PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
MEMORANDUM
FROM: Calderwood & Harkness LLP
Megan Chu, Lead Associate, Mergers & Acquisitions Derek Okonkwo, Working Associate, Mergers & Acquisitions
TO: Priya Deshmukh, Managing Partner, Fund IV, Harrowgate Capital Management IV LLC
Thomas Eriksen, Partner, Head of Financial Technology, Harrowgate Capital Management IV LLC
CC: Sandra Tung, Responsible Partner, M&A, Calderwood & Harkness LLP
Oliver Mackenzie, Billing Partner, M&A, Calderwood & Harkness LLP Leonard Cross, Specialist Partner, Tax, Calderwood & Harkness LLP
DATE: July 10, 2025
RE: IRS Form W-9 Collection Process for VeloPay Systems, Inc. Stockholders Receiving Merger Consideration in Connection with the Acquisition by Harrowgate Private Equity Fund IV LP
MATTER NUMBER: 1003-00003
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I. Purpose and Executive Summary
This memorandum describes the process for collecting IRS Forms W-9 (Request for Taxpayer Identification Number and Certification) from stockholders of VeloPay Systems, Inc. ("VeloPay" or the "Company") who are U.S. persons entitled to receive merger consideration in connection with the reverse triangular merger (the "Merger") of Harrowgate Velocity Merger Sub Inc. ("Merger Sub"), a wholly owned subsidiary of Harrowgate Private Equity Fund IV LP ("HPE Fund IV"), with and into VeloPay, pursuant to the Agreement and Plan of Merger, dated as of March 18, 2025 (the "Merger Agreement"), by and among VeloPay, HPE Fund IV, Merger Sub, and Nathan Aldridge, solely in his capacity as the Stockholder Representative. Following the consummation of the Merger, VeloPay will continue as the surviving corporation (the "Surviving Corporation") and a wholly owned subsidiary of HPE Fund IV.
The merger consideration payable in the Merger is $20.00 per share on a fully diluted, as-converted basis, representing aggregate merger consideration of approximately $1,900,000,000 (the "Aggregate Merger Consideration"), payable to holders of approximately 95,000,000 fully diluted shares. The fully diluted share count is comprised of the following:
• 82,400,000 shares of VeloPay common stock, par value $0.0001 per share (the "Common Stock"), issued and outstanding as of the date hereof;
• 7,600,000 shares of Common Stock underlying outstanding stock options (vested and unvested), at a weighted average exercise price of $12.84 per share;
• 3,200,000 shares of Common Stock underlying outstanding restricted stock units ("RSUs"), all of which are unvested and will accelerate in full at the Closing; and
• 1,800,000 shares of Common Stock underlying outstanding warrants, at an exercise price of $8.50 per share.
Keystone Pacific Transfer Services Inc. ("Keystone Pacific" or the "Paying Agent"), acting as paying agent under the Paying Agent Agreement to be dated as of July 22, 2025 (the "Paying Agent Agreement"), will be responsible for disbursing merger consideration to stockholders upon the surrender of stock certificates or book-entry shares and receipt of properly completed Forms W-9. Keystone Pacific has extensive experience serving as paying agent in connection with M&A transactions of this scale and has confirmed its operational readiness to manage the W-9 solicitation and collection process described in this memorandum.
Under Section 3406 of the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations promulgated thereunder, the Paying Agent is required to impose backup withholding at the rate of 24% on merger consideration payments to any U.S. payee who fails to furnish a correct taxpayer identification number ("TIN") via a properly completed Form W-9. Backup withholding represents a significant economic consequence for stockholders who fail to comply with the W-9 collection requirements, and accordingly, this memorandum sets forth a detailed process — including pre-closing solicitation, closing-day procedures, and post-closing follow-up — designed to maximize W-9 compliance and minimize the application of backup withholding.
It should be noted that the separate analysis of withholding obligations applicable to non-U.S. stockholders under the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA") and Sections 897 and 1445 of the Code is addressed in the FIRPTA / Withholding Analysis Memorandum prepared by Leonard Cross, Specialist Partner, Tax, Calderwood & Harkness LLP (the "FIRPTA Memorandum"). This memorandum focuses exclusively on the collection of IRS Forms W-9 from U.S. persons. Non-U.S. stockholders will be required to furnish the applicable IRS Form W-8 (Form W-8BEN for individuals, Form W-8BEN-E for entities, or Form W-8IMY for intermediaries and flow-through entities, as applicable) rather than Form W-9. The Form W-8 collection process is coordinated through the FIRPTA withholding procedures described in the FIRPTA Memorandum and is not duplicated here.
II. Legal Framework
A. Backup Withholding Under Section 3406 of the Code
Section 3406(a) of the Code requires that "reportable payments" be subject to backup withholding at a rate of 24% if the payee fails to furnish a correct TIN to the payor. The backup withholding obligation arises at the time of payment and applies to the gross amount of the reportable payment, without reduction for any amounts that may be characterized as a return of capital or otherwise not subject to federal income tax.
Merger consideration paid in cash in exchange for stock constitutes a "reportable payment" subject to information reporting under Section 6045 of the Code, which governs broker reporting of proceeds from securities transactions. The Paying Agent, Keystone Pacific, acts as a "broker" for purposes of Section 6045 and the regulations thereunder, and is accordingly obligated to file IRS Form 1099-B (Proceeds from Broker and Barter Exchange Transactions) reporting the gross proceeds paid to each stockholder in connection with the Merger. The characterization of the Paying Agent as a broker for these purposes is well established and consistent with IRS guidance and industry practice in cash merger transactions.
