1003-00003 · Harrowgate Private Equity Fund IV LP · Diligence

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MEMORANDUM

February 28, 2025

TO: Sandra Tung, Responsible Partner, Mergers & Acquisitions Oliver Mackenzie, Billing Partner, Mergers & Acquisitions Megan Chu, Lead Associate, Mergers & Acquisitions

FROM: Derek Okonkwo, Working Associate, Mergers & Acquisitions

RE: Material Contracts Summary — VeloPay Systems, Inc. and Subsidiaries

MATTER: Harrowgate Private Equity Fund IV LP — Acquisition of VeloPay Systems, Inc. (Calderwood & Harkness Matter No. 1003-00003)

CLASSIFICATION: PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

This memorandum constitutes attorney work product prepared in anticipation of the proposed acquisition of VeloPay Systems, Inc. by Harrowgate Private Equity Fund IV LP. It is protected by the attorney-client privilege and the work product doctrine. This memorandum should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP.

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I. Executive Summary and Purpose

This memorandum summarizes the material contractual relationships of VeloPay Systems, Inc. ("VeloPay" or the "Company") and its subsidiaries, as reviewed in connection with the proposed acquisition of VeloPay by Harrowgate Private Equity Fund IV LP ("HPE Fund IV" or the "Sponsor") for an aggregate enterprise value of approximately $1.9 billion (the "Transaction"). The Transaction is structured as a reverse triangular merger in which a newly-formed acquisition subsidiary of HPE Fund IV will merge with and into VeloPay, with VeloPay surviving as a wholly-owned subsidiary of HPE Fund IV (the "Merger").

Scope of Review. This memorandum covers the following categories of material contracts:

(a) the top 25 customer agreements by revenue contribution, which collectively represent approximately 58% of VeloPay's FY2024 audited revenue;

(b) key vendor and supplier contracts, including cloud infrastructure, card network sponsorship and processing, banking and settlement, telecommunications, and professional services agreements;

(c) technology licenses for third-party software, encryption and tokenization modules, and compliance/regulatory reporting tools;

(d) partnership and strategic alliance agreements, including integration partnerships, referral arrangements, and co-marketing agreements;

(e) intercompany agreements among VeloPay Systems, Inc. and its wholly-owned subsidiaries, including VeloPay Processing LLC, VeloPay Canada Inc., VeloPay Europe Unipessoal Lda., VeloPay Fraud intelligence Inc., and PayStream Gateway LLC; and

(f) VeloPay's existing credit facility with Meridian Commercial Credit Corp.

Real property leases are summarized at a high level herein but are addressed in detail in the separate Real Property Due Diligence Memorandum. Employment agreements and benefit plans are addressed in the separate Employment and Benefits Due Diligence Memorandum.

Focus of Analysis. For each material contract, this memorandum analyzes the following provisions and terms that may be implicated by the Transaction:

• Assignment provisions (including whether the reverse triangular merger constitutes an "assignment" under the applicable contract);

• Change of control provisions (including consent requirements, notification obligations, and counterparty termination rights triggered by a change of control);

• Termination provisions (including termination for cause, termination for convenience, and termination upon change of control);

• Exclusivity and most-favored-nation ("MFN") terms;

• Non-compete and non-solicitation restrictions;

• Material financial terms (including pricing, volume commitments, and minimum spend requirements); and

• Any other provisions that may be relevant to the Transaction or post-closing integration.

Change of Control Consent Tracker. This memorandum should be read in conjunction with the separate Change of Control Consent Tracker and Analysis Memorandum (the "Consent Tracker"), which I maintain on a rolling basis. The Consent Tracker identifies 14 material customer contracts and additional vendor, licensing, and partnership agreements that require change of control consent, notification, or that provide a termination right to the counterparty upon a change of control. The Consent Tracker includes detailed status updates on the consent solicitation process, counterparty contact information, proposed timelines, and recommended messaging. The Consent Tracker is updated weekly and circulated to the deal team each Friday.

Company Overview. VeloPay is a payment technology company headquartered in Austin, Texas. The Company processes approximately $87 billion in annualized gross payment volume ("GPV") across more than 14,000 merchants, serving enterprise and upper-mid-market customers across the retail, e-commerce, hospitality, healthcare, financial services, and digital media verticals. VeloPay's revenue model includes (i) interchange-plus processing fees charged on a per-transaction basis, (ii) SaaS subscription fees for the Company's analytics dashboard and fraud detection suite (marketed under the "VeloPay Insights" and "VeloPay Shield" brands, respectively), and (iii) per-transaction gateway fees. For the fiscal year ended December 31, 2024, VeloPay reported audited revenue of $412.3 million, representing year-over-year growth of approximately 18% from FY2023.

