Contract analysis

1. Introduction and Purpose of Letter This firm represents Vantage Mobility Systems Corp. ("VMS" or "Vantage") in connection with that certain Master Embedded Software License and Services Agreement, dated June 21, 2022 (the "MESLSA"), by and between VMS, as licensee, and Meridian Code Technologies, Inc. ("MeridianCode"), as licensor. We understand that your firm, Redstone Whitaker LLP, serves as outside counsel to M

2. Background and Factual Summary To ensure a common understanding of the relevant facts and to provide context for the legal positions set forth below, we summarize the pertinent background as follows. 2.1 The MESLSA and Project Argonaut The MESLSA was duly executed on June 21, 2022, by and between VMS, as licensee, and MeridianCode, as licensor. The MESLSA has an aggregate deal value of Twenty Million Dollars ($20,

Section 9.4 of the MESLSA provides, in pertinent part, that if the licensee suspends active integration for more than one hundred twenty (120) consecutive days without providing written notice, the licensor may unilaterally convert the license to Dormancy Status. The 120-day period, measured from the Suspension Date of March 22, 2023, would have expired on July 20, 2023. On July 14, 2023 — six (6) calendar days befor

3. VMS's Position on Dormancy Status Under Section 9.4 3.1 Validity and Timeliness of the Dormancy Notice VMS's invocation of Dormancy Status under Section 9.4 was both procedurally valid and timely. As noted above, Section 9.4 provides that if the licensee suspends active integration for more than one hundred twenty (120) consecutive days without written notice, the licensor may convert the license to Dormancy Statu

4. Dispute Regarding Year 2 Maintenance & Support Fee ($2,400,000) 4.1 The Invoice and VMS's Objection On July 1, 2023, MeridianCode issued an invoice to VMS in the amount of Two Million Four Hundred Thousand Dollars ($2,400,000) for the Year 2 Annual Maintenance & Support Fee (the "Disputed Invoice"). The Disputed Invoice was issued pursuant to the fee schedule set forth in Section 6.2 of the MESLSA and purports to

Section 9.4 explicitly provides that during Dormancy Status, MeridianCode's support obligations are reduced to critical-security-patch-only support. The full suite of maintenance and support services for which VMS paid $2,400,000 in Year 1, and for which MeridianCode now seeks an identical $2,400,000 in Year 2, encompasses a broad range of services as defined in Section 6.1 and detailed in Schedule C of the MESLSA. T

5. Tolling of Section 4.3 "Use-It-or-Lose-It" Deadline 5.1 The Section 4.3 Requirement

Section 4.3 of the MESLSA contains a provision commonly known as a "use-it-or-lose-it" clause. Specifically, Section 4.3 requires VMS to commence integration testing on at least two (2) of the Designated Platforms within eighteen (18) months of the Effective Date of the MESLSA (i.e., June 21, 2022). The 18-month deadline falls on December 21, 2023 (the "Section 4.3 Deadline"). This provision was designed to ensure th

Section 9.4 expressly provides that Dormancy Status tolls "all milestone deadlines" under the MESLSA. VMS's position is that the Section 4.3 Deadline constitutes a "milestone deadline" within the meaning of Section 9.4, or, at a minimum, is functionally equivalent to a milestone deadline and is therefore subject to tolling during the dormancy period under the plain language of Section 9.4. The Section 4.3 Deadline is

6. Reservation of Rights Regarding Derivative Works Without prejudice to the positions set forth above, VMS also expressly reserves all of its rights with respect to the ownership, use, and further development of derivative works created by VMS engineers during the integration process in connection with Project Argonaut. These derivative works have been internally designated as DW-001, DW-002, and DW-003, and compris

7. Fee Forfeiture Provisions and Termination — Preservation of Rights VMS brings to the parties' attention certain provisions of the MESLSA bearing on the consequences of termination, which inform VMS's approach to the issues addressed in this letter.

Section 9.1 of the MESLSA provides that termination for convenience by the licensee prior to the twenty-four (24) month anniversary of the Effective Date (i.e., prior to June 21, 2024) results in the forfeiture of all prepaid fees. As set forth in Section 2.4 above, VMS has paid Twelve Million Three Hundred Twenty Thousand Dollars ($12,320,000) in fees to date. These fees represent a substantial financial commitment

8. Proposed Path Forward VMS values the commercial relationship with MeridianCode and remains committed to resolving the issues identified in this letter through good-faith negotiation. VMS proposes that the parties and their respective counsel engage in structured discussions to address the following matters: (1) Resolution of the Year 2 Maintenance Fee Dispute. VMS proposes that the parties negotiate a resolution o

9. Dispute Resolution and Arbitration The parties' attention is directed to Section 13.2 of the MESLSA, which provides for binding arbitration of disputes arising under or in connection with the MESLSA. Section 13.2 specifies that arbitration shall be conducted under the rules of the Midwest Arbitration Institute ("MAI"), with the arbitral seat in Detroit, Michigan. For disputes in which the amount in controversy exc

10. General Reservation of Rights This letter does not constitute, and shall not be construed as, a waiver of any rights, remedies, claims, or defenses available to VMS under the MESLSA, at law, or in equity. All rights and remedies of VMS are expressly reserved, whether or not specifically referenced herein. VMS's decision to address certain issues in this letter and to defer others to future communications does not