1045-00004 · Client 1045 · Discovery/Depositions

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PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP 600 Lexington Avenue, 30th Floor New York, NY 10022

March 5, 2025

TO: Linda Osei, Responsible Partner

FROM: Carlos Espinoza, Lead Associate

RE: Deposition Outline — Cross-Examination of Marcus J. Kappel

MATTER: Belmont Ridge Bank NA v. Triton Harbor Industries, LLC et al.

COURT: New York Supreme Court, New York County, Commercial Division

INDEX NO.: 654871/2024

ASSIGNED JUSTICE: Hon. Althea Marchetti

C&H MATTER NO.: 1022-00005

DEPOSITION DATE: March 11, 2025

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I. PURPOSE AND STRATEGIC OBJECTIVES

A. Overview

This memorandum sets forth the detailed deposition outline for the cross-examination of Marcus J. Kappel, founder, Chief Executive Officer, and 72% equity member of Triton Harbor Industries, LLC ("Triton Harbor"), a Delaware limited liability company (DE File No. 5217839) with its principal place of business at 47-15 Austell Street, Suite 200, Long Island City, New York 11101. Kappel also serves as a personal guarantor under both the original Limited Personal Guaranty dated June 15, 2021 and the Amended Unlimited Personal Guaranty executed on October 6, 2023 in connection with the Forbearance and Modification Agreement. Additionally, Kappel is a named counterclaim plaintiff, having asserted affirmative claims against Belmont Ridge Bank NA ("BRB" or the "Bank") through counsel at Kestrel Voss & Huang LLP.

Kappel is the principal fact witness for the counterclaim defendants' theories of fraudulent inducement, negligent misrepresentation, breach of the implied covenant of good faith and fair dealing, and rescission. His testimony is expected to form the evidentiary foundation for virtually all of the counterclaim allegations, including the critical contention that BRB's Special Assets Group personnel — specifically, Derek Whitmore (SVP, Head of the Special Assets Group) and Joanna Reeves (VP, Special Assets Group) — made oral representations at the September 12, 2023 meeting and in subsequent communications that induced Kappel and Triton Harbor to enter into the Forbearance Agreement on terms that were more onerous than they would otherwise have accepted.

Pursuant to the Preliminary Conference Order entered by Justice Marchetti on December 6, 2024, this deposition is to be taken at the offices of Calderwood & Harkness LLP at the address above, or at such other mutually agreed location as the parties may designate. The deposition is noticed for March 11, 2025, beginning at 9:30 a.m. Eastern Time.

B. Primary Objectives

The cross-examination of Kappel should be organized around the following five primary strategic objectives, each of which is directed at building the factual record necessary for BRB's anticipated motion for summary judgment (due September 15, 2025) on the counterclaims:

1. Undermine justifiable reliance. The centerpiece of Kappel's fraudulent inducement and negligent misrepresentation counterclaims is the assertion that he justifiably relied upon alleged oral statements by Whitmore regarding BRB's purported willingness to extend a new $6.5 million revolving credit facility. Our primary objective is to establish that Kappel — as a sophisticated 30-year industry veteran who was represented by a professional restructuring advisory firm (Mercer Tidwell & Associates LLC, retained in mid-2023, with engagement led by Managing Director Raymond Mercer) and who had continuous access to experienced legal counsel — could not have justifiably relied on alleged oral statements that directly contradicted the express written terms of the Forbearance and Modification Agreement dated October 6, 2023. Under New York law, a sophisticated party represented by counsel who signs a contract containing an explicit disclaimer and integration clause cannot later claim justifiable reliance on prior oral representations that conflict with the written agreement. See Danann Realty Corp. v. Harris, 5 N.Y.2d 317 (1959); Basis Yield Alpha Fund (Master) v. Dunmore Group, 115 A.D.3d 128 (1st Dep't 2014).

2. Establish actual knowledge of contractual disclaimers. We must obtain clear, unequivocal admissions that Kappel read, understood, and voluntarily signed the Forbearance Agreement, with particular attention to the "No Commitment to Extend Credit" disclaimer set forth in Section 9(c) and the integration/merger clause set forth in Section 12(a). These admissions are essential to our argument that Kappel's reliance was unreasonable as a matter of law.

3. Demonstrate independent business judgment. We need to elicit testimony establishing that Kappel's decision to enter the Forbearance Agreement was driven primarily by Triton Harbor's deteriorating financial condition and Kappel's need to avoid the immediate acceleration of approximately $17.575 million in outstanding debt — not by any alleged promise of future credit. If Kappel would have signed the Forbearance Agreement regardless of the alleged oral representations, the causal link between the alleged misrepresentations and Kappel's damages breaks down.

4. Undermine scienter allegations. The fraudulent inducement counterclaim requires proof that BRB's SAG personnel made representations they knew to be false or with reckless disregard for their truth or falsity. We should elicit testimony showing that Kappel understood the function and mandate of a bank's Special Assets Group and the inherently contingent, non-binding nature of any workout discussions that occur in the SAG context. This testimony will support the argument that Whitmore's alleged statements, even taken at face value, were aspirational expressions of optimism — not knowing misrepresentations of present fact.

5. Lock in testimony. We must pin Kappel to specific factual claims regarding the September 12, 2023 meeting and other alleged misrepresentations, as well as to his account of the circumstances surrounding the execution of the Forbearance Agreement. Narrowing the factual claims at deposition will limit the counterclaim defendants' ability to shift theories at summary judgment and trial.

C. Key Admissions Sought

The following specific admissions should be pursued systematically throughout the deposition. Not all will be obtained through direct concession; some will be established through the cumulative weight of surrounding testimony. The examiner should return to these themes repeatedly, approaching each from multiple angles:

• Kappel reviewed the Forbearance Agreement in its entirety before signing it on October 6, 2023.

• Kappel understood that Section 9(c) of the Forbearance Agreement stated, in clear and unambiguous terms, that BRB had no obligation to extend new credit, modify existing facilities, or renew any credit facility.

• Kappel understood that Section 12(a) of the Forbearance Agreement provided that the agreement constituted the entire understanding between the parties and superseded all prior negotiations, representations, and agreements, whether oral or written.

• Kappel retained Mercer Tidwell & Associates LLC as his financial and restructuring advisor before the Forbearance Agreement was executed, and Mercer Tidwell was actively involved in reviewing and advising on the terms of the Forbearance Agreement.

• Kappel understood that, at the time he entered the Forbearance Agreement, Triton Harbor was in material default of multiple financial covenants under the Credit Agreement dated June 15, 2021, and that BRB had the contractual right to accelerate the entire outstanding indebtedness and exercise all remedies.

• Kappel's primary motivation for signing the Forbearance Agreement was to avoid immediate acceleration of the outstanding debt and potential liquidation of Triton Harbor's assets.

• No written commitment, term sheet, commitment letter, or other written instrument evidencing a binding obligation to extend a new $6.5 million revolving credit facility was ever issued by BRB to Kappel, Triton Harbor, or any of their advisors.

• Kappel has over 30 years of experience in the marine industrial services industry and has, over the course of his career, personally negotiated multiple credit facilities, loan modifications, and other complex commercial financing arrangements.

II. PRELIMINARY / BACKGROUND EXAMINATION

A. Personal Background and Business Experience

Begin the examination by establishing Kappel's personal background and extensive business experience. This section serves the dual purpose of building the record of Kappel's sophistication and establishing rapport before moving into more adversarial territory. Use a conversational tone but maintain discipline with closed-ended questions.

Exhibit A-1: Kappel's Westmark Health IT profile or curriculum vitae (if produced in discovery pursuant to the document requests served on Triton Harbor and the individual counterclaim plaintiffs).

Establish the following foundational facts:

• Confirm the witness's full legal name: Marcus J. Kappel.

• Confirm his age: 58 years old.

• Confirm his current residential address: 14 Birchmont Lane, Westport, Connecticut 06880.

• Confirm that he is the founder, Chief Executive Officer, and 72% equity member of Triton Harbor Industries, LLC, a Delaware limited liability company organized in 2009 (DE File No. 5217839), with its principal place of business at 47-15 Austell Street, Suite 200, Long Island City, New York 11101.

• Confirm that his spouse, Elaine D. Kappel, serves as Chief Financial Officer and holds the remaining 28% equity membership interest in Triton Harbor.

• Confirm Kappel's prior career history before founding Triton Harbor. Specifically, establish that Kappel served as a senior executive at Atlantic Basin Marine Corp. before departing to found Triton Harbor in 2009. Explore the nature and duration of his tenure at Atlantic Basin Marine Corp., including his title, responsibilities, and the approximate size of the company during his employment.

• Establish that Kappel has over 30 years of experience in the marine industrial services business, encompassing marine terminal logistics, vessel maintenance and repair, and harbor infrastructure construction and management. Walk through the timeline of his career to establish the depth and breadth of his industry experience.

• Explore in detail the prior credit facilities that Kappel has negotiated over the course of his career. At Atlantic Basin Marine Corp., did Kappel participate in negotiating credit facilities? What was the approximate size of those facilities? Who were the lending institutions? Did Kappel negotiate directly with bank officers? Since founding Triton Harbor, what credit facilities has Kappel negotiated, in addition to the BRB Credit Agreement? Were there predecessor facilities before the BRB relationship?

• Establish whether Kappel has previously negotiated forbearance agreements, workout arrangements, or loan modifications at any point during his 30-year career. If so, explore the circumstances, including the identity of the lending institution, the nature of the default, and the terms of the forbearance or modification. This line of questioning is designed to demonstrate that Kappel was not a neophyte in the forbearance context and understood the dynamics of bank workout negotiations.

• Establish Kappel's prior experience with personal guaranties. Has Kappel executed personal guaranties in connection with credit facilities other than the BRB facility? If so, how many times? Has he previously been asked to expand or modify a personal guaranty in the context of a workout or forbearance?

B. Educational and Professional Sophistication

Continue building the sophistication record by establishing Kappel's educational background and his familiarity with commercial lending concepts:

• Confirm Kappel's educational background, including his undergraduate institution and degree, any graduate degrees or professional certifications, and any continuing education or executive programs he has completed.

• Establish Kappel's experience reading and understanding commercial loan documents. Has he read credit agreements, promissory notes, security agreements, guaranties, and related documents in the ordinary course of his business career? How many such documents has he reviewed over the course of his career? Does he consider himself familiar with the typical structure and provisions of commercial loan agreements?

• Establish Kappel's familiarity with financial covenants commonly found in commercial credit facilities, including the Fixed Charge Coverage Ratio ("FCCR"), leverage ratios (including the Total Leverage Ratio), and minimum liquidity covenants. Confirm that Kappel understands how these financial metrics are calculated and the consequences that flow from a breach of financial covenants.