Data Room and Counterparty Counsel. The materials reviewed herein were provided by VeloPay and its outside counsel, Whitford Jessup & Crane LLP (Rebecca Thornton-Hayes, Partner, and James Okoro, Associate), through VeloPay's virtual data room, which was opened to Calderwood & Harkness and HPE Fund IV's advisors on December 12, 2024. Additional materials were provided in response to supplemental diligence requests submitted on January 8, 2025, January 22, 2025, and February 10, 2025.

II. Methodology and Sources

A. Data Room Review

All contracts reviewed in connection with this memorandum were obtained from VeloPay's virtual data room hosted on Thackeray Solutions (Project Neptune), which was opened on December 12, 2024. As of the date of this memorandum, the data room contains approximately 3,400 documents organized into the following folders relevant to this analysis:

• Folder 3.1: Customer Agreements (Top 25)

• Folder 3.2: Customer Agreements (Other Material Customers)

• Folder 3.3: Standard Form Customer Agreements and Templates

• Folder 4.1: Vendor and Supplier Agreements (Material)

• Folder 4.2: Vendor and Supplier Agreements (Other)

• Folder 5.1: Technology Licenses (Third-Party Software)

• Folder 5.2: Technology Licenses (Open-Source)

• Folder 6.1: Partnership and Strategic Alliance Agreements

• Folder 7.1: Intercompany Agreements

• Folder 8.1: Real Property Leases

• Folder 9.1: Employment Agreements and Offer Letters

• Folder 10.1: Credit Facility and Financing Documents

B. Contract Categorization and Selection Criteria

Contracts were organized by category and assessed for materiality based on the following criteria. A contract was classified as "material" and included in this memorandum if it met one or more of the following thresholds:

(i) the contract generates more than $5 million in annual revenue to VeloPay, or involves more than $2 million in annual spend by VeloPay;

(ii) the contract has a remaining term in excess of 3 years, creating a long-duration obligation;

(iii) the contract contains a change of control provision, assignment restriction, exclusivity clause, or most-favored-nation pricing provision that may be implicated by or affect the Transaction; or

(iv) the contract was identified by VeloPay management as material to the Company's ongoing operations, even if it does not meet the foregoing quantitative thresholds.

C. Management Interviews

The diligence information derived from the data room review was supplemented by management interviews and follow-up discussions conducted with the following VeloPay executives:

• Nathan Aldridge, Chief Executive Officer — participated in management presentation on January 6, 2025, and follow-up calls on January 24, 2025, and February 14, 2025; provided strategic context on customer relationships and partnership arrangements;

• Sonia Reyes-Watkins, Chief Technology Officer — participated in technology diligence session on January 9, 2025; provided background on technology licenses, platform architecture, and the integration of PayStream Gateway LLC;

• Marcus Langford, Chief Financial Officer — participated in financial diligence sessions on January 6, 2025, and January 15, 2025; provided revenue breakdowns by customer and by product, vendor spend analysis, and detail on the Meridian Commercial Credit Corp. credit facility;

• Danielle Moreau, General Counsel — participated in legal diligence sessions on January 8, 2025, January 17, 2025, February 3, 2025, and February 21, 2025; provided context on contract negotiations, change of control provisions, ongoing disputes (none material), and the Company's consent solicitation strategy.

D. Excluded Categories

The following categories of contracts are excluded from this memorandum and are addressed in separate Calderwood & Harkness work product:

• Real property leases: Addressed in the Real Property Due Diligence Memorandum (prepared by Rachel Steinberg); a high-level summary is included in Section V.H below for convenience;

• Employment agreements, offer letters, and benefit plans: Addressed in the Employment and Benefits Due Diligence Memorandum (prepared by Allison Brandt);

• intellectual property assignments, open-source license compliance, and trademark/patent matters: Addressed in the IP Due Diligence Memorandum (prepared by Thomas Ashworth);

• Regulatory licenses, money transmitter permits, and related compliance matters: Addressed in the Regulatory and Licensing Due Diligence Memorandum (prepared by Christine Falk); and

• Tax-related matters, including intercompany transfer pricing compliance: Addressed in the Tax Due Diligence Memorandum (prepared by Leonard Cross).

III. Summary of Key Findings and Risk Items

Based on our review of VeloPay's material contracts, the following key findings and risk items have been identified. Each is discussed in greater detail in the relevant section of this memorandum.

1. Change of Control Provisions — 14 Material Customer Contracts. Fourteen of the top 25 customer agreements contain change of control provisions that will be triggered by the Merger. These provisions variously require prior written consent from the counterparty, notification to the counterparty within a specified period, or provide the counterparty with a right to terminate the agreement upon a change of control. The reverse triangular merger structure — in which a newly-formed acquisition subsidiary merges with and into VeloPay, with VeloPay surviving as a wholly-owned subsidiary of HPE Fund IV — will trigger these provisions because "change of control" is generally defined in VeloPay's contracts to include any transaction in which a third party acquires a majority of VeloPay's equity or voting power, or all or substantially all of VeloPay's assets. Although VeloPay will continue to exist as the surviving entity following the Merger, the shift in equity ownership to HPE Fund IV constitutes a change of control under the applicable definitions.

