the "Contributed Business"), including but not limited to: (i) all tangible assets, including machinery, equipment, inventory, and supplies; (ii) all intangible assets, including intellectual property, patents, trademarks, trade names, copyrights, trade secrets, know-how,

26. The Contributed Business includes the business, assets, and liabilities of Kestrel Precision Controls, Inc., a wholly owned subsidiary of Veldran. The Kestrel business constitutes an integral component of the Precision Flow Solutions Division and will be transferred to Meridian as part of the Contribution.

27. In exchange for the transfer of the Contributed Business, Meridian will issue to Veldran all of its authorized and outstanding common stock and will assume the liabilities allocated to the PFS Division as set forth in the Separation Agreement. No other consideration (whether in the form of cash, securities, or other property) will be paid or delivered by Meridian to Veldran in connection with the Contribution.

28. The Contribution is intended to satisfy the requirements of a reorganization under Section 368(a)(1)(D) of the Code, including the "control" requirement as applied through Section 354(b)(1) and Section 368(a)(1)(D) of the Code.

29. Immediately after the Contribution and prior to the Distribution, Veldran will own one hundred percent (100%) of the outstanding stock of Meridian, satisfying the control requirement of Section 368(c) of the Code — namely, ownership of stock possessing at least eighty percent (80%) of the total combined voting power of all classes of stock entitled to vote and at least eighty percent (80%) of the total number of

30. Immediately following the Contribution, Veldran will distribute one hundred percent (100%) of the outstanding common stock of Meridian pro rata to holders of Veldran common stock as of the Record Date. No Meridian stock will be retained by Veldran after the Distribution.

31. The Distribution will be effected at a ratio of one (1) share of Meridian common stock for each one (1) share of Veldran common stock held of record on the Record Date (the 1:1 Distribution Ratio). Based on the 74,500,000 shares of Veldran common stock currently outstanding, the Distribution will result in the distribution of an aggregate of 74,500,000 shares of Meridian common stock (subject to adjustment for an

32. No consideration of any kind will be paid by Veldran shareholders in exchange for the Meridian shares received in the Distribution. The Distribution will be effected as a dividend in kind.

33. The Distribution is intended to qualify as a tax-free distribution under Section 355(a) of the Code, such that no gain or loss will be recognized by Veldran shareholders upon the receipt of Meridian common stock in the Distribution (except with respect to any cash received in lieu of fractional shares, if applicable).

34. Immediately following the Distribution, each holder of Veldran common stock as of the Record Date will hold one share of Veldran common stock and one share of Meridian common stock for each share of Veldran common stock held immediately prior to the Distribution. The proportionate interests of all Veldran shareholders in the combined enterprise (Veldran plus Meridian) will remain unchanged as a result of the Dist

35. No private letter ruling will be sought from the Internal Revenue Service in connection with the Spin-Off or any component thereof. The parties have determined, in consultation with Tax Counsel, that a private letter ruling is not required and that the Tax Opinion to be rendered by Calderwood & Harkness LLP will serve as the sole tax assurance regarding qualification of the Spin-Off under Sections 355 and 368(a)(

36. Prior to or concurrently with the Distribution, Veldran and Meridian will enter into a Separation and Distribution Agreement (the "Separation Agreement") governing the terms and conditions of the separation of the PFS Division from Veldran and the Distribution of Meridian stock. The Separation Agreement will address, among other things, the transfer of assets and assumption of liabilities, employee matters, intel

37. In addition, Veldran and Meridian will enter into a Tax Sharing Agreement (the "Tax Sharing Agreement") governing the allocation of pre-spin and post-spin federal, state, and local tax liabilities between Veldran and Meridian. The Tax Sharing Agreement will contain customary provisions regarding (i) the filing of pre-spin and post-spin tax returns, (ii) cooperation in tax matters, (iii) indemnification for tax li