• Establish Kappel's experience working with external financial advisors and legal counsel in connection with business transactions. Has he previously retained financial advisors to assist with credit facility negotiations? Has he previously retained attorneys to review and negotiate commercial loan documents? How frequently has he engaged such advisors over the course of his career?

These questions should be asked in a matter-of-fact tone, without telegraphing the strategic purpose. Kappel is likely to be forthcoming about his experience, as he may view it as evidence of his credibility and competence. The sophistication record will be turned against him in later sections of the deposition and in dispositive briefing.

III. THE ORIGINAL CREDIT FACILITY

A. Origination and Terms

This section establishes the foundation of the lending relationship between BRB and Triton Harbor, confirms Kappel's familiarity with the underlying credit documents, and sets the stage for the financial deterioration that led to the forbearance.

Exhibit B-1: Credit Agreement dated June 15, 2021 between Belmont Ridge Bank NA, as lender, and Triton Harbor Industries, LLC, as borrower (the "Credit Agreement").

Confirm Kappel's role in negotiating the original Credit Agreement. Was he the primary negotiating contact on behalf of Triton Harbor? Did he negotiate directly with BRB's relationship management officers? Over what period of time were the negotiations conducted?

Establish the structure and material terms of the Credit Agreement:

• Facility Structure: The Credit Agreement provided for two facilities: (a) Term Loan A in the original principal amount of $14,000,000, with an 84-month term maturing on June 15, 2028, and quarterly amortization payments; and (b) a Revolving Credit Facility with a maximum commitment of $8,000,000, maturing on June 15, 2026. The total committed facilities under the Credit Agreement were $22,000,000.

• Interest Rates: Term Loan A bore interest at SOFR plus 275 basis points. The Revolving Credit Facility bore interest at SOFR plus 250 basis points.

• Collateral: The Credit Agreement was secured by a first-priority lien on substantially all assets of Triton Harbor, including marine terminal equipment, accounts receivable, inventory, and general intangibles, together with a first mortgage on the Long Island City terminal facility located at 50-22 Borden Avenue, Long Island City, New York 11101.

• Original Collateral Valuation: At origination, the collateral package was appraised by Ridgeline Appraisal Group, Inc. in June 2021 at a total value of $18,700,000.

Confirm that Kappel reviewed the Credit Agreement before signing it. Confirm that he read the document in its entirety, or identify which portions he read. Confirm that he was represented by legal counsel during the negotiation of the original Credit Agreement, and identify the attorney or law firm that represented Triton Harbor in that transaction.

B. Original Personal Guaranty

Exhibit B-2: Limited Personal Guaranty dated June 15, 2021, executed by Marcus J. Kappel in favor of Belmont Ridge Bank NA.

Confirm the following:

• Marcus J. Kappel executed a limited personal guaranty in connection with the original Credit Agreement, dated June 15, 2021.

• The guaranty was capped at $4,500,000, meaning Kappel's personal exposure under the guaranty was limited to that amount plus applicable costs, fees, and expenses.

• Confirm that Kappel understood the terms and financial exposure of the guaranty at the time of origination. Specifically, confirm he understood that, in the event of a default by Triton Harbor, BRB could pursue Kappel personally for amounts up to the guaranty cap.

• Confirm that Kappel had the opportunity to consult with legal counsel before executing the guaranty, and that he did, in fact, consult with counsel regarding the terms and implications of the guaranty.

C. Financial Covenants

Exhibit B-3: Relevant financial covenant sections of the Credit Agreement.

Establish the specific financial covenants contained in the Credit Agreement:

• Minimum Fixed Charge Coverage Ratio: 1.20x.

• Maximum Total Leverage Ratio: 3.50x.

• Minimum Liquidity: $2,000,000.

Confirm that Kappel understood these covenants and the consequences of breach at the time the Credit Agreement was executed. Confirm that he understood that a breach of any of these covenants could trigger an event of default under the Credit Agreement.

Confirm that, in his capacity as CEO, Kappel regularly reviewed Triton Harbor's compliance with these financial covenants. How frequently did he review the company's financial performance against the covenant thresholds? Did he receive regular reports from Elaine Kappel (CFO) or from the company's accountants regarding covenant compliance? Was covenant compliance a standing agenda item in management meetings?

IV. FINANCIAL DETERIORATION AND COVENANT DEFAULTS

A. Revenue Decline and Contract Losses

This section establishes the severity of Triton Harbor's financial deterioration, which is critical to demonstrating that Kappel's primary motivation for signing the Forbearance Agreement was to avoid acceleration and liquidation — not reliance on alleged oral promises of future credit.

Establish the following facts regarding Triton Harbor's financial performance:

• For the fiscal year ended December 31, 2022 ("FY2022"), Triton Harbor generated approximately $68,000,000 in revenue and approximately $9,400,000 in adjusted EBITDA.

• By the first quarter of 2023 ("Q1 2023"), Triton Harbor's trailing-twelve-month adjusted EBITDA had fallen to approximately $5,100,000, representing a decline of approximately 45.7% from the FY2022 figure. This was a dramatic and rapid deterioration in the company's financial performance.

• The decline was driven in significant part by the loss of two major contracts: (a) the Port of Bridgehaven municipal contract, which had generated estimated annual revenue of approximately $12,000,000, and (b) the Newark Bay maintenance contract, which had generated estimated annual revenue of approximately $7,500,000. Explore the timing and circumstances of each contract loss. When was Kappel first informed that these contracts were at risk? When were the contracts formally lost or not renewed? What were the underlying reasons — competitive bidding, performance issues, budget cuts, or other factors?

• As a result of these contract losses, Triton Harbor's annualized revenue run-rate had dropped to approximately $48,000,000 by mid-2023, down from $68,000,000 in FY2022.

Confirm that Kappel was aware of this financial deterioration in real time, in his capacity as CEO. He did not learn of the revenue decline after the fact; he was watching it unfold as the chief executive of the company. Confirm that Kappel understood the impact that the revenue decline and EBITDA deterioration would have on the company's compliance with its financial covenants under the BRB Credit Agreement.

B. Covenant Breaches

Exhibit C-1: Q1 2023 financial reporting delivered by Triton Harbor to BRB.

Establish the specific covenant breaches:

• As of the Q1 2023 reporting period, Triton Harbor's Fixed Charge Coverage Ratio had fallen to 0.87x. The covenant minimum was 1.20x. This constituted a material breach of the FCCR covenant.

• As of the same period, Triton Harbor's Total Leverage Ratio had risen to 4.92x. The covenant maximum was 3.50x. This constituted a material breach of the leverage covenant.

Confirm that Kappel was aware that Triton Harbor was in material default of the Credit Agreement as a result of these covenant breaches. Confirm that Kappel understood that BRB had the contractual right, upon the occurrence of these events of default, to accelerate the entire outstanding indebtedness under the Credit Agreement and to exercise all remedies available to it as a secured creditor, including foreclosure on the collateral and pursuit of the personal guaranty.

C. Credit Downgrade and Transfer to SAG

Exhibit C-2: Notice from BRB regarding transfer of the Triton Harbor account to the Special Assets Group (if such notice was sent externally to the borrower; if no external notice was sent, explore Kappel's awareness of the transfer through other means).

Establish the following:

• On or about March 8, 2023, BRB's internal credit review committee downgraded the Triton Harbor credit from a "Pass" rating to a "Substandard" rating (Risk Rating 7), reflecting the deterioration in the borrower's financial condition and the covenant defaults.

• As a consequence of the downgrade, the Triton Harbor account was transferred from BRB's Relationship Management division to the Special Assets Group ("SAG"), which is the division of the Bank responsible for managing distressed, criticized, and classified credits.

• At the time of the transfer, the outstanding balances under the Credit Agreement were as follows: Term Loan A: $11,375,000; Revolving Credit Facility: $6,200,000; total outstanding indebtedness: $17,575,000.

Establish Kappel's awareness that the account had been transferred to BRB's workout/special assets division. When did Kappel first learn that the account was being managed by SAG? How did he learn this — was he notified by BRB, or did he learn through other channels? Confirm that Kappel understood the function and mandate of a bank's Special Assets Group — that is, its purpose is to manage distressed credits, protect the bank's position, and work toward resolution of problem loans, which may include workout, restructuring, or orderly exit from the relationship.

Explore whether Kappel had any prior experience dealing with a bank's special assets or workout group. In his prior career at Atlantic Basin Marine Corp. or in connection with any other business venture, had Kappel ever had a credit relationship transferred to a bank's workout division? If so, what was his understanding of the dynamic of those relationships?

D. Introduction to SAG Personnel

Confirm that Kappel understood that, following the account's transfer to SAG, Derek Whitmore (Senior Vice President, Head of the Special Assets Group) and Joanna Reeves (Vice President, Special Assets Group) were assigned to manage the BRB-Triton Harbor relationship on behalf of the Bank.

Confirm the nature and frequency of communications between Kappel and Whitmore and Reeves from approximately March 2023 forward. How often did Kappel speak with Whitmore and Reeves — weekly, biweekly, monthly? Were these communications primarily by telephone, email, or in-person meetings? Were the communications typically between Kappel alone and the BRB SAG personnel, or were others typically present or copied (e.g., Mercer Tidwell, Elaine Kappel, counsel)?

V. RETENTION OF MERCER TIDWELL & ASSOCIATES LLC

A. Engagement

Exhibit D-1: Mercer Tidwell & Associates LLC engagement letter (produced in discovery).

Establish the following facts regarding the retention of a professional restructuring advisory firm:

• Triton Harbor retained Mercer Tidwell & Associates LLC ("Mercer Tidwell"), a restructuring advisory firm with offices at 245 Park Avenue, 28th Floor, New York, New York 10167, in mid-2023. Confirm the exact date of the engagement — when was the engagement letter signed? When did Mercer Tidwell commence work on the engagement?

• The engagement was led by Managing Director Raymond Mercer, who served as the senior advisor to Triton Harbor throughout the restructuring process.

• Establish the scope of Mercer Tidwell's engagement: was Mercer Tidwell retained to advise Triton Harbor on restructuring options, negotiate with BRB on Triton Harbor's behalf, evaluate the company's financial condition, develop financial projections, and explore alternatives to the forbearance? Confirm each element of the engagement scope.

• Was the decision to retain Mercer Tidwell made by Kappel alone, or was it a joint decision with Elaine Kappel and/or the company's board or management team? Was the decision to retain Mercer Tidwell made at the suggestion or requirement of BRB, or was it Kappel's independent decision?