Backup withholding under Section 3406 is triggered upon the occurrence of any of the following conditions:
(i) the payee fails to furnish a TIN to the payor in the manner required;
(ii) the IRS notifies the payor that the TIN furnished by the payee is incorrect (a so-called "B notice");
(iii) there has been a notified payee underreporting, meaning the IRS has determined that the payee has failed to report interest or dividend income and has notified the payor accordingly; or
(iv) the payee fails to certify that it is not subject to backup withholding under clause (ii) or (iii) above.
A properly completed and signed Form W-9 provides both the TIN and the required certifications necessary to avoid backup withholding. Specifically, by signing the Form W-9 under penalties of perjury, the payee certifies that (1) the TIN provided is correct, (2) the payee is not subject to backup withholding (or, if subject to backup withholding, acknowledges that status by crossing out the relevant certification), (3) the payee is a U.S. person (including a U.S. resident alien), and (4) any FATCA codes entered on the form are correct.
It is important to emphasize to all stockholders that backup withholding is not an additional tax. Amounts withheld under Section 3406 are credited against the stockholder's federal income tax liability for the taxable year in which the withholding occurs, and any excess withholding over the stockholder's actual tax liability is refundable upon the timely filing of a federal income tax return. Nevertheless, the imposition of backup withholding creates a meaningful liquidity impact, as 24% of the gross merger consideration would be withheld and remitted to the IRS rather than paid to the stockholder at closing. For a stockholder receiving $200,000 in merger consideration, for example, backup withholding would result in $48,000 being withheld, with the stockholder receiving only $152,000 at the time of payment.
B. Treasury Regulation Requirements
The Treasury Regulations promulgated under Section 3406 of the Code set forth detailed procedural requirements governing the solicitation of TINs and the application of backup withholding. The key regulatory provisions are summarized below.
Treasury Regulation §§ 31.3406(d)-1 through 31.3406(h)-3 establish the framework for TIN solicitation and backup withholding procedures. Under these regulations, the payor (here, the Paying Agent) must make reasonable efforts to obtain TINs from payees, including solicitation at the time of payment. The regulations contemplate that the payor will include a request for a completed Form W-9 in connection with the initial payment-related correspondence (in this case, the Letter of Transmittal package) and will undertake follow-up solicitations if the initial request does not result in a properly completed form.
Treasury Regulation § 31.3406(d)-1 addresses the requirement that a payee furnish a TIN and make certifications in the manner specified on Form W-9. The Form W-9 must be signed under penalties of perjury, and an unsigned form is treated as not having been furnished for purposes of the backup withholding rules. Similarly, a form that is incomplete — for example, a form that omits the TIN or fails to include the required checkboxes — is treated as deficient and does not satisfy the payee's obligation.
Treasury Regulation § 31.3406(d)-5 provides rules regarding the manner and timing of furnishing a TIN. A payee may furnish a TIN to a payor either orally or in writing, but the payor must have received the TIN prior to payment in order for the payment to be exempt from backup withholding. In the context of this Merger, the Letter of Transmittal will require submission of a completed Form W-9, and Keystone Pacific will not process payment of merger consideration until it has either received a completed W-9 or applied backup withholding to the payment.
Treasury Regulation § 31.3406(g)-3 sets forth rules governing the payor's obligation to aggregate payments and report backup withholding on an annual basis.
C. Information Reporting — Form 1099-B
Keystone Pacific, in its capacity as Paying Agent and broker for purposes of Section 6045 of the Code, will file IRS Form 1099-B (Proceeds from Broker and Barter Exchange Transactions) with the IRS for each stockholder receiving merger consideration, reporting the gross proceeds paid to such stockholder in connection with the Merger. Form 1099-B will also reflect any amounts of backup withholding imposed under Section 3406 with respect to the payment.
The filing deadlines for Form 1099-B are as follows:
• Copies to payees (stockholders): Due by January 31 of the year following the calendar year in which the payment is made. For the anticipated Closing Date of July 22, 2025, copies of Form 1099-B reflecting tax year 2025 payments must be furnished to stockholders by January 31, 2026.
• Filing with the IRS: Due by February 28 of the year following the calendar year of payment if filed on paper, or by March 31 if filed electronically. Because Keystone Pacific files information returns electronically (as required for payors filing 250 or more information returns), Forms 1099-B for tax year 2025 will be due to the IRS by March 31, 2026.
• Escrow release payments: To the extent escrow release payments are made in calendar year 2026 or later, separate Forms 1099-B will be required for such payments, with corresponding filing deadlines.
Keystone Pacific is responsible for the preparation, filing, and distribution of all Forms 1099-B in connection with the Merger. Calderwood & Harkness and the Surviving Corporation will cooperate with Keystone Pacific as necessary to ensure accurate and timely information reporting.
III. Scope of W-9 Collection
A. Stockholder Universe
The W-9 collection process encompasses all holders of VeloPay equity securities who are U.S. persons and who are entitled to receive merger consideration (whether in the form of per-share cash consideration, net option spread payments, RSU cash-out payments, or warrant cash-out payments) in connection with the Merger. The relevant categories of stockholders and equity award holders are described below.
Common Stockholders. All holders of VeloPay Common Stock (82,400,000 shares outstanding as of the date hereof) who are U.S. persons are required to furnish a completed Form W-9 in order to receive their pro rata portion of the merger consideration at $20.00 per share without the imposition of backup withholding.
Stock Option Holders. All holders of vested stock options (a portion of the 7,600,000 options outstanding, at a weighted average exercise price of $12.84 per share) who are entitled to receive the net cash spread (i.e., $20.00 minus the applicable exercise price per share) are required to furnish a completed Form W-9. As described in Section VIII.A below, certain option holders who are employees of VeloPay may have their option spread income reported through payroll (on Form W-2) rather than on Form 1099-B, depending on the type of option (incentive stock option vs. nonqualified stock option); however, a Form W-9 should be collected from all option holders regardless of the anticipated reporting treatment, to ensure that Keystone Pacific and the Surviving Corporation have complete TIN records.
