Contract analysis

I. Executive Summary The purpose of this memorandum is to analyze whether the memorandum dated August 22, 2023, authored by Philip Aaronson (Executive Vice President and Chief Credit Officer, Belmont Ridge Bank NA ("BRB")) and addressed to Derek Whitmore (Senior Vice President, Head of Special Assets Group, BRB), with a copy to Margaret Linden (Senior Vice President and General Counsel, BRB) (the "Aaronson Memorandum

II. Description of the Aaronson Memorandum A. Formal Attributes The Aaronson Memorandum bears the following formal characteristics: • Date: August 22, 2023. • Author: Philip Aaronson, Executive Vice President and Chief Credit Officer, Belmont Ridge Bank NA. Aaronson is the most senior credit officer at BRB and has ultimate authority over credit disposition decisions for the bank's loan portfolio. • Primary Recipient:

III. Applicable Legal Standards A. Attorney-Client Privilege Under New York Law Under New York law, the attorney-client privilege protects from disclosure confidential communications between an attorney and a client made for the purpose of obtaining or providing legal advice. The privilege is codified at CPLR § 4503(a), which provides, in relevant part, that "an attorney or his or her employee, or any person who obta

IV. Analysis of the Aaronson Memorandum A. Arguments Supporting Privilege The following arguments support the assertion of attorney-client privilege over the Aaronson Memorandum:

1. The CC to General Counsel Reflects a Legal Purpose. Margaret Linden, SVP and General Counsel of BRB, was copied on the memorandum. If BRB can demonstrate that Linden was copied specifically to obtain her legal review and advice regarding the legal risks and regulatory implications of the recommended disposition strategy, the communication may be privileged. The assertion would be that Aaronson was not merely keepi

2. The Content May Intertwine Legal and Business Considerations. If the Aaronson Memorandum discusses potential legal risks of acceleration, regulatory implications (such as OCC compliance requirements, loan-loss reserve classification by BRB's outside auditors at Tavrenis & Hatch CPAs LLP, or the Interagency Policy Statement on Prudent Commercial Real Estate Loan Workouts), or litigation exposure from the dispositio

3. BRB's Corporate Practice of Routing Disposition Decisions Through Legal. If BRB has a documented policy or practice of routing all significant credit disposition strategies through the General Counsel's office for legal review before implementation, this bolsters the argument that the CC to Linden was for legal purposes, not merely informational. Many banks maintain such policies, particularly for substandard or c

4. Subsequent Legal Consultation. If Margaret Linden responded to the Aaronson Memorandum with legal advice — for example, regarding the legal sufficiency of the acceleration provisions in the Triton Harbor credit documents, the enforceability of the proposed forbearance terms, litigation exposure arising from the Kappel personal guaranties, or the regulatory implications of the recommended exit — the communication t

1. The Primary Purpose Is a Business/Credit Decision. The strongest argument against privilege is that the Aaronson Memorandum is, on its face, a business document. The author — Philip Aaronson, Chief Credit Officer — is a business-side officer whose role is to make credit decisions, not to provide or seek legal advice. The primary recipient — Derek Whitmore, Head of SAG — is likewise a business-side officer responsi

2. The CC to Counsel Is Insufficient. Kestrel Voss & Huang will argue, consistent with the weight of authority discussed in Section III.C above, that the CC to Linden was merely informational — a courtesy copy to keep the General Counsel in the loop on a significant credit decision affecting one of the bank's troubled accounts — and does not transform the document into a privileged communication. Ted Huang will likel

3. No Legal Advice Was Requested or Rendered in the Document Itself. If the memorandum on its face does not request legal advice, pose legal questions, or contain legal analysis, the privilege claim is significantly weakened. Huang will argue that the document must be evaluated on its own terms, and that the absence of any express request for legal guidance or any legal content demonstrates that the communication was

4. The Document Is a "Mixed-Purpose" or "Dual-Purpose" Communication. Even if some legal aspects are present — for example, a passing reference to regulatory compliance or litigation risk — Triton Harbor will argue that the dominant purpose was business, and that under New York's primary purpose test, the document is not privileged. Under this framework, the mere presence of incidental or secondary legal content does

5. Crime-Fraud Exception. Although this is a more aggressive argument, and one that is unlikely to succeed on the current record, Triton Harbor could theoretically argue that the crime-fraud exception to the attorney-client privilege applies. The exception provides that the privilege does not protect communications made in furtherance of a crime or fraud. See In re Grand Jury Proceedings, 219 F.3d 175, 182 (2d Cir. 2

V. Factual Investigation Required In order to make a final determination regarding the viability of the privilege claim and to prepare for the anticipated motion to compel, the following factual investigation must be completed on an expedited basis, ideally before January 10, 2025 (five days before the privilege log deadline):

1. Interview Margaret Linden, SVP and General Counsel, BRB. This interview is the single most important investigative step. The following questions must be addressed: (a) Why was Linden copied on the Aaronson Memorandum? Was the CC made for the specific purpose of seeking her legal review and advice, or was it made as an informational courtesy to keep senior management, including the General Counsel, apprised of sign

2. Interview Philip Aaronson, EVP and Chief Credit Officer, BRB. Aaronson should be interviewed to determine: (a) Whether he intended to seek legal advice by copying Linden on the memorandum, or whether the CC was made for informational or governance purposes. (b) Whether the memorandum was discussed with Linden before or after its issuance — for example, whether Aaronson consulted with Linden about the legal risks o

3. Review the Full Communication Thread. We must review the complete email chain or communication thread surrounding the Aaronson Memorandum, including any responsive or advisory communications from Linden. If Linden sent a responding email, memorandum, or other written communication providing legal analysis, this communication is itself privileged and its existence supports the privilege claim over the underlying Aa

4. Review BRB's Internal Policies and Procedures. We should request and review BRB's Credit Policy Manual, SAG Operating Procedures, and any General Counsel's Office policies or directives regarding the role of in-house counsel in credit disposition decisions. Any provision requiring or contemplating legal review of disposition strategies for classified or substandard credits would materially strengthen the privilege

5. Determine Engagement History with Outside Counsel. We must determine whether BRB had engaged or consulted with Blakemore & Stern LLP or any other outside counsel regarding the Triton Harbor relationship as of August 22, 2023. As noted above, Blakemore & Stern served as BRB's original litigation counsel and filed the complaint on August 12, 2024, but it is unclear when the firm was first consulted. If BRB had alrea

VI. Privilege Log Entry The Aaronson Memorandum should be listed on BRB's initial privilege log, which is due for service on Kestrel Voss & Huang on January 15, 2025 pursuant to the Preliminary Conference Order dated November 14, 2024 (Justice Marchetti). The following entry is recommended: Drafting Notes Regarding the Privilege Log Description: The description should be crafted carefully to assert the legal purpose

VII. Risk of Motion to Compel and In Camera Review A. Anticipated Motion Practice Kestrel Voss & Huang will almost certainly challenge the privilege designation of the Aaronson Memorandum and move to compel its production. There is no realistic scenario in which opposing counsel fails to pursue this document. The memorandum is central to Triton Harbor's fraudulent inducement theory — it is the document Triton Harbor

VIII. Recommendations Based on the foregoing analysis, we recommend the following course of action: A. Assert Privilege on the January 15, 2025 Privilege Log BRB should include the Aaronson Memorandum on its initial privilege log with the carefully drafted description set forth in Section VI above, asserting both attorney-client privilege and work product as bases for withholding the document. BRB should not voluntar