Contract analysis

I. EXECUTIVE SUMMARY A. Purpose and Scope This memorandum summarizes the key legal findings from the due diligence investigation of VeloPay Systems, Inc. ("VeloPay" or the "Company") and its wholly-owned subsidiaries (collectively with VeloPay, the "VeloPay Group"), conducted by Calderwood & Harkness LLP ("C&H") in connection with the proposed acquisition of VeloPay by Harrowgate Private Equity Fund IV LP ("HPE Fund

1. Corporate Organization and Capitalization;

4. Litigation and Contingent Liabilities;

8. Real Property. The scope of our review has included documents and information made available in VeloPay's virtual data room (the "Data Room"), which was hosted on Thackeray Solutions and to which C&H was granted access on December 12, 2024. As of the date of this memorandum, the Data Room contains approximately 4,800 documents organized across 23 primary folders and numerous subfolders. Our diligence is ongoing, a

II. CORPORATE ORGANIZATION AND CAPITALIZATION A. VeloPay Systems, Inc. VeloPay Systems, Inc. is a corporation organized and existing under the laws of the State of Delaware. The Company was incorporated on June 17, 2014, and is registered with the Delaware Secretary of State under File Number 5748392. The Company's Employer Identification Number is 82-3019478. We have reviewed VeloPay's Amended and Restated Certifica

1. VeloPay Processing LLC. VeloPay Processing LLC is a Delaware limited liability company formed on September 4, 2015. Its sole member is VeloPay Systems, Inc. The entity operates VeloPay's core payment processing infrastructure, including its connections to the major card networks and the ACH system. The limited liability company agreement (as amended and restated on January 12, 2020) was reviewed; it reflects VeloP

2. VeloPay Canada Inc. VeloPay Canada Inc. is a corporation incorporated under the laws of the Province of Ontario, Canada, on March 22, 2018. The entity is wholly owned by VeloPay Systems, Inc. and conducts VeloPay's Canadian operations, including Canadian merchant onboarding, transaction processing for Canadian merchants, customer support, and certain software development activities. VeloPay Canada Inc. employs app

3. VeloPay Europe, Unipessoal Lda. VeloPay Europe, Unipessoal Lda. is a Portuguese sociedade unipessoal por quotas de responsabilidade limitada (a single-member limited liability company) formed on January 15, 2020, under the laws of Portugal. The entity is wholly owned by VeloPay Systems, Inc. and operates as VeloPay's European research and development center and European operational support hub, located in Lisbon,

4. VeloPay Fraud intelligence Inc. VeloPay Fraud intelligence Inc. is a Delaware corporation incorporated on July 11, 2019. The entity is wholly owned by VeloPay Systems, Inc. and operates VeloPay's fraud detection and analytics SaaS product line, which is marketed to VeloPay's merchant customers and, on a standalone basis, to certain third-party merchants and financial institutions. Good standing has been confirmed

5. PayStream Gateway LLC. PayStream Gateway LLC is a Delaware limited liability company originally formed on April 3, 2016, by third parties. VeloPay acquired 100% of the membership interests of PayStream Gateway LLC on June 30, 2021, pursuant to a Membership Interest Purchase Agreement (the "PayStream Acquisition Agreement") for a purchase price of $45,000,000 in cash. The acquisition was treated as an asset purchas

III. MATERIAL CONTRACTS A. Overview. A comprehensive review of VeloPay's material contracts was conducted as part of the legal due diligence investigation. A separate, detailed Material Contracts Summary Memorandum has been prepared by Derek Okonkwo and is referenced herein. This section provides a high-level summary of the principal findings. The scope of our review encompassed VeloPay's top 25 customer agreements (

IV. INTELLECTUAL PROPERTY A. Overview. A separate, detailed IP Due Diligence Memorandum has been prepared by Derek Okonkwo and is referenced herein. This section provides a high-level summary of the principal findings from the intellectual property due diligence review. VeloPay's intellectual property portfolio is central to the Company's competitive position and value proposition. The Company's core IP assets includ

V. LITIGATION AND CONTINGENT LIABILITIES A. Pending Litigation A separate, detailed Litigation and Contingent Liabilities Memorandum has been prepared by Megan Chu and is referenced herein. This section provides a summary of the two matters currently pending or threatened against VeloPay.

1. Pinnacle Merchant Solutions LLC v. VeloPay Systems, Inc. Court: United States District Court for the Western District of Texas, Austin Division. Case No.: 1:24-cv-01147-JRN. Filed: September 18, 2024. Parties: Pinnacle Merchant Solutions LLC ("Pinnacle"), an online retail merchant, as plaintiff; VeloPay Systems, Inc. as defendant. Claims: Breach of contract and breach of the implied covenant of good faith and fair

2. Threatened Wage and Hour Class Action — Denver Customer Support Employees. Status: Pre-litigation demand letter received November 14, 2024, from the law firm of Canfield Ross & Burke P.C. (Denver, Colorado), on behalf of a putative class of approximately 120 current and former customer support employees in VeloPay's Denver, Colorado office. Allegations: The demand letter alleges that VeloPay misclassified the cust

VI. REGULATORY AND LICENSING A. Money Transmitter Licenses A separate, detailed Regulatory and Licensing Due Diligence Memorandum has been prepared by Megan Chu and is referenced herein. This section provides a summary of the principal regulatory and licensing findings. VeloPay's payment processing operations require the Company to hold money transmitter licenses (or equivalent licenses, registrations, or authorizati