2. Anti-Assignment Provisions. Three customer agreements within the top 25 contain anti-assignment provisions without express change of control clauses. Because the reverse triangular merger does not result in a transfer or assignment of VeloPay's contractual rights (VeloPay remains the surviving entity and continues as the party to each contract), the Merger should not constitute an "assignment" under these provisions. This conclusion is consistent with Delaware law and the law of most other jurisdictions. The risk of an adverse interpretation is low, but we recommend monitoring these three agreements and, if counterparty relationships permit, providing informal notice of the Transaction.

3. Vendor Exclusivity Restrictions. Two vendor contracts contain exclusivity provisions that restrict VeloPay's ability to engage alternative providers for certain services during the term of the agreement. These exclusivity obligations should be evaluated in the context of post-acquisition integration planning, particularly if HPE Fund IV intends to rationalize VeloPay's vendor relationships or consolidate services with vendors used by other portfolio companies.

4. Cloud Infrastructure Agreement — Favorable Terms. VeloPay's primary cloud infrastructure agreement with Stratosphere Cloud Services, Inc. has a remaining term of approximately 3 years, includes favorable pricing with predictable annual escalators, and does not contain a change of control termination right. This is a favorable finding, given that the Stratosphere relationship underpins VeloPay's entire payment processing platform.

5. Meridian Commercial Credit Corp. — Mandatory Prepayment. VeloPay's existing senior secured term loan with Meridian Commercial Credit Corp. ($112 million outstanding principal) contains a mandatory prepayment trigger upon a change of control of VeloPay. The Merger will trigger this provision. The credit facility will be paid off in full at the closing of the Transaction, with an estimated payoff amount of approximately $113,230,000 (including accrued interest through the anticipated closing date of July 22, 2025), and will be replaced by the new credit facilities committed by Tralvendo National Bank and Prairie State Bank, N.A. All existing liens on VeloPay's assets will be released at closing, and UCC termination statements will be filed. The payoff of the Meridian facility is a closing condition under the Merger Agreement.

6. Technology License Anti-Assignment Language. Several of VeloPay's third-party technology licenses contain restrictions on sublicensing or assignment that could, depending on their drafting, be interpreted to encompass a change of control. Two licenses in particular — the Irongate Software, Inc. database license and the CipherVault Technologies, Inc. tokenization license — contain language that warrants careful review. We recommend obtaining consent from these licensors as a precautionary measure.

7. PayStream Gateway LLC — No Outstanding Obligations. The 2021 acquisition agreement for PayStream Gateway LLC ($45 million purchase price) contains surviving representations and an earnout provision that has been fully earned and paid. The standard survival period for representations and warranties has expired. There are no outstanding contingent payment obligations or indemnification claims. The PayStream technology has been fully integrated into VeloPay Processing LLC's infrastructure.

8. BIN Sponsorship and Settlement Banking — Critical Consent Requirements. The BIN sponsorship agreement with Trident Merchant Bank, N.A. and the settlement banking agreement with Commonwealth Settlement Bank, N.A. both require change of control consent. These agreements are operationally critical — VeloPay cannot process card transactions without a BIN sponsor, and merchant settlement cannot occur without the settlement banking relationship. We classify both as HIGH risk and recommend that consent outreach be prioritized alongside the largest customer consent (Hawthorne Retail Group, Inc.).

IV. Top 25 Customer Agreements

A. Overview. VeloPay serves more than 14,000 merchants across multiple verticals, including retail, e-commerce, hospitality, healthcare, financial services, digital media, and education. Revenue is concentrated among enterprise and upper-mid-market customers. The top 25 customers by revenue contribution represent approximately 58% of VeloPay's FY2024 audited revenue, or approximately $239 million of $412.3 million.

VeloPay's standard customer agreement structure consists of a Master Services Agreement ("MSA") that governs the provision of payment processing services. The MSA is supplemented by one or more order forms or service schedules that add specific service lines, including:

• Payment Processing Services: Interchange-plus model, with VeloPay charging a per-transaction processing fee on top of the applicable card network interchange rate;

• VeloPay Insights (Analytics Dashboard): SaaS subscription, billed as a fixed monthly fee based on the number of merchant locations and transaction volume tier;

• VeloPay Shield (Fraud Detection Suite): SaaS subscription, billed as a fixed monthly fee plus a per-transaction scoring fee for high-volume merchants; and

• Gateway Services: Per-transaction fee for routing transactions through VeloPay's payment gateway to card networks and acquiring banks.

