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SETTLEMENT AGREEMENT AND MUTUAL RELEASE

EXECUTION VERSION

Dated: October 28, 2022

CONFIDENTIAL TREATMENT REQUESTED — THIS DOCUMENT AND ITS CONTENTS ARE SUBJECT TO THE CONFIDENTIALITY PROVISIONS OF ARTICLE VII HEREOF

This SETTLEMENT AGREEMENT AND MUTUAL RELEASE (this "Agreement") is entered into as of October 28, 2022 (the "Effective Date"), by and between:

VANTAGE MOBILITY SYSTEMS CORP., a corporation organized and existing under the laws of the State of Delaware, with its principal place of business at 4280 Mound Road, Sterling Heights, Michigan 48310 ("Vantage" or "VMS"),

and

MERIDIAN POWERTRAIN HOLDINGS, INC., a corporation organized and existing under the laws of the State of Illinois, with its principal place of business at 2200 North Meacham Road, Suite 400, Schaumburg, Illinois 60173 ("Meridian").

Vantage and Meridian are each referred to herein individually as a "Party" and collectively as the "Parties."

RECITALS

WHEREAS:

A. The LTSA. The Parties are parties to that certain Long-Term Supply Agreement, Reference Number LTSA-MPT-2020-0315, dated March 15, 2020, as amended by Amendment No. 1 thereto and Amendment No. 2 thereto (collectively, the "LTSA"), pursuant to which Vantage supplies precision-machined aluminum valve body housings (Part Numbers VMS-4400A, VMS-4400B, VMS-4400C, VMS-4400D, VMS-4400E, and VMS-4400F) (collectively, the "Parts") to Meridian for integration into Meridian's 8-speed automatic transmission modules (Model MPT-8AT). The LTSA has a five-year term commencing on March 15, 2020, and expiring on March 14, 2025. The LTSA is governed by the laws of the State of Illinois pursuant to Section 22.4 thereof.

B. The Warranty Chargebacks. Beginning in or about October 2021, certain of Meridian's original equipment manufacturer ("OEM") customers reported field failures in vehicles equipped with MPT-8AT transmission modules. Meridian attributed such field failures to alleged defects in valve body housings supplied by Vantage under the LTSA. In connection with such field failures, Meridian issued three warranty chargeback notices to Vantage under Section 9 of the LTSA (the "Chargeback Notices"), as follows:

(i) Warranty Chargeback Notice WCN-2021-1247, dated December 6, 2021, covering three thousand eight hundred forty-two (3,842) units in the aggregate amount of One Million Five Hundred Eighty-Three Thousand Six Hundred Fifty-Four Dollars and Sixty Cents ($1,583,654.60);

(ii) Warranty Chargeback Notice WCN-2022-0103, dated January 18, 2022, covering four thousand two hundred sixty (4,260) units in the aggregate amount of One Million Seven Hundred Fifty-Six Thousand Three Hundred Ninety-Eight Dollars and No Cents ($1,756,398.00); and

(iii) Warranty Chargeback Notice WCN-2022-0289, dated February 7, 2022, covering three thousand seven hundred twelve (3,712) units in the aggregate amount of One Million Five Hundred Thirty Thousand Four Hundred Ninety-Seven Dollars and Sixty Cents ($1,530,497.60).

The aggregate amount of the Chargeback Notices is Four Million Eight Hundred Seventy Thousand Five Hundred Fifty Dollars and Twenty Cents ($4,870,550.20) across eleven thousand eight hundred fourteen (11,814) units (collectively, the "Chargebacks").

C. The Dispute. Vantage disputed the Chargebacks on contractual, procedural, and technical grounds, including but not limited to challenges to the validity of the root-cause analysis underlying Meridian's claims, alleged procedural deficiencies in Meridian's compliance with the notice and inspection requirements of Section 9.4(b) of the LTSA, and the recoverability of the per-unit administrative fee component included in the Chargebacks. Vantage contested the validity of the Chargebacks in their entirety. Commencing in January 2022, Meridian withheld and deducted amounts from Vantage's accounts receivable on account of the Chargebacks. The Parties engaged in extensive discussions regarding the dispute, including meet-and-confer sessions held on May 12, 2022, and July 8, 2022, and exchanged technical data, failure-analysis reports, and settlement proposals in an effort to resolve the matter.

D. Desire to Resolve. The Parties wish to resolve all claims, disputes, and controversies arising from or relating to the Chargebacks and the allegations underlying them, without any admission of liability, fault, or wrongdoing by either Party, on the terms and conditions set forth in this Agreement. The Parties intend for this Agreement, including the Settlement Payment described herein, to constitute a one-time quality accommodation and not to establish any precedent for the resolution of future warranty claims or chargebacks under the LTSA or otherwise.

E. Concurrent Amendment. Concurrently with the execution and delivery of this Agreement, the Parties are executing Amendment No. 3 to the LTSA ("LTSA Amendment No. 3"), effective November 1, 2022, which amends certain warranty-chargeback and inspection provisions of the LTSA, all as more particularly described in Section 3.4 of this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants, promises, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE I — DEFINITIONS

Section 1.1 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not otherwise defined in this Article I shall have the meanings ascribed to them elsewhere in this Agreement.

(a) "Agreement" means this Settlement Agreement and Mutual Release, including all exhibits and schedules attached hereto, as the same may be amended, modified, or supplemented from time to time in accordance with Section 12.3 hereof.

(b) "Chargebacks" means the aggregate warranty chargebacks asserted by Meridian against Vantage under the Chargeback Notices, in the aggregate amount of Four Million Eight Hundred Seventy Thousand Five Hundred Fifty Dollars and Twenty Cents ($4,870,550.20) across eleven thousand eight hundred fourteen (11,814) units.

(c) "Chargeback Notices" means, collectively, (i) Warranty Chargeback Notice WCN-2021-1247, dated December 6, 2021, (ii) Warranty Chargeback Notice WCN-2022-0103, dated January 18, 2022, and (iii) Warranty Chargeback Notice WCN-2022-0289, dated February 7, 2022.

(d) "CT-Scan Protocol" means the supplemental porosity-screening protocol utilizing computed tomography (CT) scanning described in Section 3.3 of this Agreement and further specified in Exhibit C hereto.

(e) "Effective Date" means October 28, 2022.

(f) "LTSA" means the Long-Term Supply Agreement, Reference Number LTSA-MPT-2020-0315, dated March 15, 2020, between Vantage and Meridian, as amended by Amendment No. 1, Amendment No. 2, and LTSA Amendment No. 3 thereto.

(g) "LTSA Amendment No. 3" means Amendment No. 3 to the LTSA, effective November 1, 2022, executed concurrently with this Agreement.

(h) "Parts" means precision-machined aluminum valve body housings, Part Numbers VMS-4400A, VMS-4400B, VMS-4400C, VMS-4400D, VMS-4400E, and VMS-4400F, supplied by Vantage to Meridian under the LTSA.

(i) "Released Claims" has the meaning set forth in Section 4.1 of this Agreement.

(j) "Settlement Payment" has the meaning set forth in Section 2.1 of this Agreement.

(k) "Withheld Amounts" means all amounts deducted, withheld, or set off by Meridian from Vantage's accounts receivable on account of the Chargebacks, whether prior to, on, or after the Effective Date.

ARTICLE II — SETTLEMENT PAYMENT

Section 2.1 Payment by Vantage. In consideration of the mutual releases and other covenants contained herein, Vantage shall pay to Meridian a lump-sum settlement payment in the amount of One Million Nine Hundred Fifty Thousand Dollars ($1,950,000.00) (the "Settlement Payment"). The Settlement Payment shall be made by wire transfer of immediately available funds in United States dollars to the account designated by Meridian in writing in accordance with the wire transfer instructions set forth on Exhibit A attached hereto. The Settlement Payment shall be due and payable within thirty (30) days following the Effective Date (i.e., no later than November 27, 2022). In the event that November 27, 2022, falls on a day that is not a business day, the Settlement Payment shall be due on the next succeeding business day.

Section 2.2 Characterization of Payment. The Parties acknowledge and agree that the Settlement Payment constitutes a one-time quality accommodation payment made by Vantage in the interest of resolving the disputed Chargebacks and preserving the ongoing commercial relationship between the Parties under the LTSA. The Settlement Payment does not constitute, and shall not be construed as, an admission of liability, fault, defect, or wrongdoing by Vantage or any of its affiliates with respect to the Parts, the field failures in MPT-8AT transmissions, or any other matter. The Settlement Payment is not intended to, and shall not, establish a precedent for the resolution, valuation, or payment of any future warranty claims, chargebacks, or disputes arising under the LTSA or any other agreement between the Parties.

Section 2.3 Tax Treatment. Each Party shall be solely responsible for its own federal, state, local, and foreign tax obligations, if any, arising from or attributable to the Settlement Payment, including the obligation to report such payment to the applicable taxing authorities. No withholding shall be applied to the Settlement Payment by Vantage unless withholding is required by applicable law, in which case Vantage shall provide Meridian with prompt written notice of any such withholding and shall remit the withheld amount to the appropriate taxing authority in accordance with applicable law. Each Party agrees to provide such tax forms, certifications, or documentation as may be reasonably requested by the other Party in connection with the Settlement Payment.

ARTICLE III — REVERSAL OF CHARGEBACKS AND REMEDIAL MEASURES

Section 3.1 Reversal and Restoration of Chargebacks. Within ten (10) business days following Meridian's receipt and confirmation of the Settlement Payment in immediately available funds, Meridian shall reverse the full remaining balance of previously withheld Chargebacks in the aggregate amount of Two Million Nine Hundred Twenty Thousand Five Hundred Fifty Dollars and Twenty Cents ($2,920,550.20). Such amount represents the difference between the aggregate Chargebacks of Four Million Eight Hundred Seventy Thousand Five Hundred Fifty Dollars and Twenty Cents ($4,870,550.20) and the Settlement Payment of One Million Nine Hundred Fifty Thousand Dollars ($1,950,000.00). Meridian shall restore such reversed amounts to Vantage's accounts receivable and shall issue appropriate credit memoranda, substantially in the form attached hereto as Exhibit B, reflecting such reversals. The Parties acknowledge the following reconciliation:

Upon completion of the reversal and restoration described in this Section 3.1, the Chargebacks shall be deemed fully and finally resolved, and no further amounts shall be owing by either Party to the other Party on account of the Chargebacks or the Chargeback Notices.

Section 3.2 Cessation of Further Deductions. Effective as of the Effective Date, Meridian shall not make, and shall cause its accounting and finance personnel to refrain from making, any further deductions, withholdings, set-offs, or offsets from Vantage's accounts receivable, invoices, or any other amounts otherwise payable to Vantage in connection with the Chargebacks, the Chargeback Notices, or the underlying allegations of field failures in MPT-8AT transmissions covered by the Chargeback Notices. All future invoices submitted by Vantage under the LTSA for Parts delivered on or after the Effective Date, and all invoices for Parts delivered prior to the Effective Date that remain unpaid as of the Effective Date, shall be paid by Meridian in accordance with the payment terms set forth in the LTSA, without offset, deduction, or withholding for the matters resolved by this Agreement.

