1007-00005 · Calderwood & Harkness LLP · Engagement

engagement-letter-vms.docx DOCUMENT Litigation

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CALDERWOOD & HARKNESS LLP Attorneys at Law

200 South Wacker Drive, Suite 3100 Chicago, Illinois 60606 Telephone: (312) 555-8200 Facsimile: (312) 555-8201 www.calderwoodharkness.com

February 14, 2022

Priya Nandakumar, Esq. General Counsel Vantage Mobility Systems Corp. 4280 Mound Road Sterling Heights, MI 48310

Re: Engagement of Calderwood & Harkness LLP — Defense of Vantage Mobility Systems Corp. in Warranty-Chargeback Dispute with Meridian Powertrain Holdings, Inc. Calderwood & Harkness Matter No. 1007-00005

Dear Ms. Nandakumar:

1. Purpose and Confirmation of Engagement

Calderwood & Harkness LLP is pleased to confirm its engagement by Vantage Mobility Systems Corp. ("Vantage" or the "Company"), a Delaware corporation headquartered in Sterling Heights, Michigan, to represent and defend Vantage in connection with the warranty-chargeback dispute initiated by Meridian Powertrain Holdings, Inc. ("Meridian"), an Illinois corporation headquartered in Schaumburg, Illinois. This engagement letter (the "Letter") sets forth the terms and conditions governing the attorney-client relationship between Calderwood & Harkness LLP (the "Firm") and Vantage with respect to this matter. We refer to the Firm and Vantage collectively herein as the "Parties" and individually as a "Party."

This Letter follows the preliminary discussions that we have had with you and with Vantage's Chief Executive Officer, Mr. Derek Calloway, regarding the nature of the dispute, the chargebacks at issue, the relevant contractual provisions, and Vantage's objectives in resolving this matter. We appreciate the confidence you and the Vantage leadership team have placed in Calderwood & Harkness, and we are committed to providing the highest caliber of legal representation. By countersigning this Letter in the space provided below, Vantage confirms its agreement to the terms and conditions set forth herein.

2. Description of the Matter

Based on the information provided to us to date, we understand the relevant background of the matter as follows.

Vantage and Meridian are parties to a Long-Term Supply Agreement bearing reference number LTSA-MPT-2020-0315, which was executed on March 15, 2020, for a five-year term running through March 14, 2025 (the "LTSA"). Under the LTSA, Vantage supplies Meridian with, among other components, precision-machined aluminum valve body housings designated as Part Nos. VMS-4400A through VMS-4400F (collectively, the "Parts"), which are incorporated into Meridian's MPT-8AT automatic transmission modules.

Meridian has issued three Warranty Chargeback Notices (each, a "WCN") under the LTSA, alleging that certain of the Parts supplied by Vantage are defective. The three WCNs are summarized as follows:

(a) First Warranty Chargeback Notice (WCN-2021-1247), dated December 6, 2021, covering 3,842 units, in the aggregate amount of $1,583,654.60;

(b) Second Warranty Chargeback Notice (WCN-2022-0103), dated January 18, 2022, covering 4,260 units, in the aggregate amount of $1,756,398.00; and

(c) Third Warranty Chargeback Notice (WCN-2022-0289), dated February 7, 2022, covering 3,712 units, in the aggregate amount of $1,530,497.60.

In total, the three WCNs cover 11,814 units and assert aggregate chargebacks in the amount of $4,870,550.20.

We further understand that Meridian has begun unilaterally deducting chargeback amounts from Vantage's open accounts receivable beginning with the January 2022 payment cycle. As of the date of this Letter, Meridian has withheld approximately $2.4 million from payments otherwise owed to Vantage, and we anticipate that additional deductions may be taken in the upcoming February 2022 payment cycle absent intervention.

Meridian is represented in this matter by Pratt, Givens & Lowell LLP, with Rachel Drummond serving as lead partner and Victor Saldana as the associate handling day-to-day matters.

3. Scope of Representation

Subject to the terms and conditions of this Letter, Calderwood & Harkness will provide legal services to Vantage in connection with the following:

(a) Defense of Warranty Chargebacks. Defense of Vantage against the warranty chargebacks totaling $4,870,550.20 issued by Meridian under the LTSA, including the preparation and pursuit of all defenses available to Vantage on both procedural and substantive grounds.

(b) Contract Review and Analysis. Comprehensive review and analysis of the LTSA (Ref. No. LTSA-MPT-2020-0315), with particular focus on the warranty provisions set forth in Section 9 thereof, the chargeback procedures established in Section 9.4, the part inspection requirements detailed in Section 9.4(b), and the applicable engineering specifications referenced in the LTSA, including Meridian Drawing Set MER-DWG-4400, Rev. C, and the ASTM E505 porosity standard, as well as any other drawings, specifications, or quality requirements incorporated by reference into the LTSA.

(c) Formal Chargeback Responses. Preparation and delivery of formal written responses to each of the three Warranty Chargeback Notices (WCN-2021-1247, WCN-2022-0103, and WCN-2022-0289), contesting the chargebacks on procedural and substantive grounds and preserving Vantage's rights under the LTSA.

(d) Defense Strategy Development. Evaluation and development of affirmative defenses available to Vantage, including, without limitation: (i) specification compliance and conformity of the Parts to the applicable engineering drawings and quality standards at the time of delivery; (ii) root cause analysis demonstrating that the alleged defects are attributable to conditions outside Vantage's control, including Meridian's own manufacturing processes, handling, or storage; (iii) procedural non-compliance by Meridian with the inspection, notification, and chargeback procedures set forth in the LTSA; and (iv) challenges to the individual components of Meridian's chargeback calculations, including unit costs, labor rates, and claimed consequential damages, if any.