B. Advisory Role During Workout Negotiations

Confirm that Mercer Tidwell was actively involved in the negotiations with BRB's Special Assets Group from mid-2023 through the execution of the Forbearance Agreement on October 6, 2023. Explore the scope and intensity of Mercer Tidwell's involvement:

• Did Mercer Tidwell participate in meetings or calls with Whitmore and Reeves? If so, how frequently and on what dates?

• Confirm that Mercer Tidwell reviewed the terms proposed by BRB during the workout negotiations, including the forbearance structure, the additional collateral requirements, and the proposed amendments to the personal guaranties.

• Confirm that Mercer Tidwell provided Kappel with independent financial analysis and advice regarding the terms of the Forbearance Agreement. What was the nature of that advice? Did Mercer Tidwell provide a written analysis or recommendation?

• Did Mercer Tidwell advise Kappel on the likelihood of obtaining new credit from BRB? If so, what was that advice? Did Mercer Tidwell express any view on whether BRB would extend a new revolving facility to Triton Harbor?

• Did Mercer Tidwell advise Kappel on alternative courses of action, including but not limited to (a) refinancing the BRB debt with another lender, (b) filing for protection under Chapter 11 of the Bankruptcy Code, (c) negotiating a sale of the business or its assets, or (d) any other strategic alternative? If so, what alternatives were discussed and what was Mercer Tidwell's assessment of the feasibility of each?

• This is a critical line of questioning: Did Kappel disclose to Mercer Tidwell the alleged oral representations by Whitmore at the September 12, 2023 meeting regarding a new $6.5 million revolving facility? If yes, what was Mercer Tidwell's assessment of the likelihood that BRB would, in fact, extend new credit? Did Mercer Tidwell advise Kappel that the alleged oral statements constituted a binding commitment? Did Mercer Tidwell express any concern about relying on oral representations that were not reflected in the written Forbearance Agreement?

• If Kappel did not disclose the alleged oral representations to Mercer Tidwell, explore why not. If Kappel believed he had received a significant commitment from BRB regarding future credit, why would he not share that information with his restructuring advisor?

• Confirm whether Mercer Tidwell's engagement letter or other communications between Mercer Tidwell and Triton Harbor were shared with BRB during the workout process.

C. Kappel's Access to Independent Advice

This subsection consolidates the theme of Kappel's access to multiple sources of independent, professional advice:

• Confirm that, in addition to Mercer Tidwell, Kappel also had access to legal counsel during the forbearance negotiations. Identify the attorney or attorneys who advised Kappel and Triton Harbor on the Forbearance Agreement. What law firm was retained? Was it the same firm that had represented Triton Harbor in connection with the original Credit Agreement, or a different firm?

• Confirm that Kappel did not rely solely on representations from BRB in deciding to enter into the Forbearance Agreement. He consulted his own financial advisor (Mercer Tidwell/Raymond Mercer), his own legal counsel, his wife and co-owner Elaine Kappel (who is also the company's CFO), and he drew upon his own 30-plus years of industry experience and business judgment.

• Establish that Kappel had the opportunity to consult with each of these sources of advice before signing the Forbearance Agreement, and that he, in fact, availed himself of that opportunity.

VI. THE SEPTEMBER 12, 2023 MEETING — ALLEGED MISREPRESENTATIONS

This section is the heart of the deposition. The September 12, 2023 meeting is the factual predicate for the fraudulent inducement and negligent misrepresentation counterclaims. Our objective is to pin Kappel to the specifics of his account, highlight the qualified and aspirational nature of the alleged statements, and establish that Kappel took no steps to memorialize the alleged commitments or insist that they be included in the written agreement.

A. Attendees and Setting

Exhibit E-1: Any contemporaneous notes, calendar entries, emails, or memoranda regarding the September 12, 2023 meeting (whether produced by BRB or Triton Harbor in discovery).

Establish the basic facts about the meeting:

• The meeting took place at BRB's offices located at 1200 Avenue of the Americas, 38th Floor, New York, New York 10036.

• Confirm the attendees: Derek Whitmore (SVP, Head of SAG), Joanna Reeves (VP, SAG), Marcus J. Kappel, and Elaine D. Kappel.

• Were any attorneys present at the meeting — either BRB's counsel or Kappel's counsel? If not, was there a deliberate decision not to include counsel?

• Was Raymond Mercer or anyone from Mercer Tidwell & Associates LLC present at the meeting? If not, why not? If Mercer Tidwell was actively advising Triton Harbor in the workout negotiations, why was the restructuring advisor not included in what Kappel contends was a meeting at which significant commitments were made?

• Who requested the meeting? Was it Kappel's request, BRB's request, or a mutually agreed-upon meeting?

• How long did the meeting last? What was the approximate duration?

• Was there a written agenda prepared in advance of the meeting? If so, by whom, and what topics were included on the agenda?

B. Alleged Oral Representations

This is the critical section. Pin Kappel to the specific representations he alleges Derek Whitmore made at the September 12, 2023 meeting. The objective is to (a) fix Kappel's account of the alleged statements, (b) establish that the statements, even on Kappel's own account, were qualified and aspirational rather than definitive commitments, and (c) demonstrate that Kappel took no contemporaneous steps to memorialize or formalize the alleged commitments.

Kappel alleges, in the Answer with Counterclaims, that Whitmore made the following representations at the September 12, 2023 meeting:

(i) BRB was "committed to the long-term relationship" with Triton Harbor;

(ii) If Triton Harbor successfully completed the forbearance milestones, BRB would "seriously consider" a new $6.5 million revolving credit facility; and

(iii) The additional collateral that was being required under the proposed forbearance was "a formality to satisfy regulators."

For each of these three alleged statements, pursue the following detailed line of questioning:

• Ask Kappel to provide, to the best of his recollection, the exact words used by Whitmore. Not a paraphrase or summary — the actual words. If Kappel cannot recall the exact words, ask him to explain what aspects of the statement he is recounting from memory and what aspects are reconstructed or inferred.

• Ask for the context in which each statement was made. What was being discussed immediately before the statement? Was the statement made in the context of a discussion about the forbearance terms, or at some other point in the meeting — for example, during introductory remarks, during a discussion of Triton Harbor's business prospects, or during a casual aside?

• Who else was present when each statement was made? Were all four attendees (Whitmore, Reeves, Marcus Kappel, Elaine Kappel) present in the room, or had anyone stepped out?

• Did Kappel take notes at any point during the meeting? If so, do those notes reference the alleged statements? If not, why not — given the significance that Kappel now attributes to these statements?

• Did Kappel memorialize the alleged statements in writing after the meeting? Did he send an email to Mercer Tidwell recounting what Whitmore had said? Did he send an email or text message to Elaine Kappel? Did he send a communication to his attorney? If he did memorialize the statements, produce the document. If he did not, explore why not.

• Did Kappel, at any point before or during the negotiation of the Forbearance Agreement, ask Whitmore or Reeves to include these alleged representations in writing in the Forbearance Agreement? If not, why not?

• Did Kappel share these alleged statements with Raymond Mercer at Mercer Tidwell? If so, when and how? What was Mercer's response or reaction?

• Did Mercer Tidwell or Kappel's attorney subsequently ask BRB to put these alleged commitments in writing? If not, why not?

C. "Seriously Consider" vs. Binding Commitment

Drill into the precise language that Kappel attributes to Whitmore. This is perhaps the single most important line of questioning in the entire deposition.

• Establish that Kappel's own characterization of the alleged statement — as reflected in the Answer with Counterclaims — is that Whitmore said BRB would "seriously consider" a new $6.5 million revolving facility. Confirm that this is Kappel's best recollection of the statement.

• Explore the distinction between expressing a willingness to consider a future action and making a binding commitment to take that action. Does Kappel understand the difference? In his 30-plus years of business experience, has Kappel ever told a business counterparty that he would "seriously consider" a proposal, without intending to bind himself to the proposal?

• Did Kappel understand, based on his experience in the industry and in prior credit relationships, that a bank's consideration of a new credit facility is subject to internal credit approval processes, credit committee review, and underwriting standards? Confirm that Kappel knew a bank officer's expression of willingness to "consider" new credit does not constitute approval or commitment.

• Did Kappel understand that Derek Whitmore, as SVP and Head of the Special Assets Group, did not have unilateral authority to commit BRB to new credit extensions? Did Kappel know or believe that new credit decisions would need to be approved by BRB's credit committee or other senior management?

D. "Formality to Satisfy Regulators"

Explore the alleged statement regarding additional collateral:

• What was Kappel's understanding of bank regulatory requirements? Did Kappel know that BRB, as a nationally chartered bank supervised by the Office of the Comptroller of the Currency (OCC Charter No. 14-00927), is subject to regulatory oversight, including requirements relating to the classification and management of problem credits?

• Did Kappel believe that being asked to pledge additional collateral to a regulated bank was unusual or unexpected in the context of a forbearance? In his 30-plus years of experience, had Kappel previously been asked to provide additional collateral in connection with a workout, forbearance, or loan modification? If so, describe the circumstances.

• Regardless of whether Whitmore characterized the additional collateral as "a formality," did the substance of the collateral pledge change? Kappel still pledged his personal residence and the equipment leases. Whether the pledge was described as a "formality" or as a critical risk mitigation measure, the legal effect was the same. Confirm that Kappel understood he was granting BRB a lien on his personal residence at 14 Birchmont Lane.

VII. THE SEPTEMBER 18, 2023 REEVES EMAIL

A. The Email

Exhibit F-1: Email from Joanna Reeves to Marcus Kappel dated September 18, 2023.

This email is one of the key documents cited in the counterclaims as evidence of BRB's alleged representations regarding future credit. The email contains the following language: "We are optimistic about a path forward and believe this forbearance sets the stage for a renewed credit relationship."

Pursue the following:

• Confirm that Kappel received this email and read it. When did he first read it — the day it was sent, or at some later time?

• Ask Kappel to explain, in his own words, what he understood the phrase "optimistic about a path forward" to mean. Did he interpret this as a binding commitment to extend new credit? Did he interpret it as a general expression of positive sentiment in the context of ongoing workout negotiations? Did he understand it to have a specific financial meaning?

• Ask Kappel to explain what he understood the phrase "sets the stage for a renewed credit relationship" to mean. Did "sets the stage for" connote a definitive commitment, or did it suggest a precondition — that is, successful completion of the forbearance might lead to future discussions about credit?

• Did Kappel interpret this email as a binding commitment by BRB to extend new credit to Triton Harbor? If so, on what terms — did the email specify the amount, interest rate, maturity, collateral requirements, or any other term of the alleged new facility?

• Did the email contain any specific terms (amount, rate, maturity, conditions) of any proposed new credit facility? Confirm that it did not.

• Did Kappel respond to this email? If so, what did he say? If he responded, produce the response. Did Kappel write back expressing his understanding that BRB was committed to new credit, or did his response address other matters?