Section 3.3 Supplemental CT-Scan Porosity-Screening Protocol. As a remedial measure intended to enhance quality assurance and reduce the risk of future field failures, Vantage shall implement a supplemental porosity-screening protocol utilizing computed tomography (CT) scanning (the "CT-Scan Protocol") at its production facility located at 4280 Mound Road, Sterling Heights, Michigan 48310, for all Parts (Part Numbers VMS-4400A through VMS-4400F) produced at such facility for delivery to Meridian under the LTSA. The CT-Scan Protocol shall have the following parameters:

(a) Sampling Frequency. The CT-scan sampling frequency shall be one (1) unit in every two hundred (200) units produced (a 1-in-200 sampling frequency). Samples shall be selected on a randomized basis from each production lot in accordance with the specifications set forth in Exhibit C.

(b) Implementation Deadline. The CT-Scan Protocol shall be fully implemented and operational within sixty (60) days following the Effective Date (i.e., no later than December 27, 2022).

(c) Costs. Vantage shall bear all costs and expenses associated with the procurement, installation, calibration, operation, and maintenance of CT-scanning equipment and the performance of inspections under the CT-Scan Protocol. The Parties acknowledge that the estimated annual cost of the CT-Scan Protocol is approximately One Hundred Eighty-Five Thousand Dollars ($185,000), and that such cost estimate is provided for informational purposes only and does not constitute a cap on Vantage's obligations under this Section 3.3.

(d) Recordkeeping. Vantage shall maintain complete and accurate records of all CT-scan inspections conducted under the CT-Scan Protocol, including inspection dates, unit serial numbers, scan results, and disposition of non-conforming units. Vantage shall make such records available to Meridian upon Meridian's reasonable written request, subject to a response time of not more than ten (10) business days following receipt of such request.

(e) Supplemental Nature. The CT-Scan Protocol supplements and does not replace, supersede, or diminish any existing quality inspection, testing, or certification obligations of Vantage under the LTSA, including applicable Production Part Approval Process ("PPAP") requirements, statistical process control obligations, and any other quality assurance obligations set forth in the LTSA or any quality agreement between the Parties.

The detailed technical specifications for the CT-Scan Protocol are set forth in Exhibit C attached hereto.

Section 3.4 LTSA Amendment No. 3. Concurrently with the execution and delivery of this Agreement, the Parties shall execute and deliver LTSA Amendment No. 3, effective November 1, 2022, which shall amend the LTSA as follows:

(a) Inspection Deadline. Section 9.4(b) of the LTSA shall be amended to impose a mutual forty-five (45) day deadline (replacing the prior thirty (30) day unilateral deadline applicable solely to Vantage) within which each Party must make returned or allegedly defective parts available for inspection by the other Party following the issuance of a warranty chargeback notice under Section 9 of the LTSA. The amended provision shall apply on a mutual and reciprocal basis, such that both Meridian (as the customer issuing the chargeback notice) and Vantage (as the supplier receiving the chargeback notice) shall be subject to the same forty-five (45) day deadline.

(b) Removal of Administrative Fee. Section 9.3 of the LTSA shall be amended to remove the per-unit administrative fee (previously Forty-Eight Dollars ($48.00) per unit) from the definition of recoverable warranty-chargeback costs. Following the effectiveness of LTSA Amendment No. 3, warranty chargeback amounts under Section 9.3 of the LTSA shall be calculated exclusive of any administrative fee component.

LTSA Amendment No. 3 is incorporated by reference into this Agreement, and the Parties' obligations under LTSA Amendment No. 3 are in addition to, and not in lieu of, their respective obligations under this Agreement.

ARTICLE IV — MUTUAL GENERAL RELEASE

Section 4.1 Release by Vantage. Effective upon receipt by Meridian of the Settlement Payment in full, Vantage, on behalf of itself, its officers, directors, employees, agents, representatives, successors, assigns, parent entities, subsidiaries, and affiliates (including, without limitation, Ironclad Capital Partners, LLC and Ironclad Capital Partners Fund III, L.P., solely with respect to the Released Claims), hereby irrevocably and unconditionally releases and forever discharges Meridian and its officers, directors, employees, agents, representatives, successors, assigns, parent entities, subsidiaries, and affiliates (collectively, the "Meridian Released Parties") from any and all claims, counterclaims, demands, actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, covenants, contracts, controversies, agreements, promises, damages, judgments, executions, liabilities, costs, expenses (including attorneys' fees), losses, and obligations of every kind and nature whatsoever, whether at law or in equity, whether known or unknown, suspected or unsuspected, foreseen or unforeseen, fixed or contingent, matured or unmatured, accrued or unaccrued, liquidated or unliquidated, that arise from, relate to, or are in any way connected with:

(a) the Chargebacks and the Chargeback Notices, including WCN-2021-1247, WCN-2022-0103, and WCN-2022-0289;

(b) the field failures in MPT-8AT transmissions alleged to have been caused by the Parts;

(c) Meridian's withholding and deduction of amounts from Vantage's accounts receivable in connection with the Chargebacks; and

(d) any related claims for breach of the LTSA payment terms, late payment, improper deduction, or unjust enrichment arising from Meridian's withholding of amounts on account of the Chargebacks;

(collectively, the "Released Claims").

Section 4.2 Release by Meridian. Effective upon receipt by Meridian of the Settlement Payment in full, Meridian, on behalf of itself, its officers, directors, employees, agents, representatives, successors, assigns, parent entities, subsidiaries, and affiliates, hereby irrevocably and unconditionally releases and forever discharges Vantage and its officers, directors, employees, agents, representatives, successors, assigns, parent entities, subsidiaries, and affiliates (including, without limitation, Ironclad Capital Partners, LLC and Ironclad Capital Partners Fund III, L.P.) (collectively, the "Vantage Released Parties") from any and all claims, counterclaims, demands, actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, covenants, contracts, controversies, agreements, promises, damages, judgments, executions, liabilities, costs, expenses (including attorneys' fees), losses, and obligations of every kind and nature whatsoever, whether at law or in equity, whether known or unknown, suspected or unsuspected, foreseen or unforeseen, fixed or contingent, matured or unmatured, accrued or unaccrued, liquidated or unliquidated, that arise from, relate to, or are in any way connected with:

(a) the Chargebacks and the Chargeback Notices, including WCN-2021-1247, WCN-2022-0103, and WCN-2022-0289;

(b) alleged defects in the Parts, including but not limited to alleged micro-porosity exceeding ASTM E505 Level 2, for the production lots and units covered by the Chargeback Notices; and

(c) any warranty claims under Section 9 of the LTSA with respect to the eleven thousand eight hundred fourteen (11,814) units covered by the Chargeback Notices.

The foregoing claims released by Meridian are also included within the definition of "Released Claims" for all purposes of this Agreement.

Section 4.3 Scope of Release. The mutual releases set forth in Sections 4.1 and 4.2 above are limited exclusively to the Released Claims — that is, claims arising from or related to the Chargebacks and the Chargeback Notices — and do not extend to or release:

(a) any claims, disputes, or causes of action arising from future production lots of Parts produced and delivered by Vantage after the Effective Date, or from warranty claims or chargebacks unrelated to the Chargeback Notices;

(b) any ongoing obligations, duties, or liabilities of either Party under the LTSA (as amended by LTSA Amendment No. 3), including without limitation ongoing supply, purchase, payment, quality, warranty, and indemnification obligations under the LTSA; or

For the avoidance of doubt, neither the releases contained in this Article IV nor any other provision of this Agreement shall be construed to release either Party from its obligations under this Agreement, LTSA Amendment No. 3, or the LTSA (as amended).

Section 4.4 Waiver of Unknown Claims. Each Party expressly acknowledges and agrees that the releases set forth in this Article IV extend to and cover all Released Claims, whether or not such claims are presently known or suspected by such Party. Each Party expressly waives and relinquishes, to the fullest extent permitted by applicable law, any and all rights and benefits conferred by any statute, regulation, or common-law principle of any jurisdiction (including, without limitation, Section 1542 of the California Civil Code and analogous provisions of the laws of any other state) that would otherwise limit the scope of a release to claims known or suspected at the time of execution. Each Party acknowledges that it may discover facts different from, or in addition to, those that it now knows or believes to be true with respect to the Released Claims, and each Party agrees that the releases set forth in this Article IV shall be and remain in full force and effect notwithstanding such discovery, and that the releases shall not be subject to termination, rescission, or modification by reason of any such discovery.

ARTICLE V — NO ADMISSION OF LIABILITY

Section 5.1 No Admission. The Parties expressly acknowledge and agree that this Agreement, including the Settlement Payment, represents a compromise and settlement of disputed claims between the Parties. Nothing in this Agreement, including without limitation the payment of the Settlement Payment, the reversal of the Chargebacks, the implementation of the CT-Scan Protocol, or the execution of LTSA Amendment No. 3, shall be construed as, or deemed to constitute, an admission of liability, fault, defect, wrongdoing, or violation of any legal duty or contractual obligation by either Party.

Without limiting the generality of the foregoing, neither Party has conceded, and nothing in this Agreement shall be interpreted as a concession of, the validity or invalidity of the other Party's positions regarding (a) the root cause of the field failures in MPT-8AT transmissions, (b) whether the Parts met or failed to meet the dimensional, metallurgical, or porosity specifications set forth in the LTSA and the applicable engineering drawings, (c) Meridian's compliance or non-compliance with the procedural notice and inspection requirements of Section 9.4(b) of the LTSA, (d) the recoverability of the per-unit administrative fee component of the Chargebacks under Section 9.3 of the LTSA, or (e) any other factual, legal, or contractual issue underlying the Chargebacks.

This Agreement and the facts and circumstances of its negotiation, execution, and performance shall not be admissible in any judicial, arbitral, administrative, or other proceeding as evidence of liability, fault, or wrongdoing by either Party, except that this Agreement may be introduced in evidence in any proceeding brought by either Party to enforce the terms and conditions of this Agreement.

ARTICLE VI — REPRESENTATIONS AND WARRANTIES

Section 6.1 Mutual Representations and Warranties. Each Party hereby represents and warrants to the other Party as of the Effective Date as follows:

(a) Due Organization. Such Party is a corporation duly organized, validly existing, and in good standing under the laws of its jurisdiction of organization (in the case of Vantage, the State of Delaware; in the case of Meridian, the State of Illinois) and has all requisite corporate power and authority to own, lease, and operate its properties and to carry on its business as presently conducted.

(b) Corporate Authority. Such Party has full corporate power and authority to execute, deliver, and perform this Agreement and to consummate the transactions contemplated hereby.

(c) Due Authorization. The execution, delivery, and performance of this Agreement by such Party, and the consummation by such Party of the transactions contemplated hereby, have been duly authorized by all necessary corporate action on the part of such Party, including any required approvals of its board of directors or other governing body.

(d) Valid and Binding Obligation. This Agreement constitutes the legal, valid, and binding obligation of such Party, enforceable against such Party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity (whether considered in a proceeding at law or in equity).