The standard contractual term is a 3-year initial term, with automatic 1-year renewal periods unless either party provides written notice of non-renewal at least 90 days prior to the expiration of the then-current term. Pricing is typically set at execution and subject to annual escalation provisions (generally CPI-based or a fixed percentage increase) applicable at each renewal.

Several of VeloPay's enterprise-level customer agreements deviate from the standard form in material respects, including negotiated pricing, extended terms, bespoke service level agreements, enhanced data protection obligations, exclusivity or MFN pricing provisions, and change of control or assignment restrictions. These deviations are addressed on a contract-by-contract basis below.

B. Individual Customer Agreement Summaries (Top 25)

Set forth below is a summary of each of the top 25 customer agreements, organized in order of estimated annual revenue contribution (largest to smallest).

Customer 1: Hawthorne Retail Group, Inc. Counterparty: Hawthorne Retail Group, Inc. ("Hawthorne"), a Delaware corporation headquartered in Bentonville, Arkansas. Hawthorne operates approximately 1,200 retail locations across the United States and processes in-store and e-commerce transactions through VeloPay's platform.

Contract Date: March 15, 2021 (initial MSA); amended and restated on July 1, 2023 (the "A&R MSA").

Term and Renewal: The A&R MSA has an initial term of 5 years, expiring July 1, 2028. The agreement automatically renews for successive 2-year periods unless either party provides written notice of non-renewal at least 180 days prior to the expiration of the then-current term.

Estimated Annual Revenue: Approximately $28 million (FY2024), making Hawthorne VeloPay's largest customer by revenue contribution, representing approximately 6.8% of total FY2024 revenue.

Services: Payment processing (interchange-plus), VeloPay Shield (fraud detection suite), VeloPay Insights (analytics dashboard), and gateway services. Hawthorne also utilizes VeloPay's real-time transaction monitoring API for integration with Hawthorne's proprietary inventory management system.

Change of Control Provision: Section 14.3 of the A&R MSA provides that VeloPay may not undergo a "Change of Control" without the prior written consent of Hawthorne. "Change of Control" is defined as any transaction or series of related transactions in which (a) any person or group acquires, directly or indirectly, more than 50% of the voting power or equity interests of VeloPay, (b) VeloPay sells, transfers, or disposes of all or substantially all of its assets, or (c) VeloPay merges or consolidates with or into another entity, unless VeloPay is the surviving entity and no change in voting power or equity interests occurs as described in clause (a). If a Change of Control occurs without Hawthorne's prior written consent, Hawthorne has the right to terminate the A&R MSA upon 60 days' written notice to VeloPay. This provision is triggered by the Merger. This contract is one of the 14 material contracts requiring change of control consent.

Assignment Clause: Section 14.1 provides that neither party may assign the agreement or any rights or obligations hereunder without the prior written consent of the other party, not to be unreasonably withheld, conditioned, or delayed. Assignment without consent is void.

Exclusivity/MFN: Section 8.2 contains an MFN pricing clause. VeloPay represents and warrants that the pricing provided to Hawthorne under the A&R MSA is, and shall at all times remain, no less favorable than the pricing offered to any other VeloPay customer with comparable transaction volume and a comparable service scope. If VeloPay offers more favorable pricing to another similarly situated customer, Hawthorne is entitled to receive the benefit of such pricing retroactive to the date it became available. VeloPay management reports that the Hawthorne pricing is currently competitive, and no MFN adjustment has been requested or paid during the term of the A&R MSA.

Termination Provisions: In addition to the change of control termination right described above, the A&R MSA provides for (a) termination for cause upon a material breach that remains uncured for 30 days following written notice, and (b) termination for convenience by either party upon 180 days' prior written notice, exercisable only after the expiration of the initial term.

Service Level Agreement: The A&R MSA includes a bespoke SLA requiring 99.99% platform uptime, with service credits applicable if VeloPay fails to meet the uptime target in any calendar month. VeloPay management reports no material SLA credit claims from Hawthorne in the past 12 months.

Governing Law: State of Delaware.

Risk Assessment: HIGH. Hawthorne is VeloPay's largest customer, and the loss of this contract would have a material adverse effect on VeloPay's revenue and operations. The change of control consent requirement is a critical item for the Transaction. VeloPay management, including CEO Nathan Aldridge, has expressed confidence that Hawthorne will consent to the Merger, citing a strong and longstanding commercial relationship. However, consent has not yet been obtained as of the date of this memorandum. We recommend prioritizing outreach to Hawthorne's legal and procurement teams.

Customer 2: Meridian Commerce Holdings LLC. Counterparty: Meridian Commerce Holdings LLC ("Meridian Commerce"), a Delaware limited liability company headquartered in San Francisco, California. Meridian Commerce operates a leading e-commerce marketplace platform with approximately 85,000 active third-party sellers.

