Contract analysis

I. PURPOSE AND LEGAL OBLIGATION Calderwood & Harkness LLP has been retained by Belmont Ridge Bank NA ("BRB" or the "Bank") effective November 4, 2024, to represent BRB in all matters arising from or related to the above-captioned litigation, including (a) defense of BRB against the counterclaims filed by Triton Harbor Industries, LLC ("Triton Harbor" or "THI"), Marcus J. Kappel ("M. Kappel"), and Elaine D. Kappel ("E

II. BACKGROUND OF THE LITIGATION A. The Original Action On August 12, 2024, BRB filed the original complaint in this action (Index No. 654871/2024) in the Supreme Court of the State of New York, County of New York, Commercial Division, against Triton Harbor Industries, LLC, Marcus J. Kappel, and Elaine D. Kappel. The complaint seeks, among other relief: (i) enforcement of the Forbearance and Modification Agreement da

1. First Counterclaim — Fraudulent Inducement (CPLR and Common Law): The Counterclaim Plaintiffs allege that BRB, through its representatives, made material misrepresentations of fact and concealed material information with the intent to induce the Counterclaim Plaintiffs to enter into the Forbearance Agreement and the amended and new personal guaranties, and that the Counterclaim Plaintiffs justifiably relied upon s

2. Second Counterclaim — Negligent Misrepresentation: The Counterclaim Plaintiffs allege that BRB, through its representatives, carelessly and negligently made false statements of material fact regarding the Bank's intentions with respect to the ongoing lending relationship, upon which the Counterclaim Plaintiffs relied in executing the Forbearance Agreement and providing additional collateral and expanded guaranties

3. Third Counterclaim — Breach of the Implied Covenant of Good Faith and Fair Dealing: The Counterclaim Plaintiffs allege that BRB's conduct in extracting additional collateral and expanded guaranties while simultaneously harboring an undisclosed intention to accelerate the remaining indebtedness and refuse to extend additional credit constituted a breach of the implied covenant of good faith and fair dealing inheren

4. Fourth Counterclaim — Rescission: The Counterclaim Plaintiffs seek rescission of the Forbearance and Modification Agreement dated October 6, 2023, the amended unlimited Personal Guaranty of Marcus J. Kappel, and the new unlimited Personal Guaranty of Elaine D. Kappel, on the grounds that these instruments were procured through fraud and misrepresentation. The central factual allegations underlying all four counter

III. SCOPE OF PRESERVATION OBLIGATION A. General Categories of Documents and ESI to Be Preserved All documents and ESI, in any format, related to the lending relationship between BRB and Triton Harbor Industries, LLC must be preserved, including but not limited to the specific categories enumerated in Section III.B below. For purposes of this litigation hold, the term "documents" is used in its broadest sense and inc

1. Credit Origination and Facility Documents. The following documents relating to the origination and structure of the BRB-Triton Harbor credit facilities must be preserved: (a) The original Credit Agreement dated June 15, 2021, between Belmont Ridge Bank NA (as Lender) and Triton Harbor Industries, LLC (as Borrower), providing for Total Committed Facilities of $22,000,000, comprising a Term Loan A facility in the or

2. Credit Monitoring, Covenant Compliance, and Financial Reporting. All documents relating to the ongoing monitoring of the Triton Harbor credit, including but not limited to: (a) All borrower financial statements, including annual audited financial statements, quarterly unaudited financial statements, monthly management reports, and any interim financial information submitted by or on behalf of Triton Harbor to BRB

3. Credit Committee and Internal Approval Documents. All credit committee and internal approval documents relating to the Triton Harbor credit, including but not limited to: (a) All credit committee meeting minutes, presentations, memoranda, briefing materials, and approval records relating to the Triton Harbor credit facilities, from the initial credit approval in or around May-June 2021 through the present, includi

4. Special Assets Group Files. The complete Special Assets Group file for the Triton Harbor relationship is of central importance to this litigation and must be preserved in its entirety. This includes, without limitation: (a) All internal memoranda, strategy documents, workout plans, call reports, meeting notes, and analyses prepared by Derek Whitmore, Joanna Reeves, or any other SAG personnel in connection with the

5. Forbearance and Modification Agreement — All Related Documents. All documents relating to the Forbearance and Modification Agreement dated October 6, 2023, including but not limited to: (a) The fully executed Forbearance and Modification Agreement, together with all drafts, redlines, markup versions, negotiation versions, and term sheets that were exchanged or prepared during the negotiation of the agreement, whet