(e) Authority of Signatory. The individual executing this Agreement on behalf of such Party has been duly authorized to execute and deliver this Agreement on behalf of such Party and to bind such Party to the terms and conditions hereof.

Section 6.2 Additional Representations by Vantage. Vantage hereby further represents and warrants to Meridian as of the Effective Date as follows:

(a) No Assignment of Claims. Vantage has not assigned, transferred, conveyed, pledged, encumbered, or otherwise disposed of any of the Released Claims or any interest therein to any third party.

(b) Lender Disclosure. Vantage has disclosed, or will disclose prior to the payment of the Settlement Payment, the existence and material terms of this Agreement to Dralvecen Commercial Lending Corp., as Vantage's senior secured lender, to the extent required under the terms and conditions of Vantage's existing credit facility with Dralvecen Commercial Lending Corp. Vantage's execution, delivery, and performance of this Agreement does not violate, conflict with, or result in a default under the terms of such credit facility.

Section 6.3 Additional Representations by Meridian. Meridian hereby further represents and warrants to Vantage as of the Effective Date as follows:

(a) No Assignment of Claims or Chargeback Rights. Meridian has not assigned, transferred, conveyed, pledged, encumbered, or otherwise disposed of any of the Released Claims, or any rights under the Chargeback Notices, to any third party, including without limitation any OEM customer, tier-one supplier, or other entity in the supply chain.

ARTICLE VII — CONFIDENTIALITY

Section 7.1 Confidential Treatment. The Parties agree that the terms and conditions of this Agreement, including without limitation the amount of the Settlement Payment, the amounts of the Chargebacks to be reversed, and all negotiations, discussions, correspondence, proposals, counterproposals, technical data exchanges, and other communications between the Parties (or their respective representatives) leading to the execution of this Agreement, shall be treated as strictly confidential by each Party. Neither Party shall disclose, publish, or otherwise disseminate such confidential terms and information to any third party, except as follows:

(a) Internal Disclosures. To such Party's officers, directors, employees, attorneys, accountants, auditors, and financial advisors who have a reasonable need to know such information for purposes of performing their duties on behalf of such Party and who are bound by obligations of confidentiality (whether by contract, professional obligation, or otherwise) at least as restrictive as those contained in this Section 7.1.

(b) Vantage's Equity Sponsors. By Vantage, to Ironclad Capital Partners, LLC and Ironclad Capital Partners Fund III, L.P. (as Vantage's equity sponsors), and to such entities' respective officers, directors, employees, attorneys, and financial advisors, subject to such entities' agreement to maintain the confidentiality of such information.

(c) Vantage's Lender. By Vantage, to Dralvecen Commercial Lending Corp. (as Vantage's senior secured lender), to the extent that disclosure is required under the terms and conditions of Vantage's existing credit facility with Dralvecen Commercial Lending Corp.

(d) Vantage's Insurer. By Vantage, to Trident Assurance Group, LLC (as Vantage's product liability insurer under Policy No. TAG-PL-2021-00487), to the extent required for claims reporting, reserve establishment, or other purposes under such insurance policy.

(e) Legal Compulsion. As required by applicable law, regulation, governmental order, subpoena, or other legal process, including but not limited to reporting requirements of the U.S. Securities and Exchange Commission. In the event that a Party is required to make a disclosure pursuant to this subsection (e), such Party shall, to the extent permitted by law and practicable under the circumstances, provide the other Party with prompt written notice of such requirement prior to making such disclosure, so that the other Party may seek a protective order or other appropriate remedy. Each Party agrees to cooperate reasonably with the other Party in any effort to obtain such a protective order or other remedy.

(f) Consent. With the prior written consent of the other Party, which consent may be granted, conditioned, or withheld in such Party's sole discretion.

Section 7.2 Public Statements. Neither Party shall issue, authorize, or cause to be issued any press release, public announcement, marketing communication, trade publication article, or other public statement regarding this Agreement, the Settlement Payment, the Chargebacks, the underlying dispute, or the terms of the resolution thereof, without the prior written consent of the other Party. This restriction shall not preclude either Party from making any disclosure that is required by applicable law or regulation, subject to the notice obligations set forth in Section 7.1(e) above.

ARTICLE VIII — NON-DISPARAGEMENT

Section 8.1 Mutual Non-Disparagement. Each Party agrees that it shall not, and shall cause its officers, directors, and senior management personnel not to, make, publish, or cause to be made or published any disparaging, defamatory, derogatory, or otherwise harmful statements (whether oral, written, electronic, or otherwise) about the other Party, its products, services, quality processes, officers, directors, employees, or business practices in connection with the Chargebacks, the underlying dispute, or the matters resolved by this Agreement. This non-disparagement obligation applies to all communications, whether public or private, to third parties, including but not limited to OEM customers, suppliers, industry trade groups, and media outlets.

Notwithstanding the foregoing, this Section 8.1 shall not restrict or prohibit either Party from (a) making truthful statements that are required by applicable law, regulation, or legal process, (b) providing truthful testimony in any judicial, arbitral, administrative, or regulatory proceeding, or (c) making truthful statements in the course of internal communications reasonably necessary for the conduct of such Party's business.

ARTICLE IX — CONTINUATION OF LTSA

Section 9.1 LTSA Remains in Effect. The Parties acknowledge and agree that, except as expressly modified by LTSA Amendment No. 3, the LTSA (Reference Number LTSA-MPT-2020-0315) shall remain in full force and effect in accordance with its terms through its expiration on March 14, 2025. Nothing in this Agreement shall be construed to terminate, rescind, impair, or otherwise adversely affect the LTSA or the rights and obligations of the Parties thereunder. The Parties hereby reaffirm their commitment to the ongoing commercial relationship between them under the LTSA and their mutual intention to perform their respective obligations thereunder in good faith.

Section 9.2 No Impact on Future Performance. This Agreement, the Settlement Payment, and the other transactions contemplated hereby shall not affect, modify, or otherwise alter the future pricing, volume commitments, delivery schedules, or other commercial terms under the LTSA (including annual volumes of approximately four hundred eighty thousand (480,000) units at a weighted average unit price of Seventy-Eight Dollars and Fifty Cents ($78.50) per unit). All future warranty claims, chargebacks, quality disputes, and related matters arising after the Effective Date shall be governed solely by the LTSA (as amended by LTSA Amendment No. 3) and the quality agreements and specifications referenced therein, and shall not be affected by, or subject to, the terms and conditions of this Agreement.

ARTICLE X — INDEMNIFICATION

Section 10.1 Mutual Indemnification. Each Party (in such capacity, the "Indemnifying Party") shall indemnify, defend, and hold harmless the other Party and its officers, directors, employees, agents, successors, and assigns (collectively, the "Indemnified Parties") from and against any and all losses, damages, liabilities, claims, demands, actions, suits, judgments, costs, and expenses (including reasonable attorneys' fees and expenses of investigation) incurred or suffered by any Indemnified Party and arising from or attributable to any material breach by the Indemnifying Party of any representation, warranty, covenant, or obligation of the Indemnifying Party under this Agreement.

Section 10.2 Third-Party Claims. In the event that any OEM customer, end user, dealer, or other third party asserts a claim, demand, or cause of action against either Party (or both Parties) relating to the field failures in MPT-8AT transmissions covered by the Chargeback Notices, the Parties shall cooperate in good faith to address, respond to, and, if appropriate, defend against such third-party claim. Such cooperation shall include the timely exchange of relevant information, documents, and data, and participation in joint defense or joint response efforts, to the extent mutually agreed by the Parties. Notwithstanding the foregoing, nothing in this Section 10.2 shall (a) create any obligation on the part of either Party to indemnify the other Party against any third-party claim beyond the scope of the Released Claims, (b) alter or diminish either Party's rights or obligations under the indemnification provisions of the LTSA (as amended by LTSA Amendment No. 3), or (c) modify the scope of the mutual releases set forth in Article IV of this Agreement.

ARTICLE XI — DISPUTE RESOLUTION

Section 11.1 Good Faith Negotiation. In the event of any dispute, controversy, or claim arising out of, relating to, or in connection with this Agreement, including any question regarding its existence, validity, interpretation, performance, breach, or termination (a "Dispute"), the Parties shall first attempt in good faith to resolve such Dispute through direct negotiation between senior executives of the Parties (at the level of Vice President or above) for a period of thirty (30) days following written notice by one Party to the other identifying the Dispute and requesting negotiation. During such thirty (30) day negotiation period, neither Party shall commence any judicial proceeding with respect to the Dispute (except for proceedings seeking emergency, temporary, or preliminary injunctive relief).

Section 11.2 Jurisdiction and Venue. If a Dispute is not resolved through negotiation pursuant to Section 11.1 within the thirty (30) day period specified therein, any action, suit, or proceeding to enforce, interpret, or adjudicate any rights or obligations arising under or in connection with this Agreement may be brought in any state court of general jurisdiction sitting in Cook County, Illinois, or in the United States District Court for the Northern District of Illinois. Each Party hereby irrevocably and unconditionally (a) consents and submits to the exclusive personal jurisdiction of such courts for purposes of any such action, suit, or proceeding, (b) waives any objection to the laying of venue of any such action, suit, or proceeding in such courts, and (c) waives and agrees not to plead or claim that any such action, suit, or proceeding brought in any such court has been brought in an inconvenient forum.

ARTICLE XII — GENERAL PROVISIONS

Section 12.1 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois, without giving effect to any choice-of-law or conflict-of-laws rules or provisions (whether of the State of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois.

Section 12.2 Entire Agreement; Integration. This Agreement, together with LTSA Amendment No. 3, the LTSA (as amended), and the exhibits and schedules attached hereto, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous negotiations, representations, warranties, commitments, offers, contracts, and agreements (whether oral or written) of the Parties relating to the Chargebacks, the Chargeback Notices, and the matters resolved herein. Without limiting the generality of the foregoing, no prior course of dealing or correspondence between the Parties, including the demand letters, rejection notices, meet-and-confer discussions of May 12, 2022, and July 8, 2022, technical data exchanges, and settlement proposals exchanged prior to the Effective Date, shall form part of, or be admissible to interpret, this Agreement.

Section 12.3 Amendment and Waiver. This Agreement may not be amended, modified, or supplemented except by a written instrument duly executed by both Parties. No waiver of any provision of this Agreement, or of any right or remedy arising hereunder, shall be effective unless set forth in a written instrument signed by the Party granting such waiver. No failure or delay by either Party in exercising any right, power, or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power, or remedy preclude any other or further exercise thereof or the exercise of any other right, power, or remedy.

Section 12.4 Severability. If any provision of this Agreement (or any portion thereof) is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such invalidity, illegality, or unenforceability shall not affect the validity, legality, or enforceability of any other provision of this Agreement, and the remaining provisions shall remain in full force and effect. In the event that any provision is so held to be invalid, illegal, or unenforceable, the Parties shall negotiate in good faith to replace such provision with a valid, legal, and enforceable provision that, to the greatest extent practicable, achieves the economic, legal, and commercial objectives intended by the invalid, illegal, or unenforceable provision.