Contract Date: September 1, 2022 (MSA and initial order forms).

Term and Renewal: 3-year initial term expiring September 1, 2025, with automatic 1-year renewals and 90-day notice of non-renewal.

Estimated Annual Revenue: Approximately $22 million (FY2024), representing approximately 5.3% of total FY2024 revenue.

Services: Payment processing (interchange-plus), gateway services, and VeloPay Shield (fraud detection suite). Meridian Commerce also utilizes VeloPay's batch settlement and disbursement services for seller payouts.

Change of Control Provision: Section 12.5 of the MSA requires VeloPay to notify Meridian Commerce in writing within 30 days of any Change of Control. No prior consent is required. However, if the entity that acquires control of VeloPay is a "Direct Competitor" (defined as any person or entity that derives more than 25% of its annual revenue from the provision of payment processing or merchant services), Meridian Commerce has the right to terminate the MSA upon 90 days' written notice following receipt of such notification. HPE Fund IV is a private equity fund and does not derive any revenue from the provision of payment processing or merchant services. Accordingly, the Direct Competitor termination right should not be triggered.

Assignment Clause: Section 12.1 provides that neither party may assign the agreement without the prior written consent of the other party. The reverse triangular merger structure, in which VeloPay survives as the contracting entity, should not constitute an "assignment" under this provision.

Exclusivity/MFN: None.

Termination Provisions: Termination for cause upon material breach with a 30-day cure period; termination for convenience on 120 days' notice after the initial term.

Governing Law: State of California.

Risk Assessment: LOW. While the notification requirement must be satisfied within the applicable timeframe, HPE Fund IV's status as a financial sponsor (and not a Direct Competitor) means the termination right should not be triggered. We recommend prompt notification following the signing or closing of the Transaction, as applicable, and inclusion of a brief statement in the notification confirming that HPE Fund IV does not constitute a Direct Competitor.

Customer 3: Lakeview Hospitality Group, Inc. Counterparty: Lakeview Hospitality Group, Inc. ("Lakeview"), a Nevada corporation headquartered in Las Vegas, Nevada. Lakeview operates a portfolio of approximately 60 hotel and resort properties across North America.

Contract Date: June 1, 2022 (MSA); supplemental order form for VeloPay Insights added August 15, 2023.

Term and Renewal: 4-year initial term expiring June 1, 2026, with automatic 1-year renewals and 90-day notice of non-renewal.

Estimated Annual Revenue: Approximately $19 million (FY2024), representing approximately 4.6% of total FY2024 revenue.

Services: Payment processing (interchange-plus) for all hotel and resort properties, VeloPay Shield (fraud detection suite with enhanced chargeback management module), and VeloPay Insights (analytics dashboard).

Change of Control Provision: Section 13.2 of the MSA requires VeloPay to obtain the prior written consent of Lakeview before any Change of Control, defined consistently with the Hawthorne definition. If VeloPay undergoes a Change of Control without Lakeview's consent, Lakeview may terminate the MSA upon 45 days' written notice. The 45-day cure period provides VeloPay with some additional time relative to other contracts (which may provide only 30 days or no cure period). This contract is one of the 14 material contracts requiring change of control consent.

Assignment Clause: Standard anti-assignment without consent; not to be unreasonably withheld.

Exclusivity/MFN: None.

Termination Provisions: Termination for cause with 30-day cure; termination for convenience on 120 days' notice after the initial term.

Governing Law: State of Nevada.

Risk Assessment: MODERATE-HIGH. Lakeview is a significant customer, and the 45-day termination right following an unconsented change of control creates meaningful risk. VeloPay management reports a positive relationship with Lakeview and anticipates that consent will be obtained. Consent outreach has been initiated.

Customer 4: Pinnacle Software Solutions, Inc. Counterparty: Pinnacle Software Solutions, Inc. ("Pinnacle"), a Delaware corporation headquartered in Raleigh, North Carolina. Pinnacle is a SaaS company that offers enterprise resource planning software and utilizes VeloPay for embedded payment processing within its platform.

Contract Date: January 15, 2023 (MSA and integration agreement).

Term and Renewal: 3-year initial term expiring January 15, 2026, with automatic 1-year renewals and 90-day notice of non-renewal.

Estimated Annual Revenue: Approximately $16 million (FY2024), representing approximately 3.9% of total FY2024 revenue.

Services: Payment processing (interchange-plus), gateway services, and a customized API integration enabling Pinnacle's end users to process transactions natively within Pinnacle's ERP platform.

Change of Control Provision: The Pinnacle MSA does not contain a change of control provision. No action is required in connection with the Transaction with respect to change of control.

Assignment Clause: Section 11.1 contains a standard anti-assignment clause providing that neither party may assign the agreement without the prior written consent of the other party. The clause is silent on change of control. Because VeloPay will remain the surviving entity in the reverse triangular merger and will continue as the contracting party, the Merger should not constitute an "assignment" under this provision.

