Contract analysis

I. Background of Blakemore & Stern's Engagement Blakemore & Stern was originally retained by BRB in connection with the pre-litigation workout and enforcement of a Forbearance and Modification Agreement dated October 6, 2023 (the "Forbearance Agreement") between BRB and Triton Harbor Industries, LLC ("Triton Harbor" or the "Borrower"). Our engagement encompassed advising the Bank on the enforcement of its remedies fo

1. Fraudulent Inducement — alleging that BRB officers made material misrepresentations to the Borrower and the Kappels to induce their execution of the Forbearance Agreement and the amended and new personal guaranties;

2. Negligent Misrepresentation — alleging that BRB owed and breached a duty of care in providing information and assurances upon which the Borrower and the Kappels relied to their detriment;

3. Breach of the Implied Covenant of Good Faith and Fair Dealing — alleging that BRB acted in bad faith in its administration of the Forbearance Agreement and in the exercise of its remedies; and

4. Rescission of the Forbearance Agreement and Amended Guaranties — seeking to void the Forbearance Agreement dated October 6, 2023, the amended unlimited personal guaranty of Marcus J. Kappel, and the unlimited personal guaranty of Elaine D. Kappel on the grounds of fraud and duress. The Counterclaims seek compensatory damages of not less than $12,500,000, plus unspecified punitive damages, attorneys' fees, and such

II. Inventory of Materials Being Transferred The following is a comprehensive inventory of the materials that Blakemore & Stern is transferring to Calderwood & Harkness in connection with the transition of this matter. A detailed file inventory index is attached separately as an enclosure to this letter. A. Court Filings and Pleadings The following court filings and related documents are being transferred:

1. Summons and Verified Complaint, filed August 12, 2024, together with all exhibits annexed thereto, including: (a) the original Credit Agreement dated June 15, 2021; (b) the Forbearance and Modification Agreement dated October 6, 2023; (c) the original limited personal guaranty of Marcus J. Kappel in the amount of $4,500,000, dated June 15, 2021; (d) the amended unlimited personal guaranty of Marcus J. Kappel, date

2. Affidavit of Service evidencing proper service of the Summons and Complaint upon all Defendants.

3. Answer with Counterclaims, filed October 18, 2024, by Kestrel Voss & Huang LLP on behalf of all Defendants.

4. Request for Judicial Intervention filed in connection with the assignment of this matter to the Commercial Division.

5. All correspondence with the Clerk of the Court and the Commercial Division of the New York Supreme Court, New York County, including any communications relating to the assignment of the case to Justice Marchetti. B. Pre-Litigation Workout File The following materials relating to Blakemore & Stern's pre-litigation workout efforts on behalf of BRB are being transferred:

1. Complete correspondence file between Blakemore & Stern (on behalf of BRB) and Triton Harbor Industries, LLC, as well as Kestrel Voss & Huang LLP (on behalf of the Defendants), dating from approximately July 2024 through October 2024. This file encompasses demand letters, responses, and settlement-related communications exchanged during the period leading up to the filing of the Complaint and continuing through the

2. Notice of Default and Acceleration, dated April 15, 2024, issued by BRB to Triton Harbor Industries, LLC and the individual guarantors. This notice constitutes the formal acceleration of the credit facilities and is a predicate document for the enforcement action.

3. Foreclosure commencement documents related to the Long Island City terminal facility located at 50-22 Borden Avenue, Long Island City, NY 11101, filed on May 20, 2024. These documents relate to BRB's exercise of its remedial rights under the first mortgage encumbering the LIC terminal property.

4. Title insurance policy issued by Harborview Title & Escrow Co., Policy No. HT-NYC-2021-04553, covering the LIC terminal facility.

5. Correspondence with BRB's in-house legal team, specifically Margaret Linden, Senior Vice President and General Counsel, and Thomas Hargreaves, Vice President and Associate General Counsel, relating to strategy, enforcement decisions, and the preparation of the Complaint. This correspondence is privileged and should be treated accordingly. C. Credit and Loan Documentation The following credit and loan documentation

1. Original Credit Agreement, dated June 15, 2021, between Belmont Ridge Bank NA, as Lender, and Triton Harbor Industries, LLC, as Borrower, including all schedules and exhibits. The facility structure under the Credit Agreement is as follows: (a) Term Loan A: $14,000,000 principal amount, with an 84-month term maturing on June 15, 2028; and (b) Revolving Credit Facility: $8,000,000 committed amount, maturing on June

2. Interest rate documentation, reflecting the applicable pricing under the Credit Agreement: Term Loan A bears interest at SOFR plus 275 basis points, and the Revolving Credit Facility bears interest at SOFR plus 250 basis points. Rate adjustment and floor provisions are set forth in the Credit Agreement.