Section 12.5 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by electronic mail (including .pdf format) or facsimile transmission shall be as effective as delivery of a manually executed counterpart. Electronic signatures and facsimile signatures shall have the same force and effect as original ink signatures for all purposes.

Section 12.6 Notices. All notices, requests, demands, consents, approvals, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of delivery, if delivered by personal delivery or by nationally recognized overnight courier service, (b) on the date of transmission, if sent by electronic mail with confirmation of receipt, or (c) on the fifth (5th) business day following the date of mailing, if sent by certified mail, return receipt requested, postage prepaid, in each case addressed as follows:

If to Vantage:

Vantage Mobility Systems Corp. 4280 Mound Road Sterling Heights, MI 48310

Attention: Priya Nandakumar, General Counsel

with a copy (which shall not constitute notice) to:

Calderwood & Harkness LLP 200 South Wacker Drive, Suite 3100 Chicago, IL 60606

Attention: Samuel Eklund

If to Meridian:

Meridian Powertrain Holdings, Inc. 2200 North Meacham Road, Suite 400 Schaumburg, IL 60173

Attention: Karen Whitford, Vice President, Supply Chain

with a copy (which shall not constitute notice) to:

Pratt, Givens & Lowell LLP 155 North Michigan Avenue, Suite 2700 Chicago, IL 60601

Attention: Rachel Drummond

Either Party may change its address for notice purposes by giving written notice of such change to the other Party in accordance with this Section 12.6.

Section 12.7 Assignment. Neither Party may assign, delegate, or otherwise transfer this Agreement, or any rights, interests, or obligations hereunder, whether by operation of law or otherwise, without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned, or delayed; provided, however, that either Party may, without the consent of the other Party, assign this Agreement to any successor in interest to all or substantially all of the assigning Party's business or assets, whether by merger, consolidation, reorganization, sale of assets, or other similar transaction, so long as the assignee or successor expressly assumes in writing all obligations of the assigning Party under this Agreement. Any purported assignment in violation of this Section 12.7 shall be null and void and of no force or effect. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.

Section 12.8 No Third-Party Beneficiaries. This Agreement is entered into solely for the benefit of the Parties and their respective successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person or entity any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement; provided, however, that Ironclad Capital Partners, LLC and Ironclad Capital Partners Fund III, L.P. are hereby designated as express third-party beneficiaries of the release provisions set forth in Article IV of this Agreement, solely as they relate to the Released Claims, and such entities shall have the right to enforce such release provisions directly against the applicable releasing Party.

Section 12.9 Costs and Expenses. Each Party shall bear its own costs, expenses, and attorneys' fees incurred in connection with the negotiation, preparation, execution, delivery, and performance of this Agreement, including the fees and expenses of counsel, financial advisors, accountants, and other professionals retained by such Party. For the avoidance of doubt, this Section 12.9 does not apply to costs and expenses recoverable under the indemnification provisions of Section 10.1.

Section 12.10 Construction. This Agreement has been negotiated by the Parties and their respective legal counsel, and shall be construed fairly in accordance with its terms and without any strict construction in favor of or against either Party as the drafter. The headings and section titles used in this Agreement are included for convenience of reference only and shall not affect the meaning or interpretation of any provision of this Agreement. References to "Sections," "Articles," "Exhibits," and "Schedules" are to the sections, articles, exhibits, and schedules of this Agreement unless otherwise specified. The terms "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation." The words "herein," "hereof," "hereunder," and words of similar import refer to this Agreement as a whole and not to any particular provision.

Section 12.11 Further Assurances. Each Party shall, upon the reasonable request of the other Party, execute and deliver such additional documents, instruments, conveyances, and assurances, and take such additional actions, as may be reasonably necessary or desirable to carry out and effectuate the provisions, purposes, and intent of this Agreement.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the Parties have caused this Settlement Agreement and Mutual Release to be executed by their duly authorized representatives as of the date first written above.

VANTAGE MOBILITY SYSTEMS CORP.

By: ________

Name: Derek Calloway

Title: Chief Executive Officer

Date: ________

MERIDIAN POWERTRAIN HOLDINGS, INC.

By: ________

Name: Karen Whitford

Title: Vice President, Supply Chain

Date: ________

EXHIBIT A

WIRE TRANSFER INSTRUCTIONS

The Settlement Payment of One Million Nine Hundred Fifty Thousand Dollars ($1,950,000.00) shall be made by wire transfer of immediately available funds to the following account:

Meridian shall deliver the completed wire transfer instructions to Vantage in writing within five (5) business days following the Effective Date. Vantage shall confirm the wire transfer instructions by telephone with an authorized representative of Meridian prior to initiating the wire transfer.

EXHIBIT B

FORM OF CREDIT MEMORANDUM

Upon reversal of the Chargebacks in accordance with Section 3.1 of the Agreement, Meridian shall issue one or more credit memoranda to Vantage substantially in the following form:

MERIDIAN POWERTRAIN HOLDINGS, INC.

CREDIT MEMORANDUM

Date: [Date of Issuance]

Credit Memo No.: [CM Number]

To: Vantage Mobility Systems Corp., 4280 Mound Road, Sterling Heights, MI 48310

From: Meridian Powertrain Holdings, Inc., 2200 North Meacham Road, Suite 400, Schaumburg, IL 60173

Reference: Settlement Agreement and Mutual Release dated October 28, 2022

Description: Reversal of warranty chargebacks pursuant to Section 3.1 of the Settlement Agreement and Mutual Release dated October 28, 2022, between Meridian Powertrain Holdings, Inc. and Vantage Mobility Systems Corp.

Total Credit Amount: $2,920,550.20

The above credit has been applied to Vantage Mobility Systems Corp.'s accounts receivable in the Meridian Powertrain Holdings, Inc. accounting system.

Authorized by: ________

Name: [Authorized Representative]

Title: [Title]

Date: ________

EXHIBIT C

CT-SCAN PROTOCOL SPECIFICATIONS

1. Purpose. This Exhibit C sets forth the technical specifications for the supplemental computed tomography (CT) scanning porosity-screening protocol (the "CT-Scan Protocol") to be implemented by Vantage Mobility Systems Corp. ("Vantage") at its Sterling Heights, Michigan production facility in accordance with Section 3.3 of the Settlement Agreement and Mutual Release dated October 28, 2022, between Vantage and Meridian Powertrain Holdings, Inc. ("Meridian").

2. Applicable Standard. All CT-scan inspections under this protocol shall be performed in accordance with, and evaluated against, ASTM E505, Standard Reference Radiographs for Inspection of Aluminum and Magnesium Die Castings (current edition as of the date of inspection), and any applicable customer-specific or drawing-level supplemental standards referenced in the LTSA or applicable PPAP documentation.

3. Maximum Porosity Threshold. The maximum acceptable porosity level for the Parts shall be ASTM E505 Level 2. Any unit exhibiting porosity exceeding ASTM E505 Level 2 shall be deemed non-conforming and shall be quarantined, dispositioned, and documented in accordance with Vantage's internal non-conformance procedures and the applicable provisions of the LTSA.

4. Parts Covered. The CT-Scan Protocol shall apply to all precision-machined aluminum valve body housings produced by Vantage for Meridian under the LTSA, specifically:

• Part No. VMS-4400A

• Part No. VMS-4400B

• Part No. VMS-4400C

• Part No. VMS-4400D

• Part No. VMS-4400E

• Part No. VMS-4400F

5. Sampling Frequency. The CT-scan sampling frequency shall be one (1) unit in every two hundred (200) units produced (a 1-in-200 sampling frequency). Samples shall be selected on a randomized basis from each production lot. In the event that a production lot consists of fewer than two hundred (200) units, at least one (1) unit from such lot shall be subjected to CT-scan inspection.

6. Facility. All CT-scan inspections under this protocol shall be performed at Vantage's production facility located at:

Vantage Mobility Systems Corp. 4280 Mound Road Sterling Heights, MI 48310

Vantage may, with Meridian's prior written approval, utilize a qualified third-party laboratory to perform CT-scan inspections, provided that such laboratory meets the accreditation and competency requirements specified by Vantage's quality management system and the LTSA.

7. Implementation Deadline. The CT-Scan Protocol shall be fully implemented and operational within sixty (60) days following the Effective Date of the Agreement (i.e., no later than December 27, 2022).

8. Estimated Annual Cost. The estimated annual cost of the CT-Scan Protocol, including equipment depreciation or lease expense, operator labor, consumables, calibration, maintenance, and data management, is approximately One Hundred Eighty-Five Thousand Dollars ($185,000). All such costs shall be borne solely by Vantage.

9. Recordkeeping. Vantage shall maintain complete, accurate, and legible records of all CT-scan inspections conducted under this protocol, including at a minimum:

(a) Date and time of inspection;

(b) Part number and unit serial number of inspected unit;

(d) CT-scan image files and measurement data;

(e) Porosity level determination (pass/fail against ASTM E505 Level 2 threshold);

(f) Disposition of non-conforming units (if any); and

(g) Name or identification of the inspector or technician performing the scan.

Such records shall be retained for a minimum period of seven (7) years from the date of inspection, or such longer period as may be required by applicable law, regulation, or the terms of the LTSA, and shall be made available to Meridian upon reasonable written request in accordance with Section 3.3(d) of the Agreement.

10. Supplemental Nature. The CT-Scan Protocol supplements and does not replace, supersede, or diminish any existing quality inspection, testing, measurement, or certification obligations of Vantage under the LTSA, applicable PPAP requirements, or any quality agreement between the Parties.

[End of Exhibit C]

[End of Settlement Agreement and Mutual Release]

Item	Amount
Aggregate Chargebacks (WCN-2021-1247 + WCN-2022-0103 + WCN-2022-0289)	$4,870,550.20
Less: Settlement Payment by Vantage	($1,950,000.00)
Chargebacks to be Reversed and Restored by Meridian	$2,920,550.20
Item	Detail
Bank Name:	[To be provided by Meridian in writing prior to wire transfer]
Bank Address:	[To be provided by Meridian in writing prior to wire transfer]
ABA Routing Number:	[To be provided by Meridian in writing prior to wire transfer]
Account Name:	Meridian Powertrain Holdings, Inc.
Account Number:	[To be provided by Meridian in writing prior to wire transfer]
SWIFT Code (if applicable):	[To be provided by Meridian in writing prior to wire transfer]
Reference:	Settlement Agreement — VMS/MPT — October 28, 2022
Chargeback Notice	Original Amount	Settlement Payment Allocation	Amount Reversed
WCN-2021-1247 (Dec. 6, 2021)	$1,583,654.60	[Allocated portion]	[Reversed portion]
WCN-2022-0103 (Jan. 18, 2022)	$1,756,398.00	[Allocated portion]	[Reversed portion]
WCN-2022-0289 (Feb. 7, 2022)	$1,530,497.60	[Allocated portion]	[Reversed portion]
Total	$4,870,550.20	$1,950,000.00	$2,920,550.20