• Did Kappel forward this email to Raymond Mercer at Mercer Tidwell, to his attorney, or to Elaine Kappel? If so, what did Kappel say in the forwarding email? Did he characterize Reeves's email as a commitment, or as something else?

B. Context

Establish the proper context for interpreting this email:

• This email was sent on September 18, 2023 — six days after the September 12, 2023 meeting and eighteen days before the execution of the Forbearance Agreement on October 6, 2023. It was sent in the context of ongoing forbearance negotiations.

• Confirm that Kappel understood that expressions of optimism in the context of workout discussions are a common feature of bank-borrower communications and do not constitute formal credit commitments or term sheets.

• Establish that Kappel understood the difference between a general expression of goodwill from a workout officer and a formal credit commitment, which would typically take the form of a term sheet, commitment letter, or board or committee resolution.

• Did Kappel, following receipt of this email, ask Reeves or Whitmore to reduce any commitment to new credit to writing? Did he ask for a term sheet or commitment letter? If not, why not?

VIII. THE SEPTEMBER 29, 2023 INTERNAL DRAFT TERM SHEET

A. Kappel's Knowledge

Exhibit G-1: Email from Joanna Reeves to Derek Whitmore dated September 29, 2023, forwarding a draft term sheet for a potential $6,500,000 revolving credit facility, bearing the notation "for discussion purposes only — not approved."

This document is significant because it is an internal BRB communication that was never approved and was never transmitted to the borrower. It may be cited by the counterclaim defendants as evidence that BRB was, at some point, internally contemplating new credit. Our objective is to establish that Kappel had no knowledge of this document at the time he entered the Forbearance Agreement and therefore could not have relied upon it.

• Confirm whether Kappel was aware of the existence of this internal draft term sheet at the time it was prepared (September 29, 2023) or at any time before the execution of the Forbearance Agreement (October 6, 2023).

• Was this draft ever shared with Kappel, Mercer Tidwell, or any representative of Triton Harbor? Confirm that it was not.

• If Kappel was not aware of the draft at the time, when did he first become aware of its existence? Confirm that he first learned of it during the course of this litigation, through discovery.

• Confirm that the draft was marked "for discussion purposes only — not approved." Confirm that Kappel understands what this notation means in the context of a bank's internal credit process.

• Confirm that no approved, executed, or externally transmitted term sheet or commitment letter for a new $6.5 million revolving credit facility was ever delivered to Kappel, Triton Harbor, Mercer Tidwell, or any of their advisors by BRB.

IX. THE FORBEARANCE AND MODIFICATION AGREEMENT — EXECUTION AND UNDERSTANDING

A. Review and Negotiation of the Forbearance Agreement

Exhibit H-1: Forbearance and Modification Agreement dated October 6, 2023, by and between Belmont Ridge Bank NA and Triton Harbor Industries, LLC.