Exclusivity/MFN: None.

Termination Provisions: Standard termination for cause with 30-day cure; termination for convenience on 90 days' notice after the initial term.

Governing Law: State of North Carolina.

Risk Assessment: LOW. No change of control provision. The anti-assignment clause should not be implicated by the reverse triangular merger structure.

Customer 5: Brindoval Health Systems, Inc. Counterparty: Brindoval Health Systems, Inc. ("Brindoval"), a Delaware corporation headquartered in Nashville, Tennessee. Brindoval operates a network of approximately 35 hospitals and 120 outpatient clinics across the southeastern United States.

Contract Date: April 1, 2022 (MSA); HIPAA Business Associate Agreement ("BAA") executed simultaneously.

Term and Renewal: 5-year initial term expiring April 1, 2027, with automatic 1-year renewals and 120-day notice of non-renewal (extended notice period relative to standard).

Estimated Annual Revenue: Approximately $14 million (FY2024), representing approximately 3.4% of total FY2024 revenue.

Services: Payment processing for patient billing and payment collection, VeloPay Shield (fraud detection with enhanced healthcare transaction monitoring), and gateway services. VeloPay processes credit card, debit card, ACH, and HSA/FSA transactions for Brindoval.

Change of Control Provision: Section 15.1 of the MSA requires VeloPay to obtain the prior written consent of Brindoval before any Change of Control. "Change of Control" is defined broadly to include any transaction in which a third party acquires, directly or indirectly, more than 50% of VeloPay's equity or voting interests, or in which VeloPay merges or consolidates with another entity (regardless of the surviving entity). If consent is not obtained, Brindoval may terminate the MSA upon 60 days' written notice. This contract is one of the 14 material contracts requiring change of control consent.

HIPAA Business Associate Agreement: The BAA imposes enhanced data protection obligations on VeloPay with respect to the handling of protected health information ("PHI") transmitted through VeloPay's payment processing platform. The BAA requires VeloPay to maintain HIPAA-compliant security safeguards, provide breach notification within 10 business days, and submit to periodic security audits. The BAA also restricts VeloPay's ability to use or disclose PHI except as permitted by the MSA and applicable law. The BAA includes its own assignment restriction, which mirrors the MSA's change of control consent requirement. VeloPay's HIPAA compliance posture is addressed in the Regulatory and Licensing Due Diligence Memorandum prepared by Christine Falk.

Assignment Clause: Standard anti-assignment without consent; mirrors the change of control provision.

Exclusivity/MFN: None.

Termination Provisions: Termination for cause with 30-day cure; no termination for convenience during the initial term; termination for convenience on 180 days' notice during renewal periods only.

Governing Law: State of Tennessee.

Risk Assessment: MODERATE-HIGH. Brindoval is a significant customer, and the healthcare vertical presents enhanced data privacy considerations under HIPAA. The change of control consent requirement applies to both the MSA and the BAA. VeloPay management reports that the Brindoval relationship is strong and expects consent to be obtainable. However, the healthcare industry's heightened sensitivity to changes in vendor ownership adds complexity to the consent process. We recommend involving VeloPay's privacy/security team in the consent outreach.

Customers 6 through 25. Set forth below are summaries of the remaining 20 customer agreements within the top 25, organized in descending order of estimated annual revenue contribution.

Customer 6: Ridgeline Automotive Group, Inc.

Counterparty: Ridgeline Automotive Group, Inc. ("Ridgeline"), a Texas corporation headquartered in Dallas, Texas, operating approximately 180 automobile dealerships.

Contract Date: November 1, 2021 (MSA).

Term and Renewal: 4-year initial term expiring November 1, 2025; automatic 1-year renewals; 90-day notice of non-renewal.

Estimated Annual Revenue: Approximately $12 million (FY2024).

Services: Payment processing (interchange-plus) and gateway services for in-dealership and online vehicle purchase and service transactions.

Change of Control Provision: Section 12.4 requires VeloPay to provide written notification to Ridgeline within 30 days of any Change of Control. Ridgeline has a termination right exercisable within 60 days of receiving notification if the acquirer is a Direct Competitor (defined as an entity that derives more than 30% of its revenue from payment processing). HPE Fund IV does not meet this definition. This contract is one of the 14 material contracts requiring notification.

Assignment Clause: Standard anti-assignment without consent.

Exclusivity/MFN: None.

Governing Law: State of Texas.

Risk Assessment: LOW. Notification requirement only; HPE Fund IV is not a Direct Competitor.

Customer 7: Northland Financial Services Corp.

Counterparty: Northland Financial Services Corp. ("Northland"), a Delaware corporation headquartered in Chicago, Illinois. Northland operates a network of approximately 4,500 financial advisors and independent broker-dealers, each of which accepts client payments through VeloPay's platform.