SETTLEMENT AGREEMENT AND MUTUAL RELEASE
EXECUTION VERSION
Dated: October 28, 2022
CONFIDENTIAL TREATMENT REQUESTED — THIS DOCUMENT AND ITS CONTENTS ARE SUBJECT TO THE CONFIDENTIALITY PROVISIONS OF ARTICLE VII HEREOF
This SETTLEMENT AGREEMENT AND MUTUAL RELEASE (this "Agreement") is entered into as of October 28, 2022 (the "Effective Date"), by and between:
VANTAGE MOBILITY SYSTEMS CORP., a corporation organized and existing under the laws of the State of Delaware, with its principal place of business at 4280 Mound Road, Sterling Heights, Michigan 48310 ("Vantage" or "VMS"),
and
MERIDIAN POWERTRAIN HOLDINGS, INC., a corporation organized and existing under the laws of the State of Illinois, with its principal place of business at 2200 North Meacham Road, Suite 400, Schaumburg, Illinois 60173 ("Meridian").
Vantage and Meridian are each referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS:
A. The LTSA. The Parties are parties to that certain Long-Term Supply Agreement, Reference Number LTSA-MPT-2020-0315, dated March 15, 2020, as amended by Amendment No. 1 thereto and Amendment No. 2 thereto (collectively, the "LTSA"), pursuant to which Vantage supplies precision-machined aluminum valve body housings (Part Numbers VMS-4400A, VMS-4400B, VMS-4400C, VMS-4400D, VMS-4400E, and VMS-4400F) (collectively, the "Parts") to Meridian for integration into Meridian's 8-speed automatic transmission modules (Model MPT-8AT). The LTSA has a five-year term commencing on March 15, 2020, and expiring on March 14, 2025. The LTSA is governed by the laws of the State of Illinois pursuant to Section 22.4 thereof.
B. The Warranty Chargebacks. Beginning in or about October 2021, certain of Meridian's original equipment manufacturer ("OEM") customers reported field failures in vehicles equipped with MPT-8AT transmission modules. Meridian attributed such field failures to alleged defects in valve body housings supplied by Vantage under the LTSA. In connection with such field failures, Meridian issued three warranty chargeback notices to Vantage under Section 9 of the LTSA (the "Chargeback Notices"), as follows:
(i) Warranty Chargeback Notice WCN-2021-1247, dated December 6, 2021, covering three thousand eight hundred forty-two (3,842) units in the aggregate amount of One Million Five Hundred Eighty-Three Thousand Six Hundred Fifty-Four Dollars and Sixty Cents ($1,583,654.60);
(ii) Warranty Chargeback Notice WCN-2022-0103, dated January 18, 2022, covering four thousand two hundred sixty (4,260) units in the aggregate amount of One Million Seven Hundred Fifty-Six Thousand Three Hundred Ninety-Eight Dollars and No Cents ($1,756,398.00); and
(iii) Warranty Chargeback Notice WCN-2022-0289, dated February 7, 2022, covering three thousand seven hundred twelve (3,712) units in the aggregate amount of One Million Five Hundred Thirty Thousand Four Hundred Ninety-Seven Dollars and Sixty Cents ($1,530,497.60).
The aggregate amount of the Chargeback Notices is Four Million Eight Hundred Seventy Thousand Five Hundred Fifty Dollars and Twenty Cents ($4,870,550.20) across eleven thousand eight hundred fourteen (11,814) units (collectively, the "Chargebacks").
C. The Dispute. Vantage disputed the Chargebacks on contractual, procedural, and technical grounds, including but not limited to challenges to the validity of the root-cause analysis underlying Meridian's claims, alleged procedural deficiencies in Meridian's compliance with the notice and inspection requirements of Section 9.4(b) of the LTSA, and the recoverability of the per-unit administrative fee component included in the Chargebacks. Vantage contested the validity of the Chargebacks in their entirety. Commencing in January 2022, Meridian withheld and deducted amounts from Vantage's accounts receivable on account of the Chargebacks. The Parties engaged in extensive discussions regarding the dispute, including meet-and-confer sessions held on May 12, 2022, and July 8, 2022, and exchanged technical data, failure-analysis reports, and settlement proposals in an effort to resolve the matter.
D. Desire to Resolve. The Parties wish to resolve all claims, disputes, and controversies arising from or relating to the Chargebacks and the allegations underlying them, without any admission of liability, fault, or wrongdoing by either Party, on the terms and conditions set forth in this Agreement. The Parties intend for this Agreement, including the Settlement Payment described herein, to constitute a one-time quality accommodation and not to establish any precedent for the resolution of future warranty claims or chargebacks under the LTSA or otherwise.
E. Concurrent Amendment. Concurrently with the execution and delivery of this Agreement, the Parties are executing Amendment No. 3 to the LTSA ("LTSA Amendment No. 3"), effective November 1, 2022, which amends certain warranty-chargeback and inspection provisions of the LTSA, all as more particularly described in Section 3.4 of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, promises, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not otherwise defined in this Article I shall have the meanings ascribed to them elsewhere in this Agreement.
(a) "Agreement" means this Settlement Agreement and Mutual Release, including all exhibits and schedules attached hereto, as the same may be amended, modified, or supplemented from time to time in accordance with Section 12.3 hereof.
(b) "Chargebacks" means the aggregate warranty chargebacks asserted by Meridian against Vantage under the Chargeback Notices, in the aggregate amount of Four Million Eight Hundred Seventy Thousand Five Hundred Fifty Dollars and Twenty Cents ($4,870,550.20) across eleven thousand eight hundred fourteen (11,814) units.
(c) "Chargeback Notices" means, collectively, (i) Warranty Chargeback Notice WCN-2021-1247, dated December 6, 2021, (ii) Warranty Chargeback Notice WCN-2022-0103, dated January 18, 2022, and (iii) Warranty Chargeback Notice WCN-2022-0289, dated February 7, 2022.
(d) "CT-Scan Protocol" means the supplemental porosity-screening protocol utilizing computed tomography (CT) scanning described in Section 3.3 of this Agreement and further specified in Exhibit C hereto.
(e) "Effective Date" means October 28, 2022.
(f) "LTSA" means the Long-Term Supply Agreement, Reference Number LTSA-MPT-2020-0315, dated March 15, 2020, between Vantage and Meridian, as amended by Amendment No. 1, Amendment No. 2, and LTSA Amendment No. 3 thereto.
(g) "LTSA Amendment No. 3" means Amendment No. 3 to the LTSA, effective November 1, 2022, executed concurrently with this Agreement.
(h) "Parts" means precision-machined aluminum valve body housings, Part Numbers VMS-4400A, VMS-4400B, VMS-4400C, VMS-4400D, VMS-4400E, and VMS-4400F, supplied by Vantage to Meridian under the LTSA.
(i) "Released Claims" has the meaning set forth in Section 4.1 of this Agreement.
(j) "Settlement Payment" has the meaning set forth in Section 2.1 of this Agreement.
(k) "Withheld Amounts" means all amounts deducted, withheld, or set off by Meridian from Vantage's accounts receivable on account of the Chargebacks, whether prior to, on, or after the Effective Date.
ARTICLE II — SETTLEMENT PAYMENT
Section 2.1 Payment by Vantage. In consideration of the mutual releases and other covenants contained herein, Vantage shall pay to Meridian a lump-sum settlement payment in the amount of One Million Nine Hundred Fifty Thousand Dollars ($1,950,000.00) (the "Settlement Payment"). The Settlement Payment shall be made by wire transfer of immediately available funds in United States dollars to the account designated by Meridian in writing in accordance with the wire transfer instructions set forth on Exhibit A attached hereto. The Settlement Payment shall be due and payable within thirty (30) days following the Effective Date (i.e., no later than November 27, 2022). In the event that November 27, 2022, falls on a day that is not a business day, the Settlement Payment shall be due on the next succeeding business day.
Section 2.2 Characterization of Payment. The Parties acknowledge and agree that the Settlement Payment constitutes a one-time quality accommodation payment made by Vantage in the interest of resolving the disputed Chargebacks and preserving the ongoing commercial relationship between the Parties under the LTSA. The Settlement Payment does not constitute, and shall not be construed as, an admission of liability, fault, defect, or wrongdoing by Vantage or any of its affiliates with respect to the Parts, the field failures in MPT-8AT transmissions, or any other matter. The Settlement Payment is not intended to, and shall not, establish a precedent for the resolution, valuation, or payment of any future warranty claims, chargebacks, or disputes arising under the LTSA or any other agreement between the Parties.
Section 2.3 Tax Treatment. Each Party shall be solely responsible for its own federal, state, local, and foreign tax obligations, if any, arising from or attributable to the Settlement Payment, including the obligation to report such payment to the applicable taxing authorities. No withholding shall be applied to the Settlement Payment by Vantage unless withholding is required by applicable law, in which case Vantage shall provide Meridian with prompt written notice of any such withholding and shall remit the withheld amount to the appropriate taxing authority in accordance with applicable law. Each Party agrees to provide such tax forms, certifications, or documentation as may be reasonably requested by the other Party in connection with the Settlement Payment.
ARTICLE III — REVERSAL OF CHARGEBACKS AND REMEDIAL MEASURES
Section 3.1 Reversal and Restoration of Chargebacks. Within ten (10) business days following Meridian's receipt and confirmation of the Settlement Payment in immediately available funds, Meridian shall reverse the full remaining balance of previously withheld Chargebacks in the aggregate amount of Two Million Nine Hundred Twenty Thousand Five Hundred Fifty Dollars and Twenty Cents ($2,920,550.20). Such amount represents the difference between the aggregate Chargebacks of Four Million Eight Hundred Seventy Thousand Five Hundred Fifty Dollars and Twenty Cents ($4,870,550.20) and the Settlement Payment of One Million Nine Hundred Fifty Thousand Dollars ($1,950,000.00). Meridian shall restore such reversed amounts to Vantage's accounts receivable and shall issue appropriate credit memoranda, substantially in the form attached hereto as Exhibit B, reflecting such reversals. The Parties acknowledge the following reconciliation:
Upon completion of the reversal and restoration described in this Section 3.1, the Chargebacks shall be deemed fully and finally resolved, and no further amounts shall be owing by either Party to the other Party on account of the Chargebacks or the Chargeback Notices.
Section 3.2 Cessation of Further Deductions. Effective as of the Effective Date, Meridian shall not make, and shall cause its accounting and finance personnel to refrain from making, any further deductions, withholdings, set-offs, or offsets from Vantage's accounts receivable, invoices, or any other amounts otherwise payable to Vantage in connection with the Chargebacks, the Chargeback Notices, or the underlying allegations of field failures in MPT-8AT transmissions covered by the Chargeback Notices. All future invoices submitted by Vantage under the LTSA for Parts delivered on or after the Effective Date, and all invoices for Parts delivered prior to the Effective Date that remain unpaid as of the Effective Date, shall be paid by Meridian in accordance with the payment terms set forth in the LTSA, without offset, deduction, or withholding for the matters resolved by this Agreement.
Section 3.3 Supplemental CT-Scan Porosity-Screening Protocol. As a remedial measure intended to enhance quality assurance and reduce the risk of future field failures, Vantage shall implement a supplemental porosity-screening protocol utilizing computed tomography (CT) scanning (the "CT-Scan Protocol") at its production facility located at 4280 Mound Road, Sterling Heights, Michigan 48310, for all Parts (Part Numbers VMS-4400A through VMS-4400F) produced at such facility for delivery to Meridian under the LTSA. The CT-Scan Protocol shall have the following parameters:
(a) Sampling Frequency. The CT-scan sampling frequency shall be one (1) unit in every two hundred (200) units produced (a 1-in-200 sampling frequency). Samples shall be selected on a randomized basis from each production lot in accordance with the specifications set forth in Exhibit C.
(b) Implementation Deadline. The CT-Scan Protocol shall be fully implemented and operational within sixty (60) days following the Effective Date (i.e., no later than December 27, 2022).
