1003-00003 · Harrowgate Private Equity Fund IV LP · Corporate Filings

resolutions-hpe-fund-iv.docx DOCUMENT M&A / Corporate

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WRITTEN CONSENT OF THE GENERAL PARTNER OF HARROWGATE PRIVATE EQUITY FUND IV LP IN LIEU OF A MEETING

Action by Written Consent of Harrowgate Capital Management IV LLC, as Sole General Partner

March 17, 2025

This Written Consent (this "Consent") is executed pursuant to and in accordance with Section 6.4 of that certain Amended and Restated Agreement of Limited Partnership of Harrowgate Private Equity Fund IV LP (as amended, supplemented, or otherwise modified from time to time, the "Limited Partnership Agreement" or "LPA"), dated as of June 14, 2022, governing Harrowgate Private Equity Fund IV LP, a Delaware limited partnership (EIN: 87-4231956), with its principal office located at 300 King Street, Suite 4200, Wilmington, Delaware 19801 (the "Fund" or "HPE Fund IV"). The Fund was formed under the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. § 17-101 et seq. (the "Delaware LP Act").

Harrowgate Capital Management IV LLC (EIN: 87-4231847), a Delaware limited liability company, in its capacity as the sole general partner of Harrowgate Private Equity Fund IV LP (in such capacity, the "General Partner"), hereby takes the following actions by written consent in lieu of a meeting, effective as of the date first written above. The Limited Partnership Agreement authorizes the General Partner to take any and all actions on behalf of the Fund without a meeting of the limited partners to the extent such actions fall within the scope of the General Partner's authority as set forth therein. The General Partner has determined that the actions set forth herein are within the scope of its authority and do not require the separate approval or consent of the limited partners of the Fund, except as may otherwise be required by the Limited Partnership Agreement with respect to capital calls and drawdowns, which the General Partner shall effectuate in accordance with the procedures set forth in Article V of the Limited Partnership Agreement.

RECITALS

A. The Fund and Its General Partner.

Harrowgate Private Equity Fund IV LP ("HPE Fund IV" or the "Fund") is a Delaware limited partnership duly formed and validly existing under the laws of the State of Delaware, organized for the purpose of making growth equity and buyout investments in financial services technology, infrastructure software, and data analytics companies, together with related and complementary investments, as more fully described in the Fund's Confidential Private Placement Memorandum dated May 9, 2022 (the "PPM"). HPE Fund IV had its final close on September 30, 2022, with aggregate capital commitments of $3,850,000,000 from its limited partners, of which approximately $2,410,000,000 has been drawn and invested as of the date hereof.

Harrowgate Capital Management IV LLC (the "General Partner") is the sole general partner of HPE Fund IV. The General Partner is a Delaware limited liability company duly formed and validly existing under the laws of the State of Delaware, and is authorized under the Limited Partnership Agreement to manage the business and affairs of the Fund, to make investment and divestiture decisions on behalf of the Fund, and to take all actions on behalf of the Fund that the General Partner, in its sole discretion, deems necessary or appropriate in furtherance of the Fund's investment objectives.

The General Partner's managing members are Richard Harrowgate (Founder & Chairman), Priya Deshmukh (Managing Partner, Fund IV), and Thomas Eriksen (Partner, Head of Financial Technology). Collectively, the managing members of the General Partner have overseen the Fund's investment activities since inception, and Ms. Deshmukh and Mr. Eriksen have served as co-leads of the investment team responsible for evaluating, negotiating, and executing the transaction described herein.

B. The Proposed Transaction.

The General Partner has determined, following extensive due diligence, analysis, and deliberation, that it is in the best interests of the Fund and its limited partners for the Fund to acquire all of the outstanding equity interests of VeloPay Systems, Inc. ("VeloPay" or the "Company"), a Delaware corporation with its principal offices at 1455 Innovation Parkway, Suite 800, Austin, Texas 78759 (EIN: 82-3019478; Delaware File Number: 5748392), on the terms and subject to the conditions described herein (the "Transaction").

VeloPay operates a cloud-native payments processing and merchant acquiring platform serving mid-market and enterprise customers across the United States and Canada. The Company processes approximately $87 billion in annualized gross payment volume ("GPV") across more than 14,000 active merchants. VeloPay's platform integrates payment gateway, issuer processing, risk management, and value-added data analytics capabilities into a unified technology stack, and the Company has experienced a compound annual revenue growth rate of approximately 28% over the preceding three fiscal years.

VeloPay's audited financial statements for its fiscal year ended December 31, 2024 ("FY2024"), as audited by Vance Thornbury & Co. LLP, a nationally recognized independent registered public accounting firm, reflect the following key financial metrics: (i) total revenue of $412.3 million; (ii) Adjusted EBITDA of $98.1 million, representing an Adjusted EBITDA margin of 23.79%; and (iii) net income of $41.7 million. VeloPay's FY2024 financial statements received an unqualified audit opinion, and the Company reported no material weaknesses in its internal controls over financial reporting as of December 31, 2024.

The aggregate merger consideration for the acquisition of all outstanding equity interests of VeloPay is $1,900,000,000 (One Billion Nine Hundred Million Dollars), payable entirely in cash at the closing of the Transaction, subject to customary purchase price adjustments for working capital, cash, debt, and transaction expenses. The per-share merger consideration is $20.00 per share on a fully diluted, as-converted basis, calculated on the basis of 95,000,000 fully diluted shares of VeloPay common stock (inclusive of outstanding in-the-money stock options, restricted stock units, and warrants on an as-converted and treasury stock method basis). The aggregate merger consideration implies an enterprise value-to-revenue ("EV/Revenue") multiple of approximately 4.61x based on FY2024 revenue, and an enterprise value-to-EBITDA ("EV/EBITDA") multiple of approximately 19.37x based on FY2024 Adjusted EBITDA.

C. Transaction Structure.

The acquisition of VeloPay is to be structured as a reverse triangular merger pursuant to Section 251 of the Delaware General Corporation Law (the "DGCL"). This structure was selected by the General Partner, in consultation with the Fund's legal counsel, to provide for the continuity of VeloPay's corporate existence and contractual relationships post-closing, while permitting the Fund to acquire 100% of the equity interests of VeloPay through a single-step merger.

In connection with the Transaction, the Fund caused the formation and incorporation of Harrowgate Velocity Merger Sub Inc. ("Merger Sub"), a Delaware corporation (EIN: 93-1847265; Delaware File Number: 7291034), which was newly formed and incorporated on February 24, 2025, under the DGCL, with its registered agent at Capitol Registered Agents LLC, 1209 Orange Street, Wilmington, Delaware 19801. HPE Fund IV is the sole stockholder of Merger Sub, and Merger Sub was formed solely for the purpose of effectuating the merger contemplated by the Transaction. Merger Sub has not conducted any business activities other than those incidental to its formation and the negotiation and execution of the Merger Agreement and the transactions contemplated thereby.

Pursuant to the Transaction, Merger Sub will merge with and into VeloPay (the "Merger"), with VeloPay surviving the Merger as a wholly-owned subsidiary of HPE Fund IV (the "Surviving Corporation"). At the effective time of the Merger, the separate corporate existence of Merger Sub will cease, and all of the rights, privileges, assets, liabilities, and obligations of Merger Sub will vest in and be assumed by VeloPay as the Surviving Corporation, in accordance with Section 259 of the DGCL.

D. Merger Agreement.

The General Partner has reviewed and carefully considered the Agreement and Plan of Merger (the "Merger Agreement") to be entered into among Harrowgate Private Equity Fund IV LP (as buyer), Harrowgate Velocity Merger Sub Inc. (as merger sub), and VeloPay Systems, Inc. (as the target company), which sets forth the terms and conditions of the Merger, the representations and warranties of the parties, the conditions to closing, and the indemnification and other post-closing obligations of the parties.

The Merger Agreement was prepared by the Fund's outside legal counsel, Calderwood & Harkness LLP, with offices at 787 Seventh Avenue, 38th Floor, New York, New York 10019 (Matter No. 1003-00003). The Merger Agreement has been the subject of extensive arm's-length negotiations between Calderwood & Harkness LLP, on behalf of the Fund, and VeloPay's legal counsel, Whitford Jessup & Crane LLP, with offices at 600 Congress Avenue, Suite 2400, Austin, Texas 78701. The General Partner has been kept apprised of the progress of such negotiations throughout the process and has provided direction to counsel on all material terms.

The Fund's financial advisor, Pendleton Hawkes & Co., with offices at 383 Madison Avenue, 17th Floor, New York, New York 10179, under the direction of lead managing director David Constantinou, has advised the Fund in connection with the Transaction, including with respect to valuation, financial analysis, transaction structuring, and negotiation strategy. Pendleton Hawkes & Co. has delivered to the General Partner its opinion, dated March 14, 2025, that the aggregate merger consideration to be paid by HPE Fund IV in the Transaction is fair, from a financial point of view, to the Fund.

E. Key Terms of the Merger Agreement.

The General Partner has reviewed the Merger Agreement in its entirety and hereby acknowledges and confirms the following key terms and provisions thereof:

(i) Aggregate Merger Consideration. The aggregate merger consideration payable to the stockholders of VeloPay is $1,900,000,000 in cash, subject to customary purchase price adjustments for net working capital, target net debt, transaction expenses, and the exercise and conversion of equity awards.

(ii) Per-Share Merger Consideration. Each share of VeloPay common stock outstanding at the effective time of the Merger (other than shares held by VeloPay as treasury shares, shares owned by HPE Fund IV or Merger Sub, or shares held by stockholders who have properly exercised and perfected appraisal rights under Section 262 of the DGCL) will be converted into the right to receive $20.00 in cash, without interest, on a fully diluted, as-converted basis.

(iii) Treatment of Equity Awards.

(a) Vested Stock Options. All vested and unexercised stock options outstanding at the effective time of the Merger will be cancelled in exchange for a cash payment equal to the product of (x) the excess, if any, of $20.00 over the applicable exercise price per share, multiplied by (y) the number of shares subject to such option (the "net spread"), less applicable withholding taxes.

(b) Unvested Stock Options. Fifty percent (50%) of all unvested stock options outstanding at the effective time of the Merger will be accelerated and treated in the same manner as vested stock options described in clause (a) above. The remaining fifty percent (50%) of unvested stock options will be converted into replacement awards of HPE Fund IV (or an affiliate thereof) on substantially equivalent economic terms, with such replacement awards vesting ratably over a 24-month period following the closing date, subject to the holder's continued service with the Surviving Corporation.

(c) Restricted Stock Units (RSUs). All unvested restricted stock units outstanding at the effective time of the Merger will be fully accelerated and cancelled in exchange for a cash payment of $20.00 per share underlying such RSU, less applicable withholding taxes.

(d) Warrants. All outstanding warrants to purchase shares of VeloPay common stock will be cancelled at the effective time of the Merger in exchange for a cash payment equal to $11.50 per underlying share (being $20.00 less the exercise price of $8.50 per warrant share), less applicable withholding taxes. There are 1,800,000 warrants outstanding as of the date hereof, yielding an aggregate warrant payout of $20,700,000.

(iv) Indemnification Cap. The aggregate liability of the stockholders of VeloPay for indemnification claims under the Merger Agreement (other than claims arising from fraud, willful misconduct, or breaches of fundamental representations) shall not exceed $228,000,000, which represents 12% of the aggregate merger consideration.