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 600 Lexington Avenue, 30th Floor New York, NY 10022
March 5, 2025
TO: Linda Osei, Responsible Partner
FROM: Carlos Espinoza, Lead Associate
RE: Deposition Outline — Cross-Examination of Marcus J. Kappel
MATTER: Belmont Ridge Bank NA v. Triton Harbor Industries, LLC et al.
COURT: New York Supreme Court, New York County, Commercial Division
INDEX NO.: 654871/2024
ASSIGNED JUSTICE: Hon. Althea Marchetti
C&H MATTER NO.: 1022-00005
DEPOSITION DATE: March 11, 2025
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I. PURPOSE AND STRATEGIC OBJECTIVES
A. Overview
This memorandum sets forth the detailed deposition outline for the cross-examination of Marcus J. Kappel, founder, Chief Executive Officer, and 72% equity member of Triton Harbor Industries, LLC ("Triton Harbor"), a Delaware limited liability company (DE File No. 5217839) with its principal place of business at 47-15 Austell Street, Suite 200, Long Island City, New York 11101. Kappel also serves as a personal guarantor under both the original Limited Personal Guaranty dated June 15, 2021 and the Amended Unlimited Personal Guaranty executed on October 6, 2023 in connection with the Forbearance and Modification Agreement. Additionally, Kappel is a named counterclaim plaintiff, having asserted affirmative claims against Belmont Ridge Bank NA ("BRB" or the "Bank") through counsel at Kestrel Voss & Huang LLP.
Kappel is the principal fact witness for the counterclaim defendants' theories of fraudulent inducement, negligent misrepresentation, breach of the implied covenant of good faith and fair dealing, and rescission. His testimony is expected to form the evidentiary foundation for virtually all of the counterclaim allegations, including the critical contention that BRB's Special Assets Group personnel — specifically, Derek Whitmore (SVP, Head of the Special Assets Group) and Joanna Reeves (VP, Special Assets Group) — made oral representations at the September 12, 2023 meeting and in subsequent communications that induced Kappel and Triton Harbor to enter into the Forbearance Agreement on terms that were more onerous than they would otherwise have accepted.
Pursuant to the Preliminary Conference Order entered by Justice Marchetti on December 6, 2024, this deposition is to be taken at the offices of Calderwood & Harkness LLP at the address above, or at such other mutually agreed location as the parties may designate. The deposition is noticed for March 11, 2025, beginning at 9:30 a.m. Eastern Time.
B. Primary Objectives
The cross-examination of Kappel should be organized around the following five primary strategic objectives, each of which is directed at building the factual record necessary for BRB's anticipated motion for summary judgment (due September 15, 2025) on the counterclaims:
1. Undermine justifiable reliance. The centerpiece of Kappel's fraudulent inducement and negligent misrepresentation counterclaims is the assertion that he justifiably relied upon alleged oral statements by Whitmore regarding BRB's purported willingness to extend a new $6.5 million revolving credit facility. Our primary objective is to establish that Kappel — as a sophisticated 30-year industry veteran who was represented by a professional restructuring advisory firm (Mercer Tidwell & Associates LLC, retained in mid-2023, with engagement led by Managing Director Raymond Mercer) and who had continuous access to experienced legal counsel — could not have justifiably relied on alleged oral statements that directly contradicted the express written terms of the Forbearance and Modification Agreement dated October 6, 2023. Under New York law, a sophisticated party represented by counsel who signs a contract containing an explicit disclaimer and integration clause cannot later claim justifiable reliance on prior oral representations that conflict with the written agreement. See Danann Realty Corp. v. Harris, 5 N.Y.2d 317 (1959); Basis Yield Alpha Fund (Master) v. Dunmore Group, 115 A.D.3d 128 (1st Dep't 2014).
2. Establish actual knowledge of contractual disclaimers. We must obtain clear, unequivocal admissions that Kappel read, understood, and voluntarily signed the Forbearance Agreement, with particular attention to the "No Commitment to Extend Credit" disclaimer set forth in Section 9(c) and the integration/merger clause set forth in Section 12(a). These admissions are essential to our argument that Kappel's reliance was unreasonable as a matter of law.
3. Demonstrate independent business judgment. We need to elicit testimony establishing that Kappel's decision to enter the Forbearance Agreement was driven primarily by Triton Harbor's deteriorating financial condition and Kappel's need to avoid the immediate acceleration of approximately $17.575 million in outstanding debt — not by any alleged promise of future credit. If Kappel would have signed the Forbearance Agreement regardless of the alleged oral representations, the causal link between the alleged misrepresentations and Kappel's damages breaks down.
4. Undermine scienter allegations. The fraudulent inducement counterclaim requires proof that BRB's SAG personnel made representations they knew to be false or with reckless disregard for their truth or falsity. We should elicit testimony showing that Kappel understood the function and mandate of a bank's Special Assets Group and the inherently contingent, non-binding nature of any workout discussions that occur in the SAG context. This testimony will support the argument that Whitmore's alleged statements, even taken at face value, were aspirational expressions of optimism — not knowing misrepresentations of present fact.
5. Lock in testimony. We must pin Kappel to specific factual claims regarding the September 12, 2023 meeting and other alleged misrepresentations, as well as to his account of the circumstances surrounding the execution of the Forbearance Agreement. Narrowing the factual claims at deposition will limit the counterclaim defendants' ability to shift theories at summary judgment and trial.
C. Key Admissions Sought
The following specific admissions should be pursued systematically throughout the deposition. Not all will be obtained through direct concession; some will be established through the cumulative weight of surrounding testimony. The examiner should return to these themes repeatedly, approaching each from multiple angles:
• Kappel reviewed the Forbearance Agreement in its entirety before signing it on October 6, 2023.
• Kappel understood that Section 9(c) of the Forbearance Agreement stated, in clear and unambiguous terms, that BRB had no obligation to extend new credit, modify existing facilities, or renew any credit facility.
• Kappel understood that Section 12(a) of the Forbearance Agreement provided that the agreement constituted the entire understanding between the parties and superseded all prior negotiations, representations, and agreements, whether oral or written.
• Kappel retained Mercer Tidwell & Associates LLC as his financial and restructuring advisor before the Forbearance Agreement was executed, and Mercer Tidwell was actively involved in reviewing and advising on the terms of the Forbearance Agreement.
• Kappel understood that, at the time he entered the Forbearance Agreement, Triton Harbor was in material default of multiple financial covenants under the Credit Agreement dated June 15, 2021, and that BRB had the contractual right to accelerate the entire outstanding indebtedness and exercise all remedies.
• Kappel's primary motivation for signing the Forbearance Agreement was to avoid immediate acceleration of the outstanding debt and potential liquidation of Triton Harbor's assets.
• No written commitment, term sheet, commitment letter, or other written instrument evidencing a binding obligation to extend a new $6.5 million revolving credit facility was ever issued by BRB to Kappel, Triton Harbor, or any of their advisors.
• Kappel has over 30 years of experience in the marine industrial services industry and has, over the course of his career, personally negotiated multiple credit facilities, loan modifications, and other complex commercial financing arrangements.
II. PRELIMINARY / BACKGROUND EXAMINATION
A. Personal Background and Business Experience
Begin the examination by establishing Kappel's personal background and extensive business experience. This section serves the dual purpose of building the record of Kappel's sophistication and establishing rapport before moving into more adversarial territory. Use a conversational tone but maintain discipline with closed-ended questions.
Exhibit A-1: Kappel's Westmark Health IT profile or curriculum vitae (if produced in discovery pursuant to the document requests served on Triton Harbor and the individual counterclaim plaintiffs).
Establish the following foundational facts:
• Confirm the witness's full legal name: Marcus J. Kappel.
• Confirm his age: 58 years old.
• Confirm his current residential address: 14 Birchmont Lane, Westport, Connecticut 06880.
• Confirm that he is the founder, Chief Executive Officer, and 72% equity member of Triton Harbor Industries, LLC, a Delaware limited liability company organized in 2009 (DE File No. 5217839), with its principal place of business at 47-15 Austell Street, Suite 200, Long Island City, New York 11101.
• Confirm that his spouse, Elaine D. Kappel, serves as Chief Financial Officer and holds the remaining 28% equity membership interest in Triton Harbor.
• Confirm Kappel's prior career history before founding Triton Harbor. Specifically, establish that Kappel served as a senior executive at Atlantic Basin Marine Corp. before departing to found Triton Harbor in 2009. Explore the nature and duration of his tenure at Atlantic Basin Marine Corp., including his title, responsibilities, and the approximate size of the company during his employment.
• Establish that Kappel has over 30 years of experience in the marine industrial services business, encompassing marine terminal logistics, vessel maintenance and repair, and harbor infrastructure construction and management. Walk through the timeline of his career to establish the depth and breadth of his industry experience.
• Explore in detail the prior credit facilities that Kappel has negotiated over the course of his career. At Atlantic Basin Marine Corp., did Kappel participate in negotiating credit facilities? What was the approximate size of those facilities? Who were the lending institutions? Did Kappel negotiate directly with bank officers? Since founding Triton Harbor, what credit facilities has Kappel negotiated, in addition to the BRB Credit Agreement? Were there predecessor facilities before the BRB relationship?
• Establish whether Kappel has previously negotiated forbearance agreements, workout arrangements, or loan modifications at any point during his 30-year career. If so, explore the circumstances, including the identity of the lending institution, the nature of the default, and the terms of the forbearance or modification. This line of questioning is designed to demonstrate that Kappel was not a neophyte in the forbearance context and understood the dynamics of bank workout negotiations.
• Establish Kappel's prior experience with personal guaranties. Has Kappel executed personal guaranties in connection with credit facilities other than the BRB facility? If so, how many times? Has he previously been asked to expand or modify a personal guaranty in the context of a workout or forbearance?
B. Educational and Professional Sophistication
Continue building the sophistication record by establishing Kappel's educational background and his familiarity with commercial lending concepts:
• Confirm Kappel's educational background, including his undergraduate institution and degree, any graduate degrees or professional certifications, and any continuing education or executive programs he has completed.
• Establish Kappel's experience reading and understanding commercial loan documents. Has he read credit agreements, promissory notes, security agreements, guaranties, and related documents in the ordinary course of his business career? How many such documents has he reviewed over the course of his career? Does he consider himself familiar with the typical structure and provisions of commercial loan agreements?
• Establish Kappel's familiarity with financial covenants commonly found in commercial credit facilities, including the Fixed Charge Coverage Ratio ("FCCR"), leverage ratios (including the Total Leverage Ratio), and minimum liquidity covenants. Confirm that Kappel understands how these financial metrics are calculated and the consequences that flow from a breach of financial covenants.
• Establish Kappel's experience working with external financial advisors and legal counsel in connection with business transactions. Has he previously retained financial advisors to assist with credit facility negotiations? Has he previously retained attorneys to review and negotiate commercial loan documents? How frequently has he engaged such advisors over the course of his career?
These questions should be asked in a matter-of-fact tone, without telegraphing the strategic purpose. Kappel is likely to be forthcoming about his experience, as he may view it as evidence of his credibility and competence. The sophistication record will be turned against him in later sections of the deposition and in dispositive briefing.
III. THE ORIGINAL CREDIT FACILITY
A. Origination and Terms
This section establishes the foundation of the lending relationship between BRB and Triton Harbor, confirms Kappel's familiarity with the underlying credit documents, and sets the stage for the financial deterioration that led to the forbearance.
Exhibit B-1: Credit Agreement dated June 15, 2021 between Belmont Ridge Bank NA, as lender, and Triton Harbor Industries, LLC, as borrower (the "Credit Agreement").
Confirm Kappel's role in negotiating the original Credit Agreement. Was he the primary negotiating contact on behalf of Triton Harbor? Did he negotiate directly with BRB's relationship management officers? Over what period of time were the negotiations conducted?
Establish the structure and material terms of the Credit Agreement:
• Facility Structure: The Credit Agreement provided for two facilities: (a) Term Loan A in the original principal amount of $14,000,000, with an 84-month term maturing on June 15, 2028, and quarterly amortization payments; and (b) a Revolving Credit Facility with a maximum commitment of $8,000,000, maturing on June 15, 2026. The total committed facilities under the Credit Agreement were $22,000,000.
• Interest Rates: Term Loan A bore interest at SOFR plus 275 basis points. The Revolving Credit Facility bore interest at SOFR plus 250 basis points.