(c) Costs. Vantage shall bear all costs and expenses associated with the procurement, installation, calibration, operation, and maintenance of CT-scanning equipment and the performance of inspections under the CT-Scan Protocol. The Parties acknowledge that the estimated annual cost of the CT-Scan Protocol is approximately One Hundred Eighty-Five Thousand Dollars ($185,000), and that such cost estimate is provided for informational purposes only and does not constitute a cap on Vantage's obligations under this Section 3.3.
(d) Recordkeeping. Vantage shall maintain complete and accurate records of all CT-scan inspections conducted under the CT-Scan Protocol, including inspection dates, unit serial numbers, scan results, and disposition of non-conforming units. Vantage shall make such records available to Meridian upon Meridian's reasonable written request, subject to a response time of not more than ten (10) business days following receipt of such request.
(e) Supplemental Nature. The CT-Scan Protocol supplements and does not replace, supersede, or diminish any existing quality inspection, testing, or certification obligations of Vantage under the LTSA, including applicable Production Part Approval Process ("PPAP") requirements, statistical process control obligations, and any other quality assurance obligations set forth in the LTSA or any quality agreement between the Parties.
The detailed technical specifications for the CT-Scan Protocol are set forth in Exhibit C attached hereto.
Section 3.4 LTSA Amendment No. 3. Concurrently with the execution and delivery of this Agreement, the Parties shall execute and deliver LTSA Amendment No. 3, effective November 1, 2022, which shall amend the LTSA as follows:
(a) Inspection Deadline. Section 9.4(b) of the LTSA shall be amended to impose a mutual forty-five (45) day deadline (replacing the prior thirty (30) day unilateral deadline applicable solely to Vantage) within which each Party must make returned or allegedly defective parts available for inspection by the other Party following the issuance of a warranty chargeback notice under Section 9 of the LTSA. The amended provision shall apply on a mutual and reciprocal basis, such that both Meridian (as the customer issuing the chargeback notice) and Vantage (as the supplier receiving the chargeback notice) shall be subject to the same forty-five (45) day deadline.
(b) Removal of Administrative Fee. Section 9.3 of the LTSA shall be amended to remove the per-unit administrative fee (previously Forty-Eight Dollars ($48.00) per unit) from the definition of recoverable warranty-chargeback costs. Following the effectiveness of LTSA Amendment No. 3, warranty chargeback amounts under Section 9.3 of the LTSA shall be calculated exclusive of any administrative fee component.
LTSA Amendment No. 3 is incorporated by reference into this Agreement, and the Parties' obligations under LTSA Amendment No. 3 are in addition to, and not in lieu of, their respective obligations under this Agreement.
ARTICLE IV — MUTUAL GENERAL RELEASE
Section 4.1 Release by Vantage. Effective upon receipt by Meridian of the Settlement Payment in full, Vantage, on behalf of itself, its officers, directors, employees, agents, representatives, successors, assigns, parent entities, subsidiaries, and affiliates (including, without limitation, Ironclad Capital Partners, LLC and Ironclad Capital Partners Fund III, L.P., solely with respect to the Released Claims), hereby irrevocably and unconditionally releases and forever discharges Meridian and its officers, directors, employees, agents, representatives, successors, assigns, parent entities, subsidiaries, and affiliates (collectively, the "Meridian Released Parties") from any and all claims, counterclaims, demands, actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, covenants, contracts, controversies, agreements, promises, damages, judgments, executions, liabilities, costs, expenses (including attorneys' fees), losses, and obligations of every kind and nature whatsoever, whether at law or in equity, whether known or unknown, suspected or unsuspected, foreseen or unforeseen, fixed or contingent, matured or unmatured, accrued or unaccrued, liquidated or unliquidated, that arise from, relate to, or are in any way connected with:
(a) the Chargebacks and the Chargeback Notices, including WCN-2021-1247, WCN-2022-0103, and WCN-2022-0289;
(b) the field failures in MPT-8AT transmissions alleged to have been caused by the Parts;
(c) Meridian's withholding and deduction of amounts from Vantage's accounts receivable in connection with the Chargebacks; and
(d) any related claims for breach of the LTSA payment terms, late payment, improper deduction, or unjust enrichment arising from Meridian's withholding of amounts on account of the Chargebacks;
(collectively, the "Released Claims").
Section 4.2 Release by Meridian. Effective upon receipt by Meridian of the Settlement Payment in full, Meridian, on behalf of itself, its officers, directors, employees, agents, representatives, successors, assigns, parent entities, subsidiaries, and affiliates, hereby irrevocably and unconditionally releases and forever discharges Vantage and its officers, directors, employees, agents, representatives, successors, assigns, parent entities, subsidiaries, and affiliates (including, without limitation, Ironclad Capital Partners, LLC and Ironclad Capital Partners Fund III, L.P.) (collectively, the "Vantage Released Parties") from any and all claims, counterclaims, demands, actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, covenants, contracts, controversies, agreements, promises, damages, judgments, executions, liabilities, costs, expenses (including attorneys' fees), losses, and obligations of every kind and nature whatsoever, whether at law or in equity, whether known or unknown, suspected or unsuspected, foreseen or unforeseen, fixed or contingent, matured or unmatured, accrued or unaccrued, liquidated or unliquidated, that arise from, relate to, or are in any way connected with:
(a) the Chargebacks and the Chargeback Notices, including WCN-2021-1247, WCN-2022-0103, and WCN-2022-0289;
(b) alleged defects in the Parts, including but not limited to alleged micro-porosity exceeding ASTM E505 Level 2, for the production lots and units covered by the Chargeback Notices; and
(c) any warranty claims under Section 9 of the LTSA with respect to the eleven thousand eight hundred fourteen (11,814) units covered by the Chargeback Notices.
The foregoing claims released by Meridian are also included within the definition of "Released Claims" for all purposes of this Agreement.
Section 4.3 Scope of Release. The mutual releases set forth in Sections 4.1 and 4.2 above are limited exclusively to the Released Claims — that is, claims arising from or related to the Chargebacks and the Chargeback Notices — and do not extend to or release:
(a) any claims, disputes, or causes of action arising from future production lots of Parts produced and delivered by Vantage after the Effective Date, or from warranty claims or chargebacks unrelated to the Chargeback Notices;
(b) any ongoing obligations, duties, or liabilities of either Party under the LTSA (as amended by LTSA Amendment No. 3), including without limitation ongoing supply, purchase, payment, quality, warranty, and indemnification obligations under the LTSA; or
(c) any claims arising from a breach of this Agreement by either Party.
For the avoidance of doubt, neither the releases contained in this Article IV nor any other provision of this Agreement shall be construed to release either Party from its obligations under this Agreement, LTSA Amendment No. 3, or the LTSA (as amended).
Section 4.4 Waiver of Unknown Claims. Each Party expressly acknowledges and agrees that the releases set forth in this Article IV extend to and cover all Released Claims, whether or not such claims are presently known or suspected by such Party. Each Party expressly waives and relinquishes, to the fullest extent permitted by applicable law, any and all rights and benefits conferred by any statute, regulation, or common-law principle of any jurisdiction (including, without limitation, Section 1542 of the California Civil Code and analogous provisions of the laws of any other state) that would otherwise limit the scope of a release to claims known or suspected at the time of execution. Each Party acknowledges that it may discover facts different from, or in addition to, those that it now knows or believes to be true with respect to the Released Claims, and each Party agrees that the releases set forth in this Article IV shall be and remain in full force and effect notwithstanding such discovery, and that the releases shall not be subject to termination, rescission, or modification by reason of any such discovery.
ARTICLE V — NO ADMISSION OF LIABILITY
Section 5.1 No Admission. The Parties expressly acknowledge and agree that this Agreement, including the Settlement Payment, represents a compromise and settlement of disputed claims between the Parties. Nothing in this Agreement, including without limitation the payment of the Settlement Payment, the reversal of the Chargebacks, the implementation of the CT-Scan Protocol, or the execution of LTSA Amendment No. 3, shall be construed as, or deemed to constitute, an admission of liability, fault, defect, wrongdoing, or violation of any legal duty or contractual obligation by either Party.
Without limiting the generality of the foregoing, neither Party has conceded, and nothing in this Agreement shall be interpreted as a concession of, the validity or invalidity of the other Party's positions regarding (a) the root cause of the field failures in MPT-8AT transmissions, (b) whether the Parts met or failed to meet the dimensional, metallurgical, or porosity specifications set forth in the LTSA and the applicable engineering drawings, (c) Meridian's compliance or non-compliance with the procedural notice and inspection requirements of Section 9.4(b) of the LTSA, (d) the recoverability of the per-unit administrative fee component of the Chargebacks under Section 9.3 of the LTSA, or (e) any other factual, legal, or contractual issue underlying the Chargebacks.
This Agreement and the facts and circumstances of its negotiation, execution, and performance shall not be admissible in any judicial, arbitral, administrative, or other proceeding as evidence of liability, fault, or wrongdoing by either Party, except that this Agreement may be introduced in evidence in any proceeding brought by either Party to enforce the terms and conditions of this Agreement.
ARTICLE VI — REPRESENTATIONS AND WARRANTIES
Section 6.1 Mutual Representations and Warranties. Each Party hereby represents and warrants to the other Party as of the Effective Date as follows:
(a) Due Organization. Such Party is a corporation duly organized, validly existing, and in good standing under the laws of its jurisdiction of organization (in the case of Vantage, the State of Delaware; in the case of Meridian, the State of Illinois) and has all requisite corporate power and authority to own, lease, and operate its properties and to carry on its business as presently conducted.
(b) Corporate Authority. Such Party has full corporate power and authority to execute, deliver, and perform this Agreement and to consummate the transactions contemplated hereby.
(c) Due Authorization. The execution, delivery, and performance of this Agreement by such Party, and the consummation by such Party of the transactions contemplated hereby, have been duly authorized by all necessary corporate action on the part of such Party, including any required approvals of its board of directors or other governing body.
(d) Valid and Binding Obligation. This Agreement constitutes the legal, valid, and binding obligation of such Party, enforceable against such Party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity (whether considered in a proceeding at law or in equity).
(e) Authority of Signatory. The individual executing this Agreement on behalf of such Party has been duly authorized to execute and deliver this Agreement on behalf of such Party and to bind such Party to the terms and conditions hereof.
Section 6.2 Additional Representations by Vantage. Vantage hereby further represents and warrants to Meridian as of the Effective Date as follows:
(a) No Assignment of Claims. Vantage has not assigned, transferred, conveyed, pledged, encumbered, or otherwise disposed of any of the Released Claims or any interest therein to any third party.