38. The Spin-Off is motivated by the following bona fide corporate business purposes of Veldran, each of which is a real, substantial, and non-tax purpose germane to the business of Veldran and its shareholders: (i) Independent Capital-Allocation Strategies. The separation of the Engineered Coatings Division and the Precision Flow Solutions Division into two independent publicly traded companies will enable each enti

39. The corporate business purposes described above are purposes of Veldran at the corporate level, independent of and in addition to any investment objectives or fund-level considerations of HPE Fund IV or any other shareholder. The Board has evaluated the Spin-Off in the context of its fiduciary duties to all Veldran shareholders, including public and institutional shareholders, and has determined that the separati

41. The Spin-Off is not motivated, in whole or in part, by a purpose of distributing the earnings and profits of Veldran or Meridian. The business purposes described in Section V.A above are the sole purposes motivating the Spin-Off, and no purpose to distribute earnings and profits is a motivating factor for the transaction.

42. The Spin-Off is not principally motivated by a purpose of facilitating the sale, exchange, or monetization of HPE Fund IV's investment in Veldran or the Precision Flow Solutions Division. While HPE Fund IV, as a private equity fund, may in the ordinary course of its business seek to realize a return on its investment in Veldran at some future date, no such sale, exchange, or monetization transaction has been agre

43. The business purposes described in Section V.A above are purposes of Veldran at the corporate level, not merely purposes of one or more of Veldran's shareholders. Each such business purpose is germane to the business of the Distributing Corporation (Veldran) and the Controlled Corporation (Meridian) and would independently justify the separation of the two divisions without regard to the investment objectives of

44. The Spin-Off is a more practicable means of accomplishing the corporate business purposes described in Section V.A above than alternative transactions considered by the Board, including but not limited to: (i) a sale of the Precision Flow Solutions Division to a third party; (ii) an initial public offering of a minority interest in the PFS Division; (iii) a tracking stock structure; or (iv) a management buyout or

46. The Engineered Coatings Division has been engaged in the active conduct of a trade or business, within the meaning of Section 355(b)(2) of the Code, throughout the entire five-year period ending on the Distribution Date (the "ATB Period"). The Engineered Coatings Division has at all times during the ATB Period involved the design, manufacture, and sale of engineered coatings and surface treatment products for ind

47. For the fiscal year ended December 31, 2021, the Engineered Coatings Division generated revenue of approximately One Billion Five Hundred Twenty Million Dollars ($1,520,000,000) and EBITDA (earnings before interest, taxes, depreciation, and amortization) of approximately Two Hundred Eighty-Five Million Dollars ($285,000,000), representing an EBITDA margin of approximately 18.75%. The Engineered Coatings Division

48. The Engineered Coatings Division was not acquired by Veldran or any predecessor of Veldran in a transaction in which gain or loss was recognized (in whole or in part) during the ATB Period. No exception to this representation is anticipated. The active trade or business of the Engineered Coatings Division has been conducted by Veldran or its wholly owned subsidiaries throughout the ATB Period without interruption

49. The Precision Flow Solutions Division has been engaged in the active conduct of a trade or business, within the meaning of Section 355(b)(2) of the Code, throughout the entire ATB Period. The Precision Flow Solutions Division has at all times during the ATB Period involved the design, manufacture, and sale of precision fluid-control systems for industrial, petrochemical, and water-infrastructure end markets. Veld

50. For the fiscal year ended December 31, 2021, the Precision Flow Solutions Division generated revenue of approximately Eight Hundred Twenty Million Dollars ($820,000,000) and EBITDA of approximately One Hundred Thirty-Three Million Dollars ($133,000,000), representing an EBITDA margin of approximately 16.22%. The Precision Flow Solutions Division employs a substantial portion of Veldran's approximately 8,200 total

51. On June 7, 2019, Veldran acquired one hundred percent (100%) of the outstanding capital stock of Kestrel Precision Controls, Inc. from Rennick Industrial Partners Fund II LP for aggregate cash consideration of Two Hundred Ninety-Five Million Dollars ($295,000,000). The Kestrel Acquisition was structured as a fully taxable stock acquisition — that is, the transaction was a purchase of Kestrel stock in which Rennic