Holders of Unvested Stock Options with Partial Acceleration. Under the terms of the Merger Agreement, 50% of each holder's unvested stock options will accelerate and vest at the Closing and will be cashed out at the net spread; the remaining 50% will be converted into replacement options with respect to HPE Fund IV equity, vesting over a 24-month period following the Closing. A Form W-9 is required for the cash payout portion of the unvested options.
RSU Holders. All holders of unvested RSUs (3,200,000 shares underlying outstanding RSUs) are required to furnish a completed Form W-9. Under the Merger Agreement, all unvested RSUs accelerate in full at the Closing and are converted to cash at $20.00 per share. For employee RSU holders, the RSU cash-out amount may be treated as ordinary compensation income and reported on Form W-2 rather than Form 1099-B; however, as with option holders, a Form W-9 should be collected from all RSU holders for completeness and to ensure proper TIN records.
Warrant Holders. All holders of outstanding warrants (1,800,000 warrants at an exercise price of $8.50 per share) are entitled to receive $11.50 per warrant ($20.00 minus $8.50 exercise price), representing total warrant consideration of $20,700,000. A Form W-9 is required from each U.S. person warrant holder.
Key Stockholders. The following are the principal stockholders of VeloPay who are U.S. entities or persons, from whom W-9 collection is particularly important given the magnitude of their respective merger consideration payments:
The aggregate ownership percentages reflected above total approximately 100% of fully diluted shares. The precise breakdown among the smaller holder categories (approximately 12.3% held by other management and employees, and approximately 18.5% held by other outside investors) will be confirmed based on the final capitalization table to be delivered at the Closing.
B. Rollover Equity Participants
Two of VeloPay's founding stockholders — Nathan Aldridge (CEO & Co-Founder, 14.2% ownership) and Sonia Reyes-Watkins (CTO & Co-Founder, 9.7% ownership) — are rolling over portions of their merger proceeds into Harrowgate Velocity Co-Invest LP (the "Co-Invest Vehicle"), a newly formed Delaware limited partnership organized by HPE Fund IV for the purpose of receiving rollover equity contributions from key members of VeloPay's management team. The rollover amounts are as follows:
• Nathan Aldridge: $14,200,000 rollover (representing a portion of his total merger consideration entitlement)
• Sonia Reyes-Watkins: $9,700,000 rollover (representing a portion of her total merger consideration entitlement)
• Total rollover amount: $23,900,000
Notwithstanding the rollover, W-9 collection is required from both individuals because each will receive net cash merger consideration for the non-rolled-over portion of their equity holdings. The Paying Agent will process the cash payment and is required to obtain a Form W-9 in connection therewith.
With respect to the rollover amounts themselves, the tax characterization of the rollover transaction (i.e., whether it is treated as a contribution to a partnership in exchange for partnership interests, a direct exchange, or otherwise) is being analyzed by Leonard Cross as part of his broader tax structuring analysis for the transaction. The rollover may not constitute a "reportable payment" subject to information reporting under Section 6045 if it is characterized as a tax-free contribution to a partnership under Section 721 of the Code, but the analysis of this issue is beyond the scope of this memorandum. In any event, a properly completed Form W-9 should be collected from both Nathan Aldridge and Sonia Reyes-Watkins regardless of the ultimate characterization of the rollover, as the form will be needed for the cash consideration component and will ensure that TIN records are complete for all purposes.
C. Exclusions. The following categories of persons and entities are excluded from the Form W-9 collection process described in this memorandum:
Non-U.S. Persons and Entities. Stockholders and equity award holders who are not U.S. persons for federal income tax purposes are not required to furnish a Form W-9. Instead, such stockholders are required to furnish the applicable IRS Form W-8 (Form W-8BEN for non-U.S. individuals, Form W-8BEN-E for non-U.S. entities, or Form W-8IMY for intermediaries, nominees, and certain flow-through entities). The collection of Forms W-8 and the application of any withholding under FIRPTA (Sections 897 and 1445 of the Code) or Chapter 3 of the Code (Sections 1441–1446) are addressed in the FIRPTA / Withholding Analysis Memorandum prepared by Leonard Cross. The W-9 request letter (see Exhibit A) will include a notation directing non-U.S. persons to contact the Paying Agent for the appropriate Form W-8 and related instructions.
VeloPay Subsidiaries. VeloPay Canada Inc. (a Canadian corporation) and VeloPay Europe, Unipessoal Lda. (a Portuguese entity) are wholly owned subsidiaries of VeloPay and are not stockholders of VeloPay. Accordingly, no Form W-9 is required from these entities in connection with the Merger.
Exempt Payees. Certain categories of U.S. entities — including corporations, tax-exempt organizations described in Section 501(a) of the Code, individual retirement accounts, the United States and its agencies and instrumentalities, and state and local governments — may be exempt from backup withholding under Treasury Regulation § 31.3406(g)-1. However, even exempt payees should furnish a Form W-9 to certify their exempt status and provide their TIN for information reporting purposes. The Form W-9 includes a field (Line 4) for the payee to enter the applicable exempt payee code, which will be noted by Keystone Pacific in its records.
Harrowgate Velocity Co-Invest LP. The Co-Invest Vehicle (EIN: 93-2748163) is the recipient of rollover equity contributions from Nathan Aldridge and Sonia Reyes-Watkins. It is not receiving merger consideration from the Paying Agent in its capacity as a payee. Accordingly, no Form W-9 is required from the Co-Invest Vehicle in connection with the Paying Agent's disbursement of merger consideration. To the extent the Co-Invest Vehicle is required to furnish a Form W-9 in other contexts (e.g., in connection with banking arrangements or future distributions), such collection is outside the scope of this memorandum.
