Contract analysis

I. Purpose and Overview This memorandum has been prepared to assist in the deposition preparation of Philip Aaronson, Executive Vice President and Chief Credit Officer of Belmont Ridge Bank NA ("BRB" or the "Bank"), in connection with his deposition noticed by Kestrel Voss & Huang LLP on behalf of defendants and counterclaim-plaintiffs Triton Harbor Industries, LLC ("Triton Harbor"), Marcus J. Kappel, and Elaine D. K

II. Witness Background A. Professional Background Philip Aaronson is 61 years old. He currently holds the title of Executive Vice President and Chief Credit Officer of Belmont Ridge Bank NA. Aaronson has held the Chief Credit Officer position for approximately twelve years, having been appointed to the role in or around 2013. In this capacity, he oversees credit approval for all commercial and industrial lending abov

III. The August 22, 2023 Aaronson Memorandum — Central Document A. Summary of the Document The August 22, 2023 memorandum (the "Aaronson Memorandum") is the single most important document in the case from the standpoint of the Defendants' counterclaims. Its key attributes are as follows: • Date: August 22, 2023. • From: Philip Aaronson, EVP & Chief Credit Officer. • To: Derek Whitmore, SVP, Head of Special Assets Gro

4. The Forbearance Agreement Was a Separate Decision Made in Light of Changed Circumstances. Aaronson should emphasize that the Forbearance Agreement executed on October 6, 2023 — approximately six weeks after the Aaronson Memorandum — was a separate decision, reached after BRB received additional information that warranted reconsideration of the disposition strategy. Specifically, between August 22 and October 6, 20

5. The Forbearance Was Not an Extension of New Credit. Aaronson should be clear that the forbearance agreement did not constitute an extension of new credit to Triton Harbor. It was a modification of existing obligations and a contractual standstill — an agreement by BRB to temporarily forbear from exercising its default remedies under the Credit Agreement. The distinction between forbearance on existing debt and ext

6. The Forbearance Agreement's Section 9(c) Disclaimer. Aaronson should confirm that he was aware of, and insisted upon, the inclusion of Section 9(c) of the Forbearance Agreement, which provides: "Nothing herein shall constitute or be deemed to constitute a commitment, agreement, or obligation on the part of Lender to extend additional credit, modify existing facilities, or renew any credit facility." This provision

7. The CC to General Counsel. If the privilege issue has been resolved or the question is properly framed, Aaronson should testify that he included General Counsel Margaret Linden on the August 22 memorandum because litigation risk was a component of the disposition analysis and it is consistent with prudent banking practice to involve the General Counsel's office when significant credit risk and potential legal expo

IV. Anticipated Lines of Questioning Based on our assessment of Ted Huang's style and approach, the issues raised in Triton Harbor's Verified Counterclaim, the document production to date, and observations from the Whitmore and Reeves depositions, we anticipate the following principal lines of questioning. This section is organized thematically, though Huang is likely to proceed largely chronologically, returning to

1. June 15, 2021 — Original Credit Facility. Aaronson approved the $22 million credit facility (Term Loan A of $14 million and Revolving Facility of $8 million) to Triton Harbor Industries, LLC. Expect questions on the financial metrics and underwriting analysis that justified the approval. At the time of origination, Triton Harbor's financials were strong: FY2020 revenue was approximately $65 million, with trailing

2. March 8, 2023 — Credit Downgrade. Aaronson approved the downgrade of the Triton Harbor credits from "Pass" to "Substandard" (Risk Rating 7) and the transfer of the relationship from Relationship Management to the Special Assets Group. At the time of the downgrade, total outstanding under the facility was approximately $17,575,000, consisting of $11,375,000 on Term Loan A and $6,200,000 drawn on the Revolving Facil

3. August 22, 2023 — Aaronson Memorandum. This will be the primary focus of the deposition and is addressed comprehensively in Section III above. Expect Huang to spend significant time on the memorandum's language, the circumstances of its preparation, its distribution, and its relationship to subsequent events.

4. September–October 2023 — Forbearance Negotiations. Aaronson approved the forbearance terms that were ultimately reflected in the October 6, 2023 Forbearance Agreement. Expect questions on the following: • When did Aaronson first learn that SAG was considering a forbearance? • What materials were presented to Aaronson in connection with the forbearance approval? • Did Aaronson participate in any meetings with Trito

5. October 6, 2023 — Forbearance and Modification Agreement Executed. Aaronson should be prepared to discuss the specific terms he approved: • Forbearance period: 180 days (October 6, 2023 through April 3, 2024). • Monthly debt service payments: $125,000 per month (total of $750,000 over the forbearance period). • Additional collateral: Equipment leases valued at approximately $2.3 million; mortgage on the Kappel res

6. April 3, 2024 — Forbearance Expiration / Covenant Cure Failure. As of March 31, 2024, Triton Harbor's FCCR was 0.94x — below the 1.20x minimum required under the covenant cure provision of the Forbearance Agreement. Aaronson should explain that the covenant cure milestone was a negotiated condition of the forbearance, agreed to by Triton Harbor and its advisors, and that its failure was an objective, mathematicall