52. The Kestrel Acquisition closed on June 7, 2019, which is within the five-year ATB Period (the period beginning five years before the anticipated Distribution Date in Q4 2022 — i.e., approximately Q4 2017 through the Distribution Date). Accordingly, the Kestrel Acquisition is a transaction in which gain or loss was recognized that occurred during the ATB Period, and Section 355(b)(2)(C) of the Code is potentially

53. Kestrel's business constitutes approximately thirty-five percent (35%) of the Precision Flow Solutions Division's fiscal year 2021 revenue, representing approximately Two Hundred Eighty-Seven Million Dollars ($287,000,000) out of the PFS Division's total revenue of Eight Hundred Twenty Million Dollars ($820,000,000). The Kestrel business is therefore a material component of the Precision Flow Solutions Division.

54. Kestrel Precision Controls, Inc. was incorporated in the State of Georgia on February 12, 2003 (Employer Identification Number: 58-2847193). Kestrel has continuously operated the precision flow controls business since its founding — a period of approximately nineteen (19) years as of the anticipated Distribution Date. Specifically, Kestrel has at all times since February 12, 2003 been actively engaged in the desi

55. Kestrel conducted the precision flow controls business continuously for the full five-year period preceding the anticipated Distribution Date, within the meaning of Section 355(b)(2)(D) of the Code. That is, Kestrel (the acquired corporation) was engaged in the active conduct of the precision flow controls trade or business throughout the five-year period ending on the Distribution Date, and such trade or busines

56. Prior to the Kestrel Acquisition, Kestrel was wholly owned by Rennick Industrial Partners Fund II LP (Employer Identification Number: 82-3017564). Kestrel was not a member of Veldran's affiliated group (within the meaning of Section 1504(a) of the Code) at any time prior to June 7, 2019. There was no prior affiliation, common ownership, or other relationship between Veldran and Kestrel prior to the Kestrel Acquis

58. Tax Counsel has advised that Section 355(b)(2)(C) of the Code is implicated by the Kestrel Acquisition because the Kestrel stock was acquired in a transaction in which gain or loss was recognized during the ATB Period. However, Tax Counsel has further advised that the safe harbor of Section 355(b)(2)(D) of the Code should be satisfied with respect to the Kestrel business because the trade or business conducted by

59. Other than the Kestrel Acquisition described in Section VI.C above, neither the Engineered Coatings Division nor the Precision Flow Solutions Division (or any component thereof, including any subsidiary, asset, or business line) was acquired by Veldran or any of its affiliates in a transaction in which gain or loss was recognized (in whole or in part) during the ATB Period. The undersigned are not aware of any ot

60. As of the date of this Representation Letter and as of the anticipated Distribution Date, there is no agreement, understanding, arrangement, or substantial negotiations (whether written or oral, binding or non-binding, formal or informal) for the sale, exchange, transfer, or other disposition of stock of Veldran or Meridian by any shareholder of Veldran that would occur after the Distribution. No shareholder of V

61. No shareholder of Veldran has entered into any hedging transaction, monetization transaction, prepaid variable forward contract, equity collar, or similar financial instrument or arrangement with respect to shares of Veldran common stock that would be affected by the Distribution or that would have the economic effect of a sale or disposition of such shares. B. Nature of Distribution — Pro Rata

62. The Distribution will be pro rata to all holders of Veldran common stock as of the Record Date. Each holder of Veldran common stock will receive the same number of shares of Meridian common stock per share of Veldran common stock held, and no shareholder will receive disproportionate value as a result of the Distribution.

63. The undersigned acknowledge that the pro rata nature of the Distribution is identified in Regulations Section 1.355-2(d)(2)(iv)(A) as a factor that may be treated by the IRS as evidence that the Distribution is being used principally as a device for the distribution of earnings and profits. However, the undersigned represent that this factor is outweighed by the substantial corporate business purposes described i