IV. Collection Process and Timeline
A. Pre-Closing W-9 Solicitation
The W-9 collection process will be implemented through the following sequential steps, coordinated among Calderwood & Harkness, Keystone Pacific, VeloPay, and Whitford Jessup & Crane LLP (target's counsel):
Step 1: Preparation of Template W-9 Request Letter. Calderwood & Harkness will prepare the template W-9 request letter (the form of which is attached hereto as Exhibit A) and provide the finalized letter to Keystone Pacific Transfer Services Inc. The primary point of contact at Keystone Pacific for all matters relating to the W-9 collection process is:
Linda Matsumoto Vice President, Corporate Actions Keystone Pacific Transfer Services Inc. 250 Royall Street, Suite 100 Canton, Massachusetts 02021
The template letter will be delivered to Keystone Pacific together with the Form W-9 Completion Quick Reference Guide (attached hereto as Exhibit B) and the W-9 Collection Status Tracker Template (attached hereto as Exhibit C).
Step 2: Integration into Letter of Transmittal Package. Keystone Pacific will include the IRS Form W-9 (current revision, October 2018) and the template request letter as part of the Letter of Transmittal package to be distributed to VeloPay stockholders following the Closing. Calderwood & Harkness will confirm with Keystone Pacific that the W-9 form and request letter have been incorporated into the mailing package no later than July 14, 2025.
Step 3: Letter of Transmittal Instructions. The Form of Letter of Transmittal, which has been prepared by Calderwood & Harkness as an exhibit to the Merger Agreement, will include express instructions directing each stockholder to complete and return a Form W-9 together with the surrendered stock certificates (or book-entry transfer instructions, as applicable) and the completed Letter of Transmittal. The Letter of Transmittal will contain conspicuous disclosure regarding the consequences of failing to provide a completed Form W-9, including the imposition of 24% backup withholding.
Step 4: Equity Award Holder Solicitation. For holders of stock options, RSUs, and warrants who do not hold physical stock certificates and whose equity interests are processed through VeloPay's equity administration platform (currently administered through Sterling Reach Health IT), separate W-9 solicitation letters will be delivered by the Surviving Corporation's human resources and payroll department, in coordination with Danielle Moreau, General Counsel of VeloPay. It is expected that many option and RSU holders who are current employees of VeloPay will already have W-9 or W-4 information on file with the Company's payroll provider. However, a verification and update process is required to ensure that the TINs on file are current and accurate, and that each equity award holder has provided the certifications required by Form W-9. Calderwood & Harkness will work with Danielle Moreau to develop the process for verifying existing TIN records and soliciting updated Forms W-9 where necessary.
B. Timing Milestones
The following timeline sets forth the key milestones for the W-9 collection process:
C. Follow-Up Solicitation for Missing or Defective W-9s
Keystone Pacific will implement the following follow-up solicitation schedule for stockholders who have not submitted a properly completed Form W-9:
First Follow-Up: Thirty (30) days after the initial Letter of Transmittal mailing, Keystone Pacific will send a follow-up solicitation letter to any stockholder from whom a completed Form W-9 has not been received. The follow-up letter will reiterate the requirement to furnish a Form W-9, describe the consequences of non-compliance (24% backup withholding), and include a fresh copy of the Form W-9 and the Quick Reference Guide (Exhibit B).
Second Follow-Up: Sixty (60) days after the initial Letter of Transmittal mailing, Keystone Pacific will send a second follow-up solicitation letter to any stockholder whose W-9 remains outstanding. This letter will include a more prominent warning regarding the imminent application of backup withholding and will urge prompt action.
Application of Backup Withholding: If a properly completed Form W-9 is not received within ninety (90) days of the initial Letter of Transmittal mailing, backup withholding at the rate of 24% will be applied to the merger consideration payment and reported accordingly on the stockholder's Form 1099-B. Keystone Pacific will proceed to disburse the net amount (gross merger consideration minus 24% backup withholding) to the stockholder, together with a notice explaining the withholding and the stockholder's right to claim a credit on their federal income tax return.
Record Keeping. Keystone Pacific will maintain a detailed log of all W-9 solicitations, receipts, deficiencies, and follow-up actions, using the W-9 Collection Status Tracker Template attached hereto as Exhibit C. Calderwood & Harkness will receive periodic status reports from Keystone Pacific (at a minimum, weekly during the first 60 days following the Closing, and monthly thereafter) to monitor compliance rates and identify any issues requiring escalation.
Coordination with Target's Counsel. Calderwood & Harkness will coordinate with Whitford Jessup & Crane LLP — specifically, Rebecca Thornton-Hayes (Lead Partner) and James Okoro (Lead Associate) — to ensure that VeloPay's stockholder records are accurate and up to date for solicitation purposes. This coordination will include verification of stockholder names, addresses, TINs on file, and contact information, as well as confirmation of the final capitalization table to be used for the W-9 solicitation mailing.
V. Form W-9 Completion Instructions for Stockholders
A. Required Information
The following is a summary of the information required on each line and part of IRS Form W-9 (Rev. October 2018), which will also be reflected in the Form W-9 Completion Quick Reference Guide attached hereto as Exhibit B:
Line 1 — Name. The stockholder must enter its name as shown on the stockholder's income tax return. For individuals, this is the individual's legal name. For entities, this is the legal name of the entity as recognized for federal tax purposes (which, in the case of a disregarded entity, is the name of the regarded owner — see Section VIII.B below).
Line 2 — Business Name / Disregarded Entity Name. If the stockholder has a business name, trade name, DBA ("doing business as") name, or disregarded entity name that is different from the name entered on Line 1, such name should be entered on Line 2. For example, a single-member LLC that is disregarded for tax purposes would enter the owner's name on Line 1 and the LLC's name on Line 2.
Line 3 — Federal Tax Classification. The stockholder must check the appropriate box indicating its federal tax classification. The available options are:
• Individual / sole proprietor or single-member LLC
• C Corporation
• S Corporation
• Partnership
• Trust / estate
• Limited liability company (with designation of tax classification: C = C corporation, S = S corporation, P = partnership)
• Other (with description)
Line 4 — Exemptions. If the stockholder is exempt from backup withholding, it should enter the applicable exempt payee code (codes 1 through 13, as described in the Form W-9 instructions). If the stockholder is exempt from reporting under FATCA, it should enter the applicable exemption from FATCA reporting code (codes A through M). Most individual stockholders will leave Line 4 blank, as individual U.S. persons are generally not exempt from backup withholding or FATCA reporting.
Lines 5 and 6 — Address. The stockholder must enter its address, including street address, city, state, and ZIP code. This address will be used by the Paying Agent for purposes of mailing the merger consideration check (if applicable) and the Form 1099-B.
Part I — Taxpayer Identification Number. The stockholder must enter its TIN. For individuals, this is generally the individual's Social Security Number ("SSN"). For entities, this is the entity's Employer Identification Number ("EIN"). In certain cases, an individual may use an Individual Taxpayer Identification Number ("ITIN") issued by the IRS. Resident aliens who do not have an SSN should enter their ITIN.
Part II — Certification. The stockholder must sign the Form W-9 under penalties of perjury, certifying the following:
(1) The TIN shown on the form is the stockholder's correct TIN (or the stockholder is waiting for a TIN to be issued);
(2) The stockholder is not subject to backup withholding because (a) the stockholder is exempt from backup withholding, or (b) the stockholder has not been notified by the IRS that it is subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified the stockholder that it is no longer subject to backup withholding;
(3) The stockholder is a U.S. citizen or other U.S. person (as defined in Section 7701(a)(30) of the Code); and
(4) The FATCA code(s) entered on the form (if any) indicating that the stockholder is exempt from FATCA reporting are correct.
The certification must be signed and dated by the stockholder or an authorized representative. An unsigned form will be treated as incomplete and will not satisfy the requirements for avoiding backup withholding.
B. Common Completion Issues
Based on our experience in similar transactions, the following completion issues are most commonly encountered and should be anticipated by Keystone Pacific in its review process:
Institutional Stockholders. The principal institutional stockholders in this transaction — Ridgeline Ventures Fund III LP, Apex Growth Partners II LP, and Broadleaf Capital Partners LP — are each organized as Delaware limited partnerships. Each of these entities should check "Partnership" (or the appropriate limited liability company classification, if applicable) on Line 3 and provide the EIN of the partnership. The partnership entity (not its individual general or limited partners) is the payee for purposes of the Merger, and the W-9 should reflect the partnership's name and TIN. Each partnership will then be responsible for issuing Schedule K-1 to its partners reflecting each partner's allocable share of gain recognized in connection with the Merger.
Individual Stockholders. The principal individual stockholders — Nathan Aldridge, Sonia Reyes-Watkins, Marcus Langford, and Danielle Moreau, as well as other individual employees and investors — should check "Individual / sole proprietor or single-member LLC" on Line 3 and provide their SSN as the TIN. Individuals should generally leave Line 4 (Exemptions) blank, as individual U.S. persons are not exempt from backup withholding or FATCA reporting in these circumstances.
Trusts and Estates. To the extent any shares of VeloPay Common Stock are held by a trust or estate, the Form W-9 should reflect the trust or estate classification on Line 3, and the EIN of the trust or estate should be provided as the TIN. If a trust has not obtained an EIN, it should apply for one using IRS Form SS-4 prior to submitting the W-9.
Unsigned or Incomplete Forms. Any Form W-9 that is unsigned, missing the TIN, or otherwise incomplete will be returned by the Paying Agent to the stockholder with a cover letter identifying the specific deficiency and providing instructions for correction. Merger consideration will be withheld at the 24% backup withholding rate until a properly completed Form W-9 is received. Keystone Pacific will log all deficient forms in the W-9 Collection Status Tracker (Exhibit C).
VI. Backup Withholding Procedures
A. Application of 24% Backup Withholding
If a stockholder fails to provide a properly completed Form W-9 before the Paying Agent processes payment of merger consideration, Keystone Pacific will withhold 24% of the gross merger consideration payable to such stockholder and remit the withheld amount to the IRS on the stockholder's behalf. The remaining net amount (76% of the gross merger consideration) will be disbursed to the stockholder.
As noted above, backup withholding is not an additional tax. Amounts withheld under Section 3406 may be credited against the stockholder's federal income tax liability for the taxable year in which the withholding occurs. If the amount withheld exceeds the stockholder's actual federal income tax liability for the year, the excess is refundable upon the filing of a timely federal income tax return (IRS Form 1040 for individuals, Form 1065 for partnerships, Form 1120 for corporations, etc.).
The following example illustrates the application of backup withholding:
Example: A stockholder holds 10,000 shares of VeloPay Common Stock and is entitled to merger consideration of $20.00 per share, for a total of $200,000. The stockholder fails to provide a completed Form W-9 prior to payment. Keystone Pacific withholds $48,000 (24% × $200,000) and remits that amount to the IRS. The stockholder receives a net payment of $152,000. The stockholder will receive a Form 1099-B reflecting gross proceeds of $200,000 and backup withholding of $48,000. The stockholder may claim the $48,000 as a credit against its federal income tax liability on its 2025 federal income tax return.
B. Subsequent W-9 Submission
If a stockholder subsequently furnishes a properly completed Form W-9 after backup withholding has been applied but before the withheld amounts have been remitted to the IRS, Keystone Pacific may, to the extent permitted under applicable regulations and its internal procedures, refund the withheld amounts to the stockholder and adjust its records accordingly. Calderwood & Harkness recommends that Keystone Pacific establish a reasonable processing window (e.g., five business days from the date of withholding) during which late-received W-9s can be processed and withheld amounts returned without requiring the stockholder to file a tax return to claim a refund.
If the withheld amounts have already been remitted to the IRS at the time the stockholder provides a late Form W-9, the stockholder will not be able to obtain a refund from Keystone Pacific. Instead, the stockholder must claim the credit on its federal income tax return for the taxable year in which the withholding occurred (i.e., tax year 2025 for payments made at or following the Closing).
C. IRS Reporting
Keystone Pacific will comply with the following IRS reporting obligations in connection with backup withholding:
Form 945 — Annual Return of Withheld Federal Income Tax. Keystone Pacific will file IRS Form 945 to report all backup withholding amounts collected during the calendar year. Form 945 is due by January 31 of the year following the calendar year in which the withholding occurred. For withholding imposed in connection with the Merger (anticipated Closing Date: July 22, 2025), Form 945 for tax year 2025 will be due by January 31, 2026. Deposits of withheld amounts must be made in accordance with the IRS deposit rules applicable to Form 945 filers, generally on a semi-weekly or monthly schedule depending on the aggregate amount of withholding.
Form 1099-B — Proceeds from Broker and Barter Exchange Transactions. As described in Section II.C above, Keystone Pacific will file Form 1099-B for each stockholder receiving merger consideration, reflecting gross proceeds and any backup withholding applied. Copies will be furnished to stockholders by January 31, 2026, and filed with the IRS by March 31, 2026.
VII. Coordination with Paying Agent and Other Parties
A. Keystone Pacific Transfer Services Inc.
Keystone Pacific Transfer Services Inc. serves as the Paying Agent for the Merger and is the primary party responsible for the operational execution of the W-9 collection process.
Primary Contact: Linda Matsumoto Vice President, Corporate Actions Keystone Pacific Transfer Services Inc. 250 Royall Street, Suite 100 Canton, Massachusetts 02021
Keystone Pacific's responsibilities in connection with the W-9 collection process include the following:
(i) Including the Form W-9 in each Letter of Transmittal package distributed to VeloPay stockholders, together with the W-9 request letter (Exhibit A) and Quick Reference Guide (Exhibit B);
(ii) Reviewing submitted Forms W-9 for completeness and accuracy, including verification that the form is signed, the TIN is provided, the appropriate tax classification box is checked, and the required certifications are included;
(iii) Applying backup withholding at the rate of 24% where required (i.e., where a properly completed Form W-9 has not been received prior to payment);
(iv) Maintaining records of the W-9 collection status for each stockholder, using the W-9 Collection Status Tracker (Exhibit C), and providing periodic reports to Calderwood & Harkness and the Surviving Corporation;
(v) Filing Forms 1099-B with the IRS and furnishing copies to stockholders, reflecting gross proceeds and any backup withholding; filing Form 945 to report aggregate backup withholding amounts; and
(vi) Reporting withholding status to Calderwood & Harkness and the Surviving Corporation on a regular basis (weekly during the first 60 days following the Closing, and monthly thereafter), including the number of W-9s received, the number outstanding, the number deficient, and the total amount of backup withholding imposed.
Calderwood & Harkness will provide Keystone Pacific with the final template W-9 request letter and all related materials (Exhibits A, B, and C) by July 14, 2025, to allow sufficient time for integration into the Letter of Transmittal packages prior to the Closing.
B. VeloPay Systems, Inc. (Surviving Corporation)
Following the Closing, VeloPay will continue as the Surviving Corporation and a wholly owned subsidiary of HPE Fund IV. The Surviving Corporation's management team will play a critical role in supporting the W-9 collection process, particularly with respect to equity award holders who are current or former employees.
Danielle Moreau (General Counsel) and Marcus Langford (CFO) will coordinate the provision of current stockholder records to Keystone Pacific, including:
• Complete stockholder names, addresses, and TINs currently on file;
• Equity award holder records from VeloPay's equity administration platform (Sterling Reach Health IT), including the identity, grant details, vesting status, and contact information for all option, RSU, and warrant holders;
• Cross-reference of existing W-4 and W-9 information on file with VeloPay's payroll provider for employees who are equity award holders; and
• Any other information reasonably requested by Keystone Pacific or Calderwood & Harkness to facilitate the W-9 solicitation process.
Post-Closing, the Surviving Corporation's finance team will work with Keystone Pacific on ongoing W-9 follow-up and will serve as a secondary point of contact for stockholders and equity award holders who have questions about the W-9 process. The Surviving Corporation's payroll department will also handle the issuance of Forms W-2 for any equity award income that is treated as compensation and reported through payroll, as described in Section VIII.A below.
C. Whitford Jessup & Crane LLP (Target's Counsel)
Whitford Jessup & Crane LLP serves as legal counsel to VeloPay in connection with the Merger. The relevant contacts are:
• Rebecca Thornton-Hayes, Lead Partner
• James Okoro, Lead Associate
• Ellen Fairchild, Tax Partner
Rebecca Thornton-Hayes and James Okoro will facilitate Calderwood & Harkness's and Keystone Pacific's access to VeloPay's stockholder records and capitalization table for W-9 solicitation purposes. This includes coordinating the transfer of stockholder data from VeloPay's records (including records maintained by Sterling Reach Health IT and VeloPay's stock transfer agent of record) to Keystone Pacific in a format compatible with Keystone Pacific's mailing and tracking systems.
Ellen Fairchild, Tax Partner at Whitford Jessup & Crane LLP, will coordinate with Leonard Cross at Calderwood & Harkness on any tax reporting matters arising in connection with the W-9 collection process, including the characterization of equity award payments for information reporting purposes and any questions regarding the application of backup withholding to specific categories of stockholders or payments.
D. Garrison Trust Company (Escrow Agent)
Pursuant to the Escrow Agreement entered into in connection with the Merger, an escrow amount of $133,000,000 (representing 7% of the $1,900,000,000 Aggregate Merger Consideration) will be deposited with Garrison Trust Company (the "Escrow Agent") at the Closing.
Contact: Valerie Drummond Vice President, Corporate Trust Garrison Trust Company Reference: GT-ESC-2025-07223
The escrow amount is withheld from the merger consideration on a pro rata basis from all stockholders and will be released in two tranches, subject to any pending indemnification claims:
• First Release (12 months post-Closing): $66,500,000 (50% of the escrow amount), less any amounts reserved for pending claims;
• Second Release (18 months post-Closing): Remainder of the escrow amount, less any amounts reserved for pending claims.
W-9 Collection for Escrow Releases. The Forms W-9 collected at Closing in connection with the initial merger consideration payment should be sufficient to cover the escrow release payments, as the same stockholders who are entitled to receive the initial merger consideration will be entitled to receive their pro rata share of the escrow release. However, the Paying Agent and the Stockholder Representative (Nathan Aldridge, acting in his capacity as Stockholder Representative under the Merger Agreement) should confirm that TIN records are maintained and updated as necessary for escrow release disbursements. If any stockholder's TIN changes between the Closing and the date of an escrow release (e.g., due to a change in legal name or the reorganization of an entity), a new Form W-9 should be obtained.
Garrison Trust Company, in its capacity as Escrow Agent, is not independently responsible for W-9 collection or backup withholding. The Stockholder Representative will coordinate the distribution of escrow release payments through Keystone Pacific (or such other paying agent as may be designated), and backup withholding will be applied at the time of escrow release if a proper Form W-9 is not on file for the recipient stockholder.
VIII. Special Considerations
A. Equity Award Holders
The tax reporting treatment of merger consideration paid to equity award holders depends on the type of equity award and the holder's employment status. The following summary addresses the principal categories of equity awards outstanding at VeloPay.
Vested Stock Options. The net cash spread paid to holders of vested stock options ($20.00 minus the applicable exercise price) may be characterized as either ordinary income or capital gain, depending on the type of option:
• Incentive Stock Options ("ISOs"): If the option qualifies as an ISO under Section 422 of the Code and the applicable holding period requirements have been satisfied, the spread may be treated as capital gain. If the holding period requirements have not been satisfied (a "disqualifying disposition"), the spread will be treated as ordinary income to the extent of the discount at grant. A Form W-9 is required regardless of the characterization.
• Nonqualified Stock Options ("NSOs"): The spread on an NSO is treated as ordinary compensation income and is subject to employment tax withholding. For employees, the NSO spread income will generally be reported on Form W-2 rather than Form 1099-B, and will be processed through VeloPay's payroll system. In this case, a separate Form W-9 may not be strictly required for the NSO income component (as the employer already has the employee's TIN on file via Form W-4); however, to ensure completeness and to cover any non-payroll components of the merger consideration, a Form W-9 should be collected from all option holders regardless.
The Surviving Corporation's payroll department, in coordination with Danielle Moreau and Marcus Langford, will be responsible for identifying which options are ISOs and which are NSOs, and for ensuring appropriate payroll withholding and W-2 reporting for NSO income.
Unvested Stock Options (Partial Acceleration). Under the Merger Agreement, 50% of each holder's unvested stock options will accelerate and vest at the Closing, with the net spread paid out in cash. The remaining 50% will be converted into replacement options with respect to HPE Fund IV equity, with a 24-month vesting schedule following the Closing. A Form W-9 is required for the cash payout portion of the unvested options. The replacement options will be subject to separate tax reporting at the time of exercise or settlement, which is beyond the scope of this memorandum.
Restricted Stock Units (RSUs). All unvested RSUs (3,200,000 shares) will accelerate in full at the Closing and will be converted to cash at $20.00 per share. For employee RSU holders, the cash-out amount is treated as ordinary compensation income and is subject to employment tax withholding, reported on Form W-2 through VeloPay's payroll system. A Form W-9 may not be separately required for employee RSU holders whose income is processed through payroll, but as with option holders, a Form W-9 should be collected for completeness. For any non-employee RSU holders (e.g., directors or consultants who hold RSUs), a Form W-9 is required, and the income will be reported on Form 1099-NEC or Form 1099-B, as applicable.
Warrants. The 1,800,000 outstanding warrants will be cancelled at the Closing and converted into the right to receive cash consideration of $11.50 per warrant ($20.00 per share minus the $8.50 exercise price per warrant), representing total warrant consideration of $20,700,000. The warrant consideration is reportable on Form 1099-B, and a Form W-9 is required from each U.S. person warrant holder. Warrant holders who are entities should provide the entity's EIN and applicable tax classification on the Form W-9.
B. Entity Classification Considerations
The proper completion of Form W-9 depends on the entity classification of the stockholder for federal income tax purposes. The following guidance applies to the principal categories of entity stockholders in this transaction:
Partnerships. Ridgeline Ventures Fund III LP, Apex Growth Partners II LP, Broadleaf Capital Partners LP, and any other institutional holders organized as partnerships should check the "Partnership" box on Line 3 of the Form W-9 and provide the partnership's EIN as the TIN. The partnership is the payee for information reporting purposes. The partnership will then be responsible for allocating the gain from the Merger among its partners and issuing Schedule K-1 (Form 1065) to each partner reflecting such partner's allocable share.
Disregarded Entities. If any stockholder is a disregarded entity for federal income tax purposes (e.g., a single-member LLC that has not elected to be classified as a corporation), the Form W-9 should reflect the name and TIN of the regarded owner on Line 1, and the disregarded entity's name may be entered on Line 2. For example, if a stockholder holds shares through a single-member LLC, the individual owner's name and SSN should appear on Line 1, and the LLC's name should appear on Line 2. This is a common source of error, and Keystone Pacific should be alert to W-9 submissions that appear to reflect a disregarded entity's name and EIN rather than the regarded owner's information.
