PRIVILEGED AND CONFIDENTIAL — FOR INTERNAL CLIENT REVIEW ONLY
February 5, 2026
AGREEMENT AND PLAN OF MERGER
among
BELMONT RIDGE BANK NA,
BRB ACQUISITION SUB, INC.,
and
TESSERA LENDING, INC.
Dated as of February 5, 2026
Prepared by Calderwood & Harkness LLP, Matter No. 1045-00005
Distribution limited to: Catherine A. Royce, General Counsel & Corporate Secretary, Belmont Ridge Bank NA Derek S. Whitmore, Chief Financial Officer, Belmont Ridge Bank NA
TABLE OF CONTENTS
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as of February 5, 2026, by and among BELMONT RIDGE BANK NA, a national banking association chartered under federal law ("Parent"), BRB ACQUISITION SUB, INC., a Delaware corporation to be formed as a direct wholly owned subsidiary of Parent ("Acquisition Sub"), and TESSERA LENDING, INC., a Delaware corporation ("the Company"). Parent, Acquisition Sub, and the Company are each referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Parent is a national banking association duly organized and existing under the laws of the United States, with principal executive offices located at 600 Lexington Avenue, 34th Floor, New York, New York 10022;
WHEREAS, Acquisition Sub is a Delaware corporation to be formed as a direct wholly owned subsidiary of Parent for the sole purpose of consummating the transactions contemplated by this Agreement;
WHEREAS, the Company is a corporation duly organized and existing under the laws of the State of Delaware, with its principal offices located at 2400 Shoal Creek Boulevard, Suite 500, Austin, Texas 78756, and assigned Delaware file number 6847312;
WHEREAS, the respective boards of directors of Parent, Acquisition Sub, and the Company have each determined that it is advisable and in the best interests of their respective stockholders to effect a business combination through a reverse triangular merger of Acquisition Sub with and into the Company, with the Company surviving as a wholly owned subsidiary of Parent (the "Merger"), on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the Merger is intended to be effected pursuant to the Delaware General Corporation Law (the "DGCL"), and specifically Section 251 thereof;
WHEREAS, the aggregate merger consideration to be paid by Parent in connection with the Merger is Forty-Eight Million Dollars ($48,000,000) in cash (the "Aggregate Merger Consideration");
WHEREAS, the Company's stockholders holding a majority of the outstanding shares of common stock of the Company will approve the Merger and the transactions contemplated by this Agreement by written consent in lieu of a stockholders' meeting, in accordance with Section 228 of the DGCL;
WHEREAS, the Parties desire to make certain representations, warranties, covenants, and agreements in connection with the Merger and to prescribe certain conditions to the consummation of the Merger;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants, representations, warranties, and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms have the meanings set forth below:
"Acquisition Proposal" means any inquiry, proposal, or offer from any Person (other than Parent and its Affiliates) relating to, in a single transaction or series of related transactions: (a) any direct or indirect acquisition of assets of the Company (including equity securities of any subsidiary) equal to fifteen percent (15%) or more of the Company's consolidated assets or to which fifteen percent (15%) or more of the Company's revenues or earnings are attributable; (b) any direct or indirect acquisition of fifteen percent (15%) or more of the outstanding equity securities of the Company; (c) any tender offer or exchange offer that, if consummated, would result in any Person beneficially owning fifteen percent (15%) or more of the outstanding equity securities of the Company; or (d) any merger, consolidation, business combination, recapitalization, liquidation, dissolution, joint venture, or similar transaction involving the Company, in each case other than the transactions contemplated by this Agreement.
"Acquisition Sub" means BRB Acquisition Sub, Inc., a Delaware corporation and direct wholly owned subsidiary of Parent, to be formed prior to the Closing. The registered agent of Acquisition Sub shall be located at Cobalt Ridge Technologies, 1209 Orange Street, Wilmington, Delaware 19801.
"Adverse Recommendation Change" means any action by the Company Board to (a) withdraw, modify, or qualify, in a manner adverse to Parent, the Company Board's recommendation that the Company Stockholders approve this Agreement and the Merger, (b) fail to reaffirm such recommendation within five (5) Business Days following Parent's written request to do so, or (c) approve, recommend, or declare advisable any Acquisition Proposal.
"Affiliate" means, with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person, as such terms are used in and construed under Rule 12b-2 promulgated under the Exchange Act.
"Aggregate Merger Consideration" means Forty-Eight Million Dollars ($48,000,000) in cash.
"Balance Sheet Date" means December 31, 2025.
"Basket" has the meaning set forth in Section 9.4.
"Business Day" means any day other than a Saturday, Sunday, or any other day on which commercial banks in the City of New York, New York are authorized or required by Law to be closed.
"Caravel Trust" or "Escrow Agent" means Caravel Trust Company, N.A., a national trust company with offices at 500 Delaware Avenue, Suite 1100, Wilmington, Delaware 19801.
"Certificate" means any certificate or certificates that, immediately prior to the Effective Time, represented outstanding shares of Company Common Stock.
"Certificate of Merger" means the certificate of merger to be filed with the Secretary of State of the State of Delaware in connection with the Merger, substantially in the form attached hereto as Exhibit C.
"Closing" means the consummation of the Merger and the other transactions contemplated by this Agreement.
"Closing Date" means the date on which the Closing occurs, as determined in accordance with Section 2.2. The targeted Closing Date is in the third quarter of 2026 (Q3 2026).
"Code" means the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder.
"Company" means Tessera Lending, Inc., a Delaware corporation, EIN 83-2649107, with principal offices at 2400 Shoal Creek Boulevard, Suite 500, Austin, Texas 78756.
"Company Board" means the board of directors of the Company, which as of the date of this Agreement consists of Vikram S. Narayan, Elena M. Castillo, Jonathan R. Peake, Sandra L. Hu, and Dr. Margaret A. Forsythe.
"Company Common Stock" means the common stock, par value $0.001 per share, of the Company.
"Company Disclosure Schedules" means the disclosure schedules delivered by the Company to Parent concurrently with the execution and delivery of this Agreement.
"Company Equity Plan" means the Company's stock incentive plan, as amended from time to time, pursuant to which Company Options and Company RSUs have been granted to employees, directors, consultants, and other service providers of the Company.
"Company Financial Statements" means the audited consolidated financial statements of the Company for the fiscal years ended December 31, 2024 and December 31, 2025, together with the reports of Whitfield Thorpe LLP thereon, and any unaudited interim financial statements of the Company delivered to Parent pursuant to Section 4.6.
"Company Material Adverse Effect" has the meaning set forth in Section 1.2(a).
"Company Options" means all outstanding and unexercised options to purchase shares of Company Common Stock granted under the Company Equity Plan.
"Company RSUs" means all outstanding restricted stock units with respect to shares of Company Common Stock granted under the Company Equity Plan.
"Company Stockholder Approval" means the written consent of Company Stockholders holding shares representing at least a majority of the outstanding shares of Company Common Stock, executed and delivered in accordance with Section 228 of the DGCL.
"Company Stockholders" means the holders of outstanding shares of Company Common Stock.
"Company Termination Fee" has the meaning set forth in Section 8.3(a).
"Confidentiality Agreement" or "NDA" means the Mutual Non-Disclosure Agreement between Parent and the Company, reference NDA-BRB-TLI-2026-001, anticipated to be executed on or about February 14, 2026.
"Consent" means any consent, approval, authorization, order, registration, declaration, filing, waiver, exemption, or permit of or from, or notice to, any Person, including any Governmental Authority.
"Contract" means any written or oral agreement, contract, lease, sublease, license, sublicense, obligation, promise, undertaking, instrument, indenture, mortgage, note, commitment, or other arrangement or agreement that is binding on any Person or its property.
"DGCL" means the Delaware General Corporation Law, Title 8 of the Delaware Code, as amended.
"Dissenting Shares" has the meaning set forth in Section 3.8.
"Effective Time" means the time at which the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware, or such later time as may be agreed upon by the Parties and specified in the Certificate of Merger.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"Escrow Agreement" means the Escrow Agreement among Parent, the Stockholder Representative, and Caravel Trust Company, N.A., substantially in the form attached hereto as Exhibit B.
"Escrow Amount" means Four Million Eight Hundred Thousand Dollars ($4,800,000), representing ten percent (10%) of the Aggregate Merger Consideration.
"Escrow Period" means the period commencing on the Closing Date and ending on the date that is eighteen (18) months following the Closing Date.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
"FDIC" means the Federal Deposit Insurance Corporation.
"FIRPTA" means the Foreign Investment in Real Property Tax Act of 1980, as amended.
"Fully Diluted Shares" means 12,000,000 shares, representing the sum of (a) all outstanding shares of Company Common Stock, plus (b) all shares of Company Common Stock issuable upon the exercise or settlement of all in-the-money Company Options and all Company RSUs, in each case outstanding as of immediately prior to the Effective Time.
"Fundamental Representations" means the representations and warranties of the Company set forth in Section 4.1 (Organization, Standing, and Power), Section 4.3 (Authorization; Enforceability), Section 4.4 (Capitalization), Section 4.12 (Tax Matters), and Section 4.20 (Brokers and Finders).
"GAAP" means United States generally accepted accounting principles, consistently applied.
"Governmental Authority" means any federal, state, local, municipal, or foreign governmental, regulatory, or administrative body, department, commission, court, agency, tribunal, or instrumentality, including the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), the Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission (FTC), the Department of Justice (DOJ), the Securities and Exchange Commission (SEC), and any applicable state banking, financial services, or lending regulatory authority.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnification Escrow" means the portion of the Aggregate Merger Consideration deposited into escrow with the Escrow Agent in an amount equal to the Escrow Amount of $4,800,000.
"Knowledge of the Company" means the actual knowledge, after reasonable inquiry of their direct reports, of Vikram S. Narayan (Chief Executive Officer) and Elena M. Castillo (Chief Technology Officer).
"Knowledge of Parent" means the actual knowledge, after reasonable inquiry of their direct reports, of Marcus J. Linden (Chief Executive Officer), Catherine A. Royce (General Counsel and Corporate Secretary), and Derek S. Whitmore (Chief Financial Officer).
"Law" means any federal, state, local, municipal, or foreign statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree, or agency requirement of any Governmental Authority.
"Lien" means any mortgage, pledge, lien, charge, encumbrance, security interest, claim, option, right of first refusal, right of first offer, preemptive right, community property interest, restriction on transfer, restriction on use, conditional sale agreement, title defect, or other encumbrance of any kind.
"Losses" means any and all losses, liabilities, damages, claims, actions, judgments, settlements, penalties, fines, costs, and expenses (including reasonable attorneys' fees and expenses).
"Merger" means the merger of Acquisition Sub with and into the Company in accordance with this Agreement and the DGCL, with the Company surviving as a wholly owned subsidiary of Parent.
"Merger Consideration" means the product of (a) the Per-Share Merger Consideration, multiplied by (b) the number of Fully Diluted Shares, which equals the Aggregate Merger Consideration of $48,000,000.
"Net Closing Payment" means the Aggregate Merger Consideration ($48,000,000) minus the Escrow Amount ($4,800,000), which equals Forty-Three Million Two Hundred Thousand Dollars ($43,200,000).
"OCC" means the Office of the Comptroller of the Currency.
"OCC Approval" means approval of the Merger by the OCC, including pursuant to 12 U.S.C. §§ 24 and 24a and applicable OCC regulations, and the expiration of any applicable waiting periods imposed by the OCC in connection therewith.
"Outside Date" means the date that is [●] months following the date of this Agreement, as may be extended in accordance with the terms of this Agreement.
"Parent" means Belmont Ridge Bank NA, a national banking association, OCC charter number 24-00781, FDIC certificate number 09463, EIN 13-4517820, with principal executive offices at 600 Lexington Avenue, 34th Floor, New York, New York 10022. Parent's common stock is listed on the New York Stock Exchange under the ticker symbol "BRMG," and its SEC CIK number is 0001823456.
"Parent Indemnified Parties" has the meaning set forth in Section 9.2.
"Parent Material Adverse Effect" has the meaning set forth in Section 1.2(b).
"Parent Termination Fee" has the meaning set forth in Section 8.3(b).
"Paying Agent" has the meaning set forth in Section 3.6.
"Per-Share Merger Consideration" means Four Dollars ($4.00) per share, being the quotient of the Aggregate Merger Consideration ($48,000,000) divided by the Fully Diluted Shares (12,000,000).
"Permitted Liens" means (a) Liens for Taxes not yet due and payable or being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, (b) mechanics', carriers', workers', repairers', materialmen's, warehousemen's, and other similar Liens arising or incurred in the ordinary course of business, (c) pledges or deposits in connection with workers' compensation, unemployment insurance, and other social security legislation, (d) zoning, building, entitlement, and other land use regulations imposed by any Governmental Authority having jurisdiction over real property that are not violated by the current use of such real property, and (e) other imperfections of title, restrictions, conditions, easements, charges, rights-of-way, and encumbrances of a similar nature that do not, individually or in the aggregate, materially impair the continued use and operation of the assets to which they relate in the conduct of the Company's business as presently conducted.
"Person" means any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, Governmental Authority, or other entity of any kind or nature.
"Program Agreement" means the bank-partnership lending program agreement between the Company and Ridgeline Community Bank, dated March 15, 2020 (reference TLI-RCB-2020-001), as renewed and amended from time to time, with the current renewal term extending through December 31, 2027.
"R&W Insurance Policy" means the buyer-side representations and warranties insurance policy to be procured by Parent from Meridian Indemnity Group, Inc., with a contemplated policy limit of Nine Million Six Hundred Thousand Dollars ($9,600,000) and a retention of Nine Hundred Sixty Thousand Dollars ($960,000).
"Ridgeline" or "Ridgeline Community Bank" means Ridgeline Community Bank, a Utah-chartered industrial bank, FDIC certificate number 35218, with its principal offices at 175 East 400 South, Suite 600, Salt Lake City, Utah 84111.
"SEC" means the United States Securities and Exchange Commission.
"State Licensing Approvals" means all approvals, consents, change-of-control filings, notifications, and authorizations required by applicable state banking, financial services, or lending regulatory authorities in connection with the Merger and the change of control of the Company, with respect to the Company's lending licenses in forty-two (42) states and the District of Columbia.
"Stockholder Indemnified Parties" has the meaning set forth in Section 9.3.
"Stockholder Representative" means [●], acting as the representative, agent, and attorney-in-fact of the Company Stockholders for purposes of indemnification, escrow matters, and post-Closing adjustments. It is anticipated that Vikram S. Narayan will serve as the Stockholder Representative.
"Superior Proposal" means any bona fide written Acquisition Proposal (with the percentages set forth in the definition of Acquisition Proposal changed to fifty percent (50%)) made by a third party on terms that the Company Board determines in good faith, after consultation with its outside legal counsel and financial advisor, taking into account all the terms and conditions of such proposal and this Agreement (including any modifications to the terms of this Agreement proposed by Parent in response thereto), to be more favorable to the Company Stockholders than the transactions contemplated by this Agreement.
"Surviving Corporation" means the Company, as the surviving entity following the Merger.
"Tax" or "Taxes" means (a) all federal, state, local, or foreign taxes, charges, fees, levies, imposts, duties, or other assessments, including income, gross receipts, excise, employment, sales, use, transfer, license, payroll, franchise, severance, stamp, occupation, windfall profits, environmental, customs, capital stock, disability, withholding, real property, personal property (tangible and intangible), escheat or unclaimed property, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, (b) any liability for the payment of any amounts described in clause (a) as a result of being a member of any affiliated, consolidated, combined, unitary, or similar group, and (c) any liability for the payment of any amounts described in clauses (a) or (b) as a result of any tax-sharing agreement, tax indemnity obligation, or similar agreement or any obligation to indemnify any other Person.
"Transaction Expenses" means all fees, costs, and expenses incurred by or on behalf of the Company in connection with the negotiation, preparation, execution, and performance of this Agreement and the consummation of the Merger, including (a) fees and expenses of Kessler, Aldrich & Voss LLP, the Company's outside legal counsel, (b) the advisory fee payable to Ashford Keane Partners LLC in the amount of Nine Hundred Sixty Thousand Dollars ($960,000) (being 2.0% of the Aggregate Merger Consideration), (c) fees and expenses of Whitfield Thorpe LLP, the Company's auditor, and (d) any other fees, costs, or expenses incurred by the Company in connection with the transactions contemplated hereby.
"Treasury Regulations" means the regulations promulgated under the Code by the United States Department of the Treasury, as amended.
Section 1.2 — Interpretation of Material Adverse Effect
(a) "Company Material Adverse Effect" means any change, effect, event, occurrence, state of facts, or development that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on (i) the business, operations, assets, liabilities, condition (financial or otherwise), or results of operations of the Company, or (ii) the ability of the Company to consummate the Merger and the other transactions contemplated by this Agreement on a timely basis; provided, however, that none of the following, either alone or in combination, shall be deemed to constitute, or shall be taken into account in determining whether there has been, a Company Material Adverse Effect:
(i) changes in general economic, political, regulatory, or market conditions in the United States or any foreign jurisdiction;
(ii) changes in conditions generally affecting the consumer lending industry, the financial technology industry, or the financial services industry;
(iii) changes in applicable Law (including rules, regulations, and interpretive guidance) or GAAP, or changes in the interpretation or enforcement thereof;
(iv) changes resulting from any act of war (whether or not declared), armed hostilities, sabotage, terrorism, military actions, or any escalation or worsening of any such act of war, armed hostilities, sabotage, terrorism, or military actions, or any natural disaster, epidemic, pandemic, or other force majeure event;
(v) changes resulting from the announcement, pendency, or consummation of the Merger or the transactions contemplated by this Agreement, including the impact thereof on relationships, contractual or otherwise, with customers, suppliers, distributors, employees, regulators, or business partners (including Ridgeline Community Bank);
(vi) changes in interest rates, currency exchange rates, or credit markets generally;
(vii) industry-wide regulatory changes, including any changes promulgated or proposed by the OCC, FDIC, CFPB, or any state regulatory authority affecting financial technology lenders or bank-partnership lending arrangements generally; and
(viii) any failure by the Company to meet any internal or published financial projections, budgets, forecasts, or estimates of revenue, earnings, or other financial metrics for any period (provided that the underlying cause of any such failure may itself constitute or be taken into account in determining whether a Company Material Adverse Effect has occurred, to the extent not otherwise excluded by the foregoing clauses);
provided, further, that, with respect to clauses (i) through (iv), (vi), and (vii), such changes, effects, events, occurrences, states of facts, or developments may be taken into account in determining whether a Company Material Adverse Effect has occurred to the extent that such changes, effects, events, occurrences, states of facts, or developments disproportionately affect the Company relative to other similarly situated companies operating in the consumer lending or financial technology industries.
(b) "Parent Material Adverse Effect" means any change, effect, event, occurrence, state of facts, or development that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the ability of Parent or Acquisition Sub to (i) consummate the Merger and the other transactions contemplated by this Agreement on a timely basis or (ii) pay the Aggregate Merger Consideration and fund all amounts required to be paid by Parent or Acquisition Sub in connection with the Merger.
Section 1.3 — Rules of Construction
Unless the context of this Agreement otherwise requires: (a) words of any gender include each other gender; (b) words using the singular or plural number also include the plural or singular number, respectively; (c) the terms "hereof," "herein," "hereby," "hereto," and derivative or similar words refer to this entire Agreement; (d) the terms "Article," "Section," "Schedule," "Exhibit," and "Annex" refer to the specified Article, Section, Schedule, Exhibit, or Annex of or to this Agreement unless otherwise specified; (e) the word "including" means "including, without limitation"; (f) references to any Person include such Person's successors and permitted assigns; (g) references to any Contract mean such Contract as amended, modified, supplemented, or waived from time to time in accordance with its terms and this Agreement; (h) all references to currency or "$" mean United States Dollars; (i) all references to time mean Eastern Time unless otherwise specified; (j) headings and captions are included for convenience of reference only and shall not be considered in interpreting or construing this Agreement; (k) references to any Law include all statutory and regulatory provisions consolidating, amending, replacing, supplementing, or interpreting such Law; and (l) references to "days" mean calendar days unless specifically stated as "Business Days."
ARTICLE II — THE MERGER
Section 2.1 — The Merger
Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with Section 251 of the DGCL, at the Effective Time, Acquisition Sub shall be merged with and into the Company. As a result of the Merger, the separate corporate existence of Acquisition Sub shall cease at the Effective Time, and the Company shall continue as the surviving corporation in the Merger (the "Surviving Corporation") and shall become a direct wholly owned subsidiary of Parent. The Merger shall have the effects set forth in Section 259 of the DGCL and the other applicable provisions of the DGCL.
Section 2.2 — Closing
The closing of the Merger (the "Closing") shall take place on the second (2nd) Business Day following the date on which the last of the conditions set forth in Article VII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions at the Closing) shall have been satisfied or waived, or on such other date as Parent and the Company may mutually agree in writing. The Closing shall be effected remotely by the electronic exchange of executed signature pages and wire transfer of funds in immediately available funds, or at such other place as the Parties may mutually agree in writing. The Parties anticipate that the Closing will occur during the third quarter of 2026.
Section 2.3 — Effective Time
On the Closing Date, the Parties shall cause a Certificate of Merger, substantially in the form attached hereto as Exhibit C, to be duly executed, acknowledged, and filed with the Secretary of State of the State of Delaware in accordance with the relevant provisions of the DGCL. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware or at such later time as Parent and the Company shall agree and specify in the Certificate of Merger (the date and time the Merger becomes effective being the "Effective Time").
Section 2.4 — Certificate of Incorporation of the Surviving Corporation
At the Effective Time, the certificate of incorporation of the Company, as in effect immediately prior to the Effective Time, shall be amended and restated in its entirety so as to read as set forth in Exhibit A hereto, and, as so amended and restated, shall be the certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with the DGCL and such certificate of incorporation; provided, however, that the name of the Surviving Corporation shall remain "Tessera Lending, Inc."
Section 2.5 — Bylaws of the Surviving Corporation
At the Effective Time, the bylaws of Acquisition Sub, as in effect immediately prior to the Effective Time, shall become the bylaws of the Surviving Corporation until thereafter amended in accordance with the DGCL, the certificate of incorporation of the Surviving Corporation, and such bylaws.
Section 2.6 — Directors and Officers of the Surviving Corporation
(a) At the Effective Time, the directors of the Surviving Corporation shall be the individuals who were the directors of Acquisition Sub immediately prior to the Effective Time, as designated by Parent, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation until his or her successor is duly elected or appointed and qualified, or until his or her earlier death, resignation, or removal.
(b) At the Effective Time, the officers of the Surviving Corporation shall be the individuals who were the officers of Acquisition Sub immediately prior to the Effective Time, as designated by Parent, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation until his or her successor is duly appointed and qualified, or until his or her earlier death, resignation, or removal; provided that Parent may, in its sole discretion, determine to appoint different or additional officers at or following the Effective Time.
(c) For the avoidance of doubt, the current directors of the Company (Vikram S. Narayan, Elena M. Castillo, Jonathan R. Peake, Sandra L. Hu, and Dr. Margaret A. Forsythe) and the current officers of the Company shall cease to serve in their respective capacities upon the Effective Time unless reappointed by Parent in accordance with this Section 2.6.
ARTICLE III — MERGER CONSIDERATION; TREATMENT OF COMPANY SECURITIES
Section 3.1 — Conversion of Company Common Stock
At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Acquisition Sub, the Company, or any holder of any securities of the Company or Acquisition Sub:
(a) Conversion of Company Common Stock. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than (i) Dissenting Shares and (ii) shares held by the Company as treasury stock or owned directly or indirectly by Parent or Acquisition Sub) shall be converted into the right to receive Four Dollars ($4.00) in cash, without interest (the "Per-Share Merger Consideration"), subject to reduction by such holder's pro rata share of the Escrow Amount as provided in Section 3.4, and subject to applicable withholding pursuant to Section 3.7.
(b) Cancellation of Treasury and Parent-Owned Shares. Each share of Company Common Stock held by the Company as treasury stock, or owned directly or indirectly by Parent or Acquisition Sub, in each case immediately prior to the Effective Time, shall be automatically canceled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor.
(c) Conversion of Acquisition Sub Stock. Each share of common stock of Acquisition Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one (1) validly issued, fully paid, and nonassessable share of common stock of the Surviving Corporation.
Section 3.2 — Treatment of Company Options
(a) At the Effective Time, each Company Option that is outstanding and unexercised immediately prior to the Effective Time, whether or not then vested or exercisable, shall, by virtue of the Merger and without any action on the part of the holder thereof, be treated as follows:
(i) In-the-Money Options. If the per-share exercise price applicable to such Company Option is less than the Per-Share Merger Consideration of $4.00 (i.e., such Company Option is "in the money"), such Company Option shall be canceled and extinguished and converted into the right to receive, as soon as practicable following the Effective Time, a lump-sum cash payment (without interest) equal to the product of (A) the excess, if any, of the Per-Share Merger Consideration ($4.00) over the applicable per-share exercise price of such Company Option, multiplied by (B) the total number of shares of Company Common Stock subject to such Company Option, less any amounts required to be deducted and withheld pursuant to Section 3.7.
(ii) Out-of-the-Money Options. If the per-share exercise price applicable to such Company Option is equal to or greater than the Per-Share Merger Consideration of $4.00 (i.e., such Company Option is "out of the money"), such Company Option shall be canceled and extinguished for no consideration and without any payment being made in respect thereof.
(b) The Company shall use commercially reasonable efforts prior to the Effective Time to take all actions necessary or appropriate to effectuate the treatment of Company Options set forth in this Section 3.2, including obtaining any requisite consents from holders of Company Options, amending the Company Equity Plan to the extent required, and providing all required notices to holders of Company Options.
(c) The treatment of Company Options pursuant to this Section 3.2 shall comply with Section 409A of the Code, and the Parties shall cooperate to ensure such compliance.
Section 3.3 — Treatment of Company RSUs
(a) At the Effective Time, each Company RSU that is outstanding immediately prior to the Effective Time, whether or not then vested, shall, by virtue of the Merger and without any action on the part of the holder thereof, be canceled and extinguished and converted into the right to receive, as soon as practicable following the Effective Time, a lump-sum cash payment (without interest) equal to the product of (i) the Per-Share Merger Consideration ($4.00) multiplied by (ii) the total number of shares of Company Common Stock underlying such Company RSU, less any amounts required to be deducted and withheld pursuant to Section 3.7.
(b) The Company shall use commercially reasonable efforts prior to the Effective Time to take all actions necessary or appropriate to effectuate the treatment of Company RSUs set forth in this Section 3.3, including obtaining any requisite consents, amending the Company Equity Plan to the extent required, and providing all required notices.
(c) As of the date of this Agreement, the employee and angel investor pool consists of Company Options and Company RSUs covering, in the aggregate, 900,000 shares of Company Common Stock, representing approximately 7.5% of the Company's fully diluted capitalization. The specific terms of all outstanding Company Options and Company RSUs (including exercise prices, vesting schedules, and grant dates) are set forth on Schedule 4.4.
Section 3.4 — Escrow Holdback
(a) At the Closing, an amount equal to Four Million Eight Hundred Thousand Dollars ($4,800,000) (the "Escrow Amount"), representing ten percent (10%) of the Aggregate Merger Consideration, shall be withheld from the amounts otherwise payable to the Company Stockholders (and the holders of in-the-money Company Options and Company RSUs) and deposited by Parent with the Escrow Agent pursuant to the Escrow Agreement.
(b) The Escrow Amount shall be held in the escrow account established under the Escrow Agreement for the Escrow Period of eighteen (18) months following the Closing Date and shall serve as the primary security for the indemnification obligations of the Company Stockholders under Article IX hereof, subject to the terms and conditions of the Escrow Agreement.
(c) The Escrow Amount shall be distributed in accordance with Article IX and the Escrow Agreement. At the expiration of the Escrow Period, any undistributed portion of the Escrow Amount (less any amounts subject to then-pending and unresolved claims) shall be released to the Company Stockholders on a pro rata basis.
(d) Each Company Stockholder's (and each holder of in-the-money Company Options and Company RSUs') share of the Net Closing Payment shall be proportionally reduced by such holder's pro rata share of the Escrow Amount. For purposes of this Section 3.4, each holder's pro rata share shall be determined based on the ratio of (i) the total consideration otherwise payable to such holder (before giving effect to the Escrow Amount holdback), to (ii) the Aggregate Merger Consideration.
Section 3.5 — Funds Flow; Payment Mechanics
(a) Not later than three (3) Business Days prior to the anticipated Closing Date, Parent shall deliver to the Company and the Stockholder Representative a funds flow memorandum (the "Funds Flow Memorandum") setting forth in reasonable detail the allocation of the Aggregate Merger Consideration, including the following:
(i) Aggregate Merger Consideration: $48,000,000
(ii) Less Escrow Amount deposited with Caravel Trust Company, N.A.: ($4,800,000)
(iii) Net Closing Payment: $43,200,000
(iv) Less estimated Transaction Expenses of the Company (to be specified at Closing based on invoices and estimates delivered by the Company)
(v) Net distributable amount to Company Stockholders (and holders of in-the-money Company Options and Company RSUs)
(vi) Wire transfer instructions for each payee
(b) At the Closing, Parent shall (i) deposit the Escrow Amount of $4,800,000 with the Escrow Agent by wire transfer of immediately available funds, and (ii) deliver or cause to be delivered, by wire transfer of immediately available funds, the Net Closing Payment (less applicable Transaction Expenses, the Escrow Amount, and any amounts required to be deducted and withheld pursuant to Section 3.7) to the Company Stockholders (and to the holders of in-the-money Company Options and Company RSUs) in accordance with the Funds Flow Memorandum.
(c) The allocation of the Merger Consideration among the holders of Company Common Stock, Company Options, and Company RSUs on a fully diluted basis (at the Per-Share Merger Consideration of $4.00 per share), prior to deduction of the pro rata Escrow Amount holdback, is set forth on an illustrative basis below:
The amounts set forth above are illustrative and remain subject to (i) pro rata reduction for each holder's share of the Escrow Amount, (ii) deduction of applicable exercise prices with respect to Company Options, and (iii) applicable tax withholding.
Section 3.6 — Payment Agent
(a) Prior to the Closing Date, Parent may appoint a bank or trust company (which may be Caravel Trust Company, N.A. or another institution reasonably acceptable to the Company) to act as paying agent (the "Paying Agent") in connection with the payment of the Merger Consideration.
(b) As soon as practicable following the Effective Time, the Surviving Corporation shall cause the Paying Agent to mail to each record holder of Company Common Stock (i) a letter of transmittal, substantially in the form of Exhibit E hereto, specifying that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates (or affidavits of loss in lieu thereof) to the Paying Agent, and (ii) instructions for effecting the surrender of Certificates in exchange for payment of the Per-Share Merger Consideration (less the applicable pro rata Escrow Amount holdback and withholding).
(c) Upon surrender of a Certificate to the Paying Agent, together with a properly completed and duly executed letter of transmittal and such other documents as may be reasonably required by the Paying Agent, the holder of such Certificate shall be entitled to receive in exchange therefor the aggregate Per-Share Merger Consideration (less the applicable pro rata Escrow Amount holdback and withholding) for each share of Company Common Stock formerly represented by such Certificate, and the Certificate so surrendered shall forthwith be canceled.
(d) Any portion of the Merger Consideration deposited with the Paying Agent that remains unclaimed by Company Stockholders twelve (12) months after the Effective Time shall be returned to the Surviving Corporation upon demand. Thereafter, any former Company Stockholder who has not surrendered his, her, or its Certificate(s) shall look only to the Surviving Corporation as a general creditor thereof for payment of the Merger Consideration to which such holder is entitled, without any interest thereon. Notwithstanding the foregoing, none of Parent, the Surviving Corporation, the Paying Agent, or the Escrow Agent shall be liable to any Person for any portion of the Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat, or similar Law.
Section 3.7 — Withholding Rights
Each of Parent, Acquisition Sub, the Surviving Corporation, the Escrow Agent, and the Paying Agent shall be entitled to deduct and withhold from any amounts otherwise payable pursuant to this Agreement such amounts as may be required to be deducted and withheld with respect to the making of such payment under the Code, the Treasury Regulations, or any provision of applicable state, local, or foreign Tax Law. To the extent that amounts are so deducted and withheld and remitted to the applicable Governmental Authority, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made.
Section 3.8 — Dissenting Shares
(a) Notwithstanding anything in this Agreement to the contrary, shares of Company Common Stock that are issued and outstanding immediately prior to the Effective Time and that are held by any holder who has properly demanded and perfected appraisal rights in respect of such shares in accordance with Section 262 of the DGCL and who has not effectively withdrawn or lost such appraisal rights (collectively, "Dissenting Shares") shall not be converted into the right to receive the Per-Share Merger Consideration pursuant to Section 3.1, but instead shall be entitled only to such rights as are granted by Section 262 of the DGCL.
(b) Notwithstanding the foregoing, if any holder of Dissenting Shares shall effectively withdraw or lose (through failure to perfect or otherwise) the right to appraisal under Section 262 of the DGCL, then, as of the later of the Effective Time or the occurrence of such event, such holder's shares shall automatically be converted into and represent only the right to receive the Per-Share Merger Consideration, without interest thereon, as provided in Section 3.1, upon surrender of the Certificate representing such shares in the manner provided in Section 3.6.
(c) The Company shall give Parent (i) prompt written notice of any demands for appraisal of Company Common Stock received by the Company under Section 262 of the DGCL, (ii) the opportunity to participate in and direct all negotiations and proceedings with respect to such demands, and (iii) written notice of any withdrawals of such demands. The Company shall not, except with the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned, or delayed), voluntarily make any payment with respect to, or settle, offer to settle, or otherwise negotiate, any such demand for appraisal.
Section 3.9 — Lost Certificates
In the event any Certificate shall have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen, or destroyed and, if required by the Surviving Corporation or the Paying Agent, the posting by such Person of a bond in such reasonable amount as the Surviving Corporation or the Paying Agent may direct as indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent shall pay, in exchange for such lost, stolen, or destroyed Certificate, the applicable Per-Share Merger Consideration to be paid in respect of the shares of Company Common Stock formerly represented by such Certificate, in each case subject to the Escrow Amount holdback, withholding, and the other terms and conditions of this Article III.
ARTICLE IV — REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Schedules delivered by the Company to Parent concurrently with the execution and delivery of this Agreement (the "Company Disclosure Schedules"), the Company hereby represents and warrants to Parent and Acquisition Sub that the statements contained in this Article IV are true and correct as of the date of this Agreement and will be true and correct as of the Closing Date as though made on and as of such date, except to the extent that any such representation or warranty is expressly made as of a specified date, in which case such representation or warranty shall be true and correct as of such specified date.
Section 4.1 — Organization, Standing, and Power
The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, with Delaware file number 6847312. The Company has the corporate power and authority to own, lease, and operate its properties and assets and to conduct its business as presently conducted and as presently proposed to be conducted. The Company is duly qualified or licensed to do business and is in good standing (or equivalent status, to the extent recognized) in each jurisdiction in which the nature of its business or the ownership, leasing, or operation of its properties makes such qualification or licensing necessary, except where the failure to be so qualified or licensed or in good standing would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. Without limiting the foregoing, the Company is duly qualified to do business in the State of Texas (the location of its principal offices) and in each of the forty-two (42) states and the District of Columbia in which it holds lending licenses. Schedule 4.1 sets forth a true and complete list of the jurisdictions in which the Company is qualified or licensed to do business.
Section 4.2 — Subsidiaries
Except as set forth on Schedule 4.2, the Company does not own, directly or indirectly, any equity or other ownership interest in any Person, and does not have any subsidiaries. For the avoidance of doubt, Ridgeline Community Bank is not a subsidiary of the Company but rather a contractual partner under the Program Agreement TLI-RCB-2020-001, pursuant to which the Company and Ridgeline engage in a bank-partnership lending arrangement. The nature of the Company's relationship with Ridgeline is described in further detail in Section 4.21.