6. Communications with Triton Harbor, Marcus J. Kappel, and Elaine D. Kappel. All correspondence, emails, letters, facsimile transmissions, text messages, instant messages, voicemails, and any other communications between any BRB personnel (including officers, employees, agents, and any other representatives) and any representative of Triton Harbor Industries, LLC, Marcus J. Kappel, Elaine D. Kappel, or any person ac

7. Communications with Mercer Tidwell & Associates LLC. All correspondence and communications between any BRB personnel and Mercer Tidwell & Associates LLC (Raymond Mercer, Managing Director, 245 Park Avenue, 28th Floor, New York, NY 10167), Triton Harbor's pre-workout financial and restructuring advisor, must be preserved. This includes, without limitation: (a) Any engagement letters, non-disclosure agreements, or o

8. Collateral Appraisals and Valuations. All appraisals, valuations, and related materials must be preserved, including: (a) The June 2021 origination appraisal of the Long Island City terminal facility at 50-22 Borden Avenue, Long Island City, NY 11101, prepared by Ridgeline Appraisal Group, Inc. (312 Elm Street, Stamford, CT 06902), reflecting an appraised value of $18,700,000, together with all supporting document

9. Default, Acceleration, and Foreclosure Documents. All documents relating to the default, acceleration, and enforcement actions taken by BRB must be preserved, including: (a) The April 15, 2024 Notice of Default and Acceleration sent by BRB (or its counsel) to Triton Harbor and the Kappels, together with all drafts, internal approvals, and delivery confirmations. (b) All documents, memoranda, analyses, and communic

10. Communications with Prior Counsel — Blakemore & Stern LLP. All communications between BRB personnel and Blakemore & Stern LLP (David Blakemore, Esq., 120 Broadway, Suite 3500, New York, NY 10271), from the inception of the attorney-client relationship through the present, must be preserved. This includes, without limitation: (a) All pre-litigation advice, strategy memoranda, legal analyses, and correspondence rel

11. Regulatory and Audit-Related Documents. The following regulatory and audit-related documents must be preserved to the extent they bear on the Triton Harbor relationship or the BRB commercial lending portfolio: (a) Any reports of examination or supervisory communications from the Office of the Comptroller of the Currency ("OCC") that reference or relate to the Triton Harbor credit, the Special Assets Group portfol

12. D&O Insurance Documents. All documents relating to directors' and officers' liability insurance coverage must be preserved, including: (a) The current directors' and officers' liability insurance policy issued by Pinnacle Omnivrel Insurance Co. (Policy No. PF-DO-2023-08811), together with all endorsements, amendments, renewal documentation, applications, and underwriting correspondence. (b) All reservation-of-rig

13. Personal Devices, Notes, and Informal Communications. The preservation obligation extends to materials maintained outside of BRB's formal document management systems, including: (a) Any personal notes, handwritten notes, journals, notebooks, desk files, sticky notes, whiteboard photographs, or personal electronic records maintained by any BRB employee who had any involvement with the Triton Harbor relationship, t

IV. PERSONS SUBJECT TO THIS HOLD This litigation hold applies to the following BRB personnel, as well as their administrative assistants, executive assistants, support staff, and any other person who may have custody, control, or access to their files, ESI, or records:

1. Margaret Linden — Senior Vice President & General Counsel, Belmont Ridge Bank NA

2. Thomas Hargreaves — Vice President & Associate General Counsel, Belmont Ridge Bank NA

3. Derek Whitmore — Senior Vice President, Head of Special Assets Group, Belmont Ridge Bank NA

4. Joanna Reeves — Vice President, Special Assets Group, Belmont Ridge Bank NA

5. Philip Aaronson — Executive Vice President & Chief Credit Officer, Belmont Ridge Bank NA

6. Any other member of the Special Assets Group who worked on, contributed to, reviewed, or had access to the Triton Harbor file or any aspect of the Triton Harbor workout, forbearance, or enforcement

7. Any member of the Relationship Management team (or any predecessor group) who managed, serviced, or had responsibility for the Triton Harbor account at any time prior to the March 8, 2023 transfer to the Special Assets Group, including the original relationship manager and any portfolio manager or credit analyst assigned to the account

8. Any member of the Credit Review Committee (or any equivalent body) who participated in, voted on, or was present for any review, approval, or discussion of the Triton Harbor credit at any time from origination through the present

9. Any BRB employee in the Information Technology, Records Management, Compliance, or any other department who has custody, control, or access to Triton Harbor-related records, systems, databases, or backup media

10. Any BRB employee who communicated with Triton Harbor, the Kappels, Mercer Tidwell & Associates LLC, or any other third party regarding the Triton Harbor credit facility, the workout, the forbearance negotiations, or any related matter Margaret Linden and Thomas Hargreaves are requested to review the foregoing list carefully and to identify any additional custodians who may possess relevant materials that are not

V. PRESERVATION INSTRUCTIONS A. Immediate Steps Required The following steps must be taken immediately upon receipt of this memorandum. Time is of the essence, and any delay in implementing these measures could result in the irreversible loss of relevant evidence.

1. Suspend All Routine Document Destruction. All records retention schedules, auto-delete policies, programmed destruction routines, and any other mechanisms that could result in the deletion, destruction, or overwriting of potentially relevant materials must be suspended immediately with respect to the categories of documents and ESI described in this memorandum and with respect to all custodians identified herein.

2. Notify the IT Department. BRB's Information Technology department must be notified immediately to take the following specific actions: (a) Suspend automatic deletion of emails for all identified custodians listed in Section IV above, and ensure that email retention settings for those custodians are configured to retain all emails indefinitely until further notice; (b) Preserve all backup tapes, server snapshots, d

3. Preserve Personal Devices. Any BRB employee who used a personal device (including a personal mobile phone, tablet, laptop computer, home computer, or personal email account) for communications related to Triton Harbor, the Kappels, Mercer Tidwell, or any other matter within the scope of this hold must take immediate steps to preserve those devices and the relevant data residing thereon. This means: (a) Do not dele

4. Preserve Paper Files. All physical files relating to the Triton Harbor credit must be preserved in their current state and location. This includes, without limitation: (a) Original credit files and loan documents maintained by Credit Administration or Loan Operations; (b) SAG working files maintained in the SAG file room or in the offices of Derek Whitmore, Joanna Reeves, or any other SAG personnel; (c) Credit com

VI. DOCUMENT COLLECTION PROCESS Calderwood & Harkness will work directly with Margaret Linden and Thomas Hargreaves to implement a formal, defensible document collection process. The collection will be conducted in a manner designed to satisfy the requirements of the CPLR, the Commercial Division Rules, and prevailing standards for ESI preservation and collection. The collection process will include the following com

VII. PRIVILEGE CONSIDERATIONS Many documents responsive to this litigation hold may be subject to the attorney-client privilege, the attorney work product doctrine, the bank examination privilege, or other applicable protections. The preservation of these documents is required regardless of their privilege status — preservation does not constitute a waiver of any privilege. Calderwood & Harkness will conduct a thorou

VIII. COMPLIANCE ACKNOWLEDGMENT Each recipient of this memorandum is required to take the following steps:

1. Read this memorandum in its entirety. Each recipient is responsible for understanding the full scope of the preservation obligations described herein.

2. Confirm compliance by signing and returning the attached Acknowledgment Form to Calderwood & Harkness LLP, attention: Carlos Espinoza, 600 Lexington Avenue, 30th Floor, New York, NY 10022, within five (5) business days of receipt of this memorandum. The signed Acknowledgment Form may be returned by hand delivery, overnight courier, or scanned email to Carlos Espinoza.

3. Distribute this memorandum to any direct reports or subordinates who may have custody, control, or access to relevant materials, and ensure that those individuals also read the memorandum, understand their obligations, and sign and return the Acknowledgment Form within five (5) business days.

4. Contact Calderwood & Harkness immediately if you have any questions whatsoever regarding the scope of this hold, the categories of materials to be preserved, or your individual preservation obligations. Questions should be directed to the contacts listed in Section IX below. Compliance with this litigation hold is not optional. Any failure to preserve relevant materials — whether through intentional destruction, n

IX. CONTACTS For any questions regarding this litigation hold, the scope of preservation, or your individual obligations, please contact the following attorneys at Calderwood & Harkness LLP: Linda Osei, Partner Calderwood & Harkness LLP 600 Lexington Avenue, 30th Floor New York, NY 10022 Tel: (212) 554-8100 Email: losei@calderwoodharkness.com Carlos Espinoza, Associate Calderwood & Harkness LLP 600 Lexington Avenue,