1019-00005 · Whitmore Aerospace LLC · Engagement

litigation-hold-notice.docx DOCUMENT Litigation

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CALDERWOOD & HARKNESS LLP Attorneys at Law

600 Lexington Avenue, 28th Floor New York, NY 10022 Telephone: (212) 554-7800 Facsimile: (212) 554-7801 www.calderwoodharkness.com

November 2, 2022

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION

LITIGATION HOLD NOTICE — IMMEDIATE ACTION REQUIRED

TO:

Gregory Poole, Esq. General Counsel & Vice President, Legal Affairs Whitmore Aerospace LLC 4200 Commerce Park Drive, Suite 600 Chantilly, VA 20151

Catherine Soo-Hyun Park Vice President, Government Contracts & Compliance Whitmore Aerospace LLC 4200 Commerce Park Drive, Suite 600 Chantilly, VA 20151

FROM:

Priya Anand, Partner Calderwood & Harkness LLP 600 Lexington Avenue, 28th Floor New York, NY 10022

RE:

Litigation Hold — Indemnity Dispute with Hargrove-Dalton Defense Systems, Inc. Arising Under Teaming Agreement Dated June 12, 2019 / Prime Contract No. FA8620-19-C-0337 / DCMA Contracting Officer's Preliminary Determination Dated August 1, 2022

Dear Mr. Poole and Ms. Park:

This firm writes in its capacity as outside litigation counsel to Whitmore Aerospace LLC. This memorandum constitutes a formal litigation hold notice that requires your immediate attention and action. Please read this notice in its entirety, ensure that it is distributed to all persons identified herein, and take the preservation steps outlined below without delay. Time is of the essence.

I. PURPOSE AND LEGAL OBLIGATION

Calderwood & Harkness LLP ("the Firm" or "C&H") has been retained by Whitmore Aerospace LLC ("WAL") as of November 1, 2022, to represent WAL in connection with the indemnity dispute with Hargrove-Dalton Defense Systems, Inc. ("HDDS") arising under the Teaming Agreement dated June 12, 2019, and related to cost overruns identified under U.S. Air Force Prime Contract No. FA8620-19-C-0337.

WAL anticipates filing a declaratory judgment action in the United States District Court for the Southern District of New York seeking a judicial declaration that Section 11.4 of the Teaming Agreement dated June 12, 2019, does not obligate WAL to indemnify HDDS for the $14,726,583 in cost overruns identified by the Defense Contract Management Agency ("DCMA") in its Contracting Officer's Preliminary Determination ("COPD") dated August 1, 2022. In connection with that anticipated litigation, and in light of the formal indemnification demand made by HDDS in the amount of $14,726,583 by letter dated September 9, 2022, WAL is under an immediate legal obligation to identify, locate, and preserve all documents and electronically stored information ("ESI") that are potentially relevant to this dispute.

This obligation arises under federal and state law, including the common-law duty of preservation that attaches when litigation is reasonably anticipated or pending. The duty to preserve evidence applies broadly to all forms of tangible and intangible information, whether stored in paper or electronic form. The failure to fulfill this obligation can result in severe consequences, including court-imposed sanctions, adverse inference instructions permitting a jury to presume that destroyed evidence was unfavorable to WAL, monetary penalties, and other remedies available under Federal Rule of Civil Procedure 37(e) and applicable law. Courts have not hesitated to impose such sanctions where a party has failed to take reasonable steps to preserve relevant information after the duty to preserve has attached.

This litigation hold is effective immediately upon receipt of this notice. It supersedes any and all document retention policies, document destruction schedules, automatic deletion settings, or other routine information-management practices currently in effect at WAL, to the extent those policies or practices would result in the alteration, destruction, deletion, or loss of any documents or ESI falling within the scope of this hold. No documents or ESI within the scope of this hold may be destroyed, deleted, altered, overwritten, or otherwise disposed of for any reason, regardless of whether such destruction would otherwise be authorized under WAL's existing records-management policies.

II. BACKGROUND OF THE DISPUTE

The following summary is provided to give context to the scope of the preservation obligations described in this notice. This summary is based on information provided to C&H by WAL management and counsel, and is subject to revision as additional facts become available.

A. The ATAP Prime Contract

Hargrove-Dalton Defense Systems, Inc. ("HDDS") is the prime contractor under United States Air Force Prime Contract No. FA8620-19-C-0337, commonly referred to as the Advanced Tactical Airframe Program ("ATAP"). The ATAP prime contract is administered by the Air Force Life Cycle Management Center ("AFLCMC"), headquartered at Wright-Patterson Air Force Base, Ohio. The contract is structured as a cost-plus-incentive-fee ("CPIF") contract with the following key financial parameters:

• Target Cost: $412,000,000

• Ceiling Price: $470,000,000

• Share Ratio (Overruns): 70% Government / 30% Contractor

• Share Ratio (Underruns): 60% Government / 40% Contractor

B. WAL's Role Under the Teaming Agreement

WAL serves as a subcontractor and teaming partner to HDDS under the Teaming Agreement dated June 12, 2019 (the "Teaming Agreement"). Under the Teaming Agreement, WAL is responsible for the fabrication and delivery of titanium structural assemblies designated as Work Package 4 ("WP-4"). WP-4 encompasses the manufacture of wing-box substructure components, center fuselage longerons, and bulkhead fittings. WP-4 represents approximately 18% of the ATAP target cost, amounting to approximately $74,160,000.

C. The DCMA COPD

On August 1, 2022, Administrative Contracting Officer Lt. Col. Sandra M. Vickers, USAF, assigned to DCMA Northern Virginia, issued a Contracting Officer's Preliminary Determination ("COPD") identifying $14,726,583 in cost overruns on the ATAP contract. The COPD attributed $12,817,441 (approximately 87.03%) of the identified overruns to WP-4, with the remaining $1,909,142 (approximately 12.97%) attributed to other work packages not performed by WAL.

The COPD identified the following root causes for the cost overruns:

• Titanium Raw-Material Cost Escalation: Approximately $4,200,000 in overruns attributed to significant increases in the market price of aerospace-grade titanium alloys during the performance period, driven by supply-chain disruptions and increased global demand.

• Rework Due to Non-Conforming Machining Tolerances: Approximately $5,100,000 in overruns attributed to rework costs resulting from machined components that did not conform to specified dimensional tolerances, necessitating additional fabrication cycles and quality-control inspections.

• Schedule Delays Causing Idle-Labor Charges: Approximately $2,300,000 in overruns attributed to production schedule delays that resulted in idle-labor charges for skilled machinists, engineers, and quality-control personnel during periods when production was halted or delayed.

• Engineering Change Proposal Implementation Costs: Approximately $1,200,000 in overruns attributed to the cost of implementing engineering change proposals ("ECPs") directed by the government or HDDS during the performance period, which required modifications to tooling, manufacturing processes, and quality-control procedures.

D. The HDDS Indemnification Demand

By letter dated September 9, 2022, HDDS transmitted to WAL a formal indemnification demand under Section 11.4 of the Teaming Agreement, demanding that WAL indemnify HDDS for the full $14,726,583 in cost overruns identified in the COPD. HDDS's position is that Section 11.4 requires WAL to indemnify HDDS for all cost overruns attributable to WAL's performance of WP-4, including costs arising from material price escalation, manufacturing defects, schedule delays, and ECP implementation.

E. WAL's Position

WAL disputes liability on multiple grounds, including but not limited to the following:

1. The causation requirement under Section 11.4(b) of the Teaming Agreement is not satisfied. Section 11.4(b) requires a showing that the cost overruns were "directly caused by" the indemnifying party's failure to perform in accordance with the Teaming Agreement, and WAL contends that significant portions of the overruns were caused by factors outside WAL's control, including government-directed engineering changes, HDDS's late delivery of government-furnished equipment ("GFE"), and unprecedented titanium supply-chain disruptions.

2. The HDDS demand improperly includes $1,909,142 in non-WP-4 overruns for which WAL bears no responsibility under the Teaming Agreement, as those overruns relate to work packages performed by HDDS or other team members.

3. The DCMA finding is a preliminary determination only, and no formal disallowance has been issued. The COPD does not constitute a Contracting Officer's Final Decision ("COFD") and remains subject to revision during the administrative review process. WAL contends that HDDS's demand is premature and that no indemnification obligation, if any, can be quantified with certainty until the administrative process has concluded.

F. Negotiations and Dispute Resolution Efforts

Senior executive negotiations took place on September 30, 2022, and October 14, 2022, between Marcus J. Whitmore, CEO of WAL, and William Fong, Senior Vice President of Contracts & Procurement at HDDS. These negotiations did not result in a resolution of the dispute. WAL submitted a formal mediation proposal to HDDS on October 21, 2022, pursuant to Section 14.2 of the Teaming Agreement. HDDS declined the mediation proposal by letter dated October 28, 2022.

