PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
INTERNAL MEMORANDUM
Date: January 28, 2026
To: Catherine A. Royce, General Counsel & Corporate Secretary, Belmont Ridge Bank NA Deal Team: Marcus J. Linden, Derek S. Whitmore, Phillip N. Godfrey (Hargrove Mercer & Co.)
From: Andrew Fitzpatrick, Lead Associate, and Naomi Petersen, Working Associate, Calderwood & Harkness LLP
Reviewed by: Beatrice Holloway, Responsible Partner, M&A, Calderwood & Harkness LLP
Re: Preliminary Structuring Analysis — Prospective Acquisition of Tessera Lending, Inc. by Belmont Ridge Bank NA
Matter No.: 1045-00005
Distribution Note: For internal client review only. Not to be shared with counterparties or third parties without prior authorization from Calderwood & Harkness LLP.
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I. Executive Summary
This memorandum presents our preliminary analysis and structural recommendation in connection with the prospective acquisition by Belmont Ridge Bank NA ("BRB"), a national banking association chartered under federal law (OCC Charter No. 24-00781), of Tessera Lending, Inc. ("Tessera"), a Delaware corporation (Delaware file number 6847312). BRB is headquartered at 600 Lexington Avenue, 34th Floor, New York, NY 10022, and its common stock is publicly traded on the New York Stock Exchange under the ticker symbol "BRMG" (SEC CIK 0001823456). As of December 31, 2025, BRB maintained approximately $14.7 billion in total consolidated assets. Tessera is headquartered at 2400 Shoal Creek Boulevard, Suite 500, Austin, TX 78756, and operates a technology-enabled consumer lending platform.
Based on our review of the preliminary information provided by the deal team and our analysis of the legal, regulatory, and structural considerations applicable to this transaction, we recommend that BRB pursue the acquisition of Tessera through a reverse triangular merger under the Delaware General Corporation Law (the "DGCL"). Under the recommended structure, BRB would form a new, wholly owned, single-purpose Delaware subsidiary — BRB Acquisition Sub, Inc. ("Acquisition Sub") — which would merge with and into Tessera, with Tessera surviving as a wholly owned subsidiary of BRB. This structure preserves Tessera's corporate identity, regulatory licenses, contractual relationships, and intellectual property, and permits the most efficient regulatory transition path available for this transaction.
The aggregate merger consideration is proposed at $48,000,000 in cash, corresponding to a per-share merger consideration of $4.00, based on 12,000,000 fully diluted shares of Tessera common stock outstanding. No equity component is currently contemplated for the merger consideration. The merger consideration will be funded entirely from BRB's available cash on hand, and no third-party acquisition financing is required or contemplated.
This memorandum analyzes the recommended transaction structure, the mechanics of the reverse triangular merger under the DGCL, the stockholder approval path (including the availability of written consent in lieu of a stockholders' meeting), the merger consideration and escrow arrangements, regulatory approval requirements (including OCC approval, FDIC notification, Hart-Scott-Rodino Act analysis, state lending-license change-of-control filings, CFPB supervisory jurisdiction, and the Ridgeline Community Bank program agreement consent), preliminary tax considerations, alternative structures considered and rejected, and key open issues and next steps for the transaction.
Tessera is represented by Kessler, Aldrich & Voss LLP, with Randall T. Kessler serving as lead partner. Tessera's financial advisor is Ashford Keane Partners LLC, led by Diane R. Okamoto, Partner. BRB's financial advisor on this transaction is Hargrove Mercer & Co., led by Phillip N. Godfrey, Managing Director.
II. Background on the Parties
A. Belmont Ridge Bank NA (Buyer)
Belmont Ridge Bank NA is a national banking association organized and existing under the laws of the United States, with its principal executive offices located at 600 Lexington Avenue, 34th Floor, New York, NY 10022. BRB's common stock is listed and traded on the New York Stock Exchange under the ticker symbol "BRMG," and BRB files periodic reports with the Securities and Exchange Commission under CIK 0001823456.
As of December 31, 2025, BRB reported total consolidated assets of approximately $14.7 billion and cash and cash equivalents of approximately $1.03 billion. BRB holds OCC Charter No. 24-00781 and is insured by the Federal Deposit Insurance Corporation under FDIC Certificate No. 09463. BRB's Employer Identification Number is 13-4517820.
The principal officers of BRB relevant to this transaction are as follows:
• Chief Executive Officer: Marcus J. Linden
• General Counsel & Corporate Secretary: Catherine A. Royce
• Chief Financial Officer: Derek S. Whitmore
BRB's independent auditor is Graystone & Albright LLP, headquartered in Philadelphia, Pennsylvania.
BRB operates through consumer and commercial banking divisions and has, in recent years, pursued a strategic initiative to expand its digital lending capabilities through targeted acquisitions of technology-enabled financial services platforms. The proposed acquisition of Tessera is consistent with this strategic initiative and represents BRB's entry into the technology-enabled point-of-sale installment lending market.
BRB's board of directors has authorized management to pursue the acquisition of Tessera, subject to final board approval of definitive terms. No formal board resolution approving the execution of a definitive merger agreement has been adopted as of the date of this memorandum; such resolution will be required prior to signing.
B. Tessera Lending, Inc. (Target)
Tessera Lending, Inc. is a corporation organized and existing under the laws of the State of Delaware (Delaware file number 6847312), with its principal executive offices located at 2400 Shoal Creek Boulevard, Suite 500, Austin, TX 78756. Tessera's Employer Identification Number is 83-2649107.