Corporations. Any stockholders organized as C corporations or S corporations should check the appropriate box on Line 3 and provide the corporation's EIN. Corporations are generally exempt from backup withholding and may enter the applicable exempt payee code on Line 4 (exempt payee code "5" for corporations). However, even exempt payees should furnish a completed Form W-9 to certify their exempt status.
C. FATCA Considerations
The current version of Form W-9 (Rev. October 2018) includes fields for FATCA (Foreign Account Tax Compliance Act) exemption code certification on Line 4. The FATCA provisions, codified in Sections 1471 through 1474 of the Code, impose withholding and reporting obligations on foreign financial institutions with respect to accounts held by U.S. persons. While FATCA is principally directed at accounts maintained outside the United States, the Form W-9 includes a FATCA exemption code field to accommodate situations where the payee is exempt from FATCA reporting.
For purposes of this transaction:
• Most individual U.S. stockholders will leave the FATCA exemption code field on Line 4 blank, as individual U.S. persons are generally not exempt from FATCA reporting.
• Certain exempt entities — such as banks (FATCA exemption code "A"), tax-exempt organizations (code "B"), individual retirement accounts (code "C"), and other categories described in the Form W-9 instructions — may enter the applicable FATCA exemption code on Line 4.
• The Paying Agent should note any FATCA exemption codes entered on submitted Forms W-9 and confirm that the codes are consistent with the stockholder's entity classification.
FATCA withholding (at a rate of 30%) is a separate regime from backup withholding under Section 3406, and is generally not applicable to payments of merger consideration to U.S. persons who furnish a properly completed Form W-9. Accordingly, FATCA withholding is not expected to be a material issue in connection with this Merger, but the proper completion of the FATCA fields on Form W-9 should be confirmed as part of Keystone Pacific's review process.
IX. Record Retention
Proper record retention is essential to ensure compliance with IRS requirements and to support the defense of any future inquiries or audits related to the W-9 collection and information reporting process.
Keystone Pacific Transfer Services Inc. Keystone Pacific will retain all collected Forms W-9 for a minimum of four (4) years from the date of the last payment to which the Form W-9 relates, consistent with the IRS record retention requirements set forth in Treasury Regulation § 31.3406(h)-3(g) and the general record retention period applicable to information returns under Section 6501 of the Code. In the context of this Merger, the "last payment" may include escrow release payments made up to 18 months following the Closing, which means that Forms W-9 should be retained until at least four years after the final escrow release (i.e., approximately January 2031 or later, depending on the timing of the final escrow release and resolution of any pending claims). Keystone Pacific should establish a retention schedule that accounts for the escrow release timeline and any extensions resulting from pending indemnification claims.
Calderwood & Harkness LLP. Calderwood & Harkness will maintain copies of the template W-9 request letter (Exhibit A), the Quick Reference Guide (Exhibit B), the W-9 Collection Status Tracker Template (Exhibit C), and all correspondence with Keystone Pacific, VeloPay, and other parties relating to the W-9 collection process, in the Calderwood & Harkness matter file for Matter No. 1003-00003. These records will be retained in accordance with Calderwood & Harkness's standard document retention policies for closed matters.
Surviving Corporation. The Surviving Corporation will retain copies of all Forms W-9 collected through the Letter of Transmittal process and the equity award holder solicitation process, as well as related records (including payroll records reflecting W-4 and W-9 information for employees), in connection with the Surviving Corporation's ongoing tax compliance obligations. These records should be retained for a minimum of four (4) years from the date of the last related payment, consistent with the retention period applicable to Keystone Pacific.
EXHIBIT A
Template W-9 Request Letter
VELOPAY SYSTEMS, INC. 1455 Innovation Parkway, Suite 800 Austin, Texas 78759
[Date]
[Stockholder Name] [Stockholder Address Line 1] [Stockholder Address Line 2] [City, State ZIP Code]
Re: Acquisition of VeloPay Systems, Inc. by Harrowgate Private Equity Fund IV LP — Request for IRS Form W-9
Dear [Stockholder Name]:
We are writing to inform you that the merger of Harrowgate Velocity Merger Sub Inc. with and into VeloPay Systems, Inc. ("VeloPay") was completed on July 22, 2025, pursuant to the Agreement and Plan of Merger, dated as of March 18, 2025, by and among VeloPay, Harrowgate Private Equity Fund IV LP, Harrowgate Velocity Merger Sub Inc., and the Stockholder Representative (the "Merger Agreement"). As a stockholder of VeloPay, you are entitled to receive $20.00 per share in cash (without interest, and less any applicable withholding taxes) for each share of VeloPay common stock, par value $0.0001 per share, that you held immediately prior to the effective time of the Merger (on a fully diluted, as-converted basis). The aggregate merger consideration payable to all stockholders of VeloPay in connection with the Merger is approximately $1,900,000,000.
In order to process payment of your merger consideration and to avoid backup withholding of 24% under Section 3406 of the Internal Revenue Code of 1986, as amended (the "Code"), each stockholder who is a U.S. person (as defined in Section 7701(a)(30) of the Code) must submit a properly completed IRS Form W-9 (Request for Taxpayer Identification Number and Certification). A copy of the IRS Form W-9 (current revision) is enclosed with this letter for your convenience, along with a Quick Reference Guide that provides instructions for completing each section of the form.
Please complete the enclosed Form W-9 and return it, together with the completed Letter of Transmittal and your surrendered stock certificate(s) (or evidence of book-entry transfer, as applicable), to the Paying Agent at the following address:
Keystone Pacific Transfer Services Inc.