(v) Escrow. At the closing, $133,000,000 (representing 7% of the aggregate merger consideration) will be deposited with Garrison Trust Company, as escrow agent (One Liberty Plaza, 42nd Floor, New York, New York 10006; escrow reference GT-ESC-2025-07223), to serve as an indemnification escrow fund to secure the indemnification obligations of VeloPay's stockholders under the Merger Agreement. The escrow funds will be released as follows: (a) $66,500,000 (50% of the escrow amount) will be released to the former stockholders of VeloPay on the date that is 12 months after the closing date, less the aggregate amount of any pending or unresolved indemnification claims as of such date; and (b) the remaining balance of the escrow fund will be released on the date that is 18 months after the closing date, less the aggregate amount of any pending or unresolved indemnification claims as of such date.

(vi) Survival Period. The representations and warranties of the parties under the Merger Agreement will survive the closing for a period of 18 months from the closing date (with an anticipated closing date of July 22, 2025, such survival period would expire on or about January 22, 2027), except that the fundamental representations (organization, authority, capitalization, and tax matters) shall survive for the full statute of limitations period.

(vii) No-Shop Provision. VeloPay will be subject to a customary no-shop restriction from and after the execution of the Merger Agreement, pursuant to which VeloPay and its representatives are prohibited from soliciting, initiating, encouraging, or facilitating any competing acquisition proposals, subject to a customary fiduciary-out exception permitting VeloPay's board of directors to engage with unsolicited superior proposals in compliance with its fiduciary duties. HPE Fund IV will have a five (5) business-day match right before VeloPay may terminate the Merger Agreement to accept a superior proposal.

(viii) Termination Fees. In the event VeloPay terminates the Merger Agreement to accept a superior proposal (or under certain other circumstances specified in the Merger Agreement), VeloPay will pay to HPE Fund IV a termination fee of $76,000,000, which represents 4% of the aggregate merger consideration. In the event the Merger Agreement is terminated by VeloPay as a result of HPE Fund IV's failure to consummate the closing due to a financing failure (or under certain other specified circumstances), HPE Fund IV will pay to VeloPay a reverse termination fee of $57,000,000, which represents 3% of the aggregate merger consideration.

(ix) Material Adverse Effect. The Merger Agreement contains a customary "material adverse effect" definition, with carve-outs for events, conditions, and changes arising from or related to: (a) pandemics, epidemics, or public health emergencies; (b) acts of war, armed hostilities, sabotage, or terrorism; (c) general economic, financial, or market conditions; (d) conditions generally affecting the fintech and payments processing industry; (e) changes in applicable law or regulations, or in the interpretation thereof; (f) changes in GAAP or other applicable accounting standards; (g) the failure of VeloPay to meet internal or published financial projections or forecasts (provided that the underlying cause of such failure may itself constitute a material adverse effect); and (h) the announcement or pendency of the Transaction.

F. Financing.

The General Partner has determined that the Fund will finance the aggregate merger consideration and related transaction expenses through a combination of equity and debt, as described below.

(i) Equity Contribution. HPE Fund IV will contribute equity of $1,140,000,000, representing approximately 60% of the aggregate merger consideration, to be funded through capital calls on the Fund's limited partners in accordance with Article V of the Limited Partnership Agreement. The General Partner has determined that the Fund has sufficient uncalled capital commitments to fund such equity contribution.

(ii) Senior Secured Term Loan Facility. VeloPay, as the Surviving Corporation and a wholly-owned subsidiary of HPE Fund IV following the closing, will enter into a senior secured term loan facility in the aggregate principal amount of $500,000,000 with Tralvendo National Bank (100 Federal Street, 30th Floor, Boston, Massachusetts 02110), as lead arranger and administrative agent (lead banker: Andrew Birchfield). The term loan will bear interest at a rate of SOFR plus 375 basis points, with a seven (7) year term to maturity. Tralvendo National Bank executed a commitment letter dated February 14, 2025 (reference CRE-2025-SPF-0441), committing to provide such term loan on the terms and subject to the conditions set forth therein.

(iii) Senior Secured Revolving Credit Facility. VeloPay, as the Surviving Corporation, will also enter into a senior secured revolving credit facility in the aggregate committed amount of $260,000,000 with Prairie State Bank, N.A. (231 South LaSalle Street, Suite 4400, Chicago, Illinois 60604), as co-arranger and administrative agent (lead banker: Monica Fuentes). The revolving credit facility will bear interest at a rate of SOFR plus 325 basis points, with a five (5) year term to maturity. It is anticipated that approximately $254,700,000 will be drawn on the revolving credit facility at the closing to fund a portion of the merger consideration and transaction expenses.

(iv) Commitment Letters. The Debt Commitment Letter (comprising the commitments of both Tralvendo National Bank and Prairie State Bank, N.A.) and the Equity Commitment Letter (from the General Partner on behalf of HPE Fund IV) were each executed on February 14, 2025. The General Partner has reviewed the terms and conditions of such commitment letters and has determined that the financing commitments reflected therein are sufficient, in the aggregate, to fund the aggregate merger consideration and all related transaction expenses.

(v) Refinancing of Existing Indebtedness. VeloPay's existing senior secured credit facility with Meridian Commercial Credit Corp. (599 Lexington Avenue, 26th Floor, New York, New York 10022), with an outstanding balance of approximately $112,000,000 as of the date hereof, will be repaid in full and terminated at or prior to the closing, and the security interests and liens securing such facility will be released.

G. Ancillary Agreements and Related Matters.

In connection with the Transaction, the General Partner has reviewed and approved the following ancillary agreements and related matters:

(i) Stockholder Support Agreement. A Stockholder Support Agreement (the "Support Agreement") will be entered into among HPE Fund IV and certain stockholders of VeloPay, pursuant to which such stockholders will agree, among other things, to vote their shares in favor of the Merger and against any competing transaction. The parties to the Support Agreement include: Ridgeline Ventures Fund III LP (holding approximately 22.4% of outstanding VeloPay shares), Apex Growth Partners II LP (holding approximately 16.8%), Broadleaf Capital Partners LP (holding approximately 6.1%), Nathan Aldridge (holding approximately 14.2%), and Sonia Reyes-Watkins (holding approximately 9.7%). The stockholders party to the Support Agreement collectively hold approximately 63.1% of the outstanding shares of VeloPay common stock, which percentage is in excess of the majority required to approve the Merger under the DGCL and VeloPay's certificate of incorporation.

(ii) Equity Commitment Letter. The Equity Commitment Letter, dated February 14, 2025, from Harrowgate Capital Management IV LLC on behalf of HPE Fund IV, committing to contribute equity of $1,140,000,000 to fund the Merger.

(iii) Limited Guarantee. A Limited Guarantee from Harrowgate Capital Management IV LLC in favor of VeloPay, guaranteeing HPE Fund IV's obligation to pay the reverse termination fee of $57,000,000 and certain other specified obligations under the Merger Agreement, as described in Section 8.3 of the Merger Agreement.

(iv) Escrow Agreement. An Escrow Agreement among HPE Fund IV, the Stockholder Representative (as defined below), and Garrison Trust Company, as escrow agent, providing for the deposit, administration, and release of the $133,000,000 indemnification escrow fund on the terms described in Recital E(v) above.

(v) Rollover Agreement. A Rollover Agreement with Nathan Aldridge and Sonia Reyes-Watkins, pursuant to which (a) Mr. Aldridge will contribute $14,200,000 of his merger consideration and (b) Ms. Reyes-Watkins will contribute $9,700,000 of her merger consideration, in each case in exchange for limited partnership interests in Harrowgate Velocity Co-Invest LP (EIN: 93-2748163), a Delaware limited partnership formed on March 14, 2025, with its registered agent at Capitol Registered Agents LLC, 1209 Orange Street, Wilmington, Delaware 19801, and with Harrowgate Capital Management IV LLC as its general partner. The total rollover amount is $23,900,000. Harrowgate Velocity Co-Invest LP will invest such rollover proceeds as co-investment equity alongside HPE Fund IV in the Surviving Corporation.

(vi) Non-Competition and Non-Solicitation Agreements. Separate Non-Competition and Non-Solicitation Agreements will be entered into with each of Nathan Aldridge and Sonia Reyes-Watkins, effective as of the closing of the Transaction, each with a three (3) year restrictive period, containing customary restrictions on competition, solicitation of employees and customers, and use of confidential information.

(vii) Paying Agent Agreement. A Paying Agent Agreement with Keystone Pacific Transfer Services Inc. (250 Royall Street, Suite 100, Canton, Massachusetts 02021; contact: Linda Matsumoto, Vice President, Corporate Actions), pursuant to which Keystone Pacific will serve as paying agent for the deposit and disbursement of the merger consideration to the stockholders of VeloPay in exchange for their shares.

(viii) Credit Agreement and Related Documents. The definitive Credit Agreement, Guarantee and Collateral Agreement, and Intercreditor Agreement among VeloPay (as borrower), HPE Fund IV (as equity sponsor), Tralvendo National Bank and Prairie State Bank, N.A. (as lenders), and their respective counsel, Maplewood & Strauss LLP (One International Place, Suite 3600, Boston, Massachusetts 02110), which documents will govern the terms and conditions of the senior secured term loan facility and senior secured revolving credit facility described in Recital F above.

(ix) Representations and Warranties Insurance. A buyer-side representations and warranties insurance policy has been procured from Oakbridge Omnivrel Insurance Group (underwriter: Neil Carmichael), with the following terms: policy limit of $190,000,000; retention (deductible) of $19,000,000, the first $9,500,000 of which will be borne by the sellers (through the indemnification escrow); annual premium of $5,320,000; Policy No. OFI-RW-2025-03187. The R&W insurance policy was bound on March 10, 2025.

(x) D&O Tail Insurance. A six (6) year directors' and officers' liability insurance tail policy has been procured from Continental Shield Insurance Company (Policy No. CSI-DOT-2025-4821), with a premium of $2,150,000, brokered by Greystone Risk Advisors LLC (contact: Stephen Hargrave). The D&O tail policy will provide coverage for VeloPay's pre-closing directors and officers for claims arising from acts or omissions occurring prior to the effective time of the Merger, for a period of six years following the closing.

H. Regulatory Approvals.

The consummation of the Transaction requires, among other things, the receipt of certain regulatory approvals and the making of certain regulatory filings, including without limitation:

(i) the filing of a premerger notification form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), with the Federal Trade Commission (the "FTC") and the Antitrust Division of the United States Department of Justice (the "DOJ"), and the expiration or early termination of the applicable waiting period thereunder;

(ii) the filing of a notification under the Investment Canada Act (Canada) with Innovation, Science and Economic Development Canada, in connection with the indirect acquisition by HPE Fund IV of VeloPay Canada Inc., a wholly-owned subsidiary of VeloPay that holds VeloPay's Canadian money services business licenses and operates VeloPay's Canadian merchant acquiring business;

(iii) the filing of change-of-control applications or notifications under state money transmitter licensing regimes in thirty-one (31) states in which VeloPay holds active money transmitter licenses or similar authorizations; and

(iv) such other regulatory approvals, consents, filings, or notifications as may be required under applicable law in connection with the consummation of the Merger.

Howard Bellamy, specialist partner in the Antitrust & Competition practice group at Calderwood & Harkness LLP, is advising HPE Fund IV on antitrust matters in connection with the Transaction. Fielding McGrath LLP (contact: Amara Osei), based in Washington, D.C., serves as VeloPay's regulatory and antitrust counsel. The General Partner, in consultation with Calderwood & Harkness LLP, believes that the Transaction does not present significant antitrust concerns and expects that all required regulatory approvals will be obtained within the anticipated timeframe for closing.

I. Sources and Uses.

The General Partner has reviewed and approved the following sources and uses of funds in connection with the Transaction:

The estimated transaction expenses of $48,500,000 include, among other things, legal fees and expenses, financial advisory fees, debt financing fees, insurance premiums (R&W and D&O tail), filing fees (including HSR Act filing fees), transfer taxes, paying agent fees, escrow agent fees, accounting and diligence fees, and other customary closing costs.

RESOLUTIONS

NOW, THEREFORE, BE IT:

Resolution 1 — Approval of the Transaction

RESOLVED, that the General Partner hereby approves and authorizes the acquisition by HPE Fund IV of all of the outstanding equity interests of VeloPay Systems, Inc. pursuant to a reverse triangular merger, substantially on the terms and subject to the conditions described in the recitals above and as set forth in the Merger Agreement, for aggregate merger consideration of One Billion Nine Hundred Million Dollars ($1,900,000,000), payable in cash, subject to customary purchase price adjustments, and the General Partner hereby determines that the Transaction is in the best interests of the Fund and its limited partners and is consistent with the Fund's investment objectives and strategy as set forth in the Limited Partnership Agreement and the PPM.

Resolution 2 — Approval of the Merger Agreement

RESOLVED, that the General Partner hereby approves the Agreement and Plan of Merger (the "Merger Agreement") among Harrowgate Private Equity Fund IV LP, Harrowgate Velocity Merger Sub Inc., and VeloPay Systems, Inc., in substantially the form presented to and reviewed by the General Partner, together with such changes, modifications, amendments, or supplements therein as the Authorized Representatives (as defined below) may approve in their discretion, such approval to be conclusively evidenced by their execution and delivery thereof; and be it further

RESOLVED, that each of Priya Deshmukh, Managing Partner, Fund IV, and Thomas Eriksen, Partner, Head of Financial Technology (each, an "Authorized Representative" and, collectively, the "Authorized Representatives"), is hereby authorized, empowered, and directed to execute and deliver the Merger Agreement on behalf of HPE Fund IV, and to take all actions contemplated by or necessary to give effect to the Merger Agreement.

Resolution 3 — Authorization of Equity Commitment

RESOLVED, that the General Partner hereby approves and authorizes the commitment of One Billion One Hundred Forty Million Dollars ($1,140,000,000) in equity from the Fund to finance the Transaction, and the execution and delivery by Harrowgate Capital Management IV LLC, on behalf of HPE Fund IV, of the Equity Commitment Letter dated February 14, 2025, in substantially the form presented to and reviewed by the General Partner; and be it further

RESOLVED, that the General Partner hereby authorizes and directs the issuance of capital call notices to the limited partners of the Fund, in accordance with Article V and Schedule A of the Limited Partnership Agreement, as necessary and appropriate to draw on the Fund's uncalled capital commitments in order to fund the equity contribution of $1,140,000,000 at or prior to the closing of the Transaction, together with such additional amounts as may be necessary to fund the Fund's share of transaction expenses and reserves.

Resolution 4 — Approval of Debt Financing

RESOLVED, that the General Partner hereby approves the incurrence of indebtedness by VeloPay Systems, Inc. (as the Surviving Corporation and a wholly-owned subsidiary of HPE Fund IV following the closing of the Merger) under:

(a) a senior secured term loan facility in the aggregate principal amount of $500,000,000 with Tralvendo National Bank (100 Federal Street, 30th Floor, Boston, Massachusetts 02110), as lead arranger and administrative agent, bearing interest at a rate of SOFR plus 375 basis points, with a seven (7) year term to maturity, on the terms set forth in the Debt Commitment Letter bearing reference CRE-2025-SPF-0441; and

(b) a senior secured revolving credit facility in the aggregate committed amount of $260,000,000 with Prairie State Bank, N.A. (231 South LaSalle Street, Suite 4400, Chicago, Illinois 60604), as co-arranger and administrative agent, bearing interest at a rate of SOFR plus 325 basis points, with a five (5) year term to maturity;

and be it further

RESOLVED, that the General Partner hereby approves the Debt Commitment Letter executed on February 14, 2025, in the form presented to and reviewed by the General Partner, and hereby authorizes the Authorized Representatives to negotiate, execute, and deliver, on behalf of the Fund and the Surviving Corporation, the definitive Credit Agreement, Guarantee and Collateral Agreement, Intercreditor Agreement, and all other related financing documents, instruments, and certificates required in connection with the senior secured term loan facility and senior secured revolving credit facility, at or prior to the closing of the Transaction, with such terms and provisions as the Authorized Representatives, in consultation with the Fund's legal counsel, may determine to be necessary or appropriate.

Resolution 5 — Approval of the Limited Guarantee

RESOLVED, that the General Partner hereby approves and authorizes the execution and delivery of a Limited Guarantee by Harrowgate Capital Management IV LLC in favor of VeloPay Systems, Inc., pursuant to which the General Partner will guarantee HPE Fund IV's obligation to pay the reverse termination fee of Fifty-Seven Million Dollars ($57,000,000) and certain other specified obligations under the Merger Agreement (including reimbursement obligations, if any), subject to the terms, conditions, and limitations set forth in such Limited Guarantee, and the Authorized Representatives are hereby authorized to execute and deliver such Limited Guarantee on behalf of the General Partner.

Resolution 6 — Formation and Capitalization of Merger Sub

RESOLVED, that the General Partner hereby ratifies and confirms the formation and incorporation of Harrowgate Velocity Merger Sub Inc. as a Delaware corporation on February 24, 2025 (Delaware File Number: 7291034; EIN: 93-1847265; registered agent: Capitol Registered Agents LLC, 1209 Orange Street, Wilmington, Delaware 19801), and the capitalization thereof by HPE Fund IV as its sole stockholder, including the issuance of 1,000 shares of Merger Sub common stock, par value $0.01 per share, to HPE Fund IV in exchange for a capital contribution of $10.00; and be it further

RESOLVED, that the Authorized Representatives are hereby authorized and directed to take all actions necessary or advisable in their capacity as directors and/or officers of Merger Sub to effectuate the Merger, including without limitation the adoption and approval of the Merger Agreement by Merger Sub's board of directors and sole stockholder, the execution and delivery of the Merger Agreement by Merger Sub, and the filing of the Certificate of Merger with the Delaware Secretary of State.

Resolution 7 — Approval of the Stockholder Support Agreement

RESOLVED, that the General Partner hereby approves the Stockholder Support Agreement to be entered into among HPE Fund IV and the stockholders of VeloPay identified therein, namely Ridgeline Ventures Fund III LP, Apex Growth Partners II LP, Broadleaf Capital Partners LP, Nathan Aldridge, and Sonia Reyes-Watkins, collectively holding approximately 63.1% of the outstanding shares of VeloPay common stock, and the Authorized Representatives are hereby authorized, empowered, and directed to execute and deliver such Stockholder Support Agreement on behalf of HPE Fund IV.

Resolution 8 — Approval of Escrow Agreement and Appointment of Escrow Agent

RESOLVED, that the General Partner hereby approves the Escrow Agreement to be entered into among HPE Fund IV (or the Surviving Corporation), the Stockholder Representative, and Garrison Trust Company (One Liberty Plaza, 42nd Floor, New York, New York 10006), as escrow agent, under escrow reference GT-ESC-2025-07223, providing for the deposit of One Hundred Thirty-Three Million Dollars ($133,000,000), representing 7% of the aggregate merger consideration, into an indemnification escrow fund (the "Escrow Fund"), to be held and administered in accordance with the terms of the Escrow Agreement; and be it further

RESOLVED, that the Escrow Fund shall be released as follows: (a) Sixty-Six Million Five Hundred Thousand Dollars ($66,500,000) shall be released to the former stockholders of VeloPay on the date that is twelve (12) months following the closing date of the Merger, less the aggregate amount of any then-pending or unresolved indemnification claims; and (b) the remaining balance of the Escrow Fund shall be released to the former stockholders of VeloPay on the date that is eighteen (18) months following the closing date of the Merger, less the aggregate amount of any then-pending or unresolved indemnification claims; and be it further

RESOLVED, that the Authorized Representatives are hereby authorized to execute and deliver the Escrow Agreement and all ancillary documents on behalf of HPE Fund IV.

Resolution 9 — Approval of the Rollover Agreement and Co-Invest Vehicle

RESOLVED, that the General Partner hereby approves:

(a) the formation of Harrowgate Velocity Co-Invest LP (EIN: 93-2748163), a Delaware limited partnership formed on March 14, 2025, with its registered agent at Capitol Registered Agents LLC, 1209 Orange Street, Wilmington, Delaware 19801, and with Harrowgate Capital Management IV LLC as its general partner, for the purpose of facilitating rollover equity investments by certain members of VeloPay's management team; and

(b) the Rollover Agreement to be entered into with Nathan Aldridge (rollover equity contribution of $14,200,000) and Sonia Reyes-Watkins (rollover equity contribution of $9,700,000), providing for total rollover equity of $23,900,000, to be contributed to Harrowgate Velocity Co-Invest LP in exchange for limited partnership interests therein, on the terms and subject to the conditions set forth in such Rollover Agreement;

and be it further

RESOLVED, that the Authorized Representatives are hereby authorized to execute and deliver the Rollover Agreement, the Limited Partnership Agreement of Harrowgate Velocity Co-Invest LP, and all ancillary documents in connection therewith, on behalf of the Fund and the General Partner.

Resolution 10 — Approval of Non-Competition and Non-Solicitation Agreements

RESOLVED, that the General Partner hereby approves the Non-Competition and Non-Solicitation Agreements to be entered into with each of Nathan Aldridge and Sonia Reyes-Watkins, effective as of the closing of the Transaction, each containing three (3) year post-closing restrictive covenants, and the Authorized Representatives are hereby authorized to execute and deliver such agreements on behalf of HPE Fund IV.

Resolution 11 — Approval of Paying Agent Agreement

RESOLVED, that the General Partner hereby approves the Paying Agent Agreement to be entered into with Keystone Pacific Transfer Services Inc. (250 Royall Street, Suite 100, Canton, Massachusetts 02021; contact: Linda Matsumoto, Vice President, Corporate Actions), pursuant to which Keystone Pacific will serve as paying agent for the deposit, administration, and disbursement of the merger consideration to the stockholders of VeloPay in exchange for the surrender and cancellation of their shares of VeloPay common stock, and the Authorized Representatives are hereby authorized to execute and deliver such agreement on behalf of the Fund and the Surviving Corporation, and to deposit with Keystone Pacific such funds as may be required to pay the aggregate merger consideration at the closing of the Transaction.