7. April 15, 2024 — Notice of Default and Acceleration. BRB issued its formal Notice of Default and Acceleration on April 15, 2024, twelve days after the forbearance expired. The total accelerated amount was $17,456,212, consisting of: • Term Loan A principal: $10,625,000 • Revolving Facility drawn: $6,200,000 • Accrued interest: $487,322 • Late fees and default interest: $143,890 Aaronson presumably approved or conc

8. May 20, 2024 — Commencement of Foreclosure. BRB commenced foreclosure proceedings on the Long Island City terminal facility on May 20, 2024. The updated collateral appraisal by Ridgeline Appraisal Group, completed in September 2023, valued the property at $11,200,000, down from the original appraisal of $18,700,000 — a decline of $7,500,000, or approximately 40.1%. Aaronson should be prepared to discuss the collat

1. The September 12, 2023 Meeting. Derek Whitmore and Joanna Reeves met with Marcus and Elaine Kappel at BRB's offices on September 12, 2023. According to Triton Harbor's Verified Counterclaim, Whitmore made the following statements at that meeting: • BRB was "committed to the long-term relationship" with Triton Harbor. • BRB would "seriously consider" a new $6.5 million revolving credit facility upon Triton Harbor's

2. The September 18, 2023 Email (Reeves to Marcus Kappel). On September 18, 2023, Joanna Reeves sent an email to Marcus Kappel stating: "We are optimistic about a path forward and believe this forbearance sets the stage for a renewed credit relationship." The key questions for Aaronson include: • Was this email approved by or known to Aaronson? • Did Reeves clear this language with Whitmore or with Aaronson before se

3. The September 29, 2023 Internal Email (Reeves to Whitmore). On September 29, 2023, Reeves sent an internal email to Whitmore forwarding a draft term sheet for a potential new $6.5 million revolving credit facility, marked "for discussion purposes only — not approved." The key questions for Aaronson include: • Was Aaronson copied on this email? • Was the draft term sheet forwarded to Aaronson by Whitmore or anyone

V. Key Documents for Deposition The following documents are expected to feature prominently in the Aaronson deposition. They should be reviewed with Aaronson during the preparation sessions, and copies should be included in the deposition preparation binder. This section is organized by category. A. Documents Aaronson Authored or Received

1. Aaronson Memorandum (August 22, 2023) — "Triton Harbor — Recommended Disposition Strategy." This is the central document and should be reviewed extensively during preparation, regardless of whether it remains privileged. If privilege is maintained, Aaronson should review the document for his own preparation but should not disclose its contents at the deposition absent direction from counsel. Privilege status is pe

2. Credit Approval Memorandum for Original Facility (June 2021) — Aaronson's approval of the $22 million credit facility, including the underwriting analysis, financial metrics, collateral valuation, and risk factors considered at origination.

3. Credit Downgrade Recommendation (March 8, 2023) — The documentation supporting the downgrade of the Triton Harbor credits from "Pass" (Risk Rating 4) to "Substandard" (Risk Rating 7), including the financial analysis, covenant compliance calculations, and narrative discussion of the credit deterioration.

4. Internal Emails Between Aaronson and Whitmore (March–October 2023) — These emails document Aaronson's direction of SAG strategy during the workout period. Any emails directing SAG to pursue acceleration or exit should be identified and reviewed carefully with Aaronson.

5. Forbearance Approval Documentation (Late September/Early October 2023) — Credit committee records or CCO approval memorandum relating to the approval of the forbearance terms. This may include a formal approval memorandum, credit committee minutes, or an email chain documenting Aaronson's approval.

6. Notice of Default and Acceleration (April 15, 2024) — To confirm Aaronson's involvement in the acceleration decision and the circumstances surrounding the issuance of the notice. B. Documents Authored by Others That Reference Aaronson

1. September 29, 2023 Internal Email from Reeves to Whitmore — Forwarding a draft term sheet for a potential new $6.5 million revolving credit facility, marked "for discussion purposes only — not approved." It is critical to determine whether Aaronson was copied on this email, whether the draft was forwarded to him by Whitmore, and whether he ever saw or reviewed it. This determination should be made before the first

2. September 18, 2023 Email from Reeves to Marcus Kappel — "We are optimistic about a path forward and believe this forbearance sets the stage for a renewed credit relationship." We need to determine whether Aaronson was aware of this email at or around the time it was sent.

3. Whitmore's Meeting Notes or Reports Regarding the September 12, 2023 Meeting — Any notes, memoranda, or email reports prepared by Whitmore or Reeves summarizing the September 12, 2023 meeting with the Kappels and the representations allegedly made at that meeting. If such documents exist and reference Aaronson (e.g., "as directed by Phil" or "per Phil's guidance"), they will be highly significant. C. The Forbearan

VI. Observations from Prior Depositions (Whitmore and Reeves) A. Whitmore Deposition (February 18, 2025) — Key Takeaways The Whitmore deposition was conducted by Ted Huang on February 18, 2025 and lasted approximately six hours. The following observations are relevant to Aaronson's preparation: Aaronson's Direction and Awareness. Huang spent considerable time probing the extent to which Whitmore acted under Aaronson'