Michael returns to the loft to find Sam there with the ingredients to make napalm. Apparently it's part of Michael's cover, since they can't fake a police record for him to fool Pete. So they're going to work around that by blowing shit up? These people make no sense sometimes. As they mix ingredients, Michael says that in addition to its more famous uses, napalm cans also help you control the size and shape of a flame, making it useful "in forest fire work, building demolition, and any situation where you want to scare the hell out of someone." Once they've got it good and gooey, Sam leaves Michael to get ready. "Look sharp, and don't wear any synthetic fibers." As if.
Late that night at a marina, Michael walks to the meeting place while Sam (holding a sniper rifle) whines in his earpiece about staying in his line of sight. "Every time we do this you act like I can shoot around corners." Michael walks up to a fuel drum on the beach, just before Pete shows up. Pete's pretty suspicious, given Ted's absence, and draws on Michael, who matter-of-factly says he cut out the middleman -- namely, Ted's throat. Michael makes a pitch, but Pete says the deal's off. Michael says Pete doesn't know about him because he's careful, meaning he kills people to keep them quiet. "Just like when a dirty cop comes to me with a deal, that dirty cop doesn't get to walk away!" Michael lights and tosses a Zippo, and a moment later, both of them are in a circle of flame. It's kind of impressive, but it's not the kind of thing I look for in a business partner. "I call this the ring of trust!" Michael yells, and asks, "Are we going to do some business together?" Pete agrees. "Fantastic, let's do that!" Michael says happily. I guess now they just have to work out details while the napalm burns down.
Next day at the loft, Michael is yelling at Pete on his cell phone when Sam shows up for an update. Michael says Pete's getting nervous enough that he might just flush the drugs, so Michael has a new plan, which Sam's going to hate. "Pete had Kevin killed," Michael points out, "but he never actually saw the body." Sure enough, Sam hates the idea, especially since it's going to involve Claire, but he goes along.