**ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT**
Team,
Attached for your review is the preliminary draft of the Agreement and Plan of Merger for the prospective acquisition of Tessera Lending, Inc. ("Tessera" or the "Company") by Belmont Ridge Bank NA ("BRB") (Matter No. 1045-00005). This is the first complete draft of the merger agreement, prepared for internal Calderwood & Harkness team review before we circulate to the client — specifically Catherine A. Royce (General Counsel) and Derek S. Whitmore (CFO) at Belmont Ridge. The draft is marked "DRAFT — PRIVILEGED AND CONFIDENTIAL — FOR INTERNAL CLIENT REVIEW ONLY."
**Attachment:** draft-merger-agreement.docx — *Preliminary Draft — Agreement and Plan of Merger (Belmont Ridge Bank NA / BRB Acquisition Sub, Inc. / Tessera Lending, Inc.)*
I want to flag the following key drafting points for the team's attention as you work through the document:
1. **Transaction Structure.** The draft is structured as a reverse triangular merger under the DGCL among Belmont Ridge Bank NA, BRB Acquisition Sub, Inc. (a to-be-formed Delaware wholly owned subsidiary of BRB), and Tessera Lending, Inc. Tessera will survive the merger as a wholly owned subsidiary of BRB. The aggregate all-cash merger consideration is $48,000,000, with per-share merger consideration of $4.00 per share based on 12,000,000 fully diluted shares of Tessera common stock.
2. **Material Adverse Effect Definition.** The MAE definition includes carve-outs for industry-wide regulatory changes, which is particularly important given the evolving fintech regulatory environment in which Tessera operates. Beatrice — I would appreciate your close review of the scope of the carve-outs and whether they are appropriately tailored to this transaction. This will almost certainly be a point of negotiation with Kessler, Aldrich & Voss LLP (target's counsel), and we should have a clear view of our position before we go external.
3. **Interim Operating Covenants.** The draft includes a comprehensive set of interim operating covenants governing Tessera's conduct of business between signing and closing. These are drafted to restrict material actions outside the ordinary course of business, including (among other things) limitations on new lending programs, modifications to the Ridgeline Community Bank bank-partnership arrangement, capital expenditures above specified thresholds, employee compensation changes, and equity issuances. Naomi — please confirm these align with the categories reflected in the diligence request list so we have consistency across work streams.
4. **No-Shop Provision with Fiduciary Out.** The draft includes a no-shop/no-solicitation provision restricting Tessera and its board from soliciting or engaging with competing acquisition proposals. Consistent with market practice, the provision includes a customary fiduciary-out permitting the Tessera board to respond to a bona fide unsolicited superior proposal if failure to do so would constitute a breach of the directors' fiduciary duties under Delaware law. As a practical matter, the co-founders — Vikram S. Narayan and Elena M. Castillo — hold a combined 54.0% of outstanding equity and are expected to deliver written consent approving the merger, which significantly limits the risk of a competing proposal succeeding. That said, the fiduciary-out is standard and will be expected by target's counsel.
5. **Treatment of Tessera Stock Options and RSUs.** The draft provides for the cancellation and cash-out of all outstanding Tessera stock options (in-the-money) and restricted stock units at $4.00 per share (less the applicable exercise price in the case of options), consistent with the fully diluted share count of 12,000,000. The employee/angel pool comprises 900,000 shares. Sylvia — please review this section carefully from a Section 409A and Section 83 compliance perspective, cross-referencing the tax structuring memorandum you prepared dated January 30, 2026.
6. **Ridgeline Community Bank Consent.** The draft includes as a condition to closing the receipt of consent from Ridgeline Community Bank under the existing bank-partnership program agreement (reference TLI-RCB-2020-001, dated March 15, 2020, renewed through December 31, 2027) to the change of control of Tessera. We will need to review the actual consent provisions of the program agreement during diligence (commencing March 2026) to confirm whether the merger triggers a consent requirement and, if so, the specific mechanics and any timing constraints.
7. **Indemnification Escrow Mechanics.** The draft contemplates a general indemnification escrow of $4,800,000, representing 10% of the $48,000,000 aggregate merger consideration, to be held by Caravel Trust Company, N.A. as escrow agent for a period of 18 months post-closing. The escrow agreement itself will be a separate ancillary document to be negotiated. For reference, the pro forma funds flow is as follows: gross consideration of $48,000,000, less escrow holdback of $4,800,000, equals net closing consideration of $43,200,000 distributable to stockholders at closing.
8. **R&W Insurance — Placeholder Brackets.** The draft contains placeholder brackets for representations and warranties insurance terms, pending receipt of a formal quote from Meridian Indemnity Group, Inc. The contemplated structure is a buyer-side R&W policy with a policy limit of $9,600,000 (20% of deal value) and a retention of $960,000 (2% of deal value). The retention would be split 50/50 between the indemnification escrow and the policy retention. Estimated premium is approximately $288,000 (3.0% of policy limit), which would be a buyer-borne expense. Final R&W terms will need to be integrated once Meridian provides a formal indication. Beatrice — do you want to submit the application to Meridian now, or would you prefer to wait until after NDA execution with target's counsel?
9. **Conditions to Closing.** The key closing conditions as currently drafted are: (a) OCC prior approval (referencing BRB's OCC charter number 24-00781); (b) state lending-license change-of-control approvals in up to 42 states and D.C.; (c) Tessera stockholder approval by written consent (majority of outstanding shares); (d) accuracy of representations and warranties at closing (subject to MAE-qualified bring-down); (e) no material adverse effect; (f) Ridgeline Community Bank consent. Note that HSR filing is not included as a closing condition, as the $48,000,000 deal value falls below the 2026 size-of-transaction threshold of $119.5 million.
10. **Governing Law.** Delaware for the merger agreement, consistent with the structuring memorandum.
**Regulatory and Timeline Notes**
The anticipated timeline contemplates: NDA execution with Tessera and Kessler, Aldrich & Voss LLP by February 14, 2026 (reference NDA-BRB-TLI-2026-001); diligence commencing in March 2026; targeted signing in Q2 2026; regulatory approval period in Q2–Q3 2026; and targeted closing in Q3 2026. On that front, Beatrice's introduction letter to Randall T. Kessler at Kessler, Aldrich & Voss is expected to go out shortly. The draft merger agreement would be shared with target's counsel following NDA execution.
**Action Items**
Please review the attached draft and provide your comments and redlines by **end of day Saturday, February 7, 2026**. Specifically:
- **Beatrice:** Overall structural review, MAE carve-outs, no-shop/fiduciary-out provisions, and guidance on the R&W insurance application timing with Meridian Indemnity. - **James:** Fee and expense provisions and termination fee mechanics. - **Sylvia:** Tax-related provisions — Section 338(h)(10) election mechanics (cross-referencing your January 30 tax memo), option/RSU cash-out treatment under Sections 409A and 83, and any tax representations that need to be added or refined. - **Naomi:** Cross-check against the preliminary diligence request list and issues tracker; confirm alignment of interim covenants with anticipated diligence findings; and review capitalization provisions against the cap table analysis (12,000,000 fully diluted shares).
Once internal comments are consolidated, the plan is to circulate the draft to Catherine Royce and Derek Whitmore at Belmont Ridge early next week for client review and comment before any external circulation.
Thanks, everyone. I know the turnaround is tight, but I want us to be well-positioned ahead of the NDA execution timeline. Please don't hesitate to reach out if you have questions in the interim.
Best,
Andrew Fitzpatrick Partner Calderwood & Harkness LLP 1 World Financial Center, 42nd Floor New York, NY 10281 Direct: (212) 554-7180 afitzpatrick@calderwoodharkness.com Matter: 1045-00005 (Belmont Ridge Bank NA / Tessera Lending, Inc.)
---
*CONFIDENTIALITY NOTICE: This email message and any attachments are privileged and confidential attorney-client communications and/or attorney work product. They are intended solely for the use of the named recipient(s) above. If you are not an intended recipient, you are hereby notified that any review, disclosure, copying, distribution, or use of this communication or its contents is strictly prohibited. If you have received this communication in error, please notify the sender immediately by reply email and permanently delete the original message and all copies. Thank you.*