• Collateral: The Credit Agreement was secured by a first-priority lien on substantially all assets of Triton Harbor, including marine terminal equipment, accounts receivable, inventory, and general intangibles, together with a first mortgage on the Long Island City terminal facility located at 50-22 Borden Avenue, Long Island City, New York 11101.
• Original Collateral Valuation: At origination, the collateral package was appraised by Ridgeline Appraisal Group, Inc. in June 2021 at a total value of $18,700,000.
Confirm that Kappel reviewed the Credit Agreement before signing it. Confirm that he read the document in its entirety, or identify which portions he read. Confirm that he was represented by legal counsel during the negotiation of the original Credit Agreement, and identify the attorney or law firm that represented Triton Harbor in that transaction.
B. Original Personal Guaranty
Exhibit B-2: Limited Personal Guaranty dated June 15, 2021, executed by Marcus J. Kappel in favor of Belmont Ridge Bank NA.
Confirm the following:
• Marcus J. Kappel executed a limited personal guaranty in connection with the original Credit Agreement, dated June 15, 2021.
• The guaranty was capped at $4,500,000, meaning Kappel's personal exposure under the guaranty was limited to that amount plus applicable costs, fees, and expenses.
• Confirm that Kappel understood the terms and financial exposure of the guaranty at the time of origination. Specifically, confirm he understood that, in the event of a default by Triton Harbor, BRB could pursue Kappel personally for amounts up to the guaranty cap.
• Confirm that Kappel had the opportunity to consult with legal counsel before executing the guaranty, and that he did, in fact, consult with counsel regarding the terms and implications of the guaranty.
C. Financial Covenants
Exhibit B-3: Relevant financial covenant sections of the Credit Agreement.
Establish the specific financial covenants contained in the Credit Agreement:
• Minimum Fixed Charge Coverage Ratio: 1.20x.
• Maximum Total Leverage Ratio: 3.50x.
• Minimum Liquidity: $2,000,000.
Confirm that Kappel understood these covenants and the consequences of breach at the time the Credit Agreement was executed. Confirm that he understood that a breach of any of these covenants could trigger an event of default under the Credit Agreement.
Confirm that, in his capacity as CEO, Kappel regularly reviewed Triton Harbor's compliance with these financial covenants. How frequently did he review the company's financial performance against the covenant thresholds? Did he receive regular reports from Elaine Kappel (CFO) or from the company's accountants regarding covenant compliance? Was covenant compliance a standing agenda item in management meetings?
IV. FINANCIAL DETERIORATION AND COVENANT DEFAULTS
A. Revenue Decline and Contract Losses
This section establishes the severity of Triton Harbor's financial deterioration, which is critical to demonstrating that Kappel's primary motivation for signing the Forbearance Agreement was to avoid acceleration and liquidation — not reliance on alleged oral promises of future credit.
Establish the following facts regarding Triton Harbor's financial performance:
• For the fiscal year ended December 31, 2022 ("FY2022"), Triton Harbor generated approximately $68,000,000 in revenue and approximately $9,400,000 in adjusted EBITDA.
• By the first quarter of 2023 ("Q1 2023"), Triton Harbor's trailing-twelve-month adjusted EBITDA had fallen to approximately $5,100,000, representing a decline of approximately 45.7% from the FY2022 figure. This was a dramatic and rapid deterioration in the company's financial performance.
• The decline was driven in significant part by the loss of two major contracts: (a) the Port of Bridgehaven municipal contract, which had generated estimated annual revenue of approximately $12,000,000, and (b) the Newark Bay maintenance contract, which had generated estimated annual revenue of approximately $7,500,000. Explore the timing and circumstances of each contract loss. When was Kappel first informed that these contracts were at risk? When were the contracts formally lost or not renewed? What were the underlying reasons — competitive bidding, performance issues, budget cuts, or other factors?
• As a result of these contract losses, Triton Harbor's annualized revenue run-rate had dropped to approximately $48,000,000 by mid-2023, down from $68,000,000 in FY2022.
Confirm that Kappel was aware of this financial deterioration in real time, in his capacity as CEO. He did not learn of the revenue decline after the fact; he was watching it unfold as the chief executive of the company. Confirm that Kappel understood the impact that the revenue decline and EBITDA deterioration would have on the company's compliance with its financial covenants under the BRB Credit Agreement.
B. Covenant Breaches
Exhibit C-1: Q1 2023 financial reporting delivered by Triton Harbor to BRB.
Establish the specific covenant breaches:
• As of the Q1 2023 reporting period, Triton Harbor's Fixed Charge Coverage Ratio had fallen to 0.87x. The covenant minimum was 1.20x. This constituted a material breach of the FCCR covenant.
• As of the same period, Triton Harbor's Total Leverage Ratio had risen to 4.92x. The covenant maximum was 3.50x. This constituted a material breach of the leverage covenant.
Confirm that Kappel was aware that Triton Harbor was in material default of the Credit Agreement as a result of these covenant breaches. Confirm that Kappel understood that BRB had the contractual right, upon the occurrence of these events of default, to accelerate the entire outstanding indebtedness under the Credit Agreement and to exercise all remedies available to it as a secured creditor, including foreclosure on the collateral and pursuit of the personal guaranty.
C. Credit Downgrade and Transfer to SAG
Exhibit C-2: Notice from BRB regarding transfer of the Triton Harbor account to the Special Assets Group (if such notice was sent externally to the borrower; if no external notice was sent, explore Kappel's awareness of the transfer through other means).
Establish the following:
• On or about March 8, 2023, BRB's internal credit review committee downgraded the Triton Harbor credit from a "Pass" rating to a "Substandard" rating (Risk Rating 7), reflecting the deterioration in the borrower's financial condition and the covenant defaults.
• As a consequence of the downgrade, the Triton Harbor account was transferred from BRB's Relationship Management division to the Special Assets Group ("SAG"), which is the division of the Bank responsible for managing distressed, criticized, and classified credits.
• At the time of the transfer, the outstanding balances under the Credit Agreement were as follows: Term Loan A: $11,375,000; Revolving Credit Facility: $6,200,000; total outstanding indebtedness: $17,575,000.
Establish Kappel's awareness that the account had been transferred to BRB's workout/special assets division. When did Kappel first learn that the account was being managed by SAG? How did he learn this — was he notified by BRB, or did he learn through other channels? Confirm that Kappel understood the function and mandate of a bank's Special Assets Group — that is, its purpose is to manage distressed credits, protect the bank's position, and work toward resolution of problem loans, which may include workout, restructuring, or orderly exit from the relationship.
Explore whether Kappel had any prior experience dealing with a bank's special assets or workout group. In his prior career at Atlantic Basin Marine Corp. or in connection with any other business venture, had Kappel ever had a credit relationship transferred to a bank's workout division? If so, what was his understanding of the dynamic of those relationships?
D. Introduction to SAG Personnel
Confirm that Kappel understood that, following the account's transfer to SAG, Derek Whitmore (Senior Vice President, Head of the Special Assets Group) and Joanna Reeves (Vice President, Special Assets Group) were assigned to manage the BRB-Triton Harbor relationship on behalf of the Bank.
Confirm the nature and frequency of communications between Kappel and Whitmore and Reeves from approximately March 2023 forward. How often did Kappel speak with Whitmore and Reeves — weekly, biweekly, monthly? Were these communications primarily by telephone, email, or in-person meetings? Were the communications typically between Kappel alone and the BRB SAG personnel, or were others typically present or copied (e.g., Mercer Tidwell, Elaine Kappel, counsel)?
V. RETENTION OF MERCER TIDWELL & ASSOCIATES LLC
A. Engagement
Exhibit D-1: Mercer Tidwell & Associates LLC engagement letter (produced in discovery).
Establish the following facts regarding the retention of a professional restructuring advisory firm:
• Triton Harbor retained Mercer Tidwell & Associates LLC ("Mercer Tidwell"), a restructuring advisory firm with offices at 245 Park Avenue, 28th Floor, New York, New York 10167, in mid-2023. Confirm the exact date of the engagement — when was the engagement letter signed? When did Mercer Tidwell commence work on the engagement?
• The engagement was led by Managing Director Raymond Mercer, who served as the senior advisor to Triton Harbor throughout the restructuring process.
• Establish the scope of Mercer Tidwell's engagement: was Mercer Tidwell retained to advise Triton Harbor on restructuring options, negotiate with BRB on Triton Harbor's behalf, evaluate the company's financial condition, develop financial projections, and explore alternatives to the forbearance? Confirm each element of the engagement scope.
• Was the decision to retain Mercer Tidwell made by Kappel alone, or was it a joint decision with Elaine Kappel and/or the company's board or management team? Was the decision to retain Mercer Tidwell made at the suggestion or requirement of BRB, or was it Kappel's independent decision?
B. Advisory Role During Workout Negotiations
Confirm that Mercer Tidwell was actively involved in the negotiations with BRB's Special Assets Group from mid-2023 through the execution of the Forbearance Agreement on October 6, 2023. Explore the scope and intensity of Mercer Tidwell's involvement:
• Did Mercer Tidwell participate in meetings or calls with Whitmore and Reeves? If so, how frequently and on what dates?
• Confirm that Mercer Tidwell reviewed the terms proposed by BRB during the workout negotiations, including the forbearance structure, the additional collateral requirements, and the proposed amendments to the personal guaranties.
• Confirm that Mercer Tidwell provided Kappel with independent financial analysis and advice regarding the terms of the Forbearance Agreement. What was the nature of that advice? Did Mercer Tidwell provide a written analysis or recommendation?
• Did Mercer Tidwell advise Kappel on the likelihood of obtaining new credit from BRB? If so, what was that advice? Did Mercer Tidwell express any view on whether BRB would extend a new revolving facility to Triton Harbor?
• Did Mercer Tidwell advise Kappel on alternative courses of action, including but not limited to (a) refinancing the BRB debt with another lender, (b) filing for protection under Chapter 11 of the Bankruptcy Code, (c) negotiating a sale of the business or its assets, or (d) any other strategic alternative? If so, what alternatives were discussed and what was Mercer Tidwell's assessment of the feasibility of each?
• This is a critical line of questioning: Did Kappel disclose to Mercer Tidwell the alleged oral representations by Whitmore at the September 12, 2023 meeting regarding a new $6.5 million revolving facility? If yes, what was Mercer Tidwell's assessment of the likelihood that BRB would, in fact, extend new credit? Did Mercer Tidwell advise Kappel that the alleged oral statements constituted a binding commitment? Did Mercer Tidwell express any concern about relying on oral representations that were not reflected in the written Forbearance Agreement?
• If Kappel did not disclose the alleged oral representations to Mercer Tidwell, explore why not. If Kappel believed he had received a significant commitment from BRB regarding future credit, why would he not share that information with his restructuring advisor?
• Confirm whether Mercer Tidwell's engagement letter or other communications between Mercer Tidwell and Triton Harbor were shared with BRB during the workout process.
C. Kappel's Access to Independent Advice
This subsection consolidates the theme of Kappel's access to multiple sources of independent, professional advice:
• Confirm that, in addition to Mercer Tidwell, Kappel also had access to legal counsel during the forbearance negotiations. Identify the attorney or attorneys who advised Kappel and Triton Harbor on the Forbearance Agreement. What law firm was retained? Was it the same firm that had represented Triton Harbor in connection with the original Credit Agreement, or a different firm?
• Confirm that Kappel did not rely solely on representations from BRB in deciding to enter into the Forbearance Agreement. He consulted his own financial advisor (Mercer Tidwell/Raymond Mercer), his own legal counsel, his wife and co-owner Elaine Kappel (who is also the company's CFO), and he drew upon his own 30-plus years of industry experience and business judgment.
• Establish that Kappel had the opportunity to consult with each of these sources of advice before signing the Forbearance Agreement, and that he, in fact, availed himself of that opportunity.
VI. THE SEPTEMBER 12, 2023 MEETING — ALLEGED MISREPRESENTATIONS
This section is the heart of the deposition. The September 12, 2023 meeting is the factual predicate for the fraudulent inducement and negligent misrepresentation counterclaims. Our objective is to pin Kappel to the specifics of his account, highlight the qualified and aspirational nature of the alleged statements, and establish that Kappel took no steps to memorialize the alleged commitments or insist that they be included in the written agreement.
A. Attendees and Setting
Exhibit E-1: Any contemporaneous notes, calendar entries, emails, or memoranda regarding the September 12, 2023 meeting (whether produced by BRB or Triton Harbor in discovery).
Establish the basic facts about the meeting:
• The meeting took place at BRB's offices located at 1200 Avenue of the Americas, 38th Floor, New York, New York 10036.
• Confirm the attendees: Derek Whitmore (SVP, Head of SAG), Joanna Reeves (VP, SAG), Marcus J. Kappel, and Elaine D. Kappel.
• Were any attorneys present at the meeting — either BRB's counsel or Kappel's counsel? If not, was there a deliberate decision not to include counsel?