(e) Technical Coordination. Coordination with Vantage's internal quality assurance team, including Thomas Reinhardt, Vice President of Quality, to gather, organize, and analyze Production Part Approval Process ("PPAP") documentation, statistical process control ("SPC") data, dimensional inspection records, first article inspection reports, process flow diagrams, control plans, and other technical records relevant to the defense.

(f) Expert Engagement. Engagement and oversight of independent technical experts, as needed, for metallurgical failure analysis, dimensional analysis, and other testing of the Parts at issue, including coordination with expert consultants to prepare written reports and, if necessary, expert declarations or affidavits supporting Vantage's position.

(g) Negotiation and Commercial Resolution. Negotiation and pursuit of a commercial resolution of the dispute, including participation in meet-and-confer sessions, telephone conferences, and in-person meetings with Meridian and its counsel at Pratt, Givens & Lowell LLP, with the objective of resolving the chargebacks on terms acceptable to Vantage.

(h) Settlement Documentation. Drafting and negotiation of any settlement agreement, mutual release, or amendment to the LTSA that may result from the resolution of the dispute, including appropriate provisions regarding future warranty claims, chargeback procedures, and quality standards.

(i) Insurance Coverage Evaluation. Evaluation of insurance coverage under Vantage's product liability policy issued by Trident Assurance Group, LLC (Policy No. TAG-PL-2021-00487), including review of the policy for potentially applicable coverage, preparation and submission of a formal notice of claim to the insurer, and coordination with the insurer and any coverage counsel appointed by the insurer, as appropriate.

Exclusions from Scope. Notwithstanding the foregoing, the scope of this engagement does not extend to: (a) the filing or prosecution of any litigation, arbitration, or other proceeding in any court or arbitral forum, unless separately authorized in writing by Vantage; (b) any regulatory proceedings, investigations, or inquiries by governmental authorities; or (c) any matters unrelated to the Meridian warranty-chargeback dispute described herein, including disputes with other customers, suppliers, or business partners of Vantage.

If circumstances require an expansion of the scope of this engagement — for example, if Vantage determines that the filing of affirmative claims against Meridian or the initiation of formal arbitration or litigation is warranted — Calderwood & Harkness will seek Vantage's advance written authorization before undertaking any such additional work and will provide an updated fee estimate reflecting the expanded scope. Any such expansion will be documented in a supplemental engagement letter or amendment to this Letter.

4. Engagement Team

Calderwood & Harkness will staff this matter with the following professionals, who collectively bring significant experience in commercial litigation, automotive supply chain disputes, and contractual warranty matters:

(a) Samuel Eklund — Responsible Partner, Litigation (General). Mr. Eklund will serve as the responsible partner on the matter. He will have overall responsibility for strategic direction, key client communications, and supervision of the engagement team. Mr. Eklund will be Vantage's primary point of contact at the Firm for strategic and material developments.

(b) Linda Osei — Billing Partner, Litigation (General). Ms. Osei will serve as the billing partner on the matter. She will oversee billing matters, monitor staffing and efficiency, and provide senior litigation counsel on substantive legal issues as needed.

(c) Carlos Espinoza — Lead Associate, Litigation (General). Mr. Espinoza will manage the day-to-day execution of the engagement, including the drafting of correspondence and formal chargeback responses, analysis of contractual provisions, coordination of document review and production, and oversight of expert engagement and communications with Meridian's counsel.

(d) Hannah Brinkley — Working Associate, Litigation (General). Ms. Brinkley will support the engagement through legal research, document preparation, factual analysis, and coordination with retained technical experts.

As the matter progresses, additional attorneys, paralegals, or other paraprofessionals may be assigned to the engagement team as necessary to ensure efficient and effective representation. The Firm will notify Vantage in advance of any material changes to the core engagement team identified above, including the assignment of any new partner or lead associate to the matter.

Vantage has designated the following individuals as its primary points of contact for this engagement: Priya Nandakumar, General Counsel, and Derek Calloway, Chief Executive Officer, or such other individuals as Vantage may designate in writing from time to time. All substantive communications regarding the matter, including strategic recommendations, status updates, and requests for authorization, will be directed to these contacts unless Vantage instructs otherwise.

5. Billing Rates and Fee Arrangements

5.1 Hourly Rates

The Firm will bill for professional services rendered in connection with this matter on an hourly basis. The current standard billing rates for the members of the engagement team are as follows:

Time is recorded and billed in increments of one-tenth (0.1) of an hour.

5.2 Rate Adjustments

Billing rates are subject to annual adjustment, typically effective as of January 1 of each calendar year, consistent with the Firm's standard rate review process. The Firm will provide Vantage with at least thirty (30) days' prior written notice of any rate adjustment before the adjusted rates are applied to invoices for this matter. Any such adjustment will apply only to services rendered on or after the effective date of the adjustment.

5.3 Disbursements and Out-of-Pocket Costs

The Firm does not charge for internal administrative costs, including routine photocopying, standard postage, and intra-office communications. However, material out-of-pocket disbursements incurred in connection with this matter will be passed through to Vantage at cost. Such disbursements may include, without limitation:

• Travel expenses (airfare, ground transportation, lodging, and meals) incurred in connection with client meetings, depositions, hearings, and other engagements related to the matter;

• Court filing fees and service of process fees, if applicable;

• Expert and consultant fees and expenses;

• Outside vendor charges, including document reproduction, printing, and courier services;

• Electronic discovery platform costs, including hosting, processing, and review platform fees, if applicable; and

• Long-distance telephone, videoconference, and teleconference charges in excess of routine amounts.