Contract Date: February 15, 2022 (MSA).

Term and Renewal: 5-year initial term expiring February 15, 2027; automatic 2-year renewals; 180-day notice of non-renewal.

Estimated Annual Revenue: Approximately $11.5 million (FY2024).

Services: Payment processing (interchange-plus), gateway services, and VeloPay Insights (analytics dashboard).

Change of Control Provision: Section 14.1 requires prior written consent for any Change of Control. If consent is not obtained, Northland may terminate on 90 days' notice. This contract is one of the 14 material contracts requiring change of control consent.

Assignment Clause: Standard anti-assignment without consent.

Exclusivity Clause: Section 9.3 provides that VeloPay shall be the exclusive payment processor for Northland's merchant network during the term of the MSA. In consideration of this exclusivity, Northland guarantees a minimum annual processing volume of $4.5 billion through VeloPay's platform. If Northland fails to meet the minimum volume commitment, VeloPay is entitled to a shortfall payment equal to the difference between the actual processing fees earned and the fees that would have been earned on the minimum volume. This exclusivity provision is notable because it creates a locked-in revenue stream for VeloPay, but also obligates VeloPay to maintain service levels and pricing competitive enough to support the relationship.

Governing Law: State of Illinois.

Risk Assessment: MODERATE-HIGH. The consent requirement and the exclusivity arrangement make this a relationship of particular importance. Loss of the Northland contract would result in a loss of guaranteed minimum volume and associated revenue. VeloPay management reports that Northland's primary concern is service continuity and that early outreach is advisable.

Customer 8: Summit Education Corporation

Counterparty: Summit Education Corporation ("Summit"), a Massachusetts corporation headquartered in Boston, Massachusetts, operating a network of approximately 45 private K-12 schools and a tuition management platform.

Contract Date: May 1, 2023 (MSA).

Term and Renewal: 3-year initial term expiring May 1, 2026; automatic 1-year renewals; 90-day notice of non-renewal.

Estimated Annual Revenue: Approximately $10.8 million (FY2024).

Services: Payment processing (ACH and credit card), tuition billing integration, and gateway services.

Change of Control Provision: Section 11.5 requires VeloPay to provide written notification within 20 business days of any Change of Control. No consent is required, and no termination right is triggered by the Change of Control itself. This contract is one of the 14 material contracts requiring notification.

Assignment Clause: Standard anti-assignment without consent.

Exclusivity/MFN: None.

Governing Law: Commonwealth of Massachusetts.

Risk Assessment: LOW. Notification requirement only; no termination right.

Customer 9: Cascadia Fresh Markets, Inc.

Counterparty: Cascadia Fresh Markets, Inc. ("Cascadia"), a Washington corporation headquartered in Seattle, Washington, operating approximately 90 organic and specialty grocery stores in the Pacific Northwest.

Contract Date: August 1, 2022 (MSA).

Term and Renewal: 3-year initial term expiring August 1, 2025; automatic 1-year renewals; 90-day notice of non-renewal.

Estimated Annual Revenue: Approximately $10.2 million (FY2024).

Services: Payment processing (interchange-plus), POS integration, and VeloPay Shield (fraud detection suite).

Change of Control Provision: Section 13.1 requires prior written consent for any Change of Control. Cascadia may terminate on 30 days' notice if consent is not obtained. This contract is one of the 14 material contracts requiring change of control consent.

Assignment Clause: Standard anti-assignment without consent.

Exclusivity/MFN: None.

Governing Law: State of Washington.

Risk Assessment: MODERATE. The 30-day termination period following unconsented change of control is relatively short. VeloPay management reports a positive relationship with Cascadia.

Customer 10: Alderman Digital Media LLC

Counterparty: Alderman Digital Media LLC ("Alderman"), a California limited liability company headquartered in Los Angeles, California, operating a digital content subscription platform with approximately 2.4 million paying subscribers.

Contract Date: October 1, 2020 (MSA).

Term and Renewal: 3-year initial term expired October 1, 2023; currently continuing on a month-to-month basis (neither party provided notice of non-renewal, and the agreement's automatic renewal provision was inadvertently not triggered due to an administrative oversight).

Estimated Annual Revenue: Approximately $9.5 million (FY2024).

Services: Payment processing (interchange-plus and subscription recurring billing), gateway services, and VeloPay Shield.

Change of Control Provision: None.

Assignment Clause: Section 10.1 contains a standard anti-assignment provision without consent. The agreement is silent on change of control.

Exclusivity/MFN: None.

Termination Provisions: Because the agreement is currently operating on a month-to-month basis, either party may terminate upon 30 days' written notice.

Governing Law: State of California.

