Contract analysis

I. Executive Summary and Purpose The purpose of this memorandum is to set forth an internal analysis of the enforceability under Delaware law of the key protective provisions contained in the Agreement and Plan of Merger (the "Merger Agreement"), dated as of March 18, 2025, among Harrowgate Private Equity Fund IV LP ("HPE Fund IV"), Harrowgate Velocity Merger Sub Inc. ("Merger Sub"), and VeloPay Systems, Inc. ("VeloP

1. The no-shop provision (Article 5, Section 5.3 of the Merger Agreement);

2. The VeloPay termination fee of $76,000,000 (Article 8, Section 8.3(a) of the Merger Agreement);

3. The HPE Fund IV reverse termination fee of $57,000,000 (Article 8, Section 8.3(b) of the Merger Agreement);

4. The specific performance remedy (Article 9, Section 9.9 of the Merger Agreement); and

5. The material adverse effect definition and related carve-outs (Article 1, Section 1.1 of the Merger Agreement, as applied to the closing conditions set forth in Article 7). Overall Conclusion. Based on the analysis set forth herein, each of the five provisions identified above is expected to be enforceable under Delaware law, subject to customary equitable limitations and the specific factual circumstances that ma

II. No-Shop Provision A. Summary of Contractual Terms

Section 5.3(a) of the Merger Agreement imposes a no-shop restriction on VeloPay commencing upon the execution of the Merger Agreement on March 18, 2025 and continuing through the earlier of (x) the Effective Time (as defined in the Merger Agreement) and (y) the valid termination of the Merger Agreement in accordance with Article 8. During the no-shop period, VeloPay and its subsidiaries are prohibited from, and are r

Section 5.3(c) of the Merger Agreement contains a customary fiduciary-out exception that, notwithstanding the restrictions of Section 5.3(a), permits VeloPay's Board of Directors (the "VeloPay Board"), prior to the receipt of the Requisite Stockholder Approval (as defined in the Merger Agreement), to: (i) furnish non-public information relating to VeloPay and its subsidiaries to a person making a bona fide, unsolicit

Section 5.3(d) of the Merger Agreement provides HPE Fund IV with a match right in the event the VeloPay Board proposes to effect a Change of Recommendation or to terminate the Merger Agreement to accept a Superior Proposal. Specifically, VeloPay is required to provide HPE Fund IV with: (i) written notice at least five (5) business days in advance of the VeloPay Board taking any such action, which notice must include

III. VeloPay Termination Fee ($76,000,000) A. Summary of Contractual Terms

Section 8.3(a) of the Merger Agreement provides that VeloPay is obligated to pay HPE Fund IV a termination fee in the amount of $76,000,000 (the "VeloPay Termination Fee"), which represents 4.0% of the aggregate merger consideration of $1,900,000,000. The VeloPay Termination Fee is payable in immediately available funds within two (2) business days of the applicable termination event. The VeloPay Termination Fee is t

IV. HPE Fund IV Reverse Termination Fee ($57,000,000) A. Summary of Contractual Terms

Section 8.3(b) of the Merger Agreement provides that HPE Fund IV is obligated to pay VeloPay a reverse termination fee in the amount of $57,000,000 (the "Reverse Termination Fee"), which represents 3.0% of the aggregate merger consideration of $1,900,000,000. The Reverse Termination Fee is triggered upon the occurrence of either of the following events: (i) Financing Failure. VeloPay terminates the Merger Agreement p

V. Specific Performance A. Summary of Contractual Terms

Section 9.9 of the Merger Agreement contains a mutual specific performance provision that permits either Party to seek an injunction, specific performance, or other equitable relief to prevent breaches of the Merger Agreement and to enforce specifically the terms and provisions thereof, in addition to (and not in limitation of) any other remedy to which such Party may be entitled at law or in equity. The specific per

VI. Material Adverse Effect Definition A. Summary of Contractual Terms

Section 1.1 of the Merger Agreement defines "Material Adverse Effect" as: "any event, change, effect, development, condition, circumstance, or occurrence that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the business, financial condition, or results of operations of the Company and its Subsidiaries, taken as a whole." For purposes of this definition,