3. Financial covenant documentation, reflecting the following maintenance covenants applicable to the Borrower under the Credit Agreement: (a) Minimum Fixed Charge Coverage Ratio ("FCCR") of 1.20x; (b) Maximum Total Leverage Ratio of 3.50x; and (c) Minimum Liquidity of $2,000,000.

4. Security documents, including: (a) UCC-1 financing statements filed with respect to the Borrower's personal property and equipment; (b) First mortgage on the LIC terminal facility at 50-22 Borden Avenue, Long Island City, NY 11101; and (c) Collateral assignments of receivables and other intangible assets.

5. Original limited personal guaranty of Marcus J. Kappel, dated June 15, 2021, in the amount of $4,500,000.

6. Forbearance and Modification Agreement, dated October 6, 2023, including all exhibits thereto. We draw your particular attention to the following provisions, which we expect will be of central importance to the defense of the Counterclaims: (a) Section 9(c) — "No Commitment to Extend Credit" disclaimer, which states expressly that nothing in the Forbearance Agreement or in any communications between the parties sh

7. Amended unlimited personal guaranty of Marcus J. Kappel, dated October 6, 2023, replacing and superseding the original limited guaranty and expanding the scope of the guaranty obligation to an unlimited amount.

8. New unlimited personal guaranty of Elaine D. Kappel, dated October 6, 2023, providing an unlimited personal guaranty by the spouse of Marcus J. Kappel in connection with the Forbearance Agreement.

9. Assignment of additional collateral, executed in connection with the Forbearance Agreement, including: (a) Two equipment leases, with an aggregate appraised value of $2,300,000; and (b) A mortgage on the Kappel residence located at 14 Birchmont Lane, Westport, CT 06880, with an appraised value of $3,100,000.

10. Forbearance fee documentation, reflecting the payment by the Borrower of a forbearance fee in the amount of $87,500, paid at the signing of the Forbearance Agreement on October 6, 2023. D. Internal BRB Documents Received from Client The following internal BRB documents were provided to Blakemore & Stern by the client in connection with the preparation and prosecution of the Complaint:

1. Credit review committee materials relating to the March 8, 2023 downgrade of the Triton Harbor credit facilities from a "Pass" rating to "Substandard" (Risk Rating 7) and the concurrent transfer of the Triton Harbor account from BRB's Relationship Management division to the Special Assets Group ("SAG").

2. Borrower financial reporting, including: (a) Triton Harbor FY2022 audited financial statements, reflecting revenue of approximately $68 million and adjusted EBITDA of approximately $9.4 million; and (b) Triton Harbor Q1 2023 unaudited financial statements, reflecting trailing-twelve-month EBITDA of approximately $5.1 million, an FCCR of 0.87x (versus the minimum covenant of 1.20x), and a Total Leverage Ratio of 4.

3. Outstanding balance records as of March 8, 2023, reflecting: (a) Term Loan A outstanding principal of $11,375,000; and (b) Revolving Credit Facility drawn balance of $6,200,000 (fully drawn); (c) Total outstanding indebtedness of $17,575,000.

4. Ridgeline Appraisal Group, Inc. appraisal reports, consisting of: (a) Original collateral appraisal, dated June 2021, reflecting a total appraised value of $18,700,000; and (b) Updated collateral appraisal, dated September 2023, reflecting a total appraised value of $11,200,000 — representing a decline of $7,500,000, or approximately 40.1%, from the original appraisal.

5. Monthly forbearance payment records, reflecting six monthly payments of $125,000 each ($750,000 in total) made by Triton Harbor during the forbearance period.

6. Covenant compliance reporting through March 31, 2024, reflecting an FCCR of 0.94x. The Borrower's attempt to cure the FCCR covenant failed, as the minimum required ratio was 1.20x. Important Note Regarding Scope of Internal BRB Documents: Blakemore & Stern received certain internal BRB documents from the client for the limited purpose of preparing the Complaint and assessing the Bank's enforcement position. Howeve

1. Correspondence with Mercer Tidwell & Associates LLC (Raymond Mercer, Managing Director; 245 Park Avenue, 28th Floor, New York, NY 10167), which served as Triton Harbor's restructuring advisor during the pre-litigation period. This correspondence was received by Blakemore & Stern in connection with the workout negotiations and includes restructuring proposals and financial projections submitted on behalf of the Bor

2. Correspondence with Ridgeline Appraisal Group, Inc. (312 Elm Street, Stamford, CT 06902) regarding the September 2023 updated collateral appraisal and related valuation matters.

3. Correspondence with Tavrenis & Hatch CPAs LLP (1301 Avenue of the Americas, 42nd Floor, New York, NY 10019) regarding auditor inquiries relating to the classification of the Triton Harbor loan on BRB's books and related financial reporting considerations.

III. Key Issues and Observations for Successor Counsel While we are confident that Calderwood & Harkness will conduct its own independent assessment of the matter, we offer the following observations and strategic notes that we believe will be of assistance during the transition:

1. Focus of the Counterclaims — September 2023 Communications. The Counterclaims center on alleged oral and written representations made by BRB's Special Assets Group officers — specifically Derek Whitmore and Joanna Reeves — during September 2023, in the period immediately preceding the execution of the Forbearance Agreement on October 6, 2023. The Defendants allege that Whitmore and Reeves represented to Marcus Kap

2. Contractual Defenses — Section 9(c) and Section 12(a) of the Forbearance Agreement. As noted above, the Forbearance Agreement contains two provisions that we expect will be central to the defense: (a) Section 9(c) — the express disclaimer stating that nothing in the Forbearance Agreement or in any prior or contemporaneous communications constitutes a commitment by BRB to extend additional credit or to modify the t

3. Alleged "Structured Exit" Memorandum. Blakemore & Stern is aware that the Counterclaims reference the purported existence of an internal BRB memorandum that allegedly directed a "structured exit" from the Triton Harbor banking relationship. This document is referenced in the Counterclaims as evidence that BRB's true intention at the time of the Forbearance Agreement was to liquidate the relationship rather than to

4. D&O Insurance Coverage. A notice of potential claims has been submitted to Pinnacle Omnivrel Insurance Co. under the Bank's directors and officers liability insurance policy, Policy No. PF-DO-2023-08811. Coverage counsel for BRB in connection with this matter is Robert Alcott at Crane, Alcott & Shire LLP, located at 400 Park Avenue, 18th Floor, New York, NY 10022. Calderwood & Harkness should coordinate with Mr. A

5. Current discovery and Scheduling Status. No discovery has yet been served or responded to by either party. No depositions have been noticed, and no document demands or interrogatories are outstanding. The Preliminary Conference before Justice Marchetti is currently scheduled for December 6, 2024, at which time it is anticipated that the Court will issue a Preliminary Conference Order establishing a discovery sched

IV. Method and Timing of File Delivery The complete physical and electronic file maintained by Blakemore & Stern in connection with this matter will be delivered to Calderwood & Harkness via secure courier and encrypted electronic transfer to your offices at 600 Lexington Avenue, 30th Floor, New York, NY 10022, no later than November 12, 2024. The file comprises approximately the following: • Physical documents: Appr

V. Substitution of Counsel Blakemore & Stern hereby consents to the filing of a Notice of Substitution of Counsel substituting Calderwood & Harkness LLP as counsel of record for Belmont Ridge Bank NA in Belmont Ridge Bank NA v. Triton Harbor Industries, LLC, Marcus J. Kappel, and Elaine D. Kappel, Index No. 654871/2024. The Firm will execute any stipulation, consent form, or other document required by the Court in co

VI. Outstanding Billing and Administrative Matters Blakemore & Stern's final invoice for professional services rendered through November 8, 2024 will be submitted separately to Margaret Linden, Senior Vice President and General Counsel, at Belmont Ridge Bank NA. This letter does not address billing matters, which remain between the Firm and its client. We confirm that no trust account funds, escrow funds, or other cl

VII. Availability for Consultation I and the Blakemore & Stern team remain available to consult with you and your colleagues at Calderwood & Harkness during the transition period regarding any questions about the file, the history of the matter, the pre-litigation communications and negotiations, or any other aspect of our representation. We are committed to ensuring a seamless transition and to providing whatever as

1. File inventory index (attached separately)

2. Consent to Substitution of Counsel (executed by Blakemore & Stern LLP) Component | Amount Term Loan A — Outstanding Principal | $10,625,000 Revolving Credit Facility — Outstanding Principal | $6,200,000 Accrued and Unpaid Interest | $487,322 Late Fees and Default Interest | $143,890 Total Accelerated Amount | $17,456,212