Separately, HDDS filed a formal response and request for a Contracting Officer's Final Decision ("COFD") with DCMA on October 15, 2022. That administrative review is currently ongoing, and no COFD has been issued as of the date of this notice.

G. Insurance and Lender Notifications

WAL tendered the indemnity claim to Meridian Surety & Insurance Group ("Meridian") on September 22, 2022, under Directors & Officers Liability Policy No. MSI-DO-2022-07814 and Commercial General Liability Policy No. MSI-CGL-2021-33291. Meridian issued a reservation-of-rights letter on November 1, 2022, reserving its rights to deny coverage while acknowledging receipt of the tender and agreeing to investigate the claim.

WAL also provided notice to Ridgeline National Bank, N.A. ("Ridgeline") under Section 6.07(b) of WAL's $75,000,000 senior secured revolving credit facility (dated March 15, 2021) by letter dated September 28, 2022, disclosing the HDDS indemnification demand as a material pending or threatened claim.

H. Governing Law and Forum

The Teaming Agreement is governed by the laws of the State of New York (Section 18.1) and contains a forum-selection clause designating the United States District Court for the Southern District of New York or the Supreme Court of the State of New York, New York County, as the exclusive forums for the resolution of disputes arising under or relating to the Teaming Agreement (Section 18.2).

III. SCOPE OF THE LITIGATION HOLD

The scope of this litigation hold is intentionally broad. When in doubt about whether a particular document or category of ESI falls within the scope of this hold, the document or ESI must be preserved. Questions regarding the scope of the hold should be directed to Gregory Poole, who may escalate to the undersigned or to Patrick Gallagher at Calderwood & Harkness LLP.

A. Subject Matter Categories

All documents, communications, data, and ESI relating to any of the following subject matter categories must be identified and preserved:

1. The Teaming Agreement. The Teaming Agreement dated June 12, 2019, between HDDS (Team Lead) and WAL (Team Member), including without limitation all amendments, modifications, side letters, letter agreements, attachments, exhibits, schedules, appendices, and statement-of-work documents incorporated by reference. This category also encompasses all documents relating to the negotiation of the Teaming Agreement, including term sheets, memoranda of understanding, letters of intent, draft agreements and redlines exchanged between the parties, negotiation correspondence (whether by email, letter, or other medium), internal WAL memoranda, analyses, or presentations evaluating the terms of the Teaming Agreement, and all correspondence concerning the interpretation or performance of any provision of the Teaming Agreement following execution.

2. Prime Contract No. FA8620-19-C-0337. The ATAP prime contract, including all subcontract agreements, task orders, delivery orders, contract modifications (bilateral and unilateral), change orders, engineering change proposals, contract data requirements lists, work breakdown structures, integrated master schedules, and all other related contractual documents that WAL possesses, has access to, or has received copies of. This includes any flow-down provisions from the prime contract to the Teaming Agreement or WAL's subcontract scope of work.

3. Work Package 4 (WP-4). All documents relating to WAL's performance of the titanium structural assembly work package, encompassing the wing-box substructure, center fuselage longerons, and bulkhead fittings. This category includes but is not limited to the following:

• Manufacturing records, production logs, and work order documentation;

• Quality control and inspection records, including first-article inspection reports, in-process inspection records, and final acceptance inspection documentation;

• Non-conformance reports ("NCRs"), material review board ("MRB") dispositions, and corrective action reports;

• All rework documentation, including rework orders, rework cost estimates, and post-rework inspection records;

• Engineering change proposals ("ECPs") and their implementation records, including cost estimates, technical analyses, and schedule impact assessments;

• Cost and schedule tracking documents, including earned-value management system ("EVMS") data, cost performance reports, schedule performance reports, and variance analyses;

• Labor records, including timesheets, labor distribution reports, and labor-rate information for all personnel assigned to WP-4;

• Material procurement records and pricing documentation, with particular emphasis on titanium raw-material procurement, including purchase orders, supplier quotations, invoices, long-term supply agreements, spot-market purchase records, and any hedging or forward-purchasing arrangements;

• Supplier and vendor communications, including correspondence with titanium suppliers, machining subcontractors, and other vendors supporting WP-4 performance.

4. DCMA COPD Dated August 1, 2022. The Contracting Officer's Preliminary Determination and all documents relating to the $14,726,583 in identified cost overruns. This includes WAL's internal analysis of the COPD, all communications with DCMA (including Administrative Contracting Officer Lt. Col. Sandra M. Vickers), DCMA field audit documentation, cost data submissions provided to DCMA, and any draft or final responses prepared by WAL or HDDS in connection with the COPD. This also includes any documents relating to HDDS's October 15, 2022, request for a Contracting Officer's Final Decision.

5. HDDS Indemnification Demand. The HDDS demand letter dated September 9, 2022, and all related correspondence between WAL and HDDS, including any interim communications, responses, counterproposals, or position papers. This category also encompasses WAL's internal analysis and response to the demand, including legal analyses, financial assessments, and management presentations prepared in response to the indemnification demand. All documents relating to the interpretation, application, or scope of Section 11.4 and Section 11.5 of the Teaming Agreement must be preserved, including any documents created during or after the negotiation of the Teaming Agreement that bear on the intended scope of the indemnification and limitation-of-liability provisions.

6. Cost Overrun Root Causes. All documents relating to the root causes of the cost overruns identified in the COPD, including:

• Titanium raw-material cost escalation, including market price data, supplier pricing history, and any internal or external analyses of titanium price trends during the relevant period;

• Machining tolerance issues and rework, including root-cause analyses of non-conforming parts, corrective action plans, tooling assessments, and any communications with HDDS or the government regarding machining specifications;

• Schedule delays, including any delays attributable to HDDS's late delivery of government-furnished equipment ("GFE"), government-directed changes, or other external factors; production schedules, schedule recovery plans, delay notices, and idle-labor cost calculations;

• Engineering change proposal implementation costs, including ECP directives from HDDS or the government, cost-impact analyses, and implementation timelines.

7. Dispute Resolution Communications. All records of the senior executive negotiations held on September 30, 2022, and October 14, 2022 (Marcus J. Whitmore and William Fong), including meeting agendas, presentation materials, notes, summaries, and follow-up correspondence. All documents relating to WAL's October 21, 2022, mediation proposal and HDDS's October 28, 2022, declination. All inter-party communications regarding the dispute, including correspondence between outside counsel for both parties.

8. Government-Furnished Equipment and HDDS-Supplied Specifications. All documents regarding government-furnished equipment ("GFE") delivery schedules, GFE receipt records, and any delays in GFE delivery. All engineering specifications provided by HDDS for WP-4, including initial specifications, specification change notices, and any communications regarding the adequacy, accuracy, or completeness of HDDS-supplied specifications. This category is particularly relevant to WAL's position that certain cost overruns were caused by factors outside WAL's control.

9. Force Majeure. All documents relating to force-majeure events or conditions that may have affected WAL's performance of WP-4, including titanium supply-chain disruptions, global market conditions, sanctions or trade restrictions affecting raw-material availability, and any other events claimed or potentially claimable as force majeure under Section 13 of the Teaming Agreement. This includes any force-majeure notices issued or received by WAL, market pricing data and supply-chain analyses, and communications with suppliers regarding supply disruptions.

10. Insurance Tender. All documents relating to WAL's September 22, 2022, tender of the indemnity claim to Meridian Surety & Insurance Group, including the tender letter, supporting documentation provided to Meridian, all communications with Meridian representatives, Meridian's reservation-of-rights letter dated November 1, 2022, and all internal analyses regarding insurance coverage for the indemnity demand. This includes documents relating to both D&O Policy No. MSI-DO-2022-07814 and CGL Policy No. MSI-CGL-2021-33291.

11. Lender Notification. All documents relating to WAL's notice to Ridgeline National Bank, N.A. under Section 6.07(b) of WAL's $75,000,000 senior secured revolving credit facility (dated March 15, 2021), including the September 28, 2022, notice letter, any acknowledgment or response from Ridgeline, and all internal analyses regarding WAL's disclosure obligations under the credit facility.

12. Financial Records. Cost accounting records, incurred-cost submissions, billing records, invoices, and financial analyses relating to WP-4 performance costs. This includes data maintained in WAL's enterprise resource planning ("ERP") system, project cost ledgers, and any financial models or projections relating to WP-4. It also includes ASC 450 (formerly FAS 5) contingent liability assessments prepared by WAL's finance team or in consultation with Pinnacle Advisory Partners LLC, including any work papers, draft assessments, and final memoranda relating to the potential indemnification liability.

13. Government Compliance and Security. Any documents relating to WAL's facility security clearance (SECRET level), DCMA Northern Virginia contract administration activities, or any other government compliance matters that bear on the cost-overrun dispute, including any communications with the Defense Counterintelligence and Security Agency ("DCSA") or other government entities regarding WAL's performance or eligibility status.