5.4 Expert Fees

Fees and costs payable to retained experts and consultants — including, by way of example, fees payable to Apex Metallurgical Consulting, Inc. or other experts retained in connection with the metallurgical failure analysis of the Parts — will be billed separately as disbursements on the Firm's monthly invoices or, at Vantage's election, will be directly invoiced to Vantage by the expert, as the Parties may mutually agree. In either case, Vantage will be responsible for all approved expert fees and costs.

5.5 Fee Estimate

Based on our preliminary assessment of the matter, the complexity of the contractual and technical issues involved, and the anticipated scope of negotiations and analysis, we estimate that total legal fees for the defense and resolution of the matter will range from approximately $250,000 to $375,000. This estimate is necessarily preliminary and is dependent upon a number of factors, including the scope and duration of negotiations with Meridian, the extent of technical analysis and expert work required, Meridian's responsiveness to Vantage's defenses, and whether the matter proceeds to any form of formal dispute resolution (such as mediation or arbitration). This estimate is provided for budgeting purposes only and does not constitute a fee cap, fixed fee, or guarantee of total fees.

We will provide periodic updates to this estimate as the matter develops and will promptly advise Vantage if, at any point, we anticipate that fees will materially exceed the upper range of this estimate.

5.6 Invoicing and Payment

Invoices for professional fees and disbursements will be rendered on a monthly basis, generally within fifteen (15) days following the close of each calendar month. Payment is due within thirty (30) calendar days of the date of each invoice. Past-due amounts are subject to a late charge of one percent (1.0%) per month, or the maximum rate permitted by applicable law, whichever is less.

Vantage reserves the right to request, and the Firm will use commercially reasonable efforts to provide, detailed billing summaries, task-based or phase-based breakdowns, budget-to-actual reports, and accrual estimates for purposes of Vantage's internal financial reporting, audit, and sponsor reporting requirements. The Firm will cooperate with reasonable outside billing guideline compliance, provided that such guidelines are communicated to the Firm in advance and are not inconsistent with the Firm's obligation to provide competent and diligent representation.

6. Client Identification and Conflicts

The Firm's client in this matter is Vantage Mobility Systems Corp. and Vantage Mobility Systems Corp. only. This engagement does not create an attorney-client relationship between Calderwood & Harkness LLP and any other person or entity, including, without limitation:

(a) Ironclad Capital Partners, LLC, the private equity sponsor of Vantage;

(b) Ironclad Capital Partners Fund III, L.P., the investment fund through which Ironclad Capital Partners holds its equity interest in Vantage;

(d) Any subsidiary, affiliate, parent company, or other related entity of Vantage, whether currently existing or subsequently formed.

Any communications by the Firm with representatives of the foregoing entities are undertaken solely in connection with and for the benefit of the Firm's representation of Vantage and do not give rise to separate attorney-client relationships or duties of loyalty.

The Firm has performed a check of its conflict-of-interest records in accordance with its standard procedures and the applicable Illinois Rules of Professional Conduct. Based on that review, the Firm is not presently aware of any conflict of interest that would preclude or materially limit the representation of Vantage in this matter. Should a conflict of interest arise during the course of this engagement — whether involving a current or prospective client of the Firm — the Firm will promptly notify Vantage and take appropriate steps to address the conflict in accordance with Rule 1.7 and Rule 1.9 of the Illinois Rules of Professional Conduct, including, where applicable, seeking informed consent or, if consent cannot be obtained, withdrawing from the representation.

7. Confidentiality and Privilege

All communications between Calderwood & Harkness LLP and Vantage in connection with this matter, including oral and written communications, memoranda, legal analyses, strategy assessments, and other materials prepared by the Firm in the course of representing Vantage, are intended to be privileged and confidential under the attorney-client privilege, the work-product doctrine, and any other applicable evidentiary privilege or protection. The Firm will take reasonable measures to maintain the confidentiality of such communications, and Vantage's information will not be disclosed by the Firm to third parties except as authorized by Vantage or as required by law.

Vantage agrees to take reasonable steps to maintain the confidentiality of legal advice, work product, and privileged communications received from Calderwood & Harkness in connection with this matter. Such steps include, without limitation, limiting the internal distribution of privileged materials to those individuals within the Company who have a need to know in connection with the management or resolution of the dispute, and clearly marking privileged documents as "Attorney-Client Privileged and Confidential" or with an equivalent designation.

To the extent Vantage shares or intends to share privileged communications, work product, or legal advice with third parties — including, without limitation, its private equity sponsor, Ironclad Capital Partners, LLC, or its lender, Dralvecen Commercial Lending Corp. — Vantage should consult with the Firm in advance regarding appropriate steps to preserve the attorney-client privilege and work-product protection. Depending on the circumstances, such steps may include the execution of a common-interest agreement, the application of confidentiality designations or restrictive legends, or the establishment of protocols governing the handling and distribution of privileged materials. Sharing privileged communications with third parties without appropriate safeguards may result in the waiver of the attorney-client privilege, and the Firm recommends that any such disclosure be carefully coordinated.

8. Governing Law

This engagement letter and the attorney-client relationship established hereby shall be governed by, and construed in accordance with, the laws of the State of Illinois, without giving effect to principles of conflicts of law. The Parties acknowledge that this governing law provision is consistent with the governing law provision set forth in Section 22.4 of the LTSA (Ref. No. LTSA-MPT-2020-0315), which provides that the LTSA is governed by Illinois law, and that Illinois law will accordingly apply to the interpretation of the contractual provisions at issue in this dispute.