Resolution 12 — Authorization of Stockholder Representative Agreement

RESOLVED, that the General Partner hereby approves and authorizes the Stockholder Representative Agreement, pursuant to which Nathan Aldridge shall be appointed as the Stockholder Representative to act on behalf of the former stockholders of VeloPay with respect to all matters arising under the Merger Agreement following the closing, including without limitation the administration and resolution of indemnification claims, the management and release of the Escrow Fund, the determination of purchase price adjustments, and the giving and receiving of notices on behalf of the former stockholders, and the Authorized Representatives are hereby authorized to execute and deliver such agreement on behalf of HPE Fund IV.

Resolution 13 — Approval of Representations and Warranties Insurance

RESOLVED, that the General Partner hereby approves the procurement of the buyer-side representations and warranties insurance policy from Oakbridge Omnivrel Insurance Group (Policy No. OFI-RW-2025-03187), with the following material terms: policy limit of $190,000,000; retention (deductible) of $19,000,000, of which the first $9,500,000 shall be borne by the sellers (through the indemnification escrow) and the remaining $9,500,000 shall be borne by the buyer; premium of $5,320,000; underwriter: Neil Carmichael; and be it further

RESOLVED, that the General Partner hereby authorizes the payment of the premium of $5,320,000 for such representations and warranties insurance policy from Fund resources or through transaction expense reimbursement, as the Authorized Representatives may determine to be appropriate.

Resolution 14 — Approval of D&O Tail Insurance

RESOLVED, that the General Partner hereby approves the procurement of a six (6) year directors' and officers' liability insurance tail policy from Continental Shield Insurance Company (Policy No. CSI-DOT-2025-4821), with a premium of $2,150,000, brokered by Greystone Risk Advisors LLC (contact: Stephen Hargrave), for the benefit of VeloPay's pre-closing directors and officers, covering claims arising from acts or omissions occurring prior to the effective time of the Merger, for a period of six (6) years following the closing date, and the General Partner hereby authorizes the payment of the premium therefor from Fund resources or as a transaction expense.

Resolution 15 — Authorization of Regulatory Filings

RESOLVED, that the General Partner hereby authorizes the Authorized Representatives and the Fund's counsel, Calderwood & Harkness LLP (including Howard Bellamy, specialist partner, Antitrust & Competition), to prepare, execute, and file on behalf of HPE Fund IV all regulatory filings, applications, notifications, and submissions required in connection with the Transaction, including without limitation:

(a) the premerger notification filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), with the Federal Trade Commission and the Antitrust Division of the United States Department of Justice, together with any supplemental submissions, voluntary timing agreements, or responses to second requests that may be required or advisable in connection therewith;

(b) the notification under the Investment Canada Act (Canada) with Innovation, Science and Economic Development Canada, in connection with the indirect acquisition of VeloPay Canada Inc.;

(c) all change-of-control applications, notifications, and filings required under state money transmitter licensing regimes in the thirty-one (31) states in which VeloPay holds active money transmitter licenses or similar authorizations, including but not limited to those states requiring prior approval of a change of control; and

(d) any and all other regulatory filings, applications, notifications, or approvals required under applicable federal, state, local, or foreign law in order to consummate the Merger;

and be it further

RESOLVED, that the Authorized Representatives are hereby authorized to pay all filing fees, application fees, and related expenses in connection with such regulatory filings from Fund resources.

Resolution 16 — Approval of Amended and Restated Organizational Documents of the Surviving Corporation

RESOLVED, that the General Partner hereby approves the Amended and Restated Certificate of Incorporation and the Amended and Restated Bylaws of VeloPay Systems, Inc., as the Surviving Corporation, each in substantially the form to be attached as exhibits to the Merger Agreement, to be effective at the effective time of the Merger, and the Authorized Representatives are hereby authorized to take all actions necessary to effectuate the adoption of such amended and restated organizational documents.

Resolution 17 — Authorization of Certificate of Merger

RESOLVED, that the General Partner hereby authorizes and directs the Authorized Representatives, in their capacity as officers and/or directors of Merger Sub and/or the Surviving Corporation, to prepare, execute, and file the Certificate of Merger with the Secretary of State of the State of Delaware pursuant to Section 251 of the DGCL, effectuating the merger of Harrowgate Velocity Merger Sub Inc. with and into VeloPay Systems, Inc., at such time as the conditions to closing set forth in the Merger Agreement have been satisfied or waived and the parties are prepared to consummate the Merger.

Resolution 18 — Appointment and Authorization of Officers and Representatives

RESOLVED, that Priya Deshmukh (Managing Partner, Fund IV) and Thomas Eriksen (Partner, Head of Financial Technology) are each hereby authorized, empowered, and directed, acting individually or together, in the name and on behalf of the Fund and the General Partner, to:

(a) execute and deliver the Merger Agreement, Equity Commitment Letter, Limited Guarantee, Stockholder Support Agreement, Escrow Agreement, Paying Agent Agreement, Rollover Agreement, Non-Competition and Non-Solicitation Agreements, Stockholder Representative Agreement, Credit Agreement, Guarantee and Collateral Agreement, Intercreditor Agreement, and all other ancillary agreements, instruments, documents, and certificates contemplated by the Merger Agreement or otherwise necessary or desirable in connection with the Transaction;

(b) negotiate, approve, and agree to any amendments, modifications, supplements, waivers, or consents to any of the foregoing documents, agreements, or instruments, in each case as they may deem necessary, advisable, or appropriate in their sole discretion;

(c) execute and deliver officer's certificates, secretary's certificates, incumbency certificates, good standing certificates, bring-down certificates, closing deliverables, and all other certificates and documents required to be delivered at or in connection with the closing of the Transaction;

(d) cause the Fund's equity commitment of $1,140,000,000 to be funded at closing by issuing capital call notices to the Fund's limited partners and directing the deposit of such funds as may be required to consummate the Transaction; and

(e) take all other actions and execute and deliver all other documents as they may deem necessary, advisable, or appropriate to consummate the Transaction and to carry out the intent and purposes of these resolutions;

and be it further

RESOLVED, that any actions heretofore taken by the Authorized Representatives in connection with the foregoing matters are hereby ratified, confirmed, and approved in all respects.

Resolution 19 — Engagement and Payment of Advisors

RESOLVED, that the General Partner hereby ratifies and confirms the engagement of the following advisors in connection with the Transaction, and authorizes the payment of all fees, expenses, and disbursements of such advisors from Fund resources:

(a) Calderwood & Harkness LLP — outside legal counsel to HPE Fund IV; engagement letter dated October 7, 2024; Matter No. 1003-00003; fee arrangement: Partner rate of $1,650 per hour, Counsel rate of $1,350 per hour, Associate rate of $950 per hour; success fee of $1,250,000 payable at the closing of the Transaction; expense cap of $250,000; engagement team: Sandra Tung (responsible partner), Oliver Mackenzie (billing partner), Megan Chu (lead associate), Derek Okonkwo (working associate), Leonard Cross (specialist partner, Tax), and Howard Bellamy (specialist partner, Antitrust & Competition).

(b) Pendleton Hawkes & Co. — financial advisor to HPE Fund IV; lead managing director: David Constantinou; advisory fee of $6,650,000, representing 0.35% of aggregate deal value, payable at the closing of the Transaction.

Resolution 20 — Ratification of Prior Acts

RESOLVED, that all acts heretofore taken by the Authorized Representatives, officers, agents, and attorneys of the General Partner and the Fund in connection with the Transaction, including without limitation the following, are hereby ratified, confirmed, and approved in all respects as the acts and deeds of the General Partner and the Fund:

(a) the negotiation and execution of the exclusivity agreement with VeloPay, dated December 6, 2024;

(b) the negotiation and execution of the Equity Commitment Letter, dated February 14, 2025;

(c) the negotiation and execution of the Debt Commitment Letter with Tralvendo National Bank and Prairie State Bank, N.A., dated February 14, 2025;

(d) the submission of the buyer-side representations and warranties insurance application to Oakbridge Omnivrel Insurance Group, dated February 21, 2025;

(e) the formation and incorporation of Harrowgate Velocity Merger Sub Inc. on February 24, 2025;

(f) the formation of Harrowgate Velocity Co-Invest LP on March 14, 2025;

(g) the binding of the R&W insurance policy (Policy No. OFI-RW-2025-03187) on March 10, 2025; and

(h) all related due diligence, evaluation, negotiation, and preparatory activities undertaken in connection with the Transaction.

Resolution 21 — General Authorization

RESOLVED, that the Authorized Representatives are hereby authorized, empowered, and directed, acting singly or together, to execute and deliver any and all agreements, instruments, documents, certificates, notices, filings, and communications, and to take any and all actions, in the name and on behalf of the Fund and the General Partner, as they may deem necessary, advisable, or appropriate to carry out the intent and purposes of the foregoing resolutions and to consummate the Transaction and the transactions contemplated thereby, the execution and delivery of any such document or the taking of any such action to be conclusive evidence of such determination; and be it further

RESOLVED, that any and all expenses incurred by the General Partner or the Fund in connection with the Transaction, including but not limited to legal fees, advisory fees, financing fees, insurance premiums, filing fees, transfer taxes, escrow agent fees, paying agent fees, and other customary closing costs, shall be proper expenses of the Fund and shall be paid from Fund resources or reimbursed to the General Partner, in each case in accordance with the terms of the Limited Partnership Agreement.

EFFECTIVENESS AND COUNTERPARTS

This Written Consent shall be effective as of the date first written above, March 17, 2025, and shall have the same force and effect as if the actions set forth herein had been authorized at a duly called and held meeting of the General Partner.

This Written Consent may be executed in one or more counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of this Written Consent by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document shall have the same effect as delivery of a physically executed original.

This Written Consent shall be filed with the records of the Fund maintained at the principal office of the Fund at 300 King Street, Suite 4200, Wilmington, Delaware 19801, and shall be maintained with the minutes and records of actions taken by the General Partner.

[Signature Page Follows]

[SIGNATURE PAGE TO WRITTEN CONSENT OF THE GENERAL PARTNER OF HARROWGATE PRIVATE EQUITY FUND IV LP IN LIEU OF A MEETING]

IN WITNESS WHEREOF, the undersigned has executed this Written Consent as of the date first written above.

HARROWGATE CAPITAL MANAGEMENT IV LLC, as Sole General Partner of Harrowgate Private Equity Fund IV LP

By: ________

Name: Priya Deshmukh

Title: Managing Partner, Fund IV

Date: March 17, 2025

ACKNOWLEDGED AND CONSENTED:

By: ________

Name: Thomas Eriksen

Title: Partner, Head of Financial Technology

Date: March 17, 2025

By: ________

Name: Richard Harrowgate

Title: Founder & Chairman

Date: March 17, 2025

Sources	Amount
HPE Fund IV Equity Contribution	$1,140,000,000
Senior Secured Term Loan (Tralvendo National Bank)	$500,000,000
VeloPay Cash on Hand (Target)	$53,800,000
Revolver Draw at Closing (Prairie State Bank, N.A.)	$254,700,000
Total Sources	$1,948,500,000
Uses	Amount
Equity Consideration to VeloPay Stockholders	$1,900,000,000

(of which $133,000,000 deposited in indemnification escrow)

Estimated Transaction Expenses	$48,500,000
Total Uses	$1,948,500,000

WRITTEN CONSENT OF THE GENERAL PARTNER OF HARROWGATE PRIVATE EQUITY FUND IV LP IN LIEU OF A MEETING
Action by Written Consent of Harrowgate Capital Management IV LLC, as Sole General Partner
March 17, 2025
This Written Consent (this "Consent") is executed pursuant to and in accordance with Section 6.4 of that certain Amended and Restated Agreement of Limited Partnership of Harrowgate Private Equity Fund IV LP (as amended, supplemented, or otherwise modified from time to time, the "Limited Partnership Agreement" or "LPA"), dated as of June 14, 2022, governing Harrowgate Private Equity Fund IV LP, a Delaware limited partnership (EIN: 87-4231956), with its principal office located at 300 King Street, Suite 4200, Wilmington, Delaware 19801 (the "Fund" or "HPE Fund IV"). The Fund was formed under the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. § 17-101 et seq. (the "Delaware LP Act").
Harrowgate Capital Management IV LLC (EIN: 87-4231847), a Delaware limited liability company, in its capacity as the sole general partner of Harrowgate Private Equity Fund IV LP (in such capacity, the "General Partner"), hereby takes the following actions by written consent in lieu of a meeting, effective as of the date first written above. The Limited Partnership Agreement authorizes the General Partner to take any and all actions on behalf of the Fund without a meeting of the limited partners to the extent such actions fall within the scope of the General Partner's authority as set forth therein. The General Partner has determined that the actions set forth herein are within the scope of its authority and do not require the separate approval or consent of the limited partners of the Fund, except as may otherwise be required by the Limited Partnership Agreement with respect to capital calls and drawdowns, which the General Partner shall effectuate in accordance with the procedures set forth in Article V of the Limited Partnership Agreement.
RECITALS
A. The Fund and Its General Partner.
Harrowgate Private Equity Fund IV LP ("HPE Fund IV" or the "Fund") is a Delaware limited partnership duly formed and validly existing under the laws of the State of Delaware, organized for the purpose of making growth equity and buyout investments in financial services technology, infrastructure software, and data analytics companies, together with related and complementary investments, as more fully described in the Fund's Confidential Private Placement Memorandum dated May 9, 2022 (the "PPM"). HPE Fund IV had its final close on September 30, 2022, with aggregate capital commitments of $3,850,000,000 from its limited partners, of which approximately $2,410,000,000 has been drawn and invested as of the date hereof.
Harrowgate Capital Management IV LLC (the "General Partner") is the sole general partner of HPE Fund IV. The General Partner is a Delaware limited liability company duly formed and validly existing under the laws of the State of Delaware, and is authorized under the Limited Partnership Agreement to manage the business and affairs of the Fund, to make investment and divestiture decisions on behalf of the Fund, and to take all actions on behalf of the Fund that the General Partner, in its sole discretion, deems necessary or appropriate in furtherance of the Fund's investment objectives.
The General Partner's managing members are Richard Harrowgate (Founder & Chairman), Priya Deshmukh (Managing Partner, Fund IV), and Thomas Eriksen (Partner, Head of Financial Technology). Collectively, the managing members of the General Partner have overseen the Fund's investment activities since inception, and Ms. Deshmukh and Mr. Eriksen have served as co-leads of the investment team responsible for evaluating, negotiating, and executing the transaction described herein.
B. The Proposed Transaction.
The General Partner has determined, following extensive due diligence, analysis, and deliberation, that it is in the best interests of the Fund and its limited partners for the Fund to acquire all of the outstanding equity interests of VeloPay Systems, Inc. ("VeloPay" or the "Company"), a Delaware corporation with its principal offices at 1455 Innovation Parkway, Suite 800, Austin, Texas 78759 (EIN: 82-3019478; Delaware File Number: 5748392), on the terms and subject to the conditions described herein (the "Transaction").
VeloPay operates a cloud-native payments processing and merchant acquiring platform serving mid-market and enterprise customers across the United States and Canada. The Company processes approximately $87 billion in annualized gross payment volume ("GPV") across more than 14,000 active merchants. VeloPay's platform integrates payment gateway, issuer processing, risk management, and value-added data analytics capabilities into a unified technology stack, and the Company has experienced a compound annual revenue growth rate of approximately 28% over the preceding three fiscal years.
VeloPay's audited financial statements for its fiscal year ended December 31, 2024 ("FY2024"), as audited by Vance Thornbury & Co. LLP, a nationally recognized independent registered public accounting firm, reflect the following key financial metrics: (i) total revenue of $412.3 million; (ii) Adjusted EBITDA of $98.1 million, representing an Adjusted EBITDA margin of 23.79%; and (iii) net income of $41.7 million. VeloPay's FY2024 financial statements received an unqualified audit opinion, and the Company reported no material weaknesses in its internal controls over financial reporting as of December 31, 2024.
The aggregate merger consideration for the acquisition of all outstanding equity interests of VeloPay is $1,900,000,000 (One Billion Nine Hundred Million Dollars), payable entirely in cash at the closing of the Transaction, subject to customary purchase price adjustments for working capital, cash, debt, and transaction expenses. The per-share merger consideration is $20.00 per share on a fully diluted, as-converted basis, calculated on the basis of 95,000,000 fully diluted shares of VeloPay common stock (inclusive of outstanding in-the-money stock options, restricted stock units, and warrants on an as-converted and treasury stock method basis). The aggregate merger consideration implies an enterprise value-to-revenue ("EV/Revenue") multiple of approximately 4.61x based on FY2024 revenue, and an enterprise value-to-EBITDA ("EV/EBITDA") multiple of approximately 19.37x based on FY2024 Adjusted EBITDA.
C. Transaction Structure.
The acquisition of VeloPay is to be structured as a reverse triangular merger pursuant to Section 251 of the Delaware General Corporation Law (the "DGCL"). This structure was selected by the General Partner, in consultation with the Fund's legal counsel, to provide for the continuity of VeloPay's corporate existence and contractual relationships post-closing, while permitting the Fund to acquire 100% of the equity interests of VeloPay through a single-step merger.
In connection with the Transaction, the Fund caused the formation and incorporation of Harrowgate Velocity Merger Sub Inc. ("Merger Sub"), a Delaware corporation (EIN: 93-1847265; Delaware File Number: 7291034), which was newly formed and incorporated on February 24, 2025, under the DGCL, with its registered agent at Capitol Registered Agents LLC, 1209 Orange Street, Wilmington, Delaware 19801. HPE Fund IV is the sole stockholder of Merger Sub, and Merger Sub was formed solely for the purpose of effectuating the merger contemplated by the Transaction. Merger Sub has not conducted any business activities other than those incidental to its formation and the negotiation and execution of the Merger Agreement and the transactions contemplated thereby.
Pursuant to the Transaction, Merger Sub will merge with and into VeloPay (the "Merger"), with VeloPay surviving the Merger as a wholly-owned subsidiary of HPE Fund IV (the "Surviving Corporation"). At the effective time of the Merger, the separate corporate existence of Merger Sub will cease, and all of the rights, privileges, assets, liabilities, and obligations of Merger Sub will vest in and be assumed by VeloPay as the Surviving Corporation, in accordance with Section 259 of the DGCL.
D. Merger Agreement.
The General Partner has reviewed and carefully considered the Agreement and Plan of Merger (the "Merger Agreement") to be entered into among Harrowgate Private Equity Fund IV LP (as buyer), Harrowgate Velocity Merger Sub Inc. (as merger sub), and VeloPay Systems, Inc. (as the target company), which sets forth the terms and conditions of the Merger, the representations and warranties of the parties, the conditions to closing, and the indemnification and other post-closing obligations of the parties.
The Merger Agreement was prepared by the Fund's outside legal counsel, Calderwood & Harkness LLP, with offices at 787 Seventh Avenue, 38th Floor, New York, New York 10019 (Matter No. 1003-00003). The Merger Agreement has been the subject of extensive arm's-length negotiations between Calderwood & Harkness LLP, on behalf of the Fund, and VeloPay's legal counsel, Whitford Jessup & Crane LLP, with offices at 600 Congress Avenue, Suite 2400, Austin, Texas 78701. The General Partner has been kept apprised of the progress of such negotiations throughout the process and has provided direction to counsel on all material terms.
The Fund's financial advisor, Pendleton Hawkes & Co., with offices at 383 Madison Avenue, 17th Floor, New York, New York 10179, under the direction of lead managing director David Constantinou, has advised the Fund in connection with the Transaction, including with respect to valuation, financial analysis, transaction structuring, and negotiation strategy. Pendleton Hawkes & Co. has delivered to the General Partner its opinion, dated March 14, 2025, that the aggregate merger consideration to be paid by HPE Fund IV in the Transaction is fair, from a financial point of view, to the Fund.
E. Key Terms of the Merger Agreement.
The General Partner has reviewed the Merger Agreement in its entirety and hereby acknowledges and confirms the following key terms and provisions thereof:
(i) Aggregate Merger Consideration. The aggregate merger consideration payable to the stockholders of VeloPay is $1,900,000,000 in cash, subject to customary purchase price adjustments for net working capital, target net debt, transaction expenses, and the exercise and conversion of equity awards.
(ii) Per-Share Merger Consideration. Each share of VeloPay common stock outstanding at the effective time of the Merger (other than shares held by VeloPay as treasury shares, shares owned by HPE Fund IV or Merger Sub, or shares held by stockholders who have properly exercised and perfected appraisal rights under Section 262 of the DGCL) will be converted into the right to receive $20.00 in cash, without interest, on a fully diluted, as-converted basis.
(iii) Treatment of Equity Awards.
(a) Vested Stock Options. All vested and unexercised stock options outstanding at the effective time of the Merger will be cancelled in exchange for a cash payment equal to the product of (x) the excess, if any, of $20.00 over the applicable exercise price per share, multiplied by (y) the number of shares subject to such option (the "net spread"), less applicable withholding taxes.
(b) Unvested Stock Options. Fifty percent (50%) of all unvested stock options outstanding at the effective time of the Merger will be accelerated and treated in the same manner as vested stock options described in clause (a) above. The remaining fifty percent (50%) of unvested stock options will be converted into replacement awards of HPE Fund IV (or an affiliate thereof) on substantially equivalent economic terms, with such replacement awards vesting ratably over a 24-month period following the closing date, subject to the holder's continued service with the Surviving Corporation.
(c) Restricted Stock Units (RSUs). All unvested restricted stock units outstanding at the effective time of the Merger will be fully accelerated and cancelled in exchange for a cash payment of $20.00 per share underlying such RSU, less applicable withholding taxes.
(d) Warrants. All outstanding warrants to purchase shares of VeloPay common stock will be cancelled at the effective time of the Merger in exchange for a cash payment equal to $11.50 per underlying share (being $20.00 less the exercise price of $8.50 per warrant share), less applicable withholding taxes. There are 1,800,000 warrants outstanding as of the date hereof, yielding an aggregate warrant payout of $20,700,000.
(iv) Indemnification Cap. The aggregate liability of the stockholders of VeloPay for indemnification claims under the Merger Agreement (other than claims arising from fraud, willful misconduct, or breaches of fundamental representations) shall not exceed $228,000,000, which represents 12% of the aggregate merger consideration.
(v) Escrow. At the closing, $133,000,000 (representing 7% of the aggregate merger consideration) will be deposited with Garrison Trust Company, as escrow agent (One Liberty Plaza, 42nd Floor, New York, New York 10006; escrow reference GT-ESC-2025-07223), to serve as an indemnification escrow fund to secure the indemnification obligations of VeloPay's stockholders under the Merger Agreement. The escrow funds will be released as follows: (a) $66,500,000 (50% of the escrow amount) will be released to the former stockholders of VeloPay on the date that is 12 months after the closing date, less the aggregate amount of any pending or unresolved indemnification claims as of such date; and (b) the remaining balance of the escrow fund will be released on the date that is 18 months after the closing date, less the aggregate amount of any pending or unresolved indemnification claims as of such date.
(vi) Survival Period. The representations and warranties of the parties under the Merger Agreement will survive the closing for a period of 18 months from the closing date (with an anticipated closing date of July 22, 2025, such survival period would expire on or about January 22, 2027), except that the fundamental representations (organization, authority, capitalization, and tax matters) shall survive for the full statute of limitations period.
(vii) No-Shop Provision. VeloPay will be subject to a customary no-shop restriction from and after the execution of the Merger Agreement, pursuant to which VeloPay and its representatives are prohibited from soliciting, initiating, encouraging, or facilitating any competing acquisition proposals, subject to a customary fiduciary-out exception permitting VeloPay's board of directors to engage with unsolicited superior proposals in compliance with its fiduciary duties. HPE Fund IV will have a five (5) business-day match right before VeloPay may terminate the Merger Agreement to accept a superior proposal.
(viii) Termination Fees. In the event VeloPay terminates the Merger Agreement to accept a superior proposal (or under certain other circumstances specified in the Merger Agreement), VeloPay will pay to HPE Fund IV a termination fee of $76,000,000, which represents 4% of the aggregate merger consideration. In the event the Merger Agreement is terminated by VeloPay as a result of HPE Fund IV's failure to consummate the closing due to a financing failure (or under certain other specified circumstances), HPE Fund IV will pay to VeloPay a reverse termination fee of $57,000,000, which represents 3% of the aggregate merger consideration.
(ix) Material Adverse Effect. The Merger Agreement contains a customary "material adverse effect" definition, with carve-outs for events, conditions, and changes arising from or related to: (a) pandemics, epidemics, or public health emergencies; (b) acts of war, armed hostilities, sabotage, or terrorism; (c) general economic, financial, or market conditions; (d) conditions generally affecting the fintech and payments processing industry; (e) changes in applicable law or regulations, or in the interpretation thereof; (f) changes in GAAP or other applicable accounting standards; (g) the failure of VeloPay to meet internal or published financial projections or forecasts (provided that the underlying cause of such failure may itself constitute a material adverse effect); and (h) the announcement or pendency of the Transaction.
F. Financing.
The General Partner has determined that the Fund will finance the aggregate merger consideration and related transaction expenses through a combination of equity and debt, as described below.
(i) Equity Contribution. HPE Fund IV will contribute equity of $1,140,000,000, representing approximately 60% of the aggregate merger consideration, to be funded through capital calls on the Fund's limited partners in accordance with Article V of the Limited Partnership Agreement. The General Partner has determined that the Fund has sufficient uncalled capital commitments to fund such equity contribution.
(ii) Senior Secured Term Loan Facility. VeloPay, as the Surviving Corporation and a wholly-owned subsidiary of HPE Fund IV following the closing, will enter into a senior secured term loan facility in the aggregate principal amount of $500,000,000 with Tralvendo National Bank (100 Federal Street, 30th Floor, Boston, Massachusetts 02110), as lead arranger and administrative agent (lead banker: Andrew Birchfield). The term loan will bear interest at a rate of SOFR plus 375 basis points, with a seven (7) year term to maturity. Tralvendo National Bank executed a commitment letter dated February 14, 2025 (reference CRE-2025-SPF-0441), committing to provide such term loan on the terms and subject to the conditions set forth therein.
(iii) Senior Secured Revolving Credit Facility. VeloPay, as the Surviving Corporation, will also enter into a senior secured revolving credit facility in the aggregate committed amount of $260,000,000 with Prairie State Bank, N.A. (231 South LaSalle Street, Suite 4400, Chicago, Illinois 60604), as co-arranger and administrative agent (lead banker: Monica Fuentes). The revolving credit facility will bear interest at a rate of SOFR plus 325 basis points, with a five (5) year term to maturity. It is anticipated that approximately $254,700,000 will be drawn on the revolving credit facility at the closing to fund a portion of the merger consideration and transaction expenses.
(iv) Commitment Letters. The Debt Commitment Letter (comprising the commitments of both Tralvendo National Bank and Prairie State Bank, N.A.) and the Equity Commitment Letter (from the General Partner on behalf of HPE Fund IV) were each executed on February 14, 2025. The General Partner has reviewed the terms and conditions of such commitment letters and has determined that the financing commitments reflected therein are sufficient, in the aggregate, to fund the aggregate merger consideration and all related transaction expenses.
(v) Refinancing of Existing Indebtedness. VeloPay's existing senior secured credit facility with Meridian Commercial Credit Corp. (599 Lexington Avenue, 26th Floor, New York, New York 10022), with an outstanding balance of approximately $112,000,000 as of the date hereof, will be repaid in full and terminated at or prior to the closing, and the security interests and liens securing such facility will be released.
G. Ancillary Agreements and Related Matters.
In connection with the Transaction, the General Partner has reviewed and approved the following ancillary agreements and related matters:
(i) Stockholder Support Agreement. A Stockholder Support Agreement (the "Support Agreement") will be entered into among HPE Fund IV and certain stockholders of VeloPay, pursuant to which such stockholders will agree, among other things, to vote their shares in favor of the Merger and against any competing transaction. The parties to the Support Agreement include: Ridgeline Ventures Fund III LP (holding approximately 22.4% of outstanding VeloPay shares), Apex Growth Partners II LP (holding approximately 16.8%), Broadleaf Capital Partners LP (holding approximately 6.1%), Nathan Aldridge (holding approximately 14.2%), and Sonia Reyes-Watkins (holding approximately 9.7%). The stockholders party to the Support Agreement collectively hold approximately 63.1% of the outstanding shares of VeloPay common stock, which percentage is in excess of the majority required to approve the Merger under the DGCL and VeloPay's certificate of incorporation.
(ii) Equity Commitment Letter. The Equity Commitment Letter, dated February 14, 2025, from Harrowgate Capital Management IV LLC on behalf of HPE Fund IV, committing to contribute equity of $1,140,000,000 to fund the Merger.
(iii) Limited Guarantee. A Limited Guarantee from Harrowgate Capital Management IV LLC in favor of VeloPay, guaranteeing HPE Fund IV's obligation to pay the reverse termination fee of $57,000,000 and certain other specified obligations under the Merger Agreement, as described in Section 8.3 of the Merger Agreement.
(iv) Escrow Agreement. An Escrow Agreement among HPE Fund IV, the Stockholder Representative (as defined below), and Garrison Trust Company, as escrow agent, providing for the deposit, administration, and release of the $133,000,000 indemnification escrow fund on the terms described in Recital E(v) above.
(v) Rollover Agreement. A Rollover Agreement with Nathan Aldridge and Sonia Reyes-Watkins, pursuant to which (a) Mr. Aldridge will contribute $14,200,000 of his merger consideration and (b) Ms. Reyes-Watkins will contribute $9,700,000 of her merger consideration, in each case in exchange for limited partnership interests in Harrowgate Velocity Co-Invest LP (EIN: 93-2748163), a Delaware limited partnership formed on March 14, 2025, with its registered agent at Capitol Registered Agents LLC, 1209 Orange Street, Wilmington, Delaware 19801, and with Harrowgate Capital Management IV LLC as its general partner. The total rollover amount is $23,900,000. Harrowgate Velocity Co-Invest LP will invest such rollover proceeds as co-investment equity alongside HPE Fund IV in the Surviving Corporation.
(vi) Non-Competition and Non-Solicitation Agreements. Separate Non-Competition and Non-Solicitation Agreements will be entered into with each of Nathan Aldridge and Sonia Reyes-Watkins, effective as of the closing of the Transaction, each with a three (3) year restrictive period, containing customary restrictions on competition, solicitation of employees and customers, and use of confidential information.
(vii) Paying Agent Agreement. A Paying Agent Agreement with Keystone Pacific Transfer Services Inc. (250 Royall Street, Suite 100, Canton, Massachusetts 02021; contact: Linda Matsumoto, Vice President, Corporate Actions), pursuant to which Keystone Pacific will serve as paying agent for the deposit and disbursement of the merger consideration to the stockholders of VeloPay in exchange for their shares.
(viii) Credit Agreement and Related Documents. The definitive Credit Agreement, Guarantee and Collateral Agreement, and Intercreditor Agreement among VeloPay (as borrower), HPE Fund IV (as equity sponsor), Tralvendo National Bank and Prairie State Bank, N.A. (as lenders), and their respective counsel, Maplewood & Strauss LLP (One International Place, Suite 3600, Boston, Massachusetts 02110), which documents will govern the terms and conditions of the senior secured term loan facility and senior secured revolving credit facility described in Recital F above.
(ix) Representations and Warranties Insurance. A buyer-side representations and warranties insurance policy has been procured from Oakbridge Omnivrel Insurance Group (underwriter: Neil Carmichael), with the following terms: policy limit of $190,000,000; retention (deductible) of $19,000,000, the first $9,500,000 of which will be borne by the sellers (through the indemnification escrow); annual premium of $5,320,000; Policy No. OFI-RW-2025-03187. The R&W insurance policy was bound on March 10, 2025.
(x) D&O Tail Insurance. A six (6) year directors' and officers' liability insurance tail policy has been procured from Continental Shield Insurance Company (Policy No. CSI-DOT-2025-4821), with a premium of $2,150,000, brokered by Greystone Risk Advisors LLC (contact: Stephen Hargrave). The D&O tail policy will provide coverage for VeloPay's pre-closing directors and officers for claims arising from acts or omissions occurring prior to the effective time of the Merger, for a period of six years following the closing.
H. Regulatory Approvals.
The consummation of the Transaction requires, among other things, the receipt of certain regulatory approvals and the making of certain regulatory filings, including without limitation:
(i) the filing of a premerger notification form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), with the Federal Trade Commission (the "FTC") and the Antitrust Division of the United States Department of Justice (the "DOJ"), and the expiration or early termination of the applicable waiting period thereunder;
(ii) the filing of a notification under the Investment Canada Act (Canada) with Innovation, Science and Economic Development Canada, in connection with the indirect acquisition by HPE Fund IV of VeloPay Canada Inc., a wholly-owned subsidiary of VeloPay that holds VeloPay's Canadian money services business licenses and operates VeloPay's Canadian merchant acquiring business;
(iii) the filing of change-of-control applications or notifications under state money transmitter licensing regimes in thirty-one (31) states in which VeloPay holds active money transmitter licenses or similar authorizations; and
(iv) such other regulatory approvals, consents, filings, or notifications as may be required under applicable law in connection with the consummation of the Merger.
Howard Bellamy, specialist partner in the Antitrust & Competition practice group at Calderwood & Harkness LLP, is advising HPE Fund IV on antitrust matters in connection with the Transaction. Fielding McGrath LLP (contact: Amara Osei), based in Washington, D.C., serves as VeloPay's regulatory and antitrust counsel. The General Partner, in consultation with Calderwood & Harkness LLP, believes that the Transaction does not present significant antitrust concerns and expects that all required regulatory approvals will be obtained within the anticipated timeframe for closing.
I. Sources and Uses.
The General Partner has reviewed and approved the following sources and uses of funds in connection with the Transaction:
The estimated transaction expenses of $48,500,000 include, among other things, legal fees and expenses, financial advisory fees, debt financing fees, insurance premiums (R&W and D&O tail), filing fees (including HSR Act filing fees), transfer taxes, paying agent fees, escrow agent fees, accounting and diligence fees, and other customary closing costs.
RESOLUTIONS
NOW, THEREFORE, BE IT:
Resolution 1 — Approval of the Transaction
RESOLVED, that the General Partner hereby approves and authorizes the acquisition by HPE Fund IV of all of the outstanding equity interests of VeloPay Systems, Inc. pursuant to a reverse triangular merger, substantially on the terms and subject to the conditions described in the recitals above and as set forth in the Merger Agreement, for aggregate merger consideration of One Billion Nine Hundred Million Dollars ($1,900,000,000), payable in cash, subject to customary purchase price adjustments, and the General Partner hereby determines that the Transaction is in the best interests of the Fund and its limited partners and is consistent with the Fund's investment objectives and strategy as set forth in the Limited Partnership Agreement and the PPM.
Resolution 2 — Approval of the Merger Agreement
RESOLVED, that the General Partner hereby approves the Agreement and Plan of Merger (the "Merger Agreement") among Harrowgate Private Equity Fund IV LP, Harrowgate Velocity Merger Sub Inc., and VeloPay Systems, Inc., in substantially the form presented to and reviewed by the General Partner, together with such changes, modifications, amendments, or supplements therein as the Authorized Representatives (as defined below) may approve in their discretion, such approval to be conclusively evidenced by their execution and delivery thereof; and be it further
RESOLVED, that each of Priya Deshmukh, Managing Partner, Fund IV, and Thomas Eriksen, Partner, Head of Financial Technology (each, an "Authorized Representative" and, collectively, the "Authorized Representatives"), is hereby authorized, empowered, and directed to execute and deliver the Merger Agreement on behalf of HPE Fund IV, and to take all actions contemplated by or necessary to give effect to the Merger Agreement.
Resolution 3 — Authorization of Equity Commitment
RESOLVED, that the General Partner hereby approves and authorizes the commitment of One Billion One Hundred Forty Million Dollars ($1,140,000,000) in equity from the Fund to finance the Transaction, and the execution and delivery by Harrowgate Capital Management IV LLC, on behalf of HPE Fund IV, of the Equity Commitment Letter dated February 14, 2025, in substantially the form presented to and reviewed by the General Partner; and be it further
RESOLVED, that the General Partner hereby authorizes and directs the issuance of capital call notices to the limited partners of the Fund, in accordance with Article V and Schedule A of the Limited Partnership Agreement, as necessary and appropriate to draw on the Fund's uncalled capital commitments in order to fund the equity contribution of $1,140,000,000 at or prior to the closing of the Transaction, together with such additional amounts as may be necessary to fund the Fund's share of transaction expenses and reserves.
Resolution 4 — Approval of Debt Financing
RESOLVED, that the General Partner hereby approves the incurrence of indebtedness by VeloPay Systems, Inc. (as the Surviving Corporation and a wholly-owned subsidiary of HPE Fund IV following the closing of the Merger) under:
(a) a senior secured term loan facility in the aggregate principal amount of $500,000,000 with Tralvendo National Bank (100 Federal Street, 30th Floor, Boston, Massachusetts 02110), as lead arranger and administrative agent, bearing interest at a rate of SOFR plus 375 basis points, with a seven (7) year term to maturity, on the terms set forth in the Debt Commitment Letter bearing reference CRE-2025-SPF-0441; and
(b) a senior secured revolving credit facility in the aggregate committed amount of $260,000,000 with Prairie State Bank, N.A. (231 South LaSalle Street, Suite 4400, Chicago, Illinois 60604), as co-arranger and administrative agent, bearing interest at a rate of SOFR plus 325 basis points, with a five (5) year term to maturity;
and be it further
RESOLVED, that the General Partner hereby approves the Debt Commitment Letter executed on February 14, 2025, in the form presented to and reviewed by the General Partner, and hereby authorizes the Authorized Representatives to negotiate, execute, and deliver, on behalf of the Fund and the Surviving Corporation, the definitive Credit Agreement, Guarantee and Collateral Agreement, Intercreditor Agreement, and all other related financing documents, instruments, and certificates required in connection with the senior secured term loan facility and senior secured revolving credit facility, at or prior to the closing of the Transaction, with such terms and provisions as the Authorized Representatives, in consultation with the Fund's legal counsel, may determine to be necessary or appropriate.
Resolution 5 — Approval of the Limited Guarantee
RESOLVED, that the General Partner hereby approves and authorizes the execution and delivery of a Limited Guarantee by Harrowgate Capital Management IV LLC in favor of VeloPay Systems, Inc., pursuant to which the General Partner will guarantee HPE Fund IV's obligation to pay the reverse termination fee of Fifty-Seven Million Dollars ($57,000,000) and certain other specified obligations under the Merger Agreement (including reimbursement obligations, if any), subject to the terms, conditions, and limitations set forth in such Limited Guarantee, and the Authorized Representatives are hereby authorized to execute and deliver such Limited Guarantee on behalf of the General Partner.
Resolution 6 — Formation and Capitalization of Merger Sub
RESOLVED, that the General Partner hereby ratifies and confirms the formation and incorporation of Harrowgate Velocity Merger Sub Inc. as a Delaware corporation on February 24, 2025 (Delaware File Number: 7291034; EIN: 93-1847265; registered agent: Capitol Registered Agents LLC, 1209 Orange Street, Wilmington, Delaware 19801), and the capitalization thereof by HPE Fund IV as its sole stockholder, including the issuance of 1,000 shares of Merger Sub common stock, par value $0.01 per share, to HPE Fund IV in exchange for a capital contribution of $10.00; and be it further
RESOLVED, that the Authorized Representatives are hereby authorized and directed to take all actions necessary or advisable in their capacity as directors and/or officers of Merger Sub to effectuate the Merger, including without limitation the adoption and approval of the Merger Agreement by Merger Sub's board of directors and sole stockholder, the execution and delivery of the Merger Agreement by Merger Sub, and the filing of the Certificate of Merger with the Delaware Secretary of State.
Resolution 7 — Approval of the Stockholder Support Agreement
RESOLVED, that the General Partner hereby approves the Stockholder Support Agreement to be entered into among HPE Fund IV and the stockholders of VeloPay identified therein, namely Ridgeline Ventures Fund III LP, Apex Growth Partners II LP, Broadleaf Capital Partners LP, Nathan Aldridge, and Sonia Reyes-Watkins, collectively holding approximately 63.1% of the outstanding shares of VeloPay common stock, and the Authorized Representatives are hereby authorized, empowered, and directed to execute and deliver such Stockholder Support Agreement on behalf of HPE Fund IV.
Resolution 8 — Approval of Escrow Agreement and Appointment of Escrow Agent
RESOLVED, that the General Partner hereby approves the Escrow Agreement to be entered into among HPE Fund IV (or the Surviving Corporation), the Stockholder Representative, and Garrison Trust Company (One Liberty Plaza, 42nd Floor, New York, New York 10006), as escrow agent, under escrow reference GT-ESC-2025-07223, providing for the deposit of One Hundred Thirty-Three Million Dollars ($133,000,000), representing 7% of the aggregate merger consideration, into an indemnification escrow fund (the "Escrow Fund"), to be held and administered in accordance with the terms of the Escrow Agreement; and be it further
RESOLVED, that the Escrow Fund shall be released as follows: (a) Sixty-Six Million Five Hundred Thousand Dollars ($66,500,000) shall be released to the former stockholders of VeloPay on the date that is twelve (12) months following the closing date of the Merger, less the aggregate amount of any then-pending or unresolved indemnification claims; and (b) the remaining balance of the Escrow Fund shall be released to the former stockholders of VeloPay on the date that is eighteen (18) months following the closing date of the Merger, less the aggregate amount of any then-pending or unresolved indemnification claims; and be it further
RESOLVED, that the Authorized Representatives are hereby authorized to execute and deliver the Escrow Agreement and all ancillary documents on behalf of HPE Fund IV.
Resolution 9 — Approval of the Rollover Agreement and Co-Invest Vehicle
RESOLVED, that the General Partner hereby approves:
(a) the formation of Harrowgate Velocity Co-Invest LP (EIN: 93-2748163), a Delaware limited partnership formed on March 14, 2025, with its registered agent at Capitol Registered Agents LLC, 1209 Orange Street, Wilmington, Delaware 19801, and with Harrowgate Capital Management IV LLC as its general partner, for the purpose of facilitating rollover equity investments by certain members of VeloPay's management team; and
(b) the Rollover Agreement to be entered into with Nathan Aldridge (rollover equity contribution of $14,200,000) and Sonia Reyes-Watkins (rollover equity contribution of $9,700,000), providing for total rollover equity of $23,900,000, to be contributed to Harrowgate Velocity Co-Invest LP in exchange for limited partnership interests therein, on the terms and subject to the conditions set forth in such Rollover Agreement;
and be it further
RESOLVED, that the Authorized Representatives are hereby authorized to execute and deliver the Rollover Agreement, the Limited Partnership Agreement of Harrowgate Velocity Co-Invest LP, and all ancillary documents in connection therewith, on behalf of the Fund and the General Partner.
Resolution 10 — Approval of Non-Competition and Non-Solicitation Agreements
RESOLVED, that the General Partner hereby approves the Non-Competition and Non-Solicitation Agreements to be entered into with each of Nathan Aldridge and Sonia Reyes-Watkins, effective as of the closing of the Transaction, each containing three (3) year post-closing restrictive covenants, and the Authorized Representatives are hereby authorized to execute and deliver such agreements on behalf of HPE Fund IV.
Resolution 11 — Approval of Paying Agent Agreement
RESOLVED, that the General Partner hereby approves the Paying Agent Agreement to be entered into with Keystone Pacific Transfer Services Inc. (250 Royall Street, Suite 100, Canton, Massachusetts 02021; contact: Linda Matsumoto, Vice President, Corporate Actions), pursuant to which Keystone Pacific will serve as paying agent for the deposit, administration, and disbursement of the merger consideration to the stockholders of VeloPay in exchange for the surrender and cancellation of their shares of VeloPay common stock, and the Authorized Representatives are hereby authorized to execute and deliver such agreement on behalf of the Fund and the Surviving Corporation, and to deposit with Keystone Pacific such funds as may be required to pay the aggregate merger consideration at the closing of the Transaction.
Resolution 12 — Authorization of Stockholder Representative Agreement
RESOLVED, that the General Partner hereby approves and authorizes the Stockholder Representative Agreement, pursuant to which Nathan Aldridge shall be appointed as the Stockholder Representative to act on behalf of the former stockholders of VeloPay with respect to all matters arising under the Merger Agreement following the closing, including without limitation the administration and resolution of indemnification claims, the management and release of the Escrow Fund, the determination of purchase price adjustments, and the giving and receiving of notices on behalf of the former stockholders, and the Authorized Representatives are hereby authorized to execute and deliver such agreement on behalf of HPE Fund IV.
Resolution 13 — Approval of Representations and Warranties Insurance
RESOLVED, that the General Partner hereby approves the procurement of the buyer-side representations and warranties insurance policy from Oakbridge Omnivrel Insurance Group (Policy No. OFI-RW-2025-03187), with the following material terms: policy limit of $190,000,000; retention (deductible) of $19,000,000, of which the first $9,500,000 shall be borne by the sellers (through the indemnification escrow) and the remaining $9,500,000 shall be borne by the buyer; premium of $5,320,000; underwriter: Neil Carmichael; and be it further
RESOLVED, that the General Partner hereby authorizes the payment of the premium of $5,320,000 for such representations and warranties insurance policy from Fund resources or through transaction expense reimbursement, as the Authorized Representatives may determine to be appropriate.
Resolution 14 — Approval of D&O Tail Insurance
RESOLVED, that the General Partner hereby approves the procurement of a six (6) year directors' and officers' liability insurance tail policy from Continental Shield Insurance Company (Policy No. CSI-DOT-2025-4821), with a premium of $2,150,000, brokered by Greystone Risk Advisors LLC (contact: Stephen Hargrave), for the benefit of VeloPay's pre-closing directors and officers, covering claims arising from acts or omissions occurring prior to the effective time of the Merger, for a period of six (6) years following the closing date, and the General Partner hereby authorizes the payment of the premium therefor from Fund resources or as a transaction expense.
Resolution 15 — Authorization of Regulatory Filings
RESOLVED, that the General Partner hereby authorizes the Authorized Representatives and the Fund's counsel, Calderwood & Harkness LLP (including Howard Bellamy, specialist partner, Antitrust & Competition), to prepare, execute, and file on behalf of HPE Fund IV all regulatory filings, applications, notifications, and submissions required in connection with the Transaction, including without limitation:
(a) the premerger notification filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), with the Federal Trade Commission and the Antitrust Division of the United States Department of Justice, together with any supplemental submissions, voluntary timing agreements, or responses to second requests that may be required or advisable in connection therewith;
(b) the notification under the Investment Canada Act (Canada) with Innovation, Science and Economic Development Canada, in connection with the indirect acquisition of VeloPay Canada Inc.;
(c) all change-of-control applications, notifications, and filings required under state money transmitter licensing regimes in the thirty-one (31) states in which VeloPay holds active money transmitter licenses or similar authorizations, including but not limited to those states requiring prior approval of a change of control; and
(d) any and all other regulatory filings, applications, notifications, or approvals required under applicable federal, state, local, or foreign law in order to consummate the Merger;
and be it further
RESOLVED, that the Authorized Representatives are hereby authorized to pay all filing fees, application fees, and related expenses in connection with such regulatory filings from Fund resources.
Resolution 16 — Approval of Amended and Restated Organizational Documents of the Surviving Corporation
RESOLVED, that the General Partner hereby approves the Amended and Restated Certificate of Incorporation and the Amended and Restated Bylaws of VeloPay Systems, Inc., as the Surviving Corporation, each in substantially the form to be attached as exhibits to the Merger Agreement, to be effective at the effective time of the Merger, and the Authorized Representatives are hereby authorized to take all actions necessary to effectuate the adoption of such amended and restated organizational documents.
Resolution 17 — Authorization of Certificate of Merger
RESOLVED, that the General Partner hereby authorizes and directs the Authorized Representatives, in their capacity as officers and/or directors of Merger Sub and/or the Surviving Corporation, to prepare, execute, and file the Certificate of Merger with the Secretary of State of the State of Delaware pursuant to Section 251 of the DGCL, effectuating the merger of Harrowgate Velocity Merger Sub Inc. with and into VeloPay Systems, Inc., at such time as the conditions to closing set forth in the Merger Agreement have been satisfied or waived and the parties are prepared to consummate the Merger.
Resolution 18 — Appointment and Authorization of Officers and Representatives
RESOLVED, that Priya Deshmukh (Managing Partner, Fund IV) and Thomas Eriksen (Partner, Head of Financial Technology) are each hereby authorized, empowered, and directed, acting individually or together, in the name and on behalf of the Fund and the General Partner, to:
(a) execute and deliver the Merger Agreement, Equity Commitment Letter, Limited Guarantee, Stockholder Support Agreement, Escrow Agreement, Paying Agent Agreement, Rollover Agreement, Non-Competition and Non-Solicitation Agreements, Stockholder Representative Agreement, Credit Agreement, Guarantee and Collateral Agreement, Intercreditor Agreement, and all other ancillary agreements, instruments, documents, and certificates contemplated by the Merger Agreement or otherwise necessary or desirable in connection with the Transaction;
(b) negotiate, approve, and agree to any amendments, modifications, supplements, waivers, or consents to any of the foregoing documents, agreements, or instruments, in each case as they may deem necessary, advisable, or appropriate in their sole discretion;
(c) execute and deliver officer's certificates, secretary's certificates, incumbency certificates, good standing certificates, bring-down certificates, closing deliverables, and all other certificates and documents required to be delivered at or in connection with the closing of the Transaction;
(d) cause the Fund's equity commitment of $1,140,000,000 to be funded at closing by issuing capital call notices to the Fund's limited partners and directing the deposit of such funds as may be required to consummate the Transaction; and
(e) take all other actions and execute and deliver all other documents as they may deem necessary, advisable, or appropriate to consummate the Transaction and to carry out the intent and purposes of these resolutions;
and be it further
RESOLVED, that any actions heretofore taken by the Authorized Representatives in connection with the foregoing matters are hereby ratified, confirmed, and approved in all respects.
Resolution 19 — Engagement and Payment of Advisors
RESOLVED, that the General Partner hereby ratifies and confirms the engagement of the following advisors in connection with the Transaction, and authorizes the payment of all fees, expenses, and disbursements of such advisors from Fund resources:
(a) Calderwood & Harkness LLP — outside legal counsel to HPE Fund IV; engagement letter dated October 7, 2024; Matter No. 1003-00003; fee arrangement: Partner rate of $1,650 per hour, Counsel rate of $1,350 per hour, Associate rate of $950 per hour; success fee of $1,250,000 payable at the closing of the Transaction; expense cap of $250,000; engagement team: Sandra Tung (responsible partner), Oliver Mackenzie (billing partner), Megan Chu (lead associate), Derek Okonkwo (working associate), Leonard Cross (specialist partner, Tax), and Howard Bellamy (specialist partner, Antitrust & Competition).
(b) Pendleton Hawkes & Co. — financial advisor to HPE Fund IV; lead managing director: David Constantinou; advisory fee of $6,650,000, representing 0.35% of aggregate deal value, payable at the closing of the Transaction.
Resolution 20 — Ratification of Prior Acts
RESOLVED, that all acts heretofore taken by the Authorized Representatives, officers, agents, and attorneys of the General Partner and the Fund in connection with the Transaction, including without limitation the following, are hereby ratified, confirmed, and approved in all respects as the acts and deeds of the General Partner and the Fund:
(a) the negotiation and execution of the exclusivity agreement with VeloPay, dated December 6, 2024;
(b) the negotiation and execution of the Equity Commitment Letter, dated February 14, 2025;
(c) the negotiation and execution of the Debt Commitment Letter with Tralvendo National Bank and Prairie State Bank, N.A., dated February 14, 2025;
(d) the submission of the buyer-side representations and warranties insurance application to Oakbridge Omnivrel Insurance Group, dated February 21, 2025;
(e) the formation and incorporation of Harrowgate Velocity Merger Sub Inc. on February 24, 2025;
(f) the formation of Harrowgate Velocity Co-Invest LP on March 14, 2025;
(g) the binding of the R&W insurance policy (Policy No. OFI-RW-2025-03187) on March 10, 2025; and
(h) all related due diligence, evaluation, negotiation, and preparatory activities undertaken in connection with the Transaction.
Resolution 21 — General Authorization
RESOLVED, that the Authorized Representatives are hereby authorized, empowered, and directed, acting singly or together, to execute and deliver any and all agreements, instruments, documents, certificates, notices, filings, and communications, and to take any and all actions, in the name and on behalf of the Fund and the General Partner, as they may deem necessary, advisable, or appropriate to carry out the intent and purposes of the foregoing resolutions and to consummate the Transaction and the transactions contemplated thereby, the execution and delivery of any such document or the taking of any such action to be conclusive evidence of such determination; and be it further
RESOLVED, that any and all expenses incurred by the General Partner or the Fund in connection with the Transaction, including but not limited to legal fees, advisory fees, financing fees, insurance premiums, filing fees, transfer taxes, escrow agent fees, paying agent fees, and other customary closing costs, shall be proper expenses of the Fund and shall be paid from Fund resources or reimbursed to the General Partner, in each case in accordance with the terms of the Limited Partnership Agreement.
EFFECTIVENESS AND COUNTERPARTS
This Written Consent shall be effective as of the date first written above, March 17, 2025, and shall have the same force and effect as if the actions set forth herein had been authorized at a duly called and held meeting of the General Partner.
This Written Consent may be executed in one or more counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of this Written Consent by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document shall have the same effect as delivery of a physically executed original.
This Written Consent shall be filed with the records of the Fund maintained at the principal office of the Fund at 300 King Street, Suite 4200, Wilmington, Delaware 19801, and shall be maintained with the minutes and records of actions taken by the General Partner.
[Signature Page Follows]
[SIGNATURE PAGE TO WRITTEN CONSENT OF THE GENERAL PARTNER OF HARROWGATE PRIVATE EQUITY FUND IV LP IN LIEU OF A MEETING]
IN WITNESS WHEREOF, the undersigned has executed this Written Consent as of the date first written above.
HARROWGATE CAPITAL MANAGEMENT IV LLC, as Sole General Partner of Harrowgate Private Equity Fund IV LP
By: ________
Name: Priya Deshmukh
Title: Managing Partner, Fund IV
Date: March 17, 2025
ACKNOWLEDGED AND CONSENTED:
By: ________
Name: Thomas Eriksen
Title: Partner, Head of Financial Technology
Date: March 17, 2025
By: ________
Name: Richard Harrowgate
Title: Founder & Chairman
Date: March 17, 2025
Sources | Amount
HPE Fund IV Equity Contribution | $1,140,000,000
Senior Secured Term Loan (Tralvendo National Bank) | $500,000,000
VeloPay Cash on Hand (Target) | $53,800,000
Revolver Draw at Closing (Prairie State Bank, N.A.) | $254,700,000
Total Sources | $1,948,500,000
Uses | Amount
Equity Consideration to VeloPay Stockholders | $1,900,000,000
(of which $133,000,000 deposited in indemnification escrow)
Estimated Transaction Expenses | $48,500,000
Total Uses | $1,948,500,000

WRITTEN CONSENT OF THE GENERAL PARTNER OF HARROWGATE PRIVATE EQUITY FUND IV LP IN LIEU OF A MEETING

RECITALS

RESOLUTIONS

NOW, THEREFORE, BE IT:

EFFECTIVENESS AND COUNTERPARTS

ACKNOWLEDGED AND CONSENTED:

Record

Parties

Dates

Amounts