B. Types of Documents and ESI Covered

This litigation hold applies to all forms of documents and ESI, regardless of medium, format, or storage location. The following is an illustrative, non-exhaustive list of the types of materials that must be preserved:

• Paper documents: Originals, copies, drafts, notes, memoranda, reports, letters, contracts, agreements, proposals, presentations, financial records, meeting minutes, handwritten notes, calendar entries, and any other tangible records;

• Electronic documents: Emails (including drafts, sent items, deleted items that remain recoverable, archived items, and items in personal folders or .pst files), word processing files (Word, WordPerfect, or equivalent), spreadsheets (Excel or equivalent), databases (Access, SQL, or equivalent), presentations (Northgate Services Inc. or equivalent), PDF files, scanned images, and any other electronic files stored on any medium;

• Messaging platforms: Text messages (SMS and MMS), instant messages transmitted through Northgate Data Systems, Meridian Solutions, or any similar enterprise messaging platform used by WAL, as well as voicemail recordings, voicemail transcripts, and any other forms of electronic communication;

• Calendar entries and meeting invitations: All calendar entries, meeting invitations, meeting acceptances, meeting agendas, and meeting notes associated with any of the subject matter categories described in Section III.A above;

• Accounting and ERP system records: All records maintained in WAL's accounting, enterprise resource planning, and project management systems relating to WP-4 costs, purchase orders, invoices, timekeeping, and labor distribution;

• Engineering and manufacturing system records: CAD files, manufacturing execution system ("MES") data, quality management system ("QMS") records, non-conformance tracking databases, material review board records, and any other records maintained in WAL's engineering or manufacturing information systems;

• Shared drives and cloud storage: All documents and ESI stored on shared network drives, Aldermere Systems sites, Cobalt Ridge Systems accounts, or any equivalent cloud-based storage platforms used by WAL employees in connection with any of the subject matter categories described above;

• Backup tapes and archived data stores: All backup tapes, disaster-recovery media, and archived data stores that contain, or may contain, documents or ESI falling within the scope of this hold;

• Personal devices: All documents and ESI stored on personal laptops, mobile phones, tablets, or other personal devices that were used by WAL employees or contractors for business purposes in connection with any of the subject matter categories described above;

• Metadata: All metadata associated with any of the foregoing documents and ESI must be preserved in its native format. Documents should not be printed to paper or converted to PDF in lieu of preserving the native electronic file with its associated metadata.

C. Time Period

This litigation hold covers all documents and ESI created, sent, received, stored, or maintained during the period from January 1, 2018 (encompassing the pre-Teaming Agreement negotiation period) through the present date and continuing until this hold is formally released in writing by Calderwood & Harkness LLP. The January 1, 2018 start date is intended to capture documents and communications relating to the early stages of the ATAP opportunity pursuit and the negotiation of the Teaming Agreement, which was executed on June 12, 2019.

IV. PERSONS SUBJECT TO THE HOLD

The following WAL personnel are identified as custodians who are likely to possess documents and ESI falling within the scope of this litigation hold. Each of these individuals must receive a copy of this notice, comply with all preservation obligations described herein, and return a signed Custodian Acknowledgment Form (Attachment A) within five (5) business days of receipt.

Named Custodians:

1. Marcus J. Whitmore — Founder, Chief Executive Officer, and Managing Member of WAL;

2. Elaine Whitmore — Co-Founder and Chief Financial Officer of WAL;

3. Gregory Poole — General Counsel and Vice President, Legal Affairs;

4. Catherine Soo-Hyun Park — Vice President, Government Contracts & Compliance;

Functional Categories of Additional Custodians:

In addition to the named custodians above, the following categories of WAL personnel are subject to this litigation hold:

5. All employees, managers, and contractors involved in the negotiation, execution, or administration of the Teaming Agreement dated June 12, 2019, including individuals who participated in drafting sessions, negotiation meetings, or review and approval processes;

6. All employees, managers, and contractors involved in the fabrication, quality control, engineering, procurement, scheduling, and cost management functions associated with WP-4, including but not limited to program managers, manufacturing engineers, quality assurance inspectors, procurement specialists, and production schedulers;

7. All employees who participated in or were responsible for communications with HDDS, DCMA, AFLCMC, or any other government personnel regarding the ATAP program or the cost overruns identified in the COPD;

8. Finance and accounting personnel responsible for WP-4 cost tracking, incurred-cost submissions, financial reporting, and any contingent liability assessments relating to the HDDS indemnification demand;

9. Information technology personnel responsible for the administration, maintenance, and backup of email systems, document management systems, network storage, cloud-based storage platforms, and backup/archival systems that contain or may contain documents or ESI within the scope of this hold;

10. Any WAL personnel who communicated with Ridgeline National Bank, N.A. regarding the notification under the revolving credit facility or with Meridian Surety & Insurance Group regarding the insurance tender and coverage matters.

Gregory Poole and Catherine Soo-Hyun Park are requested to identify, in consultation with WAL management, any additional individuals not listed above who may possess relevant documents or ESI, and to ensure that those individuals are promptly notified of this hold. If any custodian identified above has separated from WAL's employment, please notify Calderwood & Harkness LLP immediately so that appropriate steps can be taken to preserve any documents or ESI in that individual's possession or under WAL's control.

V. PRESERVATION OBLIGATIONS AND PROHIBITED ACTIONS

The following specific obligations and prohibitions apply to all persons subject to this litigation hold, effective immediately:

1. Immediately cease any routine or scheduled destruction, deletion, overwriting, recycling, or disposal of any documents or ESI falling within the scope of this hold. This includes the suspension of any automated processes that would result in the deletion, purging, or overwriting of relevant materials.

2. Do not delete, alter, modify, move, or destroy any documents or ESI, whether in paper or electronic form, that relate to any of the subject matter categories described in Section III.A above. This prohibition extends to all forms of destruction, including shredding paper documents, emptying electronic "trash" or "deleted items" folders, overwriting electronic files, defragmenting or reformatting storage media, and uninstalling or removing software applications that contain relevant data.

3. Do not modify or disable any automatic deletion settings (such as email auto-purge rules, Outlook retention policies, or similar automated data-management functions) without first ensuring that all potentially relevant materials have been identified, collected, and preserved in a secure manner. WAL's IT department should be instructed to suspend auto-deletion policies for all custodians identified in Section IV above, and to implement technical measures to prevent the inadvertent destruction of relevant ESI.

4. Do not discard, recycle, or destroy paper files, including working files, project files, correspondence files, and archived files. Paper files that would ordinarily be subject to disposition under WAL's records-retention schedule must be retained in their current location and condition until the hold is released.

5. Preserve backup tapes and disaster-recovery media in the ordinary course of business. Do not overwrite, destroy, degauss, or dispose of any backup media containing data from the relevant time period (January 1, 2018, through the present). If WAL's backup rotation schedule would result in the overwriting or recycling of tapes containing relevant data, those tapes must be removed from the rotation cycle and segregated for preservation.

6. Third-party documents. If any custodian becomes aware that documents or ESI responsive to this hold are in the possession of third parties — including vendors, suppliers, consultants, or other business partners — the custodian must notify Gregory Poole immediately. Gregory Poole should then notify Calderwood & Harkness LLP so that appropriate steps can be taken to request preservation by the third party.

7. New documents. The obligation to preserve extends to documents and ESI created or received after the date of this notice that fall within the scope of the hold. All custodians must be mindful of this ongoing obligation and must preserve relevant materials as they are created or received.

VI. IMPLEMENTATION STEPS

To ensure the effective and timely implementation of this litigation hold, the following steps should be taken:

1. Litigation Hold Coordinators. Gregory Poole and Catherine Soo-Hyun Park are requested to serve as WAL's internal litigation hold coordinators. In this capacity, they are responsible for disseminating this notice to all identified custodians within WAL, ensuring that each custodian receives a copy of this notice, answering preliminary questions from custodians regarding the hold, and coordinating with Calderwood & Harkness LLP on all preservation-related matters.

2. Custodian Notification and Acknowledgment. Each custodian identified in Section IV above should receive a copy of this notice together with the Custodian Acknowledgment Form attached hereto as Attachment A. Each custodian should be instructed to review this notice carefully, take immediate steps to identify and preserve all documents and ESI within the scope of the hold, and return a signed Custodian Acknowledgment Form to Gregory Poole within five (5) business days of receipt.

3. IT Department Coordination. WAL's IT department should be directed to take the following actions promptly:

(a) Suspend auto-delete policies, email purge schedules, and any other automated data-destruction processes for all identified custodians;

(b) Preserve all relevant shared drives, network folders, Aldermere Systems sites, and cloud storage repositories by implementing appropriate access controls and change-prevention measures;

(c) Identify all backup tapes and archived data stores covering the relevant time period (January 1, 2018, through the present) and ensure that those media are segregated from the backup rotation cycle and preserved;

(d) Ensure that any litigation hold or legal hold functionality within WAL's email or document management systems is activated for all identified custodians;

(e) Prepare a written inventory of the data sources, systems, and storage media subject to preservation, and provide that inventory to Gregory Poole for transmission to Calderwood & Harkness LLP.