Tessera was founded in 2018 and operates a technology-enabled consumer lending platform that facilitates the origination of unsecured personal loans and point-of-sale installment financing products. Since its inception, Tessera has generated cumulative loan originations of approximately $1.2 billion across its product suite. For the fiscal year ended December 31, 2025, Tessera reported revenue of approximately $38,400,000 and adjusted EBITDA of approximately $5,100,000. Tessera's independent auditor is Whitfield Thorpe LLP, based in Austin, Texas.
Tessera currently holds lending licenses in 42 U.S. states and the District of Columbia, which enable it to originate or facilitate consumer loans across a broad geographic footprint. In addition, Tessera operates under a bank-partnership model with Ridgeline Community Bank, a Utah-chartered industrial bank (FDIC Certificate No. 35218) headquartered in Salt Lake City, Utah. The bank-partnership arrangement is governed by Program Agreement TLI-RCB-2020-001, dated March 15, 2020, which was renewed through December 31, 2027. Under this program agreement, Ridgeline Community Bank serves as the issuing bank for certain of Tessera's loan products, and Tessera provides technology, marketing, servicing, and operational support.
Tessera's co-founders and principal shareholders are Vikram S. Narayan, who serves as Chief Executive Officer and holds approximately 31.2% of the company's fully diluted equity, and Elena M. Castillo, who serves as Chief Technology Officer and holds approximately 22.8% of the fully diluted equity. The remaining equity is held by institutional investors, employees, and early-stage angel investors, as described in greater detail below.
Tessera's institutional investors include:
• Pinnacle Ventures Fund III, LP (EIN 85-3921047), managed by Pinnacle Ventures Management, LLC, based in San Francisco, California. Pinnacle led Tessera's Series B financing round in 2021 and currently holds approximately 26.5% of the fully diluted equity.
• Broadleaf Growth Capital, LLC (EIN 37-4862153), based in Chicago, Illinois. Broadleaf participated in Tessera's Series B and Series C financing rounds and currently holds approximately 12.0% of the fully diluted equity.
The remaining approximately 7.5% of Tessera's fully diluted equity is held by employees and early-stage angel investors through stock options and restricted stock units granted under Tessera's equity incentive plan.
Tessera's board of directors is composed of five members:
• Vikram S. Narayan (co-founder)
• Elena M. Castillo (co-founder)
• Jonathan R. Peake (Pinnacle Ventures designee)
• Sandra L. Hu (Broadleaf Growth Capital designee)
• Dr. Margaret A. Forsythe (independent director)
Based on preliminary information provided by the deal team, Tessera is currently debt-free, and no net-debt adjustment to the merger consideration is required at this stage. This preliminary assessment is subject to confirmatory review during the due diligence process, including a review of Tessera's audited financial statements, any off-balance-sheet obligations, and any indebtedness incurred after the most recent reporting period.
C. Capitalization of Tessera (Fully Diluted Basis)
The following table sets forth Tessera's capitalization on a fully diluted basis, together with the pro rata allocation of the merger consideration at $4.00 per share:
Reconciliation: 3,744,000 + 2,736,000 + 3,180,000 + 1,440,000 + 900,000 = 12,000,000 shares. 12,000,000 shares × $4.00 per share = $48,000,000 aggregate merger consideration.
We note that the capitalization table above is based on preliminary information and has not been independently verified. A full capitalization analysis — including a detailed review of Tessera's certificate of incorporation, any certificates of designation, stockholder agreements, investor rights agreements, the equity incentive plan, and all outstanding option and RSU grant agreements — will be required during the due diligence process to confirm the fully diluted share count and the allocation of the merger consideration among each class and series of equity interests.
III. Recommended Transaction Structure: Reverse Triangular Merger
A. Overview of the Reverse Triangular Merger
Under the recommended structure, BRB will form a wholly owned, single-purpose Delaware corporation — BRB Acquisition Sub, Inc. ("Acquisition Sub") — for the sole purpose of effecting the merger. Acquisition Sub will be organized under the DGCL and will have no assets, liabilities, or operations other than those incidental to its formation and the consummation of the merger.
The planned registered agent for Acquisition Sub is Crowne Albany Corporation, located at Cobalt Ridge Technologies, 1209 Orange Street, Wilmington, DE 19801. An Employer Identification Number for Acquisition Sub will be obtained from the Internal Revenue Service upon formation.
Pursuant to the Agreement and Plan of Merger to be entered into by and among BRB, Acquisition Sub, and Tessera (the "Merger Agreement"), Acquisition Sub will merge with and into Tessera under DGCL §§ 251 and 252. At the effective time of the merger (the "Effective Time"), Acquisition Sub will cease to exist, and Tessera will survive the merger as a wholly owned subsidiary of BRB (the "Surviving Corporation").
As the Surviving Corporation, Tessera will retain its corporate identity, its Delaware certificate of incorporation (as may be amended at the Effective Time), its Employer Identification Number (83-2649107), its contracts, its regulatory licenses in 42 U.S. states and the District of Columbia, its bank-partnership program agreement with Ridgeline Community Bank, its intellectual property, its technology platform, and all other corporate attributes. This preservation of Tessera's legal identity and regulatory standing is the principal structural advantage of the reverse triangular merger over the alternative transaction structures considered and rejected, as discussed in Section VIII below.
B. Mechanics Under the DGCL
The merger will be effected pursuant to DGCL § 251, which governs the merger of two or more domestic corporations organized under Delaware law. The key mechanical steps of the merger are summarized as follows:
1. Formation of Acquisition Sub. BRB will cause Acquisition Sub to be incorporated under the DGCL as a wholly owned subsidiary of BRB. Acquisition Sub's certificate of incorporation and bylaws will be in standard form, and its sole authorized share of common stock will be issued to and held by BRB.
2. Execution of the Merger Agreement. BRB, Acquisition Sub, and Tessera will enter into the Merger Agreement, which will set forth the terms and conditions of the merger, including the merger consideration, representations and warranties, covenants, closing conditions, indemnification provisions, and termination rights.
3. Stockholder Approval. The merger will be submitted for approval by Tessera's stockholders, as described in Section V below.
4. Regulatory Approvals. The parties will obtain all required regulatory approvals, as described in Section VI below.
5. Closing and Filing. Upon satisfaction or waiver of all closing conditions, the parties will execute and file a certificate of merger with the Secretary of State of the State of Delaware, and the merger will become effective at the time specified in the certificate of merger (or, if no time is specified, upon filing).
6. Conversion of Shares at the Effective Time. At the Effective Time:
(i) Each outstanding share of Tessera common stock (other than shares held by BRB, Acquisition Sub, or Tessera, if any, and other than dissenting shares, if applicable) will be converted into the right to receive $4.00 in cash, without interest (the "Per-Share Merger Consideration");
(ii) The sole outstanding share of Acquisition Sub common stock will be converted into one share of common stock of the Surviving Corporation (Tessera); and
(iii) All shares of Tessera common stock will be canceled and will cease to exist, and each holder of a certificate or book-entry position formerly representing shares of Tessera common stock will cease to have any rights with respect thereto, except the right to receive the Per-Share Merger Consideration upon surrender of such certificate or compliance with applicable book-entry transfer procedures.
7. Certificate of Merger. A certificate of merger complying with DGCL § 251(c) will be prepared, executed, and filed with the Delaware Secretary of State. The Effective Time will be the date and time specified in the certificate of merger.
The governing law of the merger and all aspects of the Merger Agreement is expected to be the State of Delaware.
C. Rationale for the Reverse Triangular Merger Structure
We recommend the reverse triangular merger structure for the following principal reasons:
Preservation of Tessera's Legal Identity. Tessera holds lending licenses in 42 U.S. states and the District of Columbia and is party to the critical bank-partnership program agreement with Ridgeline Community Bank (Program Agreement TLI-RCB-2020-001, dated March 15, 2020, renewed through December 31, 2027). A reverse triangular merger preserves these licenses and contractual relationships by operation of law, because Tessera — as the surviving entity in the merger — continues in existence without interruption. While certain change-of-control provisions in the program agreement and in state licensing statutes may be triggered by the merger (requiring consent or notification, as discussed in Section VI below), the reverse triangular merger avoids the need for the wholesale transfer, assignment, or re-issuance of licenses and contracts that would be required in a forward merger or asset purchase structure.
Simplification of Regulatory Transition. From the perspective of the OCC and state regulators, the acquisition by a national bank of a surviving subsidiary entity through a reverse triangular merger is a well-understood and commonly approved transaction structure. This structure is significantly cleaner from a regulatory standpoint than a direct asset acquisition, which would require Tessera's lending licenses to be surrendered and new licenses to be obtained in the name of the acquiring entity.
Continuity of Operations. The reverse triangular merger ensures continuity of Tessera's intellectual property, technology platform, vendor agreements, employee relationships, and business operations, all of which are material to the value of the acquisition. Tessera's employees will remain employed by the Surviving Corporation without interruption, subject to any post-closing organizational changes that BRB may elect to implement.
Post-Closing Integration Flexibility. Following the closing, BRB will have the flexibility to operate Tessera as a distinct wholly owned subsidiary for as long as BRB deems appropriate. At any time after the closing, BRB may elect to merge Tessera into BRB or into another subsidiary, consolidate Tessera's operations with BRB's existing digital lending platform, or take such other integration steps as BRB determines to be advisable. This phased approach minimizes disruption and preserves optionality.
Limitation of Direct Liability Exposure. By acquiring Tessera indirectly through a wholly owned subsidiary, BRB maintains corporate separateness between itself and Tessera, providing a degree of insulation from Tessera's pre-existing liabilities (subject to customary exceptions, including any parent guarantees or support agreements that may be required by regulators or contractual counterparties). This structural feature is consistent with standard practice for bank acquisitions of non-bank subsidiaries.
D. Treatment of Tessera Stock Options and RSUs
As noted in Section II.C above, approximately 900,000 shares of Tessera's fully diluted equity are held through stock options and restricted stock units issued to employees and early-stage angel investors under Tessera's equity incentive plan. The treatment of these equity awards at the Effective Time will be a key provision of the Merger Agreement.
Under the anticipated structure:
• Stock Options. At the Effective Time, each outstanding and unexercised stock option to purchase shares of Tessera common stock that is "in the money" (i.e., the Per-Share Merger Consideration of $4.00 exceeds the applicable exercise price) will be canceled and converted into the right to receive an amount in cash equal to the product of (a) the number of shares of Tessera common stock subject to such option multiplied by (b) the excess, if any, of $4.00 over the per-share exercise price of such option, without interest, less applicable withholding taxes. Options that are "out of the money" (i.e., the exercise price equals or exceeds $4.00) will be canceled for no consideration.
• Restricted Stock Units. At the Effective Time, each outstanding restricted stock unit with respect to shares of Tessera common stock will be canceled and converted into the right to receive an amount in cash equal to $4.00 per share underlying such RSU, without interest, less applicable withholding taxes. The treatment of unvested RSUs will depend on the specific vesting terms and any acceleration provisions set forth in the applicable award agreements and in Tessera's equity incentive plan, which must be reviewed during due diligence.
We note that a detailed analysis of the individual grant terms, vesting schedules, exercise prices, and tax characteristics of each outstanding option and RSU award will be required during the due diligence process. The precise treatment of each category of equity award will be confirmed and set forth in the definitive Merger Agreement.
Tax considerations relevant to the treatment of stock options and RSUs — including analysis under Internal Revenue Code ("IRC") §§ 409A (nonqualified deferred compensation) and 83 (property transferred in connection with performance of services) — are being addressed in a separate tax structuring memorandum currently being prepared by Sylvia Hartwell, Specialist Partner (Tax), which is expected to be circulated on or about January 30, 2026.
IV. Merger Consideration and Funds Flow
A. Aggregate and Per-Share Consideration
The aggregate merger consideration for the acquisition of 100% of Tessera's fully diluted equity is $48,000,000 (Forty-Eight Million Dollars), payable entirely in cash. No equity component (e.g., BRB common stock) is currently contemplated as part of the merger consideration.
The per-share merger consideration is $4.00 per share, calculated as follows:
$48,000,000 ÷ 12,000,000 fully diluted shares = $4.00 per share.
The per-share merger consideration will be payable to each holder of Tessera common stock upon surrender of such holder's stock certificates or compliance with applicable book-entry transfer procedures, subject to the escrow and holdback arrangements described in Section IV.D below and less any applicable withholding taxes.
B. Valuation Metrics (Preliminary)
Based on the proposed merger consideration of $48,000,000 and Tessera's reported financial results for the fiscal year ended December 31, 2025, the preliminary implied valuation multiples are as follows:
• Enterprise Value / Revenue: $48,000,000 ÷ $38,400,000 = 1.25×
• Enterprise Value / Adjusted EBITDA: $48,000,000 ÷ $5,100,000 ≈ 9.41×
These multiples are based on preliminary, unaudited financial information provided by Tessera's management and have not been independently verified by Calderwood & Harkness. Tessera is currently debt-free, and no net-debt adjustment to the merger consideration is required at this stage. This preliminary assessment is subject to confirmatory diligence review, including analysis of Tessera's audited financial statements, working capital, and any off-balance-sheet obligations.
Hargrove Mercer & Co. (Phillip N. Godfrey, Managing Director) is conducting an independent valuation analysis of Tessera, including a comparable company analysis, precedent transactions analysis, and discounted cash flow analysis. The results of Hargrove Mercer's valuation work will inform BRB's negotiating position and provide support for BRB's board of directors in connection with their consideration and approval of the definitive terms of the transaction.
C. Financing. BRB intends to fund the aggregate merger consideration of $48,000,000 and all transaction-related expenses entirely from available cash on hand. As of December 31, 2025, BRB reported cash and cash equivalents of approximately $1.03 billion, which is substantially in excess of the total estimated buyer outlay for this transaction (approximately $49.7 million, as detailed in Section IV.F below).
No third-party acquisition financing — whether in the form of bank debt, bond issuance, or otherwise — is contemplated in connection with this transaction. Accordingly, the Merger Agreement will not contain a financing condition, and BRB's obligation to consummate the merger at closing will not be subject to BRB's ability to obtain external funding. This is a significant structural benefit from Tessera's perspective and should simplify the negotiation of the Merger Agreement's closing conditions and termination provisions.
D. Escrow and Holdback Arrangements
To provide a source of funds for post-closing indemnification claims by BRB under the Merger Agreement's indemnification provisions, a portion of the aggregate merger consideration will be deposited into an escrow account at the closing of the merger, as follows:
General Indemnification Escrow:
• Escrow Amount: $4,800,000, representing 10% of the aggregate merger consideration of $48,000,000.
• Escrow Agent: Caravel Trust Company, N.A., located at 500 Delaware Avenue, Suite 1100, Wilmington, DE 19801.
• Escrow Hold Period: 18 months following the closing date.
• Source of Escrow Funds: The escrow amount will be funded on a pro rata basis from each Tessera stockholder's portion of the merger consideration at the closing. Accordingly, each stockholder will receive at closing the Per-Share Merger Consideration of $4.00 per share, less such stockholder's pro rata share of the escrow holdback, less applicable withholding taxes.
• Net Amount Payable to Stockholders at Closing: $48,000,000 – $4,800,000 = $43,200,000 (before applicable withholding taxes and other adjustments).
• Escrow Release and Claim Procedures: The escrow funds will serve as the first source of recovery for any indemnification claims made by BRB under the Merger Agreement. The mechanics of escrow release (including scheduled releases, claim set-off procedures, and dispute resolution) will be set forth in a separate escrow agreement (the "Escrow Agreement") to be entered into by and among BRB, a stockholder representative appointed by the Tessera stockholders (the "Stockholder Representative"), and Caravel Trust Company, N.A. as escrow agent.
The terms of the indemnification provisions in the Merger Agreement — including the scope of indemnifiable losses, survival periods for representations and warranties, basket and cap amounts, and the interaction between the indemnification escrow and the buyer-side representations and warranties insurance policy described in Section IV.E below — will be addressed in the preliminary draft Merger Agreement.
E. Representations and Warranties Insurance
BRB contemplates obtaining a buyer-side representations and warranties insurance policy (an "R&W Policy") to supplement the indemnification protections available under the Merger Agreement and the indemnification escrow. The key terms of the contemplated R&W Policy are as follows:
• Insurer: Meridian Indemnity Group, Inc., located at 280 Trumbull Street, 12th Floor, Hartford, CT 06103.
• Policy Limit: $9,600,000, representing 20% of the aggregate deal value ($48,000,000 × 20% = $9,600,000).
• Retention (Deductible): $960,000, representing 2% of the aggregate deal value ($48,000,000 × 2% = $960,000). The retention is expected to be split 50/50 between the indemnification escrow (i.e., $480,000 of the retention will be satisfied from escrow claims before the R&W Policy responds) and the policy retention (i.e., $480,000 will be a self-insured retention borne by BRB).
• Estimated Premium: Approximately $288,000, based on an estimated rate of 3.0% of the policy limit ($9,600,000 × 3.0% = $288,000). This premium estimate is preliminary and subject to underwriting.
• Premium Allocation: The R&W Policy premium will be a buyer-borne expense.
• Scope of Coverage: The R&W Policy is expected to cover losses arising from breaches of Tessera's representations and warranties in the Merger Agreement, subject to customary exclusions (which typically include known matters, forward-looking statements, transfer pricing, underfunded pension obligations, and certain environmental and ERISA matters).
The R&W insurance application process is expected to commence upon execution of the mutual non-disclosure agreement (the "NDA") and the availability of preliminary due diligence materials. Meridian Indemnity Group's underwriting team will require access to the preliminary due diligence report, the draft Merger Agreement, and the management presentations prepared by Tessera in order to complete its underwriting analysis and issue a binding policy quote.
The availability of buyer-side R&W insurance is expected to facilitate the negotiation of the Merger Agreement's indemnification provisions, as the insurance policy provides an additional layer of protection for BRB beyond the indemnification escrow, while allowing Tessera's stockholders to limit their post-closing exposure.
F. Preliminary Transaction Expense Waterfall (Buyer-Side)
The following table summarizes the estimated total buyer-side costs and expenses for the transaction:
We note that the Calderwood & Harkness legal fee estimate of $750,000 is preliminary and subject to the scope of the due diligence effort, the complexity and duration of the Merger Agreement negotiation, the extent of regulatory proceedings, and other factors. A detailed budget will be provided separately.
Seller-side transaction expenses are expected to include, among other items, the Ashford Keane Partners LLC advisory fee (estimated at 2.0% of the aggregate deal value, or $960,000), Kessler, Aldrich & Voss LLP legal fees, and other customary closing costs. These seller-side expenses will be borne by Tessera and/or its stockholders and are expected to be either (a) paid by Tessera prior to closing or (b) treated as transaction expenses deducted from the merger consideration at closing, in each case as specified in the Merger Agreement.
V. Stockholder Approval Mechanics
A. Required Approval Threshold
Under DGCL § 251(c), the merger of Tessera with Acquisition Sub must be approved and adopted by the holders of a majority of the outstanding shares of Tessera common stock entitled to vote thereon. On a fully diluted basis, the majority approval threshold requires the affirmative vote or consent of holders of more than 6,000,000 shares (representing more than 50% of the 12,000,000 fully diluted shares outstanding).
We note that the approval threshold is based on a majority of the outstanding shares, not merely a majority of the shares present and voting at a meeting. Accordingly, abstentions and failures to vote effectively count as votes against the merger for purposes of determining whether the requisite stockholder approval has been obtained.
B. Written Consent in Lieu of Meeting
DGCL § 228 permits stockholder action to be taken by written consent in lieu of a meeting of stockholders, provided that the corporation's certificate of incorporation does not prohibit such action by written consent. The written consent must be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize the action at a meeting at which all shares entitled to vote were present and voted. For the merger, this means that the written consent must be signed by holders of a majority of the outstanding shares — i.e., holders of more than 6,000,000 shares.
Written consent in lieu of a stockholders' meeting is the anticipated approval mechanism for this transaction. This approach avoids the time, expense, and procedural complexity of convening a formal stockholders' meeting, and is the customary approach for private company acquisitions where the requisite stockholder approval can be readily obtained from a small number of stockholders.
Confirmatory Diligence Required: We must confirm during the due diligence process that Tessera's certificate of incorporation (as currently in effect, including any amendments) does not contain any provision prohibiting or restricting stockholder action by written consent. This is a threshold condition to the availability of the written consent mechanism.
C. Anticipated Consent Mechanics
The two co-founders of Tessera — Vikram S. Narayan and Elena M. Castillo — together hold 6,480,000 shares of Tessera common stock on a fully diluted basis, representing approximately 54.0% of the outstanding equity:
Vikram S. Narayan: 3,744,000 shares (31.2%) Elena M. Castillo: 2,736,000 shares (22.8%) Combined: 6,480,000 shares (54.0%)
Because the co-founders together hold more than a majority of the outstanding shares, if both co-founders execute the written consent in favor of the merger, the requisite stockholder approval will be obtained without the need for the consent or vote of any other stockholder, including Pinnacle Ventures Fund III, LP and Broadleaf Growth Capital, LLC.
Notwithstanding the foregoing, several important considerations must be addressed during due diligence:
1. Stockholder Agreements and Investor Rights Agreements. Tessera's institutional investors — Pinnacle Ventures Fund III, LP and Broadleaf Growth Capital, LLC — may hold contractual consent rights, information rights, drag-along or tag-along rights, or board-level approval rights under one or more stockholder agreements, investor rights agreements, or similar contractual arrangements entered into in connection with Tessera's Series B and Series C financing rounds. Any such contractual rights may require that the institutional investors be afforded notice, information, or approval rights in connection with the merger, even if their statutory vote is not required under the DGCL. These agreements must be reviewed carefully during diligence.
2. Voting Agreements or Support Agreements. To provide certainty of stockholder approval at signing, BRB may enter into voting agreements or support agreements with the co-founders (and potentially with the institutional investors) concurrently with the execution of the Merger Agreement. Under such agreements, the signing stockholders would agree to execute the written consent in favor of the merger and to refrain from transferring their shares or supporting any competing transaction during the period between signing and closing.
3. Appraisal Rights. Under DGCL § 262, stockholders of a Delaware corporation may, in certain circumstances, exercise appraisal rights and demand judicial determination of the "fair value" of their shares in lieu of receiving the merger consideration. However, the availability of appraisal rights in the context of an all-cash merger of a non-publicly traded corporation where stockholder approval is obtained by written consent requires careful analysis. We note that DGCL § 262(b)(3) provides that no appraisal rights are available in a merger if the corporation's shares are listed on a national securities exchange or held of record by more than 2,000 holders, but Tessera is privately held and its shares are not listed on any exchange. Accordingly, appraisal rights may be available to dissenting Tessera stockholders under DGCL § 262, and the merger consideration will need to be set at a level that minimizes the risk of appraisal proceedings. This analysis must be confirmed during diligence based on a review of Tessera's certificate of incorporation and the applicable DGCL provisions and precedent.
VI. Regulatory Approval Requirements
A. Office of the Comptroller of the Currency (OCC)
BRB, as a national banking association (OCC Charter No. 24-00781, FDIC Certificate No. 09463), must obtain prior approval from the Office of the Comptroller of the Currency before acquiring Tessera as a subsidiary. The acquisition of a non-bank subsidiary by a national bank is subject to regulatory review under the applicable provisions of the National Bank Act and OCC regulations.
Applicable Statutory Authority. The principal statutory authority for the OCC's review of BRB's acquisition of Tessera is found in 12 U.S.C. § 24 (corporate powers of national banking associations) and 12 U.S.C. § 24a (financial subsidiaries), together with the OCC's implementing regulations at 12 C.F.R. Parts 5 and 7. The specific application requirements and procedural standards will depend on whether Tessera is classified as an operating subsidiary or a financial subsidiary of BRB, which in turn depends on the nature of Tessera's activities and whether those activities are permissible for a national bank to conduct directly.
Scope of OCC Review. The OCC's review of BRB's application is expected to focus on the following areas:
(i) The financial condition and capital adequacy of BRB, including BRB's ability to absorb the financial impact of the acquisition without adverse effect on its safety and soundness;
(ii) The nature of Tessera's activities (consumer lending, including unsecured personal loans and point-of-sale installment financing) and whether such activities are permissible for a national bank subsidiary under the National Bank Act and OCC regulations;
(iii) BRB's risk management framework, including its ability to supervise and control the activities of Tessera as a subsidiary;
(iv) Tessera's compliance programs, including its compliance with consumer protection laws, fair lending laws, anti-money laundering requirements, and other applicable regulatory requirements;
(v) The competitive effects of the acquisition; and
(vi) The community benefit and public interest considerations associated with the transaction.
Permissibility of Tessera's Activities. Consumer lending activities of the type conducted by Tessera — including unsecured personal loans and point-of-sale installment financing — are generally permissible activities for a national bank and its subsidiaries. The OCC has historically approved national bank applications to conduct consumer lending through operating subsidiaries. However, the OCC's analysis will focus on the specific characteristics of Tessera's business model, including its use of technology-driven underwriting algorithms, its bank-partnership arrangement with Ridgeline Community Bank, and the scope of its licensing in 42 states and the District of Columbia.
Pre-Filing Consultation. We recommend that BRB schedule a pre-filing consultation with the OCC's Licensing Division at the earliest practicable date. A pre-filing meeting will allow BRB to discuss the proposed transaction structure with the OCC informally, identify any potential issues or concerns that may arise during the formal application process, and obtain guidance on the application requirements and expected timeline. Pre-filing consultation is standard practice for transactions of this nature and is encouraged by the OCC.
Estimated Regulatory Approval Timeline. Based on our experience with comparable transactions, we estimate that the OCC approval process will take approximately 60 to 120 days from the date of filing of a complete application. This estimate is subject to the complexity of the OCC's review, the completeness of the application materials, and whether the OCC raises any issues requiring supplemental information or analysis. Accounting for the time required to prepare the application and any pre-filing consultation period, we anticipate that OCC approval may be obtained in Q2–Q3 2026.
B. FDIC Notification
Notification to the Federal Deposit Insurance Corporation may be required in connection with BRB's acquisition of Tessera as a fintech subsidiary. BRB is an FDIC-insured depository institution (FDIC Certificate No. 09463), and the FDIC maintains supervisory interest in the activities and risk profile of FDIC-insured banks and their subsidiaries.
In addition, Ridgeline Community Bank (FDIC Certificate No. 35218) serves as the issuing bank under the Tessera bank-partnership program agreement (TLI-RCB-2020-001). The FDIC, as the primary federal regulator of Ridgeline (a Utah-chartered industrial bank), may have an independent interest in the change-of-control implications of the transaction for the bank-partnership arrangement. The FDIC has in recent years increased its scrutiny of bank-fintech partnerships, and the change of control of Tessera — even though Tessera itself is not a bank — may prompt FDIC inquiry regarding the continued viability and risk profile of the Ridgeline-Tessera program.
The specific FDIC notification requirements and any approvals that may be needed will be confirmed during the regulatory analysis phase of the transaction.