(b) Lender Disclosure. Vantage has disclosed, or will disclose prior to the payment of the Settlement Payment, the existence and material terms of this Agreement to Dralvecen Commercial Lending Corp., as Vantage's senior secured lender, to the extent required under the terms and conditions of Vantage's existing credit facility with Dralvecen Commercial Lending Corp. Vantage's execution, delivery, and performance of this Agreement does not violate, conflict with, or result in a default under the terms of such credit facility.
Section 6.3 Additional Representations by Meridian. Meridian hereby further represents and warrants to Vantage as of the Effective Date as follows:
(a) No Assignment of Claims or Chargeback Rights. Meridian has not assigned, transferred, conveyed, pledged, encumbered, or otherwise disposed of any of the Released Claims, or any rights under the Chargeback Notices, to any third party, including without limitation any OEM customer, tier-one supplier, or other entity in the supply chain.
ARTICLE VII — CONFIDENTIALITY
Section 7.1 Confidential Treatment. The Parties agree that the terms and conditions of this Agreement, including without limitation the amount of the Settlement Payment, the amounts of the Chargebacks to be reversed, and all negotiations, discussions, correspondence, proposals, counterproposals, technical data exchanges, and other communications between the Parties (or their respective representatives) leading to the execution of this Agreement, shall be treated as strictly confidential by each Party. Neither Party shall disclose, publish, or otherwise disseminate such confidential terms and information to any third party, except as follows:
(a) Internal Disclosures. To such Party's officers, directors, employees, attorneys, accountants, auditors, and financial advisors who have a reasonable need to know such information for purposes of performing their duties on behalf of such Party and who are bound by obligations of confidentiality (whether by contract, professional obligation, or otherwise) at least as restrictive as those contained in this Section 7.1.
(b) Vantage's Equity Sponsors. By Vantage, to Ironclad Capital Partners, LLC and Ironclad Capital Partners Fund III, L.P. (as Vantage's equity sponsors), and to such entities' respective officers, directors, employees, attorneys, and financial advisors, subject to such entities' agreement to maintain the confidentiality of such information.
(c) Vantage's Lender. By Vantage, to Dralvecen Commercial Lending Corp. (as Vantage's senior secured lender), to the extent that disclosure is required under the terms and conditions of Vantage's existing credit facility with Dralvecen Commercial Lending Corp.
(d) Vantage's Insurer. By Vantage, to Trident Assurance Group, LLC (as Vantage's product liability insurer under Policy No. TAG-PL-2021-00487), to the extent required for claims reporting, reserve establishment, or other purposes under such insurance policy.
(e) Legal Compulsion. As required by applicable law, regulation, governmental order, subpoena, or other legal process, including but not limited to reporting requirements of the U.S. Securities and Exchange Commission. In the event that a Party is required to make a disclosure pursuant to this subsection (e), such Party shall, to the extent permitted by law and practicable under the circumstances, provide the other Party with prompt written notice of such requirement prior to making such disclosure, so that the other Party may seek a protective order or other appropriate remedy. Each Party agrees to cooperate reasonably with the other Party in any effort to obtain such a protective order or other remedy.
(f) Consent. With the prior written consent of the other Party, which consent may be granted, conditioned, or withheld in such Party's sole discretion.
Section 7.2 Public Statements. Neither Party shall issue, authorize, or cause to be issued any press release, public announcement, marketing communication, trade publication article, or other public statement regarding this Agreement, the Settlement Payment, the Chargebacks, the underlying dispute, or the terms of the resolution thereof, without the prior written consent of the other Party. This restriction shall not preclude either Party from making any disclosure that is required by applicable law or regulation, subject to the notice obligations set forth in Section 7.1(e) above.
ARTICLE VIII — NON-DISPARAGEMENT
Section 8.1 Mutual Non-Disparagement. Each Party agrees that it shall not, and shall cause its officers, directors, and senior management personnel not to, make, publish, or cause to be made or published any disparaging, defamatory, derogatory, or otherwise harmful statements (whether oral, written, electronic, or otherwise) about the other Party, its products, services, quality processes, officers, directors, employees, or business practices in connection with the Chargebacks, the underlying dispute, or the matters resolved by this Agreement. This non-disparagement obligation applies to all communications, whether public or private, to third parties, including but not limited to OEM customers, suppliers, industry trade groups, and media outlets.
Notwithstanding the foregoing, this Section 8.1 shall not restrict or prohibit either Party from (a) making truthful statements that are required by applicable law, regulation, or legal process, (b) providing truthful testimony in any judicial, arbitral, administrative, or regulatory proceeding, or (c) making truthful statements in the course of internal communications reasonably necessary for the conduct of such Party's business.
ARTICLE IX — CONTINUATION OF LTSA
Section 9.1 LTSA Remains in Effect. The Parties acknowledge and agree that, except as expressly modified by LTSA Amendment No. 3, the LTSA (Reference Number LTSA-MPT-2020-0315) shall remain in full force and effect in accordance with its terms through its expiration on March 14, 2025. Nothing in this Agreement shall be construed to terminate, rescind, impair, or otherwise adversely affect the LTSA or the rights and obligations of the Parties thereunder. The Parties hereby reaffirm their commitment to the ongoing commercial relationship between them under the LTSA and their mutual intention to perform their respective obligations thereunder in good faith.
Section 9.2 No Impact on Future Performance. This Agreement, the Settlement Payment, and the other transactions contemplated hereby shall not affect, modify, or otherwise alter the future pricing, volume commitments, delivery schedules, or other commercial terms under the LTSA (including annual volumes of approximately four hundred eighty thousand (480,000) units at a weighted average unit price of Seventy-Eight Dollars and Fifty Cents ($78.50) per unit). All future warranty claims, chargebacks, quality disputes, and related matters arising after the Effective Date shall be governed solely by the LTSA (as amended by LTSA Amendment No. 3) and the quality agreements and specifications referenced therein, and shall not be affected by, or subject to, the terms and conditions of this Agreement.
ARTICLE X — INDEMNIFICATION
Section 10.1 Mutual Indemnification. Each Party (in such capacity, the "Indemnifying Party") shall indemnify, defend, and hold harmless the other Party and its officers, directors, employees, agents, successors, and assigns (collectively, the "Indemnified Parties") from and against any and all losses, damages, liabilities, claims, demands, actions, suits, judgments, costs, and expenses (including reasonable attorneys' fees and expenses of investigation) incurred or suffered by any Indemnified Party and arising from or attributable to any material breach by the Indemnifying Party of any representation, warranty, covenant, or obligation of the Indemnifying Party under this Agreement.
Section 10.2 Third-Party Claims. In the event that any OEM customer, end user, dealer, or other third party asserts a claim, demand, or cause of action against either Party (or both Parties) relating to the field failures in MPT-8AT transmissions covered by the Chargeback Notices, the Parties shall cooperate in good faith to address, respond to, and, if appropriate, defend against such third-party claim. Such cooperation shall include the timely exchange of relevant information, documents, and data, and participation in joint defense or joint response efforts, to the extent mutually agreed by the Parties. Notwithstanding the foregoing, nothing in this Section 10.2 shall (a) create any obligation on the part of either Party to indemnify the other Party against any third-party claim beyond the scope of the Released Claims, (b) alter or diminish either Party's rights or obligations under the indemnification provisions of the LTSA (as amended by LTSA Amendment No. 3), or (c) modify the scope of the mutual releases set forth in Article IV of this Agreement.
ARTICLE XI — DISPUTE RESOLUTION
Section 11.1 Good Faith Negotiation. In the event of any dispute, controversy, or claim arising out of, relating to, or in connection with this Agreement, including any question regarding its existence, validity, interpretation, performance, breach, or termination (a "Dispute"), the Parties shall first attempt in good faith to resolve such Dispute through direct negotiation between senior executives of the Parties (at the level of Vice President or above) for a period of thirty (30) days following written notice by one Party to the other identifying the Dispute and requesting negotiation. During such thirty (30) day negotiation period, neither Party shall commence any judicial proceeding with respect to the Dispute (except for proceedings seeking emergency, temporary, or preliminary injunctive relief).
Section 11.2 Jurisdiction and Venue. If a Dispute is not resolved through negotiation pursuant to Section 11.1 within the thirty (30) day period specified therein, any action, suit, or proceeding to enforce, interpret, or adjudicate any rights or obligations arising under or in connection with this Agreement may be brought in any state court of general jurisdiction sitting in Cook County, Illinois, or in the United States District Court for the Northern District of Illinois. Each Party hereby irrevocably and unconditionally (a) consents and submits to the exclusive personal jurisdiction of such courts for purposes of any such action, suit, or proceeding, (b) waives any objection to the laying of venue of any such action, suit, or proceeding in such courts, and (c) waives and agrees not to plead or claim that any such action, suit, or proceeding brought in any such court has been brought in an inconvenient forum.
ARTICLE XII — GENERAL PROVISIONS
Section 12.1 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois, without giving effect to any choice-of-law or conflict-of-laws rules or provisions (whether of the State of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois.
Section 12.2 Entire Agreement; Integration. This Agreement, together with LTSA Amendment No. 3, the LTSA (as amended), and the exhibits and schedules attached hereto, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous negotiations, representations, warranties, commitments, offers, contracts, and agreements (whether oral or written) of the Parties relating to the Chargebacks, the Chargeback Notices, and the matters resolved herein. Without limiting the generality of the foregoing, no prior course of dealing or correspondence between the Parties, including the demand letters, rejection notices, meet-and-confer discussions of May 12, 2022, and July 8, 2022, technical data exchanges, and settlement proposals exchanged prior to the Effective Date, shall form part of, or be admissible to interpret, this Agreement.
Section 12.3 Amendment and Waiver. This Agreement may not be amended, modified, or supplemented except by a written instrument duly executed by both Parties. No waiver of any provision of this Agreement, or of any right or remedy arising hereunder, shall be effective unless set forth in a written instrument signed by the Party granting such waiver. No failure or delay by either Party in exercising any right, power, or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power, or remedy preclude any other or further exercise thereof or the exercise of any other right, power, or remedy.
Section 12.4 Severability. If any provision of this Agreement (or any portion thereof) is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such invalidity, illegality, or unenforceability shall not affect the validity, legality, or enforceability of any other provision of this Agreement, and the remaining provisions shall remain in full force and effect. In the event that any provision is so held to be invalid, illegal, or unenforceable, the Parties shall negotiate in good faith to replace such provision with a valid, legal, and enforceable provision that, to the greatest extent practicable, achieves the economic, legal, and commercial objectives intended by the invalid, illegal, or unenforceable provision.