Section 4.3 — Authorization; Enforceability
The Company has full corporate power and authority to execute and deliver this Agreement and each of the other agreements, documents, and instruments contemplated hereby to which it is or will be a party (collectively with this Agreement, the "Transaction Documents"), to perform its obligations hereunder and thereunder, and to consummate the Merger and the other transactions contemplated by this Agreement. The execution, delivery, and performance of this Agreement and the other Transaction Documents by the Company, and the consummation by the Company of the Merger and the other transactions contemplated hereby, have been duly and validly authorized by the Company Board, and, subject to the filing of the Certificate of Merger with the Secretary of State of the State of Delaware and the receipt of the Company Stockholder Approval, no other corporate action on the part of the Company or its stockholders is necessary to authorize this Agreement or the other Transaction Documents or to consummate the Merger and the other transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company and, assuming due authorization, execution, and delivery by Parent and Acquisition Sub, constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to (a) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and similar Laws of general applicability relating to or affecting creditors' rights generally, and (b) general equitable principles (whether considered in a proceeding in equity or at law).
Section 4.4 — Capitalization
(a) The authorized capital stock of the Company consists of [●] shares of common stock, par value $0.001 per share. As of the date of this Agreement, on a fully diluted basis (including all outstanding shares of Company Common Stock and all shares of Company Common Stock issuable upon the exercise or settlement of all outstanding Company Options and Company RSUs), the Company has 12,000,000 Fully Diluted Shares, allocated as follows:
(b) All outstanding shares of Company Common Stock are duly authorized, validly issued, fully paid, and nonassessable, and are not subject to, and were not issued in violation of, any preemptive right, right of first refusal, right of first offer, or other similar right.
(c) Schedule 4.4 sets forth a true and complete list of all outstanding Company Options and Company RSUs, including for each such award: (i) the name of the holder, (ii) the grant date, (iii) the number of shares of Company Common Stock subject thereto, (iv) the per-share exercise price (in the case of Company Options), (v) the vesting schedule, and (vi) the expiration date (in the case of Company Options).
(d) Except as set forth in Schedule 4.4, there are no outstanding (i) shares of capital stock or other voting securities of the Company, (ii) securities of the Company convertible into or exchangeable for shares of capital stock or voting securities of the Company, (iii) options, warrants, calls, subscriptions, rights (including preemptive rights, anti-dilution rights, or similar rights), commitments, or agreements to which the Company is a party or by which it is bound obligating the Company to issue, deliver, sell, repurchase, or redeem, or cause to be issued, delivered, sold, repurchased, or redeemed, any shares of capital stock or voting securities of the Company, or (iv) phantom equity, stock appreciation rights, profit participations, or similar rights with respect to the Company.
(e) Except as disclosed in Schedule 4.4, there are no stockholder agreements, voting agreements, voting trusts, proxies, registration rights agreements, investor rights agreements, co-sale agreements, rights of first refusal agreements, or similar agreements or understandings with respect to the voting, transfer, or registration of any shares of Company Common Stock.
Section 4.5 — No Conflicts; Consents
(a) The execution, delivery, and performance of this Agreement by the Company, and the consummation by the Company of the Merger and the other transactions contemplated hereby, do not and will not (with or without notice or lapse of time, or both): (i) conflict with or violate any provision of the certificate of incorporation or bylaws of the Company; (ii) conflict with or violate any Law applicable to the Company or by which any of its properties or assets is bound or affected; or (iii) result in any breach of, or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or give to others any right of termination, amendment, acceleration, increased payments, or cancellation of, or result in the creation of a Lien (other than Permitted Liens) on any property or asset of the Company pursuant to, any Contract to which the Company is a party or by which the Company or any of its properties or assets is bound or affected, except, in the case of clauses (ii) and (iii), as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(b) The execution, delivery, and performance of this Agreement by the Company, and the consummation by the Company of the Merger, require the following Consents: (i) the Company Stockholder Approval; (ii) the OCC Approval; (iii) the State Licensing Approvals in the forty-two (42) states and the District of Columbia in which the Company holds lending licenses; (iv) the consent of Ridgeline Community Bank under the change-of-control provisions of the Program Agreement TLI-RCB-2020-001; and (v) such other Consents as are set forth on Schedule 4.5.
Section 4.6 — Financial Statements
(a) The Company has delivered or made available to Parent the following financial statements (collectively, the "Company Financial Statements"): (i) the audited consolidated balance sheets of the Company as of December 31, 2024 and December 31, 2025, and the related audited consolidated statements of income, stockholders' equity, and cash flows for the fiscal years then ended, together with the reports of Whitfield Thorpe LLP, the Company's independent registered public accounting firm, thereon; and (ii) unaudited interim financial statements for such recent periods as have been prepared by the Company and made available to Parent.
(b) The Company Financial Statements (including the notes thereto) have been prepared in accordance with GAAP consistently applied throughout the periods indicated (except as may be indicated in the notes thereto) and fairly present, in all material respects, the consolidated financial condition and results of operations of the Company as of the respective dates thereof and for the respective periods indicated therein (subject, in the case of unaudited interim financial statements, to normal year-end adjustments and the absence of footnotes). For the fiscal year ended December 31, 2025, the Company's revenues were approximately $38,400,000 and adjusted EBITDA was approximately $5,100,000.
(c) Since the Balance Sheet Date (December 31, 2025), no Company Material Adverse Effect has occurred.
Section 4.7 — Absence of Certain Changes