• Was Raymond Mercer or anyone from Mercer Tidwell & Associates LLC present at the meeting? If not, why not? If Mercer Tidwell was actively advising Triton Harbor in the workout negotiations, why was the restructuring advisor not included in what Kappel contends was a meeting at which significant commitments were made?
• Who requested the meeting? Was it Kappel's request, BRB's request, or a mutually agreed-upon meeting?
• How long did the meeting last? What was the approximate duration?
• Was there a written agenda prepared in advance of the meeting? If so, by whom, and what topics were included on the agenda?
B. Alleged Oral Representations
This is the critical section. Pin Kappel to the specific representations he alleges Derek Whitmore made at the September 12, 2023 meeting. The objective is to (a) fix Kappel's account of the alleged statements, (b) establish that the statements, even on Kappel's own account, were qualified and aspirational rather than definitive commitments, and (c) demonstrate that Kappel took no contemporaneous steps to memorialize or formalize the alleged commitments.
Kappel alleges, in the Answer with Counterclaims, that Whitmore made the following representations at the September 12, 2023 meeting:
(i) BRB was "committed to the long-term relationship" with Triton Harbor;
(ii) If Triton Harbor successfully completed the forbearance milestones, BRB would "seriously consider" a new $6.5 million revolving credit facility; and
(iii) The additional collateral that was being required under the proposed forbearance was "a formality to satisfy regulators."
For each of these three alleged statements, pursue the following detailed line of questioning:
• Ask Kappel to provide, to the best of his recollection, the exact words used by Whitmore. Not a paraphrase or summary — the actual words. If Kappel cannot recall the exact words, ask him to explain what aspects of the statement he is recounting from memory and what aspects are reconstructed or inferred.
• Ask for the context in which each statement was made. What was being discussed immediately before the statement? Was the statement made in the context of a discussion about the forbearance terms, or at some other point in the meeting — for example, during introductory remarks, during a discussion of Triton Harbor's business prospects, or during a casual aside?
• Who else was present when each statement was made? Were all four attendees (Whitmore, Reeves, Marcus Kappel, Elaine Kappel) present in the room, or had anyone stepped out?
• Did Kappel take notes at any point during the meeting? If so, do those notes reference the alleged statements? If not, why not — given the significance that Kappel now attributes to these statements?
• Did Kappel memorialize the alleged statements in writing after the meeting? Did he send an email to Mercer Tidwell recounting what Whitmore had said? Did he send an email or text message to Elaine Kappel? Did he send a communication to his attorney? If he did memorialize the statements, produce the document. If he did not, explore why not.
• Did Kappel, at any point before or during the negotiation of the Forbearance Agreement, ask Whitmore or Reeves to include these alleged representations in writing in the Forbearance Agreement? If not, why not?
• Did Kappel share these alleged statements with Raymond Mercer at Mercer Tidwell? If so, when and how? What was Mercer's response or reaction?
• Did Mercer Tidwell or Kappel's attorney subsequently ask BRB to put these alleged commitments in writing? If not, why not?
C. "Seriously Consider" vs. Binding Commitment
Drill into the precise language that Kappel attributes to Whitmore. This is perhaps the single most important line of questioning in the entire deposition.
• Establish that Kappel's own characterization of the alleged statement — as reflected in the Answer with Counterclaims — is that Whitmore said BRB would "seriously consider" a new $6.5 million revolving facility. Confirm that this is Kappel's best recollection of the statement.
• Explore the distinction between expressing a willingness to consider a future action and making a binding commitment to take that action. Does Kappel understand the difference? In his 30-plus years of business experience, has Kappel ever told a business counterparty that he would "seriously consider" a proposal, without intending to bind himself to the proposal?
• Did Kappel understand, based on his experience in the industry and in prior credit relationships, that a bank's consideration of a new credit facility is subject to internal credit approval processes, credit committee review, and underwriting standards? Confirm that Kappel knew a bank officer's expression of willingness to "consider" new credit does not constitute approval or commitment.
• Did Kappel understand that Derek Whitmore, as SVP and Head of the Special Assets Group, did not have unilateral authority to commit BRB to new credit extensions? Did Kappel know or believe that new credit decisions would need to be approved by BRB's credit committee or other senior management?
D. "Formality to Satisfy Regulators"
Explore the alleged statement regarding additional collateral:
• What was Kappel's understanding of bank regulatory requirements? Did Kappel know that BRB, as a nationally chartered bank supervised by the Office of the Comptroller of the Currency (OCC Charter No. 14-00927), is subject to regulatory oversight, including requirements relating to the classification and management of problem credits?
• Did Kappel believe that being asked to pledge additional collateral to a regulated bank was unusual or unexpected in the context of a forbearance? In his 30-plus years of experience, had Kappel previously been asked to provide additional collateral in connection with a workout, forbearance, or loan modification? If so, describe the circumstances.
• Regardless of whether Whitmore characterized the additional collateral as "a formality," did the substance of the collateral pledge change? Kappel still pledged his personal residence and the equipment leases. Whether the pledge was described as a "formality" or as a critical risk mitigation measure, the legal effect was the same. Confirm that Kappel understood he was granting BRB a lien on his personal residence at 14 Birchmont Lane.
VII. THE SEPTEMBER 18, 2023 REEVES EMAIL
A. The Email
Exhibit F-1: Email from Joanna Reeves to Marcus Kappel dated September 18, 2023.
This email is one of the key documents cited in the counterclaims as evidence of BRB's alleged representations regarding future credit. The email contains the following language: "We are optimistic about a path forward and believe this forbearance sets the stage for a renewed credit relationship."
Pursue the following:
• Confirm that Kappel received this email and read it. When did he first read it — the day it was sent, or at some later time?
• Ask Kappel to explain, in his own words, what he understood the phrase "optimistic about a path forward" to mean. Did he interpret this as a binding commitment to extend new credit? Did he interpret it as a general expression of positive sentiment in the context of ongoing workout negotiations? Did he understand it to have a specific financial meaning?
• Ask Kappel to explain what he understood the phrase "sets the stage for a renewed credit relationship" to mean. Did "sets the stage for" connote a definitive commitment, or did it suggest a precondition — that is, successful completion of the forbearance might lead to future discussions about credit?
• Did Kappel interpret this email as a binding commitment by BRB to extend new credit to Triton Harbor? If so, on what terms — did the email specify the amount, interest rate, maturity, collateral requirements, or any other term of the alleged new facility?
• Did the email contain any specific terms (amount, rate, maturity, conditions) of any proposed new credit facility? Confirm that it did not.
• Did Kappel respond to this email? If so, what did he say? If he responded, produce the response. Did Kappel write back expressing his understanding that BRB was committed to new credit, or did his response address other matters?
• Did Kappel forward this email to Raymond Mercer at Mercer Tidwell, to his attorney, or to Elaine Kappel? If so, what did Kappel say in the forwarding email? Did he characterize Reeves's email as a commitment, or as something else?
B. Context
Establish the proper context for interpreting this email:
• This email was sent on September 18, 2023 — six days after the September 12, 2023 meeting and eighteen days before the execution of the Forbearance Agreement on October 6, 2023. It was sent in the context of ongoing forbearance negotiations.
• Confirm that Kappel understood that expressions of optimism in the context of workout discussions are a common feature of bank-borrower communications and do not constitute formal credit commitments or term sheets.
• Establish that Kappel understood the difference between a general expression of goodwill from a workout officer and a formal credit commitment, which would typically take the form of a term sheet, commitment letter, or board or committee resolution.
• Did Kappel, following receipt of this email, ask Reeves or Whitmore to reduce any commitment to new credit to writing? Did he ask for a term sheet or commitment letter? If not, why not?
VIII. THE SEPTEMBER 29, 2023 INTERNAL DRAFT TERM SHEET
A. Kappel's Knowledge
Exhibit G-1: Email from Joanna Reeves to Derek Whitmore dated September 29, 2023, forwarding a draft term sheet for a potential $6,500,000 revolving credit facility, bearing the notation "for discussion purposes only — not approved."
This document is significant because it is an internal BRB communication that was never approved and was never transmitted to the borrower. It may be cited by the counterclaim defendants as evidence that BRB was, at some point, internally contemplating new credit. Our objective is to establish that Kappel had no knowledge of this document at the time he entered the Forbearance Agreement and therefore could not have relied upon it.
• Confirm whether Kappel was aware of the existence of this internal draft term sheet at the time it was prepared (September 29, 2023) or at any time before the execution of the Forbearance Agreement (October 6, 2023).
• Was this draft ever shared with Kappel, Mercer Tidwell, or any representative of Triton Harbor? Confirm that it was not.
• If Kappel was not aware of the draft at the time, when did he first become aware of its existence? Confirm that he first learned of it during the course of this litigation, through discovery.
• Confirm that the draft was marked "for discussion purposes only — not approved." Confirm that Kappel understands what this notation means in the context of a bank's internal credit process.
• Confirm that no approved, executed, or externally transmitted term sheet or commitment letter for a new $6.5 million revolving credit facility was ever delivered to Kappel, Triton Harbor, Mercer Tidwell, or any of their advisors by BRB.
IX. THE FORBEARANCE AND MODIFICATION AGREEMENT — EXECUTION AND UNDERSTANDING
A. Review and Negotiation of the Forbearance Agreement
Exhibit H-1: Forbearance and Modification Agreement dated October 6, 2023, by and between Belmont Ridge Bank NA and Triton Harbor Industries, LLC.
Establish the process by which the Forbearance Agreement was reviewed, negotiated, and executed:
• Confirm that Kappel received a draft of the Forbearance Agreement before October 6, 2023. On what date did he first receive a draft? From whom did he receive it — directly from BRB, or through Mercer Tidwell or counsel?
• How many days or weeks did Kappel have to review the draft before signing? Was the review period adequate, in Kappel's view, to allow a thorough review of the document?
• Did Kappel read the entire Forbearance Agreement before signing it? Every page, every section, every provision?
• Did Kappel's attorney review the Forbearance Agreement? If so, identify the attorney and describe the nature and extent of the review. Did the attorney provide written comments or a mark-up of the draft? Did the attorney provide an oral or written summary of the key provisions?
• Did Raymond Mercer at Mercer Tidwell & Associates LLC review the Forbearance Agreement? If so, what was Mercer Tidwell's assessment of the terms? Did Mercer Tidwell identify any provisions of concern?
• Were there negotiations over specific terms of the Forbearance Agreement? Which terms were the subject of negotiation? Were any of Kappel's or Triton Harbor's requested changes incorporated into the final version of the agreement?
B. Section 9(c) — "No Commitment to Extend Credit"
Exhibit H-2: Section 9(c) of the Forbearance Agreement (enlarged and highlighted copy prepared for use at the deposition).
This is the single most important provision in the case for purposes of defeating the fraudulent inducement and negligent misrepresentation counterclaims. Read the full text of Section 9(c) into the record:
> "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."
Pursue the following line of questioning with precision:
• Confirm that Kappel read this provision before signing the Forbearance Agreement on October 6, 2023.
• Confirm that Kappel understood the plain meaning of this provision at the time he read it. What did he understand it to mean?
• Did Kappel ask Derek Whitmore or Joanna Reeves about Section 9(c) at any point before or on October 6, 2023? If so, what did he ask, and what was the response?
• Did Kappel ask his attorney about Section 9(c)? If so, what did his attorney advise him regarding the meaning and effect of this provision?
• Did Kappel ask Raymond Mercer at Mercer Tidwell about Section 9(c)? If so, what was Mercer Tidwell's advice?
• Did Kappel object to the inclusion of Section 9(c) during the negotiation of the Forbearance Agreement? Did he request that Section 9(c) be deleted, modified, or qualified?
• Did Kappel request that Section 9(c) be deleted or modified to reflect the alleged oral commitment by Whitmore to a new $6.5 million revolving facility? If Kappel believed that Whitmore had committed BRB to new credit, the logical step would have been to insist that the written agreement reflect that commitment — or at a minimum, that the disclaimer in Section 9(c) be removed. Did Kappel take either of those steps?
• If Kappel believed BRB was committed to providing a new revolving facility, why did he sign an agreement containing a provision that expressly stated BRB had no such commitment? How did Kappel reconcile his alleged belief that BRB was committed to new credit with the express language of Section 9(c)?
• Was Section 9(c) a provision that Kappel simply overlooked or did not read carefully? Or did he read and understand it but believe that Whitmore's oral statements somehow superseded or overrode the written language?
C. Section 12(a) — Integration / Merger Clause
Exhibit H-3: Section 12(a) of the Forbearance Agreement (enlarged and highlighted copy prepared for use at the deposition).
Read the integration clause into the record. Establish the following:
• Section 12(a) provides that the Forbearance Agreement constitutes the entire understanding between the parties and supersedes all prior negotiations, representations, warranties, and agreements, whether oral or written.
• Confirm that Kappel read and understood Section 12(a) before signing the Forbearance Agreement.
• Confirm that Kappel understood that, by operation of Section 12(a), the written Forbearance Agreement was the complete and final agreement between the parties — and that any prior oral statements, discussions, or negotiations were superseded by and merged into the written document.
• Did Kappel's attorney explain the significance of the integration clause to him? If so, what did the attorney say?
• Did Kappel object to the inclusion of the integration clause during negotiations?
D. Key Forbearance Terms
Establish the material terms of the Forbearance Agreement, which demonstrate both the severity of Triton Harbor's financial distress and the significant concessions that BRB obtained in exchange for its agreement to forbear:
• BRB agreed to forbear from exercising its default remedies for a period of 180 days, commencing on October 6, 2023 and expiring on April 3, 2024.
• Triton Harbor agreed to make monthly debt service payments of $125,000 during the forbearance period, for a total of $750,000 over the six-month period (October 2023 through March 2024).
• Triton Harbor paid a forbearance fee of $87,500 at signing, calculated as 0.50% of the approximately $17,500,000 in outstanding indebtedness.
• Additional collateral pledged: Triton Harbor assigned to BRB two equipment leases with an appraised value of $2,300,000, and Marcus J. Kappel pledged his personal residence at 14 Birchmont Lane, Westport, Connecticut 06880, which had an appraised value of $3,100,000.
• Amended personal guaranty: Marcus J. Kappel's personal guaranty was amended from a limited guaranty capped at $4,500,000 to an unlimited personal guaranty, exposing Kappel to personal liability for the full amount of Triton Harbor's indebtedness.
• New personal guaranty: Elaine D. Kappel, who had not previously been a guarantor, executed a new unlimited personal guaranty.
• Triton Harbor agreed to engage Mercer Tidwell & Associates LLC (or continue the existing engagement) and to provide BRB with monthly financial reporting.
E. Motivation for Signing the Forbearance Agreement
This is a pivotal section. The objective is to establish that Kappel's primary motivation for entering the Forbearance Agreement was to avoid the immediate and catastrophic consequences of acceleration and liquidation — not reliance on alleged oral promises of future credit.
• Confirm that, at the time of signing the Forbearance Agreement on October 6, 2023, Triton Harbor was in material default of the Credit Agreement.
• Confirm that BRB had the contractual right to accelerate the entire outstanding balance of $17,575,000 and exercise all of its remedies as a secured creditor.
• Confirm that, absent the forbearance, BRB could have immediately commenced foreclosure on the Long Island City terminal facility, seized the marine terminal equipment and other collateral, and pursued Marcus Kappel under his personal guaranty.
• Confirm that the Forbearance Agreement gave Triton Harbor 180 days of breathing room — six months during which the company could attempt to cure its covenant defaults, stabilize its operations, and explore strategic alternatives without the threat of immediate acceleration.
• Ask directly: Was avoiding immediate acceleration and liquidation a primary reason why you signed the Forbearance Agreement?
• Ask: Even if BRB had made no representations of any kind about future credit, would you still have signed the Forbearance Agreement to avoid immediate acceleration of the $17,575,000 outstanding balance?
• Ask: At the time of signing, did you believe Triton Harbor had any viable alternative to the forbearance? Could Triton Harbor have refinanced the BRB debt with another lender? Was Triton Harbor in a financial position to attract new lending? Did Mercer Tidwell explore refinancing alternatives?
F. The Amended and New Personal Guaranties
Exhibit H-4: Amended Unlimited Personal Guaranty of Marcus J. Kappel dated October 6, 2023.
Exhibit H-5: Unlimited Personal Guaranty of Elaine D. Kappel dated October 6, 2023.
• Confirm that Kappel understood his personal guaranty was being expanded from a limited guaranty capped at $4,500,000 to an unlimited personal guaranty. Did Kappel understand the significance of that change? Did he understand that his personal exposure increased from $4,500,000 to the full amount of Triton Harbor's outstanding indebtedness?
• Confirm that Kappel understood his wife, Elaine D. Kappel, was executing a new unlimited personal guaranty — that she was becoming personally liable for the full amount of Triton Harbor's debt for the first time.
• Did Kappel negotiate the terms of the guaranty amendments? Did he seek to maintain the $4,500,000 cap? Did he attempt to negotiate a higher cap rather than an unlimited guaranty? Did he object to Elaine Kappel's guaranty?
• Did Kappel's attorney advise him on the significance of agreeing to an unlimited personal guaranty? What was the attorney's advice?
• Did Mercer Tidwell (Raymond Mercer) advise Kappel on the guaranty expansion? Did Mercer Tidwell express any concerns about the move from limited to unlimited exposure?
• Did anyone at BRB prevent Kappel from consulting his own advisors before signing the guaranties? Was Kappel given adequate time to consider the amended guaranty and consult with his attorney and financial advisor?
• Confirm that Kappel signed the amended guaranty voluntarily. He was not physically coerced, threatened with bodily harm, or subjected to any form of physical duress.
X. THE FORBEARANCE PERIOD — PERFORMANCE AND COMMUNICATIONS
A. Performance Under the Forbearance Agreement
Establish Triton Harbor's compliance with the material terms of the Forbearance Agreement during the 180-day forbearance period:
• Confirm that Triton Harbor made all six monthly debt service payments of $125,000, for a total of $750,000, during the forbearance period (October 2023 through March 2024).
• Confirm that Triton Harbor pledged the additional collateral as required — the two equipment leases and the Kappel personal residence.
• Confirm that Triton Harbor engaged Mercer Tidwell (or continued the engagement) and provided BRB with monthly financial reporting as required under the Forbearance Agreement.
B. Covenant Cure Failure
Exhibit I-1: Triton Harbor financial statements as of March 31, 2024.
Notwithstanding Triton Harbor's compliance with the payment and collateral requirements, the company failed to cure the underlying covenant defaults:
• As of March 31, 2024, Triton Harbor's Fixed Charge Coverage Ratio was 0.94x. The covenant minimum was 1.20x. The covenant cure failed. Although FCCR had improved from 0.87x to 0.94x during the forbearance period, it remained materially below the required threshold.
• Confirm that Kappel was aware, before the April 3, 2024 forbearance expiration date, that Triton Harbor had failed to meet the covenant-cure milestone. When did Kappel first learn that the cure would not be achieved? Was he surprised by this result, or had it become apparent in the months leading up to the forbearance expiration?
• Confirm that Kappel understood that failure to cure the covenant defaults within the 180-day forbearance period meant that BRB's forbearance obligation would expire by its own terms, and BRB would be entitled to exercise all of its remedies as if the forbearance had never been granted.
• Did Kappel request an extension of the forbearance period beyond April 3, 2024? If so, when did he make the request, to whom, and in what form? What was BRB's response?
C. Communications During the Forbearance Period
Explore the nature and content of communications between Kappel and BRB during the 180-day forbearance period, with particular focus on whether BRB made any written or oral commitments regarding a new revolving facility:
• Were there regular communications between Kappel (or Mercer Tidwell, on Triton Harbor's behalf) and Whitmore and Reeves during the forbearance period? What was the frequency and nature of those communications?
• During the entire 180-day forbearance period, did BRB send Kappel, Triton Harbor, or Mercer Tidwell any term sheet, commitment letter, credit application, or other written document evidencing a commitment or proposal to extend a new $6.5 million revolving credit facility? Confirm that no such document was ever sent.
• Did Kappel submit a formal application or request for new credit from BRB during the forbearance period? If not, why not — if Kappel believed BRB was committed to new credit, did he take any affirmative steps to formalize that commitment?
• Were there any written communications from BRB during the forbearance period that promised, committed to, or confirmed new credit? Confirm that there were none.
XI. ACCELERATION AND POST-FORBEARANCE EVENTS
A. Expiration and Acceleration
Establish the timeline of events following the expiration of the forbearance:
• April 3, 2024: The 180-day forbearance period expired by its own terms, without the covenant-cure milestone having been achieved.
• Exhibit J-1: Notice of Default and Acceleration dated April 15, 2024, from BRB to Triton Harbor Industries, LLC and Marcus J. Kappel.
• On April 15, 2024, BRB declared the entire outstanding balance immediately due and payable pursuant to the terms of the Credit Agreement, as amended by the Forbearance Agreement. The total accelerated amount was $17,456,212, consisting of: Term Loan A outstanding principal of $10,625,000; Revolving Credit Facility outstanding principal of $6,200,000; accrued and unpaid interest of $487,322; and late fees and default interest of $143,890.
• On May 20, 2024, BRB commenced foreclosure proceedings on the Long Island City terminal facility at 50-22 Borden Avenue, Long Island City, New York 11101.
• Confirm that Kappel received the Notice of Default and Acceleration. When did he receive it? Did he share it with his attorney and Mercer Tidwell?
• Confirm that Kappel understood that the terms of the Forbearance Agreement provided that BRB's forbearance would automatically terminate upon the expiration of the 180-day period if the forbearance milestones — including the covenant cure — were not achieved.
B. 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, New York County, Commercial Division. The complaint seeks enforcement of the Forbearance Agreement, judgment on the personal guaranties of Marcus J. Kappel and Elaine D. Kappel, and recovery of the outstanding deficiency balance.
• Confirm that Kappel was served with the complaint. When and how was he served?
XII. THE COUNTERCLAIMS — KAPPEL'S ALLEGATIONS
A. Timing and Allegations
Exhibit K-1: Answer with Counterclaims filed October 18, 2024.
Establish the basic facts regarding the counterclaims:
• On October 18, 2024, Kestrel Voss & Huang LLP, acting as counsel for Triton Harbor Industries, LLC, Marcus J. Kappel, and Elaine D. Kappel, filed the Answer with Counterclaims in this action. Lead trial counsel is Theodore "Ted" Huang; senior associate Natasha Orlov is also on the matter.
• The counterclaims assert four causes of action: (1) fraudulent inducement; (2) negligent misrepresentation; (3) breach of the implied covenant of good faith and fair dealing; and (4) rescission of the Forbearance and Modification Agreement and the amended/new personal guaranties.
• The counterclaims seek compensatory damages in an amount not less than $12,500,000, together with punitive damages.
B. Basis for Damages Claim
Explore in detail the factual and analytical basis for the $12,500,000-plus damages figure. This line of questioning is designed both to understand the counterclaim defendants' damages theory and to expose weaknesses in it:
• How was the $12,500,000 damages figure calculated? What methodology was used? Has Kappel retained a damages expert, and if so, who?
• What specific categories of damages does Kappel contend he and the other counterclaim plaintiffs suffered as a result of the alleged misrepresentations?
• Does the damages calculation include the value of the additional collateral pledged under the Forbearance Agreement — i.e., the $2,300,000 in equipment leases plus the $3,100,000 appraised value of the Kappel personal residence, totaling $5,400,000?
• Does the damages figure include alleged consequential damages flowing from the acceleration of the debt? If so, what consequential damages does Kappel allege, and how are they calculated? Do they include lost business value, lost profits, lost contract opportunities, or other categories?
• What would Triton Harbor have done differently if the alleged misrepresentations had not been made? This is the critical counterfactual:
• Would Triton Harbor have sought financing from another lender? If so, which lender, and was any alternative financing actually available to a company in Triton Harbor's financial condition in September–October 2023?
• Would Triton Harbor have filed for protection under Chapter 11 of the Bankruptcy Code? If so, what outcome does Kappel believe a Chapter 11 filing would have achieved?
• Would Triton Harbor have refused to pledge the additional collateral and the Kappel personal residence? If so, what would have happened — BRB would have declined to enter the forbearance and would have immediately accelerated and commenced enforcement actions.
• Was any alternative financing actually available to Triton Harbor in September–October 2023? Did Mercer Tidwell explore alternative financing options, and if so, what were the results?
The purpose of these questions is to demonstrate that Triton Harbor had no realistic alternative to the forbearance, which undermines the assertion that the alleged misrepresentations were the "but for" cause of Kappel's decision to enter the Forbearance Agreement.
XIII. RELIANCE — KEY AREA FOR ADMISSIONS
This section synthesizes the themes developed throughout the deposition and focuses directly on the element of justifiable reliance, which is essential to both the fraudulent inducement and negligent misrepresentation counterclaims.
A. Sources of Advice and Information
Confirm that Kappel had access to the following sources of independent advice and information at the time he entered the Forbearance Agreement on October 6, 2023:
• His own 30-plus years of experience in the marine industrial services industry, including experience negotiating credit fac