4. Custodian List and Acknowledgments. Calderwood & Harkness LLP requests that WAL provide a comprehensive list of all custodians who have been notified of this litigation hold, together with their signed Custodian Acknowledgment Forms, within ten (10) business days of the date of this notice. The list should include each custodian's name, title, department, and a brief description of their role in relation to the subject matter categories described in Section III.A.

5. Escalation of Questions. Any questions from custodians regarding whether particular documents or ESI fall within the scope of this hold should be directed in the first instance to Gregory Poole. Questions that cannot be resolved internally should be escalated to Priya Anand or Patrick Gallagher at Calderwood & Harkness LLP. When in doubt, custodians should err on the side of preservation and retain the materials in question until guidance is provided.

VII. DURATION OF THE HOLD

This litigation hold will remain in effect until Calderwood & Harkness LLP issues a formal written release. No individual custodian, department, or WAL officer is authorized to release or modify this hold without the express written consent of Calderwood & Harkness LLP.

The hold applies not only to the anticipated declaratory judgment action in the United States District Court for the Southern District of New York, but also to the related DCMA administrative proceeding (including HDDS's pending request for a Contracting Officer's Final Decision) and any future claims, counterclaims, cross-claims, third-party claims, appeals, or proceedings that may arise from or relate to the indemnity dispute between WAL and HDDS.

Calderwood & Harkness LLP will issue periodic reminders to WAL and its custodians to ensure continued compliance with this hold. These reminders will be issued at intervals determined by Calderwood & Harkness LLP, but no less frequently than every ninety (90) days while the hold remains in effect. The issuance of reminders does not diminish the obligation of each custodian to comply with this hold at all times, regardless of whether a reminder has been received.

VIII. CONSEQUENCES OF NON-COMPLIANCE

The consequences of failing to comply with this litigation hold are serious and potentially severe. They include, but are not limited to, the following:

• Court-imposed sanctions: Under Federal Rule of Civil Procedure 37(e), if ESI that should have been preserved is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court may order measures no greater than necessary to cure the prejudice, or, upon a finding that the party acted with the intent to deprive another party of the information's use in the litigation, the court may presume that the lost information was unfavorable to the party, instruct the jury that it may or must presume the information was unfavorable, or dismiss the action or enter a default judgment.

• Adverse inference instructions: Courts have broad discretion to instruct juries that they may infer that documents destroyed in violation of a litigation hold would have been unfavorable to the party that destroyed them. Such instructions can be devastating to a party's case.

• Monetary penalties: Courts may impose monetary sanctions on parties that fail to preserve relevant evidence, including the costs of additional discovery necessitated by the loss of evidence and attorneys' fees.

• Prejudice to WAL's litigation position: The loss of relevant evidence could undermine WAL's ability to prosecute its declaratory judgment action or defend against HDDS's indemnification demand, resulting in an adverse outcome on the merits.

• Individual disciplinary action: Individual custodians who fail to comply with this litigation hold may be subject to disciplinary action under WAL's internal employment policies, up to and including termination.

WAL and its personnel should treat compliance with this litigation hold as a matter of the highest priority.

IX. CONTACT INFORMATION

For questions regarding this litigation hold notice, the scope of preservation, or any related matter, please contact the following individuals:

Calderwood & Harkness LLP:

Priya Anand, Partner Calderwood & Harkness LLP 600 Lexington Avenue, 28th Floor New York, NY 10022 Telephone: (212) 554-7812

Email: panand@calderwoodharkness.com

Patrick Gallagher, Lead Associate Calderwood & Harkness LLP 600 Lexington Avenue, 28th Floor New York, NY 10022 Telephone: (212) 554-7845

Email: pgallagher@calderwoodharkness.com

Simone Laroche, Associate Calderwood & Harkness LLP 1900 K Street NW, Suite 1100 Washington, D.C. 20006 Telephone: (202) 891-4220

Email: slaroche@calderwoodharkness.com

WAL Internal Contacts:

Gregory Poole, General Counsel & VP, Legal Affairs Whitmore Aerospace LLC 4200 Commerce Park Drive, Suite 600 Chantilly, VA 20151 Telephone: (703) 555-2400

Email: gpoole@whitmoreaerospace.com

Catherine Soo-Hyun Park, VP, Government Contracts & Compliance Whitmore Aerospace LLC 4200 Commerce Park Drive, Suite 600 Chantilly, VA 20151 Telephone: (703) 555-2415

Email: cspark@whitmoreaerospace.com

X. SIGNATURE

We appreciate your prompt attention to this matter and your cooperation in ensuring that WAL's preservation obligations are fully satisfied. Please do not hesitate to contact me or any member of the C&H team identified above if you have any questions.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Priya Anand, Partner Calderwood & Harkness LLP 600 Lexington Avenue, 28th Floor New York, NY 10022

Enclosure: Attachment A — Custodian Acknowledgment Form

cc:

Marcus J. Whitmore, CEO, Whitmore Aerospace LLC (via separate cover) Elaine Whitmore, CFO, Whitmore Aerospace LLC (via separate cover) Patrick Gallagher, Lead Associate, Calderwood & Harkness LLP Simone Laroche, Associate, Calderwood & Harkness LLP

ATTACHMENT A

CUSTODIAN ACKNOWLEDGMENT FORM

Litigation Hold — Indemnity Dispute with Hargrove-Dalton Defense Systems, Inc. Teaming Agreement Dated June 12, 2019 / Prime Contract No. FA8620-19-C-0337

INSTRUCTIONS: Each custodian identified in the Litigation Hold Notice dated November 2, 2022, issued by Calderwood & Harkness LLP, must complete and sign this Custodian Acknowledgment Form. Please return the signed original to Gregory Poole, General Counsel & VP, Legal Affairs, Whitmore Aerospace LLC, 4200 Commerce Park Drive, Suite 600, Chantilly, VA 20151, within five (5) business days of receipt of the Litigation Hold Notice.

Matter Reference: Indemnity Dispute with Hargrove-Dalton Defense Systems, Inc. Arising Under Teaming Agreement Dated June 12, 2019 / Prime Contract No. FA8620-19-C-0337 / DCMA Contracting Officer's Preliminary Determination Dated August 1, 2022

ACKNOWLEDGMENT AND CERTIFICATION

By signing below, I acknowledge and certify the following:

1. I have received and carefully reviewed the Litigation Hold Notice dated November 2, 2022, issued by Calderwood & Harkness LLP on behalf of Whitmore Aerospace LLC ("WAL").

2. I understand that WAL is under a legal obligation to preserve all documents and electronically stored information ("ESI") potentially relevant to the indemnity dispute described in the Litigation Hold Notice.

3. I understand the scope of the litigation hold as described in Section III of the Litigation Hold Notice, including the subject matter categories, types of documents and ESI covered, and the applicable time period (January 1, 2018, through the present and continuing).

4. I understand that I am prohibited from destroying, deleting, altering, modifying, moving, or disposing of any documents or ESI that fall within the scope of this litigation hold, regardless of whether such destruction would otherwise be permitted under WAL's document retention policies or any other policy or practice.

5. I will take immediate steps to identify all documents and ESI in my possession, custody, or control that fall within the scope of this litigation hold and will ensure that all such materials are preserved in their current form and location.

6. I will preserve all documents and ESI created or received by me after the date of this notice that fall within the scope of the litigation hold.

7. I understand that this litigation hold supersedes any existing document retention policies, destruction schedules, or automatic deletion settings.

8. I will direct any questions regarding the scope of this hold or whether particular documents or ESI fall within its scope to Gregory Poole, General Counsel & VP, Legal Affairs, Whitmore Aerospace LLC.

9. I understand that failure to comply with this litigation hold may result in court-imposed sanctions against WAL, including adverse inference instructions and monetary penalties, and may subject me to disciplinary action under WAL's internal policies.

10. I certify that, to the best of my knowledge, I have not destroyed, deleted, or altered any documents or ESI that fall within the scope of this litigation hold since becoming aware of the indemnity dispute with Hargrove-Dalton Defense Systems, Inc. If I have any reason to believe that relevant materials may have been lost, destroyed, or altered, I will immediately notify Gregory Poole.

Custodian Signature: ________

Printed Name: ________

Date: ________

RETURN INSTRUCTIONS: Please return the signed original of this form to Gregory Poole, General Counsel & VP, Legal Affairs, Whitmore Aerospace LLC, 4200 Commerce Park Drive, Suite 600, Chantilly, VA 20151, or by email scan to gpoole@whitmoreaerospace.com, within five (5) business days of receipt of the Litigation Hold Notice. Retain a copy for your personal records.

