Contract analysis

I. Purpose and Scope of Memorandum This memorandum is prepared by Calderwood & Harkness LLP (1301 Avenue of the Americas, 40th Floor, New York, NY 10019) in connection with the firm's engagement to render a "should" level tax opinion under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the "Code" or "IRC"), regarding the proposed pro rata distribution by Veldran Industries Holdings, I

II. Background — Transaction Overview A. The Proposed Transaction The proposed transaction consists of a pro rata distribution by Veldran of one hundred percent (100%) of the common stock of Meridian to all holders of Veldran common stock, on a one-for-one basis — that is, one (1) share of Meridian common stock for each share of Veldran common stock outstanding as of the record date for the distribution. As of the da

III. Overview of Veldran's Debt Capital Structure An understanding of Veldran's debt capital structure is essential to the analysis of the Credit Agreement provisions implicated by the Spin-Off and the tax implications thereof. Set forth below is a summary of Veldran's outstanding indebtedness as of the date of this memorandum. A. First Lien Term Loan B Credit Agreement The Credit Agreement, which is the primary subj

IV. Credit Agreement Provisions Implicated by the Spin-Off This Section IV identifies and analyzes the specific provisions of the Credit Agreement that are implicated by the proposed Spin-Off. For each provision, we summarize the relevant covenant language, apply it to the facts of the Spin-Off, and state our conclusion as to whether the Spin-Off would trigger or violate the provision. This analysis is conducted for

V. Lender Consent Requirements and Ashfield National Bank Position A. Summary of Required Consents Based on the analysis set forth in Section IV above, the Spin-Off would require, at a minimum, the following consents, waivers, or amendments under the Credit Agreement: (a) A waiver of the Restricted Payment covenant to permit the Distribution of Meridian common stock to Veldran shareholders, the fair market value of w

VI. Tax Implications of Credit Agreement Mechanics This Section VI analyzes the tax implications of the Credit Agreement mechanics described above, with particular focus on the impact, if any, on the qualification of the Spin-Off under § 355 and the potential for taxable events arising from any required refinancing. A. Impact of Potential Refinancing on § 355 Qualification General Rule. A refinancing of existing debt

Section 355(d) provides that if, immediately after a distribution described in § 355(a), any person holds "disqualified stock" in the Distributing corporation or the Controlled corporation, the distribution is treated as a taxable exchange. "Disqualified stock" is generally stock that was acquired by "purchase" (within the meaning of § 355(d)(5)) during the five-year period ending on the date of distribution. The § 3

VII. Interaction with Tax Matters Provisions and Tax Sharing Agreement The draft Tax Matters Provisions, prepared by Calderwood & Harkness for insertion into the Separation Agreement being drafted by Whitfield & Gage LLP, are dated July 28, 2022, and are currently in circulating draft form. The Tax Matters Provisions include post-spin restrictive covenants designed to preserve the qualification of the Spin-Off under

VIII. Summary of Open Items for Tax Opinion Purposes Based on the analysis set forth herein, the following items remain open and must be resolved before the tax analysis of the Credit Agreement mechanics can be finalized for purposes of the "should" level tax opinion:

1. Refinancing Structure Not Yet Determined. The specific terms of any amendment, waiver, or refinancing of the $1.1 billion Term Loan B have not been negotiated with Ashfield National Bank, N.A. and the lender syndicate. Whether the transaction will proceed under Scenario 1 (amendment and waiver), Scenario 2 (full refinancing), Scenario 3 (partial repayment and amendment), or some alternative structure is unknown at

2. Meridian Debt Allocation. It is not yet clear whether Meridian will assume any portion of the existing Veldran debt or will obtain independent financing at the Meridian level. If Meridian issues new debt and remits the proceeds thereof to Veldran (e.g., to fund a partial paydown of the Term Loan B), the boot analysis under § 355(a)(3)(B) and the liability assumption analysis under § 357 must be completed. The aggr

3. Representations Required. The Representation Letter to be delivered by Veldran and Meridian in connection with Calderwood & Harkness's tax opinion (second draft circulated July 11, 2022, currently under review by Veldran management and Harrowgate) should include representations confirming the following: (a) the final structure of any refinancing, amendment, or waiver of the Credit Agreement, including the identity

4. Coordination with Whitfield & Gage and Thornapple McCord. The corporate covenant compliance analysis under the Credit Agreement is being handled by Whitfield & Gage LLP (contact: Priya Chandrasekar, 51 West 52nd Street, New York, New York 10019) and Thornapple McCord LLP (contact: David Ochoa, 227 West Trade Street, Suite 2000, Charlotte, North Carolina 28202). Calderwood & Harkness should coordinate closely with

5. Lender Consent Timeline. Given that Margaret Tsao of Ashfield National Bank has indicated that significant negotiation will be required, and potentially a full refinancing of the Term Loan B, the lender consent process may take several months to complete. This timing uncertainty may affect the overall transaction timeline and the feasibility of a Q4 2022 distribution date. If the distribution date is delayed beyon

IX. Conclusion Based on the analysis set forth in this memorandum, we reach the following conclusions: Credit Agreement Implications. The Spin-Off would implicate multiple provisions of Veldran's First Lien Term Loan B Credit Agreement. Specifically, the Spin-Off would (i) constitute a "Disposition" and an "Investment" under the Credit Agreement definitions, (ii) violate the Restricted Payment covenant (because the f