Contract analysis

From: Sandra Tung <stung@calderwoodharkness.com> To: Philip Hargrove <phargrove@hargrovelandsdowne.com> Cc: Janet Pfeiffer <jpfeiffer@whitmoreaerospace.com> Date: Mon, 12 May 2025 10:47:00 -0000 Subject: Coordination on Whitmore Export Controls Matter and Drakon Intermediary Agreement

Thank you for referring Whitmore Aerospace LLC's ITAR/EAR export controls and sanctions compliance matter to Calderwood & Harkness. We formally opened the engagement on May 7, 2025, and the engagement letter has been executed with Janet. We very much appreciate Hargrove & Landsdowne's longstanding relationship with Whitmore, and I'm confident this will be a productive collaboration between our firms.

I wanted to lay out where things stand, how we see the division of responsibilities, and where we'll need to coordinate closely — particularly on the Drakon intermediary agreement.

**Engagement Overview — The WPX-4200 Meridian Program**

As you know, this matter involves a comprehensive ITAR/EAR jurisdiction and commodity classification assessment for Whitmore's WPX-4200 Meridian electro-optical/infrared multi-spectral targeting pod, an export licensing strategy for the prospective Direct Commercial Sale of 36 units to the Republic of Kantara's Ministry of National Defence, and OFAC and restricted-party sanctions screening of all foreign end-users, c

**Calderwood & Harkness's Scope of Work**

1. *ITAR/EAR Jurisdiction and Classification Analysis.* We are analyzing whether the WPX-4200 system falls under USML Category XII(d) or alternatively Category XI(a)(3), and whether the dual-use subcomponent — the WPX-4200-SC07 digital signal processing module — may be separately classifiable under EAR ECCN 6A003.b.4. We expect to deliver the jurisdiction assessment memorandum to Whitmore by June 6, 2025.

2. *Commodity Jurisdiction (CJ) Request Preparation and DDTC Filing.* We will prepare and file a CJ request with the Directorate of Defense Trade Controls, targeting a filing date of June 20, 2025. As a reference point, the predecessor system, the WPX-3100, received a CJ determination classifying it under USML Category XII(d) (DDTC Ref. CJ-2018-003214).

3. *DSP-5 and TAA Application Preparation.* We will prepare the DSP-5 permanent export license application and a Technical Assistance Agreement for defense services and technical data transfer to Kantara MoND personnel. Our target filing date is September 22, 2025, following receipt of the CJ determination, which we estimate between August 25 and September 15, 2025. I should note that because this transaction exceeds

4. *OFAC and Restricted-Party Sanctions Screening and Due Diligence.* Phase 1 automated screening will use Pinecrest Compliance Solutions LLC's PineScan Global platform, supplemented by our independent manual verification, across all applicable lists — OFAC SDN, SSI, NS-MBS, BIS Entity List, Denied Persons List, Unverified List, DDTC AECA Debarred List, DoD Section 1260H, EU Consolidated List, and UN Security Council

5. *Compliance Risk Assessment.* We will prepare an overall risk assessment and advisory regarding the export program.

As I understand it, your firm will continue as coordinating counsel for the underlying commercial contract between Whitmore and the Kantara Ministry of National Defence, structured as a Direct Commercial Sale based on the Letter of Request received from Kantara MoND on March 18, 2025. Your firm will also handle the negotiation and documentation of the intermediary/representation agreement with Drakon Defence Systems

**Coordination on the Drakon Intermediary Agreement — Key Compliance Provisions**

Philip, the Drakon intermediary agreement will be a critical area of overlap between our respective workstreams, and I'd like to flag several compliance provisions that we'll need to review and advise on before the agreement is finalized:

1. *ITAR Compliance Provisions.* The agreement should include robust representations, covenants, and undertakings by Drakon regarding compliance with the International Traffic in Arms Regulations, restrictions on re-transfer or re-export of defense articles and technical data, and cooperation with end-use monitoring.

2. *Anti-Corruption Representations and Warranties.* Given Drakon's role as a licensed defense broker under Kantaran law and the commission-based compensation structure, we will need appropriate FCPA-style representations and covenants in the agreement.

3. *Commission Disclosure Requirements.* I understand the proposed commission structure is 4.5% of net contract value, which on the $74.6 million base contract amounts to $3,357,000. This commission must be properly disclosed in the DSP-5 application, as DDTC requires disclosure of all fees and commissions paid in connection with defense article exports. The intermediary agreement should contain provisions facilitati

4. *Sanctions Compliance and Restricted-Party Screening Covenants.* The agreement should include ongoing representations by Drakon that neither it nor its owners, officers, directors, or affiliates are designated on any applicable restricted-party or sanctions list, along with a commitment to promptly notify Whitmore of any change in status.

I would ask that you coordinate with us before circulating any draft of the intermediary agreement to Drakon or its counsel so that we can review the export-controls and sanctions-related provisions. We want to make sure those provisions are fully integrated from the outset rather than layered in after the fact.

**Castellan Holdings Ltd. — Due Diligence Flag**

I want to flag briefly that we have identified a compliance concern relating to Drakon's corporate ownership structure that will require enhanced due diligence before Whitmore should finalize the intermediary agreement. We are handling this workstream directly and will keep you informed to the extent it is relevant to the commercial arrangement. This may affect the timeline for executing the Drakon agreement, so I'd

**Thessaly Law Chambers — Request for Introduction**

I understand that Drakon Defence Systems S.A. is represented by Thessaly Law Chambers in Velaris, Kantara, with Alexia Merouri as Managing Partner. Would you be able to facilitate an introduction to Ms. Merouri? If you have not yet been in direct contact with Thessaly, perhaps Janet or Raymond Ochoa at Whitmore could make the introduction. We will need to coordinate with Thessaly on the ITAR compliance provisions in

**Calderwood & Harkness Engagement Team**

For your reference, our team on this matter is as follows:

- Sandra Tung — Responsible Partner - Oliver Mackenzie — Billing Partner (cc'd on this email) - Garrett Simmons — Lead Associate - Leila Nazari — Working Associate

Please don't hesitate to reach out to me directly at any time.

To summarize the key dates we're working toward:

- Phase 1 sanctions screening completion: May 23, 2025 - Jurisdiction assessment memorandum delivery to Whitmore: June 6, 2025 - Enhanced due diligence report (ownership concern referenced above): expected mid-June 2025 - CJ request filing with DDTC: June 20, 2025

I'd like to suggest a brief call among the three of us — you, Janet, and me — sometime in the coming week to align on the commercial contract and intermediary agreement timelines and identify any open items. Please let me know what works for your schedule, and I'll coordinate with Janet.

Philip, thank you again for the referral. I look forward to working with you and your team on this matter.

Sandra Tung Partner Calderwood & Harkness LLP 1200 Pennsylvania Avenue NW, Suite 800 Washington, DC 20004 Tel: (202) 555-0147 Email: stung@calderwoodharkness.com

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