Risk Assessment: MODERATE. Although there is no change of control provision, the month-to-month status means that either party can terminate on 30 days' notice for any reason. We recommend that VeloPay negotiate a formal renewal of this agreement, ideally for a multi-year term, either before or promptly after the closing of the Transaction. VeloPay management reports that the Alderman relationship is strong and that both parties have been operating under the assumption that the agreement would be renewed; however, no formal amendment or renewal has been executed.

Customer 11: Greystone Property Management, Inc.

MEMORANDUM
February 28, 2025
TO: Sandra Tung, Responsible Partner, Mergers & Acquisitions Oliver Mackenzie, Billing Partner, Mergers & Acquisitions Megan Chu, Lead Associate, Mergers & Acquisitions
FROM: Derek Okonkwo, Working Associate, Mergers & Acquisitions
RE: Material Contracts Summary — VeloPay Systems, Inc. and Subsidiaries
MATTER: Harrowgate Private Equity Fund IV LP — Acquisition of VeloPay Systems, Inc. (Calderwood & Harkness Matter No. 1003-00003)
CLASSIFICATION: PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
This memorandum constitutes attorney work product prepared in anticipation of the proposed acquisition of VeloPay Systems, Inc. by Harrowgate Private Equity Fund IV LP. It is protected by the attorney-client privilege and the work product doctrine. This memorandum should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP.
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I. Executive Summary and Purpose
This memorandum summarizes the material contractual relationships of VeloPay Systems, Inc. ("VeloPay" or the "Company") and its subsidiaries, as reviewed in connection with the proposed acquisition of VeloPay by Harrowgate Private Equity Fund IV LP ("HPE Fund IV" or the "Sponsor") for an aggregate enterprise value of approximately $1.9 billion (the "Transaction"). The Transaction is structured as a reverse triangular merger in which a newly-formed acquisition subsidiary of HPE Fund IV will merge with and into VeloPay, with VeloPay surviving as a wholly-owned subsidiary of HPE Fund IV (the "Merger").
Scope of Review. This memorandum covers the following categories of material contracts:
(a) the top 25 customer agreements by revenue contribution, which collectively represent approximately 58% of VeloPay's FY2024 audited revenue;
(b) key vendor and supplier contracts, including cloud infrastructure, card network sponsorship and processing, banking and settlement, telecommunications, and professional services agreements;
(c) technology licenses for third-party software, encryption and tokenization modules, and compliance/regulatory reporting tools;
(d) partnership and strategic alliance agreements, including integration partnerships, referral arrangements, and co-marketing agreements;
(e) intercompany agreements among VeloPay Systems, Inc. and its wholly-owned subsidiaries, including VeloPay Processing LLC, VeloPay Canada Inc., VeloPay Europe Unipessoal Lda., VeloPay Fraud intelligence Inc., and PayStream Gateway LLC; and
(f) VeloPay's existing credit facility with Meridian Commercial Credit Corp.
Real property leases are summarized at a high level herein but are addressed in detail in the separate Real Property Due Diligence Memorandum. Employment agreements and benefit plans are addressed in the separate Employment and Benefits Due Diligence Memorandum.
Focus of Analysis. For each material contract, this memorandum analyzes the following provisions and terms that may be implicated by the Transaction:
• Assignment provisions (including whether the reverse triangular merger constitutes an "assignment" under the applicable contract);
• Change of control provisions (including consent requirements, notification obligations, and counterparty termination rights triggered by a change of control);
• Termination provisions (including termination for cause, termination for convenience, and termination upon change of control);
• Exclusivity and most-favored-nation ("MFN") terms;
• Non-compete and non-solicitation restrictions;
• Material financial terms (including pricing, volume commitments, and minimum spend requirements); and
• Any other provisions that may be relevant to the Transaction or post-closing integration.
Change of Control Consent Tracker. This memorandum should be read in conjunction with the separate Change of Control Consent Tracker and Analysis Memorandum (the "Consent Tracker"), which I maintain on a rolling basis. The Consent Tracker identifies 14 material customer contracts and additional vendor, licensing, and partnership agreements that require change of control consent, notification, or that provide a termination right to the counterparty upon a change of control. The Consent Tracker includes detailed status updates on the consent solicitation process, counterparty contact information, proposed timelines, and recommended messaging. The Consent Tracker is updated weekly and circulated to the deal team each Friday.
Company Overview. VeloPay is a payment technology company headquartered in Austin, Texas. The Company processes approximately $87 billion in annualized gross payment volume ("GPV") across more than 14,000 merchants, serving enterprise and upper-mid-market customers across the retail, e-commerce, hospitality, healthcare, financial services, and digital media verticals. VeloPay's revenue model includes (i) interchange-plus processing fees charged on a per-transaction basis, (ii) SaaS subscription fees for the Company's analytics dashboard and fraud detection suite (marