Contract analysis

From: Leonard Cross <lcross@calderwoodharkness.com> To: Philip Crundell <pmattingly@veldranindustries.com> Cc: Garrett Simmons <gsimmons@calderwoodharkness.com> Date: Fri, 29 Jul 2022 03:47:00 -0000 Subject: Veldran / Meridian Spin-Off — Lender Consent and Tax Covenant Questions

As Calderwood & Harkness continues its work on the tax opinion for the proposed pro rata distribution by Veldran Industries Holdings, Inc. of 100% of the common stock of Meridian Flow Technologies, Inc. (the "Spin-Off") (matter code HRW-SPIN-001), we need to review the provisions of Veldran's principal debt instruments that may interact with the tax analysis. Specifically, we need to understand any tax-related covena

**1. First Lien Term Loan B Credit Agreement**

With respect to Veldran's First Lien Term Loan B credit agreement (aggregate principal amount of $1.1 billion, with Ashfield National Bank, N.A. as administrative agent), we would appreciate your help with the following:

(a) Please provide a complete copy of the credit agreement, including all amendments and supplements executed to date. If this has already been uploaded to the data room, please confirm that the version currently posted is the most recent and fully conformed copy.

(b) Does the credit agreement contain a covenant restricting distributions of subsidiary stock or equity interests? Specifically, would the pro rata distribution of Meridian common stock to Veldran shareholders constitute a "Restricted Payment," "Disposition," or "Investment" (or any analogous defined term) under the credit agreement?

(c) Is lender consent required for such a distribution? If so, is that consent conditioned on receipt of a tax opinion, and if so, at what confidence level (e.g., "should," "will," or "more likely than not")?

(d) Does the credit agreement contain any "change of control" or "fundamental change" provision that could be triggered by the Spin-Off? If so, please provide the applicable definitions and the consequences of a trigger event.

(e) Have any discussions taken place with Margaret Tsao at Ashfield National Bank or with the lender syndicate regarding the proposed Spin-Off? If so, has any preliminary feedback been received on consent requirements or on a potential need for a refinancing in connection with the transaction?

(f) Are there any tax-related representations, warranties, or covenants in the credit agreement that would need to be modified or waived in connection with the Spin-Off — for example, covenants regarding maintenance of tax status, restrictions on tax elections, or requirements regarding consolidated group membership?

**2. 6.250% Senior Unsecured Notes due 2027**

With respect to Veldran's 6.250% Senior Unsecured Notes due 2027 (aggregate principal amount of $450 million, with Colton Trust Company as indenture trustee), we have the following requests:

(a) Please provide a complete copy of the indenture, including any supplemental indentures, if not already provided.

(b) Does the indenture contain an "asset sale" or "asset disposition" covenant that could be triggered by the transfer of Precision Flow Solutions Division assets to Meridian and/or the distribution of Meridian stock?

(c) Does the indenture contain a "restricted payment" covenant applicable to distributions of subsidiary stock?

(d) Does the indenture include a "successor company" or "merger/consolidation" provision that would apply to the separation? If so, would it require Meridian to become a co-obligor or guarantor of the notes?

(e) Is delivery of a tax opinion a condition to any consent, waiver, or covenant exception under the indenture?

(f) Are there any tax-related covenants or representations in the indenture that would need to be addressed in connection with the Spin-Off?

**3. General — Interplay with Tax Analysis**

I want to flag why these items are important from a tax perspective beyond simple compliance with the debt covenants. If the Spin-Off triggers a requirement to refinance or restructure Veldran's existing indebtedness, the refinancing itself could have material tax consequences — including potential cancellation of indebtedness income, original issue discount consequences, or modifications that could be treated as a d

In addition, the allocation of existing debt between Veldran (post-Spin-Off) and Meridian is relevant to both the § 368(a)(1)(D) reorganization analysis and the § 355 distribution analysis — specifically, whether Meridian will assume any portion of the existing debt as part of the Contribution of Precision Flow Solutions Division assets.

Philip, I would ask that you coordinate with Rita Subramanian and Veldran's treasury team on the factual details regarding the debt instruments and any lender discussions. Please also coordinate with Priya Chandrasekar at Whitfield & Gage on the corporate-law covenant analysis — our review at Calderwood & Harkness is focused on the tax-related aspects, and we want to make sure the two workstreams are aligned without

If possible, we would appreciate receiving the requested documents and responses by the end of next week (Friday, August 5). Garrett Simmons on our team will be preparing the covenant analysis memoranda, and our timeline is driven by the target date for circulating the first draft of the tax opinion. That said, we understand you may need to gather information from multiple sources, so please let us know if any items

Happy to set up a call early next week if it would be helpful to walk through any of these requests in more detail. Thank you for your continued assistance on this — we appreciate the responsiveness from your team throughout the engagement.

Leonard Cross Partner Calderwood & Harkness LLP 1301 Avenue of the Americas, 40th Floor New York, NY 10019 T: (212) 554-7180 lcross@calderwoodharkness.com