9. Document Preservation and Cooperation

9.1 Litigation Hold

In light of the pending warranty-chargeback dispute, Vantage is advised to implement and maintain a litigation hold to ensure the preservation of all documents, communications, data, and electronically stored information ("ESI") potentially relevant to the dispute. The obligation to preserve relevant materials extends to all custodians, departments, and systems within the Company that may contain responsive information. Without limiting the generality of the foregoing, the categories of materials subject to preservation include:

(a) Quality records, including Production Part Approval Process ("PPAP") packages, statistical process control ("SPC") data, dimensional inspection results, first article inspection reports, process flow diagrams, control plans, and Failure Mode and Effects Analyses ("FMEAs") for Part Nos. VMS-4400A through VMS-4400F;

(b) Internal communications — including emails, instant messages, text messages, and memoranda — regarding the alleged defect, warranty claims, field failures, customer complaints, and Meridian's chargeback demands;

(c) All correspondence with Meridian, including written communications, meeting minutes, and notes of telephone calls, relating to the Parts, quality concerns, warranty claims, chargeback notices, and payment disputes;

(d) Production and inspection records for the Parts, including lot traceability records, material certifications, heat treat records, and shipping documentation;

(e) Engineering documents, including CAD files, engineering change notices ("ECNs"), deviation requests, and any revisions to applicable drawings or specifications;

(f) Any returned parts or samples currently in Vantage's possession or control, which should be segregated, labeled, and preserved in a manner that maintains their evidentiary integrity; and

(g) Financial records relating to the pricing, cost structure, and invoicing of the Parts, as well as records reflecting the amounts deducted or withheld by Meridian from Vantage's accounts receivable.

The Firm strongly recommends that Vantage issue a written litigation hold notice to all relevant custodians and that the Company suspend any routine document destruction or retention policies to the extent they would result in the destruction of potentially relevant materials. We are available to assist with the drafting and distribution of a formal litigation hold notice and related protocols.

9.2 Cooperation. The Firm requests Vantage's full cooperation in connection with this engagement, including the prompt production of documents and information requested by the engagement team and the timely availability of relevant personnel — including, without limitation, Thomas Reinhardt, Vice President of Quality, and members of the quality assurance, production, engineering, and finance teams — for interviews, consultations, and preparation of factual narratives and technical analyses. The effectiveness of the defense will depend in significant part on the quality and timeliness of the factual and technical information provided by Vantage's internal teams, and we appreciate the Company's commitment to supporting this effort.

10. Termination

Either Party may terminate this engagement at any time upon written notice to the other Party, subject in each case to the Firm's obligations under the applicable Illinois Rules of Professional Conduct regarding withdrawal from representation. If the Firm seeks to withdraw, it will do so only for reasons consistent with applicable ethical rules and will take all steps required to protect Vantage's interests during the transition.

Upon termination of this engagement, whether initiated by the Firm or by Vantage, Vantage will be responsible for the payment of all fees for professional services rendered and all disbursements incurred through the effective date of termination. The Firm will render a final invoice within thirty (30) days of the effective date of termination.

Following termination, the Firm will take reasonable steps to protect Vantage's interests during any transition period and will promptly transfer the entire client file — including all documents, correspondence, memoranda, research, and work product prepared in connection with this matter — to successor counsel designated by Vantage upon receipt of Vantage's written request, subject to the Firm's right to retain copies for its own records and to satisfaction of any outstanding balance on Vantage's account.

11. Limitation of Scope and No Guarantee of Outcome

The Firm will devote its best professional efforts to achieving a favorable outcome for Vantage in connection with the warranty-chargeback dispute with Meridian. However, the Firm cannot and does not guarantee any particular result, including, without limitation, the complete reversal of the chargebacks, the recovery of amounts already withheld by Meridian, or the achievement of a settlement on any particular terms. The outcome of any dispute depends on numerous factors, many of which are beyond the control of the Firm, including the actions and positions taken by Meridian and its counsel, the factual and technical evidence developed during the course of the engagement, and, if applicable, the rulings of any arbitrator, mediator, or court.

The scope of this engagement is limited to the matters described in Section 3 of this Letter. Any expansion of the scope requires the mutual written agreement of the Parties.

12. Acceptance and Execution

We respectfully request that Vantage confirm its agreement to the terms and conditions of this engagement by having an authorized representative countersign this Letter in the space provided below and returning a fully executed copy to the undersigned. This engagement shall be effective as of February 14, 2022, the date first written above.

We look forward to working with you and the Vantage team on this important matter. We are confident that, with the Company's cooperation and the engagement team's combined experience in automotive supply chain disputes, we will be well positioned to mount a vigorous and effective defense. Should you have any questions regarding this Letter or any aspect of the engagement, please do not hesitate to contact Samuel Eklund at (312) 555-8244 or Carlos Espinoza at (312) 555-8261.

•

Sincerely,

CALDERWOOD & HARKNESS LLP

By: ________

Name: Samuel Eklund

Title: Partner

By: ________

Name: Linda Osei

Title: Partner

ACKNOWLEDGMENT AND AGREEMENT

The undersigned, on behalf of Vantage Mobility Systems Corp., hereby acknowledges receipt of the foregoing engagement letter, confirms that the undersigned is authorized to execute this letter on behalf of the Company, and agrees to the terms and conditions set forth herein.

VANTAGE MOBILITY SYSTEMS CORP.

By: ________

Name: Priya Nandakumar

Title: General Counsel

Date: ________

Enclosures: None

cc: Derek Calloway, Chief Executive Officer, Vantage Mobility Systems Corp. cc: Douglas Brenton, Managing Partner, Ironclad Capital Partners, LLC (by separate cover, at Vantage's direction)

Professional	Role	Hourly Rate
Samuel Eklund	Responsible Partner	$695.00
Linda Osei	Billing Partner	$675.00
Carlos Espinoza	Lead Associate	$475.00
Hannah Brinkley	Working Associate	$385.00
Paralegals / Legal Assistants	Various	$225.00

CALDERWOOD & HARKNESS LLP Attorneys at Law
200 South Wacker Drive, Suite 3100 Chicago, Illinois 60606 Telephone: (312) 555-8200 Facsimile: (312) 555-8201 www.calderwoodharkness.com
February 14, 2022
Priya Nandakumar, Esq. General Counsel Vantage Mobility Systems Corp. 4280 Mound Road Sterling Heights, MI 48310
Re: Engagement of Calderwood & Harkness LLP — Defense of Vantage Mobility Systems Corp. in Warranty-Chargeback Dispute with Meridian Powertrain Holdings, Inc. Calderwood & Harkness Matter No. 1007-00005
Dear Ms. Nandakumar:
1. Purpose and Confirmation of Engagement
Calderwood & Harkness LLP is pleased to confirm its engagement by Vantage Mobility Systems Corp. ("Vantage" or the "Company"), a Delaware corporation headquartered in Sterling Heights, Michigan, to represent and defend Vantage in connection with the warranty-chargeback dispute initiated by Meridian Powertrain Holdings, Inc. ("Meridian"), an Illinois corporation headquartered in Schaumburg, Illinois. This engagement letter (the "Letter") sets forth the terms and conditions governing the attorney-client relationship between Calderwood & Harkness LLP (the "Firm") and Vantage with respect to this matter. We refer to the Firm and Vantage collectively herein as the "Parties" and individually as a "Party."
This Letter follows the preliminary discussions that we have had with you and with Vantage's Chief Executive Officer, Mr. Derek Calloway, regarding the nature of the dispute, the chargebacks at issue, the relevant contractual provisions, and Vantage's objectives in resolving this matter. We appreciate the confidence you and the Vantage leadership team have placed in Calderwood & Harkness, and we are committed to providing the highest caliber of legal representation. By countersigning this Letter in the space provided below, Vantage confirms its agreement to the terms and conditions set forth herein.
2. Description of the Matter
Based on the information provided to us to date, we understand the relevant background of the matter as follows.
Vantage and Meridian are parties to a Long-Term Supply Agreement bearing reference number LTSA-MPT-2020-0315, which was executed on March 15, 2020, for a five-year term running through March 14, 2025 (the "LTSA"). Under the LTSA, Vantage supplies Meridian with, among other components, precision-machined aluminum valve body housings designated as Part Nos. VMS-4400A through VMS-4400F (collectively, the "Parts"), which are incorporated into Meridian's MPT-8AT automatic transmission modules.
Meridian has issued three Warranty Chargeback Notices (each, a "WCN") under the LTSA, alleging that certain of the Parts supplied by Vantage are defective. The three WCNs are summarized as follows:
(a) First Warranty Chargeback Notice (WCN-2021-1247), dated December 6, 2021, covering 3,842 units, in the aggregate amount of $1,583,654.60;
(b) Second Warranty Chargeback Notice (WCN-2022-0103), dated January 18, 2022, covering 4,260 units, in the aggregate amount of $1,756,398.00; and
(c) Third Warranty Chargeback Notice (WCN-2022-0289), dated February 7, 2022, covering 3,712 units, in the aggregate amount of $1,530,497.60.
In total, the three WCNs cover 11,814 units and assert aggregate chargebacks in the amount of $4,870,550.20.
We further understand that Meridian has begun unilaterally deducting chargeback amounts from Vantage's open accounts receivable beginning with the January 2022 payment cycle. As of the date of this Letter, Meridian has withheld approximately $2.4 million from payments otherwise owed to Vantage, and we anticipate that additional deductions may be taken in the upcoming February 2022 payment cycle absent intervention.
Meridian is represented in this matter by Pratt, Givens & Lowell LLP, with Rachel Drummond serving as lead partner and Victor Saldana as the associate handling day-to-day matters.
3. Scope of Representation
Subject to the terms and conditions of this Letter, Calderwood & Harkness will provide legal services to Vantage in connection with the following:
(a) Defense of Warranty Chargebacks. Defense of Vantage against the warranty chargebacks totaling $4,870,550.20 issued by Meridian under the LTSA, including the preparation and pursuit of all defenses available to Vantage on both procedural and substantive grounds.
(b) Contract Review and Analysis. Comprehensive review and analysis of the LTSA (Ref. No. LTSA-MPT-2020-0315), with particular focus on the warranty provisions set forth in Section 9 thereof, the chargeback procedures established in Section 9.4, the part inspection requirements detailed in Section 9.4(b), and the applicable engineering specifications referenced in the LTSA, including Meridian Drawing Set MER-DWG-4400, Rev. C, and the ASTM E505 porosity standard, as well as any other drawings, specifications, or quality requirements incorporated by reference into the LTSA.
(c) Formal Chargeback Responses. Preparation and delivery of formal written responses to each of the three Warranty Chargeback Notices (WCN-2021-1247, WCN-2022-0103, and WCN-2022-0289), contesting the chargebacks on procedural and substantive grounds and preserving Vantage's rights under the LTSA.
(d) Defense Strategy Development. Evaluation and development of affirmative defenses available to Vantage, including, without limitation: (i) specification compliance and conformity of the Parts to the applicable engineering drawings and quality standards at the time of delivery; (ii) root cause analysis demonstrating that the alleged defects are attributable to conditions outside Vantage's control, including Meridian's own manufacturing processes, handling, or storage; (iii) procedural non-compliance by Meridian with the inspection, notification, and chargeback procedures set forth in the LTSA; and (iv) challenges to the individual components of Meridian's chargeback calculations, including unit costs, labor rates, and claimed consequential damages, if any.
(e) Technical Coordination. Coordination with Vantage's internal quality assurance team, including Thomas Reinhardt, Vice President of Quality, to gather, organize, and analyze Production Part Approval Process ("PPAP") documentation, statistical process control ("SPC") data, dimensional inspection records, first article inspection reports, process flow diagrams, control plans, and other technical records relevant to the defense.
(f) Expert Engagement. Engagement and oversight of independent technical experts, as needed, for metallurgical failure analysis, dimensional analysis, and other testing of the Parts at issue, including coordination with expert consultants to prepare written reports and, if necessary, expert declarations or affidavits supporting Vantage's position.
(g) Negotiation and Commercial Resolution. Negotiation and pursuit of a commercial resolution of the dispute, including participation in meet-and-confer sessions, telephone conferences, and in-person meetings with Meridian and its counsel at Pratt, Givens & Lowell LLP, with the objective of resolving the chargebacks on terms acceptable to Vantage.
(h) Settlement Documentation. Drafting and negotiation of any settlement agreement, mutual release, or amendment to the LTSA that may result from the resolution of the dispute, including appropriate provisions regarding future warranty claims, chargeback procedures, and quality standards.
(i) Insurance Coverage Evaluation. Evaluation of insurance coverage under Vantage's product liability policy issued by Trident Assurance Group, LLC (Policy No. TAG-PL-2021-00487), including review of the policy for potentially applicable coverage, preparation and submission of a formal notice of claim to the insurer, and coordination with the insurer and any coverage counsel appointed by the insurer, as appropriate.
Exclusions from Scope. Notwithstanding the foregoing, the scope of this engagement does not extend to: (a) the filing or prosecution of any litigation, arbitration, or other proceeding in any court or arbitral forum, unless separately authorized in writing by Vantage; (b) any regulatory proceedings, investigations, or inquiries by governmental authorities; or (c) any matters unrelated to the Meridian warranty-chargeback dispute described herein, including disputes with other customers, suppliers, or business partners of Vantage.
If circumstances require an expansion of the scope of this engagement — for example, if Vantage determines that the filing of affirmative claims against Meridian or the initiation of formal arbitration or litigation is warranted — Calderwood & Harkness will seek Vantage's advance written authorization before undertaking any such additional work and will provide an updated fee estimate reflecting the expanded scope. Any such expansion will be documented in a supplemental engagement letter or amendment to this Letter.
4. Engagement Team
Calderwood & Harkness will staff this matter with the following professionals, who collectively bring significant experience in commercial litigation, automotive supply chain disputes, and contractual warranty matters:
(a) Samuel Eklund — Responsible Partner, Litigation (General). Mr. Eklund will serve as the responsible partner on the matter. He will have overall responsibility for strategic direction, key client communications, and supervision of the engagement team. Mr. Eklund will be Vantage's primary point of contact at the Firm for strategic and material developments.
(b) Linda Osei — Billing Partner, Litigation (General). Ms. Osei will serve as the billing partner on the matter. She will oversee billing matters, monitor staffing and efficiency, and provide senior litigation counsel on substantive legal issues as needed.
(c) Carlos Espinoza — Lead Associate, Litigation (General). Mr. Espinoza will manage the day-to-day execution of the engagement, including the drafting of correspondence and formal chargeback responses, analysis of contractual provisions, coordination of document review and production, and oversight of expert engagement and communications with Meridian's counsel.
(d) Hannah Brinkley — Working Associate, Litigation (General). Ms. Brinkley will support the engagement through legal research, document preparation, factual analysis, and coordination with retained technical experts.
As the matter progresses, additional attorneys, paralegals, or other paraprofessionals may be assigned to the engagement team as necessary to ensure efficient and effective representation. The Firm will notify Vantage in advance of any material changes to the core engagement team identified above, including the assignment of any new partner or lead associate to the matter.
Vantage has designated the following individuals as its primary points of contact for this engagement: Priya Nandakumar, General Counsel, and Derek Calloway, Chief Executive Officer, or such other individuals as Vantage may designate in writing from time to time. All substantive communications regarding the matter, including strategic recommendations, status updates, and requests for authorization, will be directed to these contacts unless Vantage instructs otherwise.
5. Billing Rates and Fee Arrangements
5.1 Hourly Rates
The Firm will bill for professional services rendered in connection with this matter on an hourly basis. The current standard billing rates for the members of the engagement team are as follows:
Time is recorded and billed in increments of one-tenth (0.1) of an hour.
5.2 Rate Adjustments
Billing rates are subject to annual adjustment, typically effective as of January 1 of each calendar year, consistent with the Firm's standard rate review process. The Firm will provide Vantage with at least thirty (30) days' prior written notice of any rate adjustment before the adjusted rates are applied to invoices for this matter. Any such adjustment will apply only to services rendered on or after the effective date of the adjustment.
5.3 Disbursements and Out-of-Pocket Costs
The Firm does not charge for internal administrative costs, including routine photocopying, standard postage, and intra-office communications. However, material out-of-pocket disbursements incurred in connection with this matter will be passed through to Vantage at cost. Such disbursements may include, without limitation:
•  Travel expenses (airfare, ground transportation, lodging, and meals) incurred in connection with client meetings, depositions, hearings, and other engagements related to the matter;
•  Court filing fees and service of process fees, if applicable;
•  Expert and consultant fees and expenses;
•  Outside vendor charges, including document reproduction, printing, and courier services;
•  Electronic discovery platform costs, including hosting, processing, and review platform fees, if applicable; and
•  Long-distance telephone, videoconference, and teleconference charges in excess of routine amounts.
5.4 Expert Fees
Fees and costs payable to retained experts and consultants — including, by way of example, fees payable to Apex Metallurgical Consulting, Inc. or other experts retained in connection with the metallurgical failure analysis of the Parts — will be billed separately as disbursements on the Firm's monthly invoices or, at Vantage's election, will be directly invoiced to Vantage by the expert, as the Parties may mutually agree. In either case, Vantage will be responsible for all approved expert fees and costs.
5.5 Fee Estimate
Based on our preliminary assessment of the matter, the complexity of the contractual and technical issues involved, and the anticipated scope of negotiations and analysis, we estimate that total legal fees for the defense and resolution of the matter will range from approximately $250,000 to $375,000. This estimate is necessarily preliminary and is dependent upon a number of factors, including the scope and duration of negotiations with Meridian, the extent of technical analysis and expert work required, Meridian's responsiveness to Vantage's defenses, and whether the matter proceeds to any form of formal dispute resolution (such as mediation or arbitration). This estimate is provided for budgeting purposes only and does not constitute a fee cap, fixed fee, or guarantee of total fees.
We will provide periodic updates to this estimate as the matter develops and will promptly advise Vantage if, at any point, we anticipate that fees will materially exceed the upper range of this estimate.
5.6 Invoicing and Payment
Invoices for professional fees and disbursements will be rendered on a monthly basis, generally within fifteen (15) days following the close of each calendar month. Payment is due within thirty (30) calendar days of the date of each invoice. Past-due amounts are subject to a late charge of one percent (1.0%) per month, or the maximum rate permitted by applicable law, whichever is less.
Vantage reserves the right to request, and the Firm will use commercially reasonable efforts to provide, detailed billing summaries, task-based or phase-based breakdowns, budget-to-actual reports, and accrual estimates for purposes of Vantage's internal financial reporting, audit, and sponsor reporting requirements. The Firm will cooperate with reasonable outside billing guideline compliance, provided that such guidelines are communicated to the Firm in advance and are not inconsistent with the Firm's obligation to provide competent and diligent representation.
6. Client Identification and Conflicts
The Firm's client in this matter is Vantage Mobility Systems Corp. and Vantage Mobility Systems Corp. only. This engagement does not create an attorney-client relationship between Calderwood & Harkness LLP and any other person or entity, including, without limitation:
(a) Ironclad Capital Partners, LLC, the private equity sponsor of Vantage;
(b) Ironclad Capital Partners Fund III, L.P., the investment fund through which Ironclad Capital Partners holds its equity interest in Vantage;
(c) Any officer, director, employee, or agent of Vantage in their individual capacities; or
(d) Any subsidiary, affiliate, parent company, or other related entity of Vantage, whether currently existing or subsequently formed.
Any communications by the Firm with representatives of the foregoing entities are undertaken solely in connection with and for the benefit of the Firm's representation of Vantage and do not give rise to separate attorney-client relationships or duties of loyalty.
The Firm has performed a check of its conflict-of-interest records in accordance with its standard procedures and the applicable Illinois Rules of Professional Conduct. Based on that review, the Firm is not presently aware of any conflict of interest that would preclude or materially limit the representation of Vantage in this matter. Should a conflict of interest arise during the course of this engagement — whether involving a current or prospective client of the Firm — the Firm will promptly notify Vantage and take appropriate steps to address the conflict in accordance with Rule 1.7 and Rule 1.9 of the Illinois Rules of Professional Conduct, including, where applicable, seeking informed consent or, if consent cannot be obtained, withdrawing from the representation.
7. Confidentiality and Privilege
All communications between Calderwood & Harkness LLP and Vantage in connection with this matter, including oral and written communications, memoranda, legal analyses, strategy assessments, and other materials prepared by the Firm in the course of representing Vantage, are intended to be privileged and confidential under the attorney-client privilege, the work-product doctrine, and any other applicable evidentiary privilege or protection. The Firm will take reasonable measures to maintain the confidentiality of such communications, and Vantage's information will not be disclosed by the Firm to third parties except as authorized by Vantage or as required by law.
Vantage agrees to take reasonable steps to maintain the confidentiality of legal advice, work product, and privileged communications received from Calderwood & Harkness in connection with this matter. Such steps include, without limitation, limiting the internal distribution of privileged materials to those individuals within the Company who have a need to know in connection with the management or resolution of the dispute, and clearly marking privileged documents as "Attorney-Client Privileged and Confidential" or with an equivalent designation.
To the extent Vantage shares or intends to share privileged communications, work product, or legal advice with third parties — including, without limitation, its private equity sponsor, Ironclad Capital Partners, LLC, or its lender, Dralvecen Commercial Lending Corp. — Vantage should consult with the Firm in advance regarding appropriate steps to preserve the attorney-client privilege and work-product protection. Depending on the circumstances, such steps may include the execution of a common-interest agreement, the application of confidentiality designations or restrictive legends, or the establishment of protocols governing the handling and distribution of privileged materials. Sharing privileged communications with third parties without appropriate safeguards may result in the waiver of the attorney-client privilege, and the Firm recommends that any such disclosure be carefully coordinated.
8. Governing Law
This engagement letter and the attorney-client relationship established hereby shall be governed by, and construed in accordance with, the laws of the State of Illinois, without giving effect to principles of conflicts of law. The Parties acknowledge that this governing law provision is consistent with the governing law provision set forth in Section 22.4 of the LTSA (Ref. No. LTSA-MPT-2020-0315), which provides that the LTSA is governed by Illinois law, and that Illinois law will accordingly apply to the interpretation of the contractual provisions at issue in this dispute.
9. Document Preservation and Cooperation
9.1 Litigation Hold
In light of the pending warranty-chargeback dispute, Vantage is advised to implement and maintain a litigation hold to ensure the preservation of all documents, communications, data, and electronically stored information ("ESI") potentially relevant to the dispute. The obligation to preserve relevant materials extends to all custodians, departments, and systems within the Company that may contain responsive information. Without limiting the generality of the foregoing, the categories of materials subject to preservation include:
(a) Quality records, including Production Part Approval Process ("PPAP") packages, statistical process control ("SPC") data, dimensional inspection results, first article inspection reports, process flow diagrams, control plans, and Failure Mode and Effects Analyses ("FMEAs") for Part Nos. VMS-4400A through VMS-4400F;
(b) Internal communications — including emails, instant messages, text messages, and memoranda — regarding the alleged defect, warranty claims, field failures, customer complaints, and Meridian's chargeback demands;
(c) All correspondence with Meridian, including written communications, meeting minutes, and notes of telephone calls, relating to the Parts, quality concerns, warranty claims, chargeback notices, and payment disputes;
(d) Production and inspection records for the Parts, including lot traceability records, material certifications, heat treat records, and shipping documentation;
(e) Engineering documents, including CAD files, engineering change notices ("ECNs"), deviation requests, and any revisions to applicable drawings or specifications;
(f) Any returned parts or samples currently in Vantage's possession or control, which should be segregated, labeled, and preserved in a manner that maintains their evidentiary integrity; and
(g) Financial records relating to the pricing, cost structure, and invoicing of the Parts, as well as records reflecting the amounts deducted or withheld by Meridian from Vantage's accounts receivable.
The Firm strongly recommends that Vantage issue a written litigation hold notice to all relevant custodians and that the Company suspend any routine document destruction or retention policies to the extent they would result in the destruction of potentially relevant materials. We are available to assist with the drafting and distribution of a formal litigation hold notice and related protocols.
9.2 Cooperation.  The Firm requests Vantage's full cooperation in connection with this engagement, including the prompt production of documents and information requested by the engagement team and the timely availability of relevant personnel — including, without limitation, Thomas Reinhardt, Vice President of Quality, and members of the quality assurance, production, engineering, and finance teams — for interviews, consultations, and preparation of factual narratives and technical analyses. The effectiveness of the defense will depend in significant part on the quality and timeliness of the factual and technical information provided by Vantage's internal teams, and we appreciate the Company's commitment to supporting this effort.
10. Termination
Either Party may terminate this engagement at any time upon written notice to the other Party, subject in each case to the Firm's obligations under the applicable Illinois Rules of Professional Conduct regarding withdrawal from representation. If the Firm seeks to withdraw, it will do so only for reasons consistent with applicable ethical rules and will take all steps required to protect Vantage's interests during the transition.
Upon termination of this engagement, whether initiated by the Firm or by Vantage, Vantage will be responsible for the payment of all fees for professional services rendered and all disbursements incurred through the effective date of termination. The Firm will render a final invoice within thirty (30) days of the effective date of termination.
Following termination, the Firm will take reasonable steps to protect Vantage's interests during any transition period and will promptly transfer the entire client file — including all documents, correspondence, memoranda, research, and work product prepared in connection with this matter — to successor counsel designated by Vantage upon receipt of Vantage's written request, subject to the Firm's right to retain copies for its own records and to satisfaction of any outstanding balance on Vantage's account.
11. Limitation of Scope and No Guarantee of Outcome
The Firm will devote its best professional efforts to achieving a favorable outcome for Vantage in connection with the warranty-chargeback dispute with Meridian. However, the Firm cannot and does not guarantee any particular result, including, without limitation, the complete reversal of the chargebacks, the recovery of amounts already withheld by Meridian, or the achievement of a settlement on any particular terms. The outcome of any dispute depends on numerous factors, many of which are beyond the control of the Firm, including the actions and positions taken by Meridian and its counsel, the factual and technical evidence developed during the course of the engagement, and, if applicable, the rulings of any arbitrator, mediator, or court.
The scope of this engagement is limited to the matters described in Section 3 of this Letter. Any expansion of the scope requires the mutual written agreement of the Parties.
12. Acceptance and Execution
We respectfully request that Vantage confirm its agreement to the terms and conditions of this engagement by having an authorized representative countersign this Letter in the space provided below and returning a fully executed copy to the undersigned. This engagement shall be effective as of February 14, 2022, the date first written above.
We look forward to working with you and the Vantage team on this important matter. We are confident that, with the Company's cooperation and the engagement team's combined experience in automotive supply chain disputes, we will be well positioned to mount a vigorous and effective defense. Should you have any questions regarding this Letter or any aspect of the engagement, please do not hesitate to contact Samuel Eklund at (312) 555-8244 or Carlos Espinoza at (312) 555-8261.
•    
Sincerely,
CALDERWOOD & HARKNESS LLP
By: ________
Name: Samuel Eklund
Title: Partner
By: ________
Name: Linda Osei
Title: Partner
ACKNOWLEDGMENT AND AGREEMENT
The undersigned, on behalf of Vantage Mobility Systems Corp., hereby acknowledges receipt of the foregoing engagement letter, confirms that the undersigned is authorized to execute this letter on behalf of the Company, and agrees to the terms and conditions set forth herein.
VANTAGE MOBILITY SYSTEMS CORP.
By: ________
Name: Priya Nandakumar
Title: General Counsel
Date: ________
Enclosures: None
cc: Derek Calloway, Chief Executive Officer, Vantage Mobility Systems Corp. cc: Douglas Brenton, Managing Partner, Ironclad Capital Partners, LLC (by separate cover, at Vantage's direction)
Professional | Role | Hourly Rate
Samuel Eklund | Responsible Partner | $695.00
Linda Osei | Billing Partner | $675.00
Carlos Espinoza | Lead Associate | $475.00
Hannah Brinkley | Working Associate | $385.00
Paralegals / Legal Assistants | Various | $225.00

CALDERWOOD & HARKNESS LLP Attorneys at Law

CALDERWOOD & HARKNESS LLP

ACKNOWLEDGMENT AND AGREEMENT

VANTAGE MOBILITY SYSTEMS CORP.

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