C. Hart-Scott-Rodino (HSR) Act Analysis
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), parties to certain mergers, acquisitions, and other business combinations that exceed applicable size thresholds must file premerger notification forms with the Federal Trade Commission ("FTC") and the Antitrust Division of the U.S. Department of Justice ("DOJ") and observe a mandatory waiting period before consummating the transaction.
For the calendar year 2026, the applicable size-of-transaction threshold under the HSR Act is $119.5 million. A premerger notification filing is generally required if, as a result of the transaction, the acquiring person would hold an aggregate total amount of voting securities and assets of the acquired person in excess of this threshold (subject to the additional "size-of-person" tests that may apply in certain circumstances).
The aggregate deal value of the proposed acquisition is $48,000,000, which falls substantially below the 2026 size-of-transaction threshold of $119.5 million.
Conclusion: Based on our preliminary analysis, no HSR Act premerger notification filing is expected to be required in connection with this transaction. This conclusion is subject to confirmation of the applicable thresholds as they may be adjusted by the FTC prior to the signing of the Merger Agreement.
D. State Lending-License Change-of-Control Filings
Tessera holds lending licenses in 42 U.S. states and the District of Columbia. These licenses are a critical regulatory asset and a key component of Tessera's ability to originate or facilitate consumer loans across its geographic footprint.
Most state lending-license statutes impose requirements in connection with a change of control of a licensed entity. These requirements vary by state and may include:
(i) Advance written notice to the state regulator of the proposed change of control;
(ii) Filing of a formal application for approval of the change of control, including submission of biographical information and background check requirements for the new controlling person (BRB);
(iii) Payment of filing fees;
(iv) A waiting period or prior approval requirement before the change of control may be consummated; and
(v) Post-closing notification requirements.
A comprehensive state-by-state analysis of the change-of-control filing requirements applicable to each of Tessera's 42 state lending licenses and its District of Columbia license will be required during the due diligence phase. This analysis will identify which states require prior approval (as a closing condition), which states require only post-closing notification, and the specific filing requirements, fees, and timelines applicable in each jurisdiction.
The estimated state regulatory filing fees — combined with OCC and FDIC filing fees — are included in the $50,000 regulatory filing fees estimate set forth in the preliminary transaction expense waterfall in Section IV.F above.
We note that certain states may impose more stringent change-of-control requirements that could affect the timeline for closing. In particular, states that require prior approval of the change of control may impose review periods of 60 to 90 days or longer. The state-by-state filing analysis will be used to develop an integrated regulatory timeline and to identify any state approvals that should be included as conditions to closing in the Merger Agreement.
E. CFPB Supervisory Jurisdiction
The Consumer Financial Protection Bureau ("CFPB") exercises supervisory jurisdiction over certain participants in the consumer financial services market. Post-closing, the combined BRB-Tessera enterprise's consumer lending activities may be subject to heightened CFPB supervisory focus.
BRB, as a depository institution with more than $10 billion in total assets (approximately $14.7 billion as of December 31, 2025), is already subject to CFPB examination and supervision authority under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The addition of Tessera's technology-enabled consumer lending platform — including its unsecured personal loan and point-of-sale installment financing products — may attract additional supervisory attention from the CFPB, particularly given the CFPB's focus on fintech lending, algorithmic underwriting, fair lending compliance, and the use of alternative data in credit decisions.
No pre-closing CFPB approval or notification is required in connection with the transaction. However, the compliance and supervisory implications of the acquisition should be analyzed during the due diligence process, and BRB's compliance team should be engaged to assess the post-closing integration of Tessera's consumer lending operations into BRB's existing compliance framework.
F. Ridgeline Community Bank — Program Agreement Consent
The bank-partnership program agreement between Tessera and Ridgeline Community Bank (Program Agreement TLI-RCB-2020-001, dated March 15, 2020, renewed through December 31, 2027) is a critical contractual relationship for Tessera's business. Under this agreement, Ridgeline serves as the issuing bank for certain of Tessera's loan products, enabling Tessera to leverage Ridgeline's bank charter and federal preemption benefits.
We anticipate that the program agreement contains a change-of-control provision requiring Ridgeline's prior written consent to (or providing Ridgeline with a termination right upon) a change of control of Tessera. Such provisions are standard in bank-fintech partnership agreements and are a key area of diligence focus.
Key Considerations:
1. Change-of-Control Definition. The definition of "change of control" in the program agreement must be reviewed to determine whether the reverse triangular merger — in which Tessera survives as a legal entity but becomes a wholly owned subsidiary of BRB — constitutes a change of control triggering the consent requirement. Many change-of-control definitions capture a change in the majority ownership or voting control of the contracting party, which would be triggered by the merger regardless of Tessera's survival as a legal entity.
2. Consent Requirement vs. Termination Right. We must determine whether the program agreement requires Ridgeline's affirmative consent to the change of control (in which case, obtaining such consent would be a closing condition) or merely provides Ridgeline with a right to terminate the agreement following a change of control (in which case, the risk analysis is different).
3. Closing Condition. Depending on the terms of the program agreement, obtaining Ridgeline's consent may be a condition to closing in the Merger Agreement. The Merger Agreement should be structured to address the risk that Ridgeline's consent is not obtained or is conditioned on terms unacceptable to BRB.
4. Post-Closing Strategy. Following the closing, BRB must evaluate whether to continue, renegotiate, or terminate the Ridgeline partnership. Because BRB holds its own national bank charter (OCC Charter No. 24-00781) and has its own lending capabilities, BRB may determine that the Ridgeline partnership is no longer necessary or desirable post-closing. Alternatively, BRB may elect to maintain the partnership during a transition period to ensure continuity of Tessera's existing loan products and borrower relationships.
G. Estimated Regulatory Filing Fees
The estimated combined regulatory filing fees for the OCC application, FDIC notification (if required), and state lending-license change-of-control filings are approximately $50,000. This estimate is preliminary and subject to adjustment based on the results of the state-by-state regulatory analysis.
VII. Tax Considerations (Summary)
A separate detailed tax structuring memorandum is currently being prepared by Sylvia Hartwell, Specialist Partner (Tax), Calderwood & Harkness LLP, and is expected to be circulated to the deal team on or about January 30, 2026. The tax memorandum will address in detail the federal, state, and local income tax consequences of the proposed transaction for BRB, Tessera, and Tessera's stockholders.
The following key preliminary observations are provided for purposes of this structuring memorandum:
Taxable Transaction. The all-cash reverse triangular merger will be a taxable transaction for Tessera's stockholders. Because the merger consideration consists entirely of cash (with no equity component), the merger will not qualify as a tax-free reorganization under IRC § 368. Each Tessera stockholder will generally recognize gain or loss on the exchange of Tessera stock for the Per-Share Merger Consideration, measured by the difference between the amount of cash received and the stockholder's adjusted tax basis in the Tessera shares surrendered. The character of the gain or loss (capital vs. ordinary, long-term vs. short-term) will depend on the individual stockholder's holding period and other circumstances.
Section 338(h)(10) Election. The deal team is currently evaluating the potential benefits of a joint election under IRC § 338(h)(10) with respect to the acquisition of Tessera. If the Section 338(h)(10) election is made, Tessera would be treated for federal income tax purposes as having sold all of its assets in a single, taxable transaction on the closing date, and BRB (through the Surviving Corporation) would obtain a stepped-up tax basis in Tessera's assets equal to the fair market value of such assets as of the closing date. The stepped-up basis would provide BRB with future tax benefits in the form of increased depreciation and amortization deductions. A Section 338(h)(10) election requires the consent of both BRB and Tessera's stockholders (specifically, the selling consolidated group or S corporation shareholders), and the economic consequences of the election for each party must be analyzed carefully. The tax structuring memorandum will include a detailed analysis of the costs and benefits of the election for both parties.
Treatment of Employee Stock Options and RSUs. The tax treatment of the cancellation and cash-out of Tessera employee stock options and restricted stock units at the Effective Time must be analyzed under IRC § 409A (nonqualified deferred compensation rules) and IRC § 83 (property transferred in connection with the performance of services). This analysis requires review of the individual grant terms, vesting schedules, exercise prices, and the classification of each award (e.g., incentive stock options under IRC § 422 vs. nonqualified stock options). The tax structuring memorandum will address these issues in detail once the relevant grant documentation is obtained during due diligence.
State Tax Considerations. Texas does not impose a state income tax on individuals, which is relevant to the co-founders (who are based in Texas) and other Texas-resident stockholders. Texas does impose a franchise tax (the "Texas Margin Tax") on entities doing business in Texas, which may apply to Tessera. Delaware franchise tax implications — including any franchise taxes arising from the merger itself or from the continued existence of the Surviving Corporation as a Delaware entity — will be addressed in the tax structuring memorandum.
Entity Tax Identification Numbers. For reference, Tessera's EIN is 83-2649107 and BRB's EIN is 13-4517820. Acquisition Sub's EIN will be obtained from the IRS upon formation.
VIII. Alternative Structures Considered and Rejected
In arriving at our recommendation of the reverse triangular merger structure, we considered and ultimately rejected the following alternative transaction structures:
A. Forward Merger (Direct Merger of Tessera into BRB or Acquisition Sub)
Description. Under a forward merger structure, Tessera would merge directly into BRB (or into Acquisition Sub), with BRB (or Acquisition Sub) as the surviving entity. Tessera would cease to exist as a separate legal entity upon the effectiveness of the merger.
Reasons for Rejection:
1. Loss of Tessera's Corporate Identity and Regulatory Licenses. Because Tessera would not survive the forward merger, its corporate existence would terminate at the Effective Time. This would jeopardize Tessera's lending licenses in 42 states and the District of Columbia, many of which are non-transferable and would require re-issuance or new applications in the name of the surviving entity. The re-licensing process would be time-consuming, expensive, and subject to significant regulatory risk, including the possibility that certain states may deny or delay the issuance of new licenses.
2. Contractual Anti-Assignment Risk. While a forward merger generally operates as an assignment by operation of law (which may override contractual anti-assignment provisions in some circumstances), the doctrine of assignment by operation of law may not fully protect against anti-assignment provisions in key contracts. In particular, the Ridgeline Community Bank program agreement (TLI-RCB-2020-001) and certain vendor, customer, and technology licensing agreements may contain provisions that terminate or require consent upon a merger in which the contracting party does not survive. The reverse triangular merger structure, in which Tessera survives, significantly reduces this risk.
3. Complex Regulatory Transition. A forward merger would require a significantly more complex and time-consuming regulatory transition process, including the transfer or re-issuance of licenses, notifications to regulators in each jurisdiction, and potential re-examination of the surviving entity by state regulators.
4. Inconsistency with Post-Closing Integration Plan. BRB's preferred post-closing integration plan contemplates operating Tessera initially as a distinct wholly owned subsidiary, preserving its separate brand, technology platform, and operational infrastructure. A forward merger would be incompatible with this approach, as Tessera would cease to exist as a separate entity.
B. Asset Purchase