Section 12.5 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by electronic mail (including .pdf format) or facsimile transmission shall be as effective as delivery of a manually executed counterpart. Electronic signatures and facsimile signatures shall have the same force and effect as original ink signatures for all purposes.
Section 12.6 Notices. All notices, requests, demands, consents, approvals, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of delivery, if delivered by personal delivery or by nationally recognized overnight courier service, (b) on the date of transmission, if sent by electronic mail with confirmation of receipt, or (c) on the fifth (5th) business day following the date of mailing, if sent by certified mail, return receipt requested, postage prepaid, in each case addressed as follows:
If to Vantage:
Vantage Mobility Systems Corp. 4280 Mound Road Sterling Heights, MI 48310
Attention: Priya Nandakumar, General Counsel
with a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP 200 South Wacker Drive, Suite 3100 Chicago, IL 60606
Attention: Samuel Eklund
If to Meridian:
Meridian Powertrain Holdings, Inc. 2200 North Meacham Road, Suite 400 Schaumburg, IL 60173
Attention: Karen Whitford, Vice President, Supply Chain
with a copy (which shall not constitute notice) to:
Pratt, Givens & Lowell LLP 155 North Michigan Avenue, Suite 2700 Chicago, IL 60601
Attention: Rachel Drummond
Either Party may change its address for notice purposes by giving written notice of such change to the other Party in accordance with this Section 12.6.
Section 12.7 Assignment. Neither Party may assign, delegate, or otherwise transfer this Agreement, or any rights, interests, or obligations hereunder, whether by operation of law or otherwise, without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned, or delayed; provided, however, that either Party may, without the consent of the other Party, assign this Agreement to any successor in interest to all or substantially all of the assigning Party's business or assets, whether by merger, consolidation, reorganization, sale of assets, or other similar transaction, so long as the assignee or successor expressly assumes in writing all obligations of the assigning Party under this Agreement. Any purported assignment in violation of this Section 12.7 shall be null and void and of no force or effect. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.
Section 12.8 No Third-Party Beneficiaries. This Agreement is entered into solely for the benefit of the Parties and their respective successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person or entity any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement; provided, however, that Ironclad Capital Partners, LLC and Ironclad Capital Partners Fund III, L.P. are hereby designated as express third-party beneficiaries of the release provisions set forth in Article IV of this Agreement, solely as they relate to the Released Claims, and such entities shall have the right to enforce such release provisions directly against the applicable releasing Party.
Section 12.9 Costs and Expenses. Each Party shall bear its own costs, expenses, and attorneys' fees incurred in connection with the negotiation, preparation, execution, delivery, and performance of this Agreement, including the fees and expenses of counsel, financial advisors, accountants, and other professionals retained by such Party. For the avoidance of doubt, this Section 12.9 does not apply to costs and expenses recoverable under the indemnification provisions of Section 10.1.
Section 12.10 Construction. This Agreement has been negotiated by the Parties and their respective legal counsel, and shall be construed fairly in accordance with its terms and without any strict construction in favor of or against either Party as the drafter. The headings and section titles used in this Agreement are included for convenience of reference only and shall not affect the meaning or interpretation of any provision of this Agreement. References to "Sections," "Articles," "Exhibits," and "Schedules" are to the sections, articles, exhibits, and schedules of this Agreement unless otherwise specified. The terms "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation." The words "herein," "hereof," "hereunder," and words of similar import refer to this Agreement as a whole and not to any particular provision.
Section 12.11 Further Assurances. Each Party shall, upon the reasonable request of the other Party, execute and deliver such additional documents, instruments, conveyances, and assurances, and take such additional actions, as may be reasonably necessary or desirable to carry out and effectuate the provisions, purposes, and intent of this Agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Parties have caused this Settlement Agreement and Mutual Release to be executed by their duly authorized representatives as of the date first written above.
VANTAGE MOBILITY SYSTEMS CORP.
By: ________
Name: Derek Calloway
Title: Chief Executive Officer
Date: ________
MERIDIAN POWERTRAIN HOLDINGS, INC.
By: ________
Name: Karen Whitford
Title: Vice President, Supply Chain
Date: ________
EXHIBIT A
WIRE TRANSFER INSTRUCTIONS
The Settlement Payment of One Million Nine Hundred Fifty Thousand Dollars ($1,950,000.00) shall be made by wire transfer of immediately available funds to the following account:
Meridian shall deliver the completed wire transfer instructions to Vantage in writing within five (5) business days following the Effective Date. Vantage shall confirm the wire transfer instructions by telephone with an authorized representative of Meridian prior to initiating the wire transfer.
EXHIBIT B
FORM OF CREDIT MEMORANDUM
Upon reversal of the Chargebacks in accordance with Section 3.1 of the Agreement, Meridian shall issue one or more credit memoranda to Vantage substantially in the following form:
MERIDIAN POWERTRAIN HOLDINGS, INC.
CREDIT MEMORANDUM
Date: [Date of Issuance]
Credit Memo No.: [CM Number]
To: Vantage Mobility Systems Corp., 4280 Mound Road, Sterling Heights, MI 48310
From: Meridian Powertrain Holdings, Inc., 2200 North Meacham Road, Suite 400, Schaumburg, IL 60173
Reference: Settlement Agreement and Mutual Release dated October 28, 2022
Description: Reversal of warranty chargebacks pursuant to Section 3.1 of the Settlement Agreement and Mutual Release dated October 28, 2022, between Meridian Powertrain Holdings, Inc. and Vantage Mobility Systems Corp.
Total Credit Amount: $2,920,550.20
The above credit has been applied to Vantage Mobility Systems Corp.'s accounts receivable in the Meridian Powertrain Holdings, Inc. accounting system.
Authorized by: ________
Name: [Authorized Representative]
Title: [Title]
Date: ________
EXHIBIT C
CT-SCAN PROTOCOL SPECIFICATIONS
1. Purpose. This Exhibit C sets forth the technical specifications for the supplemental computed tomography (CT) scanning porosity-screening protocol (the "CT-Scan Protocol") to be implemented by Vantage Mobility Systems Corp. ("Vantage") at its Sterling Heights, Michigan production facility in accordance with Section 3.3 of the Settlement Agreement and Mutual Release dated October 28, 2022, between Vantage and Meridian Powertrain Holdings, Inc. ("Meridian").
2. Applicable Standard. All CT-scan inspections under this protocol shall be performed in accordance with, and evaluated against, ASTM E505, Standard Reference Radiographs for Inspection of Aluminum and Magnesium Die Castings (current edition as of the date of inspection), and any applicable customer-specific or drawing-level supplemental standards referenced in the LTSA or applicable PPAP documentation.
3. Maximum Porosity Threshold. The maximum acceptable porosity level for the Parts shall be ASTM E505 Level 2. Any unit exhibiting porosity exceeding ASTM E505 Level 2 shall be deemed non-conforming and shall be quarantined, dispositioned, and documented in accordance with Vantage's internal non-conformance procedures and the applicable provisions of the LTSA.
4. Parts Covered. The CT-Scan Protocol shall apply to all precision-machined aluminum valve body housings produced by Vantage for Meridian under the LTSA, specifically:
•  Part No. VMS-4400A
•  Part No. VMS-4400B
•  Part No. VMS-4400C
•  Part No. VMS-4400D
•  Part No. VMS-4400E
•  Part No. VMS-4400F
5. Sampling Frequency. The CT-scan sampling frequency shall be one (1) unit in every two hundred (200) units produced (a 1-in-200 sampling frequency). Samples shall be selected on a randomized basis from each production lot. In the event that a production lot consists of fewer than two hundred (200) units, at least one (1) unit from such lot shall be subjected to CT-scan inspection.
6. Facility. All CT-scan inspections under this protocol shall be performed at Vantage's production facility located at:
Vantage Mobility Systems Corp. 4280 Mound Road Sterling Heights, MI 48310
Vantage may, with Meridian's prior written approval, utilize a qualified third-party laboratory to perform CT-scan inspections, provided that such laboratory meets the accreditation and competency requirements specified by Vantage's quality management system and the LTSA.
7. Implementation Deadline. The CT-Scan Protocol shall be fully implemented and operational within sixty (60) days following the Effective Date of the Agreement (i.e., no later than December 27, 2022).
8. Estimated Annual Cost. The estimated annual cost of the CT-Scan Protocol, including equipment depreciation or lease expense, operator labor, consumables, calibration, maintenance, and data management, is approximately One Hundred Eighty-Five Thousand Dollars ($185,000). All such costs shall be borne solely by Vantage.
9. Recordkeeping. Vantage shall maintain complete, accurate, and legible records of all CT-scan inspections conducted under this protocol, including at a minimum:
(a) Date and time of inspection;
(b) Part number and unit serial number of inspected unit;
(c) Production lot identification number;
(d) CT-scan image files and measurement data;
(e) Porosity level determination (pass/fail against ASTM E505 Level 2 threshold);
(f) Disposition of non-conforming units (if any); and
(g) Name or identification of the inspector or technician performing the scan.
Such records shall be retained for a minimum period of seven (7) years from the date of inspection, or such longer period as may be required by applicable law, regulation, or the terms of the LTSA, and shall be made available to Meridian upon reasonable written request in accordance with Section 3.3(d) of the Agreement.
10. Supplemental Nature. The CT-Scan Protocol supplements and does not replace, supersede, or diminish any existing quality inspection, testing, measurement, or certification obligations of Vantage under the LTSA, applicable PPAP requirements, or any quality agreement between the Parties.
[End of Exhibit C]
[End of Settlement Agreement and Mutual Release]
Item | Amount
Aggregate Chargebacks (WCN-2021-1247 + WCN-2022-0103 + WCN-2022-0289) | $4,870,550.20
Less: Settlement Payment by Vantage | ($1,950,000.00)
Chargebacks to be Reversed and Restored by Meridian | $2,920,550.20
Item | Detail
Bank Name: | [To be provided by Meridian in writing prior to wire transfer]
Bank Address: | [To be provided by Meridian in writing prior to wire transfer]
ABA Routing Number: | [To be provided by Meridian in writing prior to wire transfer]
Account Name: | Meridian Powertrain Holdings, Inc.
Account Number: | [To be provided by Meridian in writing prior to wire transfer]
SWIFT Code (if applicable): | [To be provided by Meridian in writing prior to wire transfer]
Reference: | Settlement Agreement — VMS/MPT — October 28, 2022
Chargeback Notice | Original Amount | Settlement Payment Allocation | Amount Reversed
WCN-2021-1247 (Dec. 6, 2021) | $1,583,654.60 | [Allocated portion] | [Reversed portion]
WCN-2022-0103 (Jan. 18, 2022) | $1,756,398.00 | [Allocated portion] | [Reversed portion]
WCN-2022-0289 (Feb. 7, 2022) | $1,530,497.60 | [Allocated portion] | [Reversed portion]
Total | $4,870,550.20 | $1,950,000.00 | $2,920,550.20

SETTLEMENT AGREEMENT AND MUTUAL RELEASE

EXECUTION VERSION

RECITALS

WHEREAS:

VANTAGE MOBILITY SYSTEMS CORP.

MERIDIAN POWERTRAIN HOLDINGS, INC.

EXHIBIT A

WIRE TRANSFER INSTRUCTIONS

EXHIBIT B

FORM OF CREDIT MEMORANDUM

MERIDIAN POWERTRAIN HOLDINGS, INC.

CREDIT MEMORANDUM

EXHIBIT C

CT-SCAN PROTOCOL SPECIFICATIONS

Record

Parties

Dates

Amounts