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION Calderwood & Harkness LLP	600 Lexington Avenue, 28th Floor	New York, NY 10022
Field	Custodian Response
Full Name:	________
Title / Position:	________
Department:	________
Office Location:	________
Business Email:	________
Business Phone:	________
Date of Receipt of Litigation Hold Notice:	________

CALDERWOOD & HARKNESS LLP Attorneys at Law
600 Lexington Avenue, 28th Floor New York, NY 10022 Telephone: (212) 554-7800 Facsimile: (212) 554-7801 www.calderwoodharkness.com
November 2, 2022
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION
LITIGATION HOLD NOTICE — IMMEDIATE ACTION REQUIRED
TO:
Gregory Poole, Esq. General Counsel & Vice President, Legal Affairs Whitmore Aerospace LLC 4200 Commerce Park Drive, Suite 600 Chantilly, VA 20151
Catherine Soo-Hyun Park Vice President, Government Contracts & Compliance Whitmore Aerospace LLC 4200 Commerce Park Drive, Suite 600 Chantilly, VA 20151
FROM:
Priya Anand, Partner Calderwood & Harkness LLP 600 Lexington Avenue, 28th Floor New York, NY 10022
RE:
Litigation Hold — Indemnity Dispute with Hargrove-Dalton Defense Systems, Inc. Arising Under Teaming Agreement Dated June 12, 2019 / Prime Contract No. FA8620-19-C-0337 / DCMA Contracting Officer's Preliminary Determination Dated August 1, 2022
Dear Mr. Poole and Ms. Park:
This firm writes in its capacity as outside litigation counsel to Whitmore Aerospace LLC. This memorandum constitutes a formal litigation hold notice that requires your immediate attention and action. Please read this notice in its entirety, ensure that it is distributed to all persons identified herein, and take the preservation steps outlined below without delay. Time is of the essence.
I. PURPOSE AND LEGAL OBLIGATION
Calderwood & Harkness LLP ("the Firm" or "C&H") has been retained by Whitmore Aerospace LLC ("WAL") as of November 1, 2022, to represent WAL in connection with the indemnity dispute with Hargrove-Dalton Defense Systems, Inc. ("HDDS") arising under the Teaming Agreement dated June 12, 2019, and related to cost overruns identified under U.S. Air Force Prime Contract No. FA8620-19-C-0337.
WAL anticipates filing a declaratory judgment action in the United States District Court for the Southern District of New York seeking a judicial declaration that Section 11.4 of the Teaming Agreement dated June 12, 2019, does not obligate WAL to indemnify HDDS for the $14,726,583 in cost overruns identified by the Defense Contract Management Agency ("DCMA") in its Contracting Officer's Preliminary Determination ("COPD") dated August 1, 2022. In connection with that anticipated litigation, and in light of the formal indemnification demand made by HDDS in the amount of $14,726,583 by letter dated September 9, 2022, WAL is under an immediate legal obligation to identify, locate, and preserve all documents and electronically stored information ("ESI") that are potentially relevant to this dispute.
This obligation arises under federal and state law, including the common-law duty of preservation that attaches when litigation is reasonably anticipated or pending. The duty to preserve evidence applies broadly to all forms of tangible and intangible information, whether stored in paper or electronic form. The failure to fulfill this obligation can result in severe consequences, including court-imposed sanctions, adverse inference instructions permitting a jury to presume that destroyed evidence was unfavorable to WAL, monetary penalties, and other remedies available under Federal Rule of Civil Procedure 37(e) and applicable law. Courts have not hesitated to impose such sanctions where a party has failed to take reasonable steps to preserve relevant information after the duty to preserve has attached.
This litigation hold is effective immediately upon receipt of this notice. It supersedes any and all document retention policies, document destruction schedules, automatic deletion settings, or other routine information-management practices currently in effect at WAL, to the extent those policies or practices would result in the alteration, destruction, deletion, or loss of any documents or ESI falling within the scope of this hold. No documents or ESI within the scope of this hold may be destroyed, deleted, altered, overwritten, or otherwise disposed of for any reason, regardless of whether such destruction would otherwise be authorized under WAL's existing records-management policies.
II. BACKGROUND OF THE DISPUTE
The following summary is provided to give context to the scope of the preservation obligations described in this notice. This summary is based on information provided to C&H by WAL management and counsel, and is subject to revision as additional facts become available.
A. The ATAP Prime Contract
Hargrove-Dalton Defense Systems, Inc. ("HDDS") is the prime contractor under United States Air Force Prime Contract No. FA8620-19-C-0337, commonly referred to as the Advanced Tactical Airframe Program ("ATAP"). The ATAP prime contract is administered by the Air Force Life Cycle Management Center ("AFLCMC"), headquartered at Wright-Patterson Air Force Base, Ohio. The contract is structured as a cost-plus-incentive-fee ("CPIF") contract with the following key financial parameters:
•  Target Cost: $412,000,000
•  Ceiling Price: $470,000,000
•  Share Ratio (Overruns): 70% Government / 30% Contractor
•  Share Ratio (Underruns): 60% Government / 40% Contractor
B. WAL's Role Under the Teaming Agreement
WAL serves as a subcontractor and teaming partner to HDDS under the Teaming Agreement dated June 12, 2019 (the "Teaming Agreement"). Under the Teaming Agreement, WAL is responsible for the fabrication and delivery of titanium structural assemblies designated as Work Package 4 ("WP-4"). WP-4 encompasses the manufacture of wing-box substructure components, center fuselage longerons, and bulkhead fittings. WP-4 represents approximately 18% of the ATAP target cost, amounting to approximately $74,160,000.
C. The DCMA COPD
On August 1, 2022, Administrative Contracting Officer Lt. Col. Sandra M. Vickers, USAF, assigned to DCMA Northern Virginia, issued a Contracting Officer's Preliminary Determination ("COPD") identifying $14,726,583 in cost overruns on the ATAP contract. The COPD attributed $12,817,441 (approximately 87.03%) of the identified overruns to WP-4, with the remaining $1,909,142 (approximately 12.97%) attributed to other work packages not performed by WAL.
The COPD identified the following root causes for the cost overruns:
•  Titanium Raw-Material Cost Escalation: Approximately $4,200,000 in overruns attributed to significant increases in the market price of aerospace-grade titanium alloys during the performance period, driven by supply-chain disruptions and increased global demand.
•  Rework Due to Non-Conforming Machining Tolerances: Approximately $5,100,000 in overruns attributed to rework costs resulting from machined components that did not conform to specified dimensional tolerances, necessitating additional fabrication cycles and quality-control inspections.
•  Schedule Delays Causing Idle-Labor Charges: Approximately $2,300,000 in overruns attributed to production schedule delays that resulted in idle-labor charges for skilled machinists, engineers, and quality-control personnel during periods when production was halted or delayed.
•  Engineering Change Proposal Implementation Costs: Approximately $1,200,000 in overruns attributed to the cost of implementing engineering change proposals ("ECPs") directed by the government or HDDS during the performance period, which required modifications to tooling, manufacturing processes, and quality-control procedures.
D. The HDDS Indemnification Demand
By letter dated September 9, 2022, HDDS transmitted to WAL a formal indemnification demand under Section 11.4 of the Teaming Agreement, demanding that WAL indemnify HDDS for the full $14,726,583 in cost overruns identified in the COPD. HDDS's position is that Section 11.4 requires WAL to indemnify HDDS for all cost overruns attributable to WAL's performance of WP-4, including costs arising from material price escalation, manufacturing defects, schedule delays, and ECP implementation.
E. WAL's Position
WAL disputes liability on multiple grounds, including but not limited to the following:
1.  The causation requirement under Section 11.4(b) of the Teaming Agreement is not satisfied. Section 11.4(b) requires a showing that the cost overruns were "directly caused by" the indemnifying party's failure to perform in accordance with the Teaming Agreement, and WAL contends that significant portions of the overruns were caused by factors outside WAL's control, including government-directed engineering changes, HDDS's late delivery of government-furnished equipment ("GFE"), and unprecedented titanium supply-chain disruptions.
2.  The HDDS demand improperly includes $1,909,142 in non-WP-4 overruns for which WAL bears no responsibility under the Teaming Agreement, as those overruns relate to work packages performed by HDDS or other team members.
3.  The DCMA finding is a preliminary determination only, and no formal disallowance has been issued. The COPD does not constitute a Contracting Officer's Final Decision ("COFD") and remains subject to revision during the administrative review process. WAL contends that HDDS's demand is premature and that no indemnification obligation, if any, can be quantified with certainty until the administrative process has concluded.
F. Negotiations and Dispute Resolution Efforts
Senior executive negotiations took place on September 30, 2022, and October 14, 2022, between Marcus J. Whitmore, CEO of WAL, and William Fong, Senior Vice President of Contracts & Procurement at HDDS. These negotiations did not result in a resolution of the dispute. WAL submitted a formal mediation proposal to HDDS on October 21, 2022, pursuant to Section 14.2 of the Teaming Agreement. HDDS declined the mediation proposal by letter dated October 28, 2022.
Separately, HDDS filed a formal response and request for a Contracting Officer's Final Decision ("COFD") with DCMA on October 15, 2022. That administrative review is currently ongoing, and no COFD has been issued as of the date of this notice.
G. Insurance and Lender Notifications
WAL tendered the indemnity claim to Meridian Surety & Insurance Group ("Meridian") on September 22, 2022, under Directors & Officers Liability Policy No. MSI-DO-2022-07814 and Commercial General Liability Policy No. MSI-CGL-2021-33291. Meridian issued a reservation-of-rights letter on November 1, 2022, reserving its rights to deny coverage while acknowledging receipt of the tender and agreeing to investigate the claim.
WAL also provided notice to Ridgeline National Bank, N.A. ("Ridgeline") under Section 6.07(b) of WAL's $75,000,000 senior secured revolving credit facility (dated March 15, 2021) by letter dated September 28, 2022, disclosing the HDDS indemnification demand as a material pending or threatened claim.
H. Governing Law and Forum
The Teaming Agreement is governed by the laws of the State of New York (Section 18.1) and contains a forum-selection clause designating the United States District Court for the Southern District of New York or the Supreme Court of the State of New York, New York County, as the exclusive forums for the resolution of disputes arising under or relating to the Teaming Agreement (Section 18.2).
III. SCOPE OF THE LITIGATION HOLD
The scope of this litigation hold is intentionally broad. When in doubt about whether a particular document or category of ESI falls within the scope of this hold, the document or ESI must be preserved. Questions regarding the scope of the hold should be directed to Gregory Poole, who may escalate to the undersigned or to Patrick Gallagher at Calderwood & Harkness LLP.
A. Subject Matter Categories
All documents, communications, data, and ESI relating to any of the following subject matter categories must be identified and preserved:
1. The Teaming Agreement. The Teaming Agreement dated June 12, 2019, between HDDS (Team Lead) and WAL (Team Member), including without limitation all amendments, modifications, side letters, letter agreements, attachments, exhibits, schedules, appendices, and statement-of-work documents incorporated by reference. This category also encompasses all documents relating to the negotiation of the Teaming Agreement, including term sheets, memoranda of understanding, letters of intent, draft agreements and redlines exchanged between the parties, negotiation correspondence (whether by email, letter, or other medium), internal WAL memoranda, analyses, or presentations evaluating the terms of the Teaming Agreement, and all correspondence concerning the interpretation or performance of any provision of the Teaming Agreement following execution.
2. Prime Contract No. FA8620-19-C-0337. The ATAP prime contract, including all subcontract agreements, task orders, delivery orders, contract modifications (bilateral and unilateral), change orders, engineering change proposals, contract data requirements lists, work breakdown structures, integrated master schedules, and all other related contractual documents that WAL possesses, has access to, or has received copies of. This includes any flow-down provisions from the prime contract to the Teaming Agreement or WAL's subcontract scope of work.
3. Work Package 4 (WP-4). All documents relating to WAL's performance of the titanium structural assembly work package, encompassing the wing-box substructure, center fuselage longerons, and bulkhead fittings. This category includes but is not limited to the following:
•  Manufacturing records, production logs, and work order documentation;
•  Quality control and inspection records, including first-article inspection reports, in-process inspection records, and final acceptance inspection documentation;
•  Non-conformance reports ("NCRs"), material review board ("MRB") dispositions, and corrective action reports;
•  All rework documentation, including rework orders, rework cost estimates, and post-rework inspection records;
•  Engineering change proposals ("ECPs") and their implementation records, including cost estimates, technical analyses, and schedule impact assessments;
•  Cost and schedule tracking documents, including earned-value management system ("EVMS") data, cost performance reports, schedule performance reports, and variance analyses;
•  Labor records, including timesheets, labor distribution reports, and labor-rate information for all personnel assigned to WP-4;
•  Material procurement records and pricing documentation, with particular emphasis on titanium raw-material procurement, including purchase orders, supplier quotations, invoices, long-term supply agreements, spot-market purchase records, and any hedging or forward-purchasing arrangements;
•  Supplier and vendor communications, including correspondence with titanium suppliers, machining subcontractors, and other vendors supporting WP-4 performance.
4. DCMA COPD Dated August 1, 2022. The Contracting Officer's Preliminary Determination and all documents relating to the $14,726,583 in identified cost overruns. This includes WAL's internal analysis of the COPD, all communications with DCMA (including Administrative Contracting Officer Lt. Col. Sandra M. Vickers), DCMA field audit documentation, cost data submissions provided to DCMA, and any draft or final responses prepared by WAL or HDDS in connection with the COPD. This also includes any documents relating to HDDS's October 15, 2022, request for a Contracting Officer's Final Decision.
5. HDDS Indemnification Demand. The HDDS demand letter dated September 9, 2022, and all related correspondence between WAL and HDDS, including any interim communications, responses, counterproposals, or position papers. This category also encompasses WAL's internal analysis and response to the demand, including legal analyses, financial assessments, and management presentations prepared in response to the indemnification demand. All documents relating to the interpretation, application, or scope of Section 11.4 and Section 11.5 of the Teaming Agreement must be preserved, including any documents created during or after the negotiation of the Teaming Agreement that bear on the intended scope of the indemnification and limitation-of-liability provisions.
6. Cost Overrun Root Causes. All documents relating to the root causes of the cost overruns identified in the COPD, including:
•  Titanium raw-material cost escalation, including market price data, supplier pricing history, and any internal or external analyses of titanium price trends during the relevant period;
•  Machining tolerance issues and rework, including root-cause analyses of non-conforming parts, corrective action plans, tooling assessments, and any communications with HDDS or the government regarding machining specifications;
•  Schedule delays, including any delays attributable to HDDS's late delivery of government-furnished equipment ("GFE"), government-directed changes, or other external factors; production schedules, schedule recovery plans, delay notices, and idle-labor cost calculations;
•  Engineering change proposal implementation costs, including ECP directives from HDDS or the government, cost-impact analyses, and implementation timelines.
7. Dispute Resolution Communications. All records of the senior executive negotiations held on September 30, 2022, and October 14, 2022 (Marcus J. Whitmore and William Fong), including meeting agendas, presentation materials, notes, summaries, and follow-up correspondence. All documents relating to WAL's October 21, 2022, mediation proposal and HDDS's October 28, 2022, declination. All inter-party communications regarding the dispute, including correspondence between outside counsel for both parties.
8. Government-Furnished Equipment and HDDS-Supplied Specifications. All documents regarding government-furnished equipment ("GFE") delivery schedules, GFE receipt records, and any delays in GFE delivery. All engineering specifications provided by HDDS for WP-4, including initial specifications, specification change notices, and any communications regarding the adequacy, accuracy, or completeness of HDDS-supplied specifications. This category is particularly relevant to WAL's position that certain cost overruns were caused by factors outside WAL's control.
9. Force Majeure. All documents relating to force-majeure events or conditions that may have affected WAL's performance of WP-4, including titanium supply-chain disruptions, global market conditions, sanctions or trade restrictions affecting raw-material availability, and any other events claimed or potentially claimable as force majeure under Section 13 of the Teaming Agreement. This includes any force-majeure notices issued or received by WAL, market pricing data and supply-chain analyses, and communications with suppliers regarding supply disruptions.
10. Insurance Tender. All documents relating to WAL's September 22, 2022, tender of the indemnity claim to Meridian Surety & Insurance Group, including the tender letter, supporting documentation provided to Meridian, all communications with Meridian representatives, Meridian's reservation-of-rights letter dated November 1, 2022, and all internal analyses regarding insurance coverage for the indemnity demand. This includes documents relating to both D&O Policy No. MSI-DO-2022-07814 and CGL Policy No. MSI-CGL-2021-33291.
11. Lender Notification. All documents relating to WAL's notice to Ridgeline National Bank, N.A. under Section 6.07(b) of WAL's $75,000,000 senior secured revolving credit facility (dated March 15, 2021), including the September 28, 2022, notice letter, any acknowledgment or response from Ridgeline, and all internal analyses regarding WAL's disclosure obligations under the credit facility.
12. Financial Records. Cost accounting records, incurred-cost submissions, billing records, invoices, and financial analyses relating to WP-4 performance costs. This includes data maintained in WAL's enterprise resource planning ("ERP") system, project cost ledgers, and any financial models or projections relating to WP-4. It also includes ASC 450 (formerly FAS 5) contingent liability assessments prepared by WAL's finance team or in consultation with Pinnacle Advisory Partners LLC, including any work papers, draft assessments, and final memoranda relating to the potential indemnification liability.
13. Government Compliance and Security. Any documents relating to WAL's facility security clearance (SECRET level), DCMA Northern Virginia contract administration activities, or any other government compliance matters that bear on the cost-overrun dispute, including any communications with the Defense Counterintelligence and Security Agency ("DCSA") or other government entities regarding WAL's performance or eligibility status.
B. Types of Documents and ESI Covered
This litigation hold applies to all forms of documents and ESI, regardless of medium, format, or storage location. The following is an illustrative, non-exhaustive list of the types of materials that must be preserved:
•  Paper documents: Originals, copies, drafts, notes, memoranda, reports, letters, contracts, agreements, proposals, presentations, financial records, meeting minutes, handwritten notes, calendar entries, and any other tangible records;
•  Electronic documents: Emails (including drafts, sent items, deleted items that remain recoverable, archived items, and items in personal folders or .pst files), word processing files (Word, WordPerfect, or equivalent), spreadsheets (Excel or equivalent), databases (Access, SQL, or equivalent), presentations (Northgate Services Inc. or equivalent), PDF files, scanned images, and any other electronic files stored on any medium;
•  Messaging platforms: Text messages (SMS and MMS), instant messages transmitted through Northgate Data Systems, Meridian Solutions, or any similar enterprise messaging platform used by WAL, as well as voicemail recordings, voicemail transcripts, and any other forms of electronic communication;
•  Calendar entries and meeting invitations: All calendar entries, meeting invitations, meeting acceptances, meeting agendas, and meeting notes associated with any of the subject matter categories described in Section III.A above;
•  Accounting and ERP system records: All records maintained in WAL's accounting, enterprise resource planning, and project management systems relating to WP-4 costs, purchase orders, invoices, timekeeping, and labor distribution;
•  Engineering and manufacturing system records: CAD files, manufacturing execution system ("MES") data, quality management system ("QMS") records, non-conformance tracking databases, material review board records, and any other records maintained in WAL's engineering or manufacturing information systems;
•  Shared drives and cloud storage: All documents and ESI stored on shared network drives, Aldermere Systems sites, Cobalt Ridge Systems accounts, or any equivalent cloud-based storage platforms used by WAL employees in connection with any of the subject matter categories described above;
•  Backup tapes and archived data stores: All backup tapes, disaster-recovery media, and archived data stores that contain, or may contain, documents or ESI falling within the scope of this hold;
•  Personal devices: All documents and ESI stored on personal laptops, mobile phones, tablets, or other personal devices that were used by WAL employees or contractors for business purposes in connection with any of the subject matter categories described above;
•  Metadata: All metadata associated with any of the foregoing documents and ESI must be preserved in its native format. Documents should not be printed to paper or converted to PDF in lieu of preserving the native electronic file with its associated metadata.
C. Time Period
This litigation hold covers all documents and ESI created, sent, received, stored, or maintained during the period from January 1, 2018 (encompassing the pre-Teaming Agreement negotiation period) through the present date and continuing until this hold is formally released in writing by Calderwood & Harkness LLP. The January 1, 2018 start date is intended to capture documents and communications relating to the early stages of the ATAP opportunity pursuit and the negotiation of the Teaming Agreement, which was executed on June 12, 2019.
IV. PERSONS SUBJECT TO THE HOLD
The following WAL personnel are identified as custodians who are likely to possess documents and ESI falling within the scope of this litigation hold. Each of these individuals must receive a copy of this notice, comply with all preservation obligations described herein, and return a signed Custodian Acknowledgment Form (Attachment A) within five (5) business days of receipt.
Named Custodians:
1.  Marcus J. Whitmore — Founder, Chief Executive Officer, and Managing Member of WAL;
2.  Elaine Whitmore — Co-Founder and Chief Financial Officer of WAL;
3.  Gregory Poole — General Counsel and Vice President, Legal Affairs;
4.  Catherine Soo-Hyun Park — Vice President, Government Contracts & Compliance;
Functional Categories of Additional Custodians:
In addition to the named custodians above, the following categories of WAL personnel are subject to this litigation hold:
5.  All employees, managers, and contractors involved in the negotiation, execution, or administration of the Teaming Agreement dated June 12, 2019, including individuals who participated in drafting sessions, negotiation meetings, or review and approval processes;
6.  All employees, managers, and contractors involved in the fabrication, quality control, engineering, procurement, scheduling, and cost management functions associated with WP-4, including but not limited to program managers, manufacturing engineers, quality assurance inspectors, procurement specialists, and production schedulers;
7.  All employees who participated in or were responsible for communications with HDDS, DCMA, AFLCMC, or any other government personnel regarding the ATAP program or the cost overruns identified in the COPD;
8.  Finance and accounting personnel responsible for WP-4 cost tracking, incurred-cost submissions, financial reporting, and any contingent liability assessments relating to the HDDS indemnification demand;
9.  Information technology personnel responsible for the administration, maintenance, and backup of email systems, document management systems, network storage, cloud-based storage platforms, and backup/archival systems that contain or may contain documents or ESI within the scope of this hold;
10.  Any WAL personnel who communicated with Ridgeline National Bank, N.A. regarding the notification under the revolving credit facility or with Meridian Surety & Insurance Group regarding the insurance tender and coverage matters.
Gregory Poole and Catherine Soo-Hyun Park are requested to identify, in consultation with WAL management, any additional individuals not listed above who may possess relevant documents or ESI, and to ensure that those individuals are promptly notified of this hold. If any custodian identified above has separated from WAL's employment, please notify Calderwood & Harkness LLP immediately so that appropriate steps can be taken to preserve any documents or ESI in that individual's possession or under WAL's control.
V. PRESERVATION OBLIGATIONS AND PROHIBITED ACTIONS
The following specific obligations and prohibitions apply to all persons subject to this litigation hold, effective immediately:
1.  Immediately cease any routine or scheduled destruction, deletion, overwriting, recycling, or disposal of any documents or ESI falling within the scope of this hold. This includes the suspension of any automated processes that would result in the deletion, purging, or overwriting of relevant materials.
2.  Do not delete, alter, modify, move, or destroy any documents or ESI, whether in paper or electronic form, that relate to any of the subject matter categories described in Section III.A above. This prohibition extends to all forms of destruction, including shredding paper documents, emptying electronic "trash" or "deleted items" folders, overwriting electronic files, defragmenting or reformatting storage media, and uninstalling or removing software applications that contain relevant data.
3.  Do not modify or disable any automatic deletion settings (such as email auto-purge rules, Outlook retention policies, or similar automated data-management functions) without first ensuring that all potentially relevant materials have been identified, collected, and preserved in a secure manner. WAL's IT department should be instructed to suspend auto-deletion policies for all custodians identified in Section IV above, and to implement technical measures to prevent the inadvertent destruction of relevant ESI.
4.  Do not discard, recycle, or destroy paper files, including working files, project files, correspondence files, and archived files. Paper files that would ordinarily be subject to disposition under WAL's records-retention schedule must be retained in their current location and condition until the hold is released.
5.  Preserve backup tapes and disaster-recovery media in the ordinary course of business. Do not overwrite, destroy, degauss, or dispose of any backup media containing data from the relevant time period (January 1, 2018, through the present). If WAL's backup rotation schedule would result in the overwriting or recycling of tapes containing relevant data, those tapes must be removed from the rotation cycle and segregated for preservation.
6.  Third-party documents. If any custodian becomes aware that documents or ESI responsive to this hold are in the possession of third parties — including vendors, suppliers, consultants, or other business partners — the custodian must notify Gregory Poole immediately. Gregory Poole should then notify Calderwood & Harkness LLP so that appropriate steps can be taken to request preservation by the third party.
7.  New documents. The obligation to preserve extends to documents and ESI created or received after the date of this notice that fall within the scope of the hold. All custodians must be mindful of this ongoing obligation and must preserve relevant materials as they are created or received.
VI. IMPLEMENTATION STEPS
To ensure the effective and timely implementation of this litigation hold, the following steps should be taken:
1.  Litigation Hold Coordinators. Gregory Poole and Catherine Soo-Hyun Park are requested to serve as WAL's internal litigation hold coordinators. In this capacity, they are responsible for disseminating this notice to all identified custodians within WAL, ensuring that each custodian receives a copy of this notice, answering preliminary questions from custodians regarding the hold, and coordinating with Calderwood & Harkness LLP on all preservation-related matters.
2.  Custodian Notification and Acknowledgment. Each custodian identified in Section IV above should receive a copy of this notice together with the Custodian Acknowledgment Form attached hereto as Attachment A. Each custodian should be instructed to review this notice carefully, take immediate steps to identify and preserve all documents and ESI within the scope of the hold, and return a signed Custodian Acknowledgment Form to Gregory Poole within five (5) business days of receipt.
3.  IT Department Coordination. WAL's IT department should be directed to take the following actions promptly:
(a) Suspend auto-delete policies, email purge schedules, and any other automated data-destruction processes for all identified custodians;
(b) Preserve all relevant shared drives, network folders, Aldermere Systems sites, and cloud storage repositories by implementing appropriate access controls and change-prevention measures;
(c) Identify all backup tapes and archived data stores covering the relevant time period (January 1, 2018, through the present) and ensure that those media are segregated from the backup rotation cycle and preserved;
(d) Ensure that any litigation hold or legal hold functionality within WAL's email or document management systems is activated for all identified custodians;
(e) Prepare a written inventory of the data sources, systems, and storage media subject to preservation, and provide that inventory to Gregory Poole for transmission to Calderwood & Harkness LLP.
4.  Custodian List and Acknowledgments. Calderwood & Harkness LLP requests that WAL provide a comprehensive list of all custodians who have been notified of this litigation hold, together with their signed Custodian Acknowledgment Forms, within ten (10) business days of the date of this notice. The list should include each custodian's name, title, department, and a brief description of their role in relation to the subject matter categories described in Section III.A.
5.  Escalation of Questions. Any questions from custodians regarding whether particular documents or ESI fall within the scope of this hold should be directed in the first instance to Gregory Poole. Questions that cannot be resolved internally should be escalated to Priya Anand or Patrick Gallagher at Calderwood & Harkness LLP. When in doubt, custodians should err on the side of preservation and retain the materials in question until guidance is provided.
VII. DURATION OF THE HOLD
This litigation hold will remain in effect until Calderwood & Harkness LLP issues a formal written release. No individual custodian, department, or WAL officer is authorized to release or modify this hold without the express written consent of Calderwood & Harkness LLP.
The hold applies not only to the anticipated declaratory judgment action in the United States District Court for the Southern District of New York, but also to the related DCMA administrative proceeding (including HDDS's pending request for a Contracting Officer's Final Decision) and any future claims, counterclaims, cross-claims, third-party claims, appeals, or proceedings that may arise from or relate to the indemnity dispute between WAL and HDDS.
Calderwood & Harkness LLP will issue periodic reminders to WAL and its custodians to ensure continued compliance with this hold. These reminders will be issued at intervals determined by Calderwood & Harkness LLP, but no less frequently than every ninety (90) days while the hold remains in effect. The issuance of reminders does not diminish the obligation of each custodian to comply with this hold at all times, regardless of whether a reminder has been received.
VIII. CONSEQUENCES OF NON-COMPLIANCE
The consequences of failing to comply with this litigation hold are serious and potentially severe. They include, but are not limited to, the following:
•  Court-imposed sanctions: Under Federal Rule of Civil Procedure 37(e), if ESI that should have been preserved is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court may order measures no greater than necessary to cure the prejudice, or, upon a finding that the party acted with the intent to deprive another party of the information's use in the litigation, the court may presume that the lost information was unfavorable to the party, instruct the jury that it may or must presume the information was unfavorable, or dismiss the action or enter a default judgment.
•  Adverse inference instructions: Courts have broad discretion to instruct juries that they may infer that documents destroyed in violation of a litigation hold would have been unfavorable to the party that destroyed them. Such instructions can be devastating to a party's case.
•  Monetary penalties: Courts may impose monetary sanctions on parties that fail to preserve relevant evidence, including the costs of additional discovery necessitated by the loss of evidence and attorneys' fees.
•  Prejudice to WAL's litigation position: The loss of relevant evidence could undermine WAL's ability to prosecute its declaratory judgment action or defend against HDDS's indemnification demand, resulting in an adverse outcome on the merits.
•  Individual disciplinary action: Individual custodians who fail to comply with this litigation hold may be subject to disciplinary action under WAL's internal employment policies, up to and including termination.
WAL and its personnel should treat compliance with this litigation hold as a matter of the highest priority.
IX. CONTACT INFORMATION
For questions regarding this litigation hold notice, the scope of preservation, or any related matter, please contact the following individuals:
Calderwood & Harkness LLP:
Priya Anand, Partner Calderwood & Harkness LLP 600 Lexington Avenue, 28th Floor New York, NY 10022 Telephone: (212) 554-7812
Email: panand@calderwoodharkness.com
Patrick Gallagher, Lead Associate Calderwood & Harkness LLP 600 Lexington Avenue, 28th Floor New York, NY 10022 Telephone: (212) 554-7845
Email: pgallagher@calderwoodharkness.com
Simone Laroche, Associate Calderwood & Harkness LLP 1900 K Street NW, Suite 1100 Washington, D.C. 20006 Telephone: (202) 891-4220
Email: slaroche@calderwoodharkness.com
WAL Internal Contacts:
Gregory Poole, General Counsel & VP, Legal Affairs Whitmore Aerospace LLC 4200 Commerce Park Drive, Suite 600 Chantilly, VA 20151 Telephone: (703) 555-2400
Email: gpoole@whitmoreaerospace.com
Catherine Soo-Hyun Park, VP, Government Contracts & Compliance Whitmore Aerospace LLC 4200 Commerce Park Drive, Suite 600 Chantilly, VA 20151 Telephone: (703) 555-2415
Email: cspark@whitmoreaerospace.com
X. SIGNATURE
We appreciate your prompt attention to this matter and your cooperation in ensuring that WAL's preservation obligations are fully satisfied. Please do not hesitate to contact me or any member of the C&H team identified above if you have any questions.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Priya Anand, Partner Calderwood & Harkness LLP 600 Lexington Avenue, 28th Floor New York, NY 10022
Enclosure: Attachment A — Custodian Acknowledgment Form
cc:
Marcus J. Whitmore, CEO, Whitmore Aerospace LLC (via separate cover) Elaine Whitmore, CFO, Whitmore Aerospace LLC (via separate cover) Patrick Gallagher, Lead Associate, Calderwood & Harkness LLP Simone Laroche, Associate, Calderwood & Harkness LLP
ATTACHMENT A
CUSTODIAN ACKNOWLEDGMENT FORM
Litigation Hold — Indemnity Dispute with Hargrove-Dalton Defense Systems, Inc. Teaming Agreement Dated June 12, 2019 / Prime Contract No. FA8620-19-C-0337
INSTRUCTIONS: Each custodian identified in the Litigation Hold Notice dated November 2, 2022, issued by Calderwood & Harkness LLP, must complete and sign this Custodian Acknowledgment Form. Please return the signed original to Gregory Poole, General Counsel & VP, Legal Affairs, Whitmore Aerospace LLC, 4200 Commerce Park Drive, Suite 600, Chantilly, VA 20151, within five (5) business days of receipt of the Litigation Hold Notice.
Matter Reference: Indemnity Dispute with Hargrove-Dalton Defense Systems, Inc. Arising Under Teaming Agreement Dated June 12, 2019 / Prime Contract No. FA8620-19-C-0337 / DCMA Contracting Officer's Preliminary Determination Dated August 1, 2022
ACKNOWLEDGMENT AND CERTIFICATION
By signing below, I acknowledge and certify the following:
1.  I have received and carefully reviewed the Litigation Hold Notice dated November 2, 2022, issued by Calderwood & Harkness LLP on behalf of Whitmore Aerospace LLC ("WAL").
2.  I understand that WAL is under a legal obligation to preserve all documents and electronically stored information ("ESI") potentially relevant to the indemnity dispute described in the Litigation Hold Notice.
3.  I understand the scope of the litigation hold as described in Section III of the Litigation Hold Notice, including the subject matter categories, types of documents and ESI covered, and the applicable time period (January 1, 2018, through the present and continuing).
4.  I understand that I am prohibited from destroying, deleting, altering, modifying, moving, or disposing of any documents or ESI that fall within the scope of this litigation hold, regardless of whether such destruction would otherwise be permitted under WAL's document retention policies or any other policy or practice.
5.  I will take immediate steps to identify all documents and ESI in my possession, custody, or control that fall within the scope of this litigation hold and will ensure that all such materials are preserved in their current form and location.
6.  I will preserve all documents and ESI created or received by me after the date of this notice that fall within the scope of the litigation hold.
7.  I understand that this litigation hold supersedes any existing document retention policies, destruction schedules, or automatic deletion settings.
8.  I will direct any questions regarding the scope of this hold or whether particular documents or ESI fall within its scope to Gregory Poole, General Counsel & VP, Legal Affairs, Whitmore Aerospace LLC.
9.  I understand that failure to comply with this litigation hold may result in court-imposed sanctions against WAL, including adverse inference instructions and monetary penalties, and may subject me to disciplinary action under WAL's internal policies.
10.  I certify that, to the best of my knowledge, I have not destroyed, deleted, or altered any documents or ESI that fall within the scope of this litigation hold since becoming aware of the indemnity dispute with Hargrove-Dalton Defense Systems, Inc. If I have any reason to believe that relevant materials may have been lost, destroyed, or altered, I will immediately notify Gregory Poole.
Custodian Signature: ________
Printed Name: ________
Date: ________
RETURN INSTRUCTIONS: Please return the signed original of this form to Gregory Poole, General Counsel & VP, Legal Affairs, Whitmore Aerospace LLC, 4200 Commerce Park Drive, Suite 600, Chantilly, VA 20151, or by email scan to gpoole@whitmoreaerospace.com, within five (5) business days of receipt of the Litigation Hold Notice. Retain a copy for your personal records.
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION Calderwood & Harkness LLP | 600 Lexington Avenue, 28th Floor | New York, NY 10022
Field | Custodian Response
Full Name: | ________
Title / Position: | ________
Department: | ________
Office Location: | ________
Business Email: | ________
Business Phone: | ________
Date of Receipt of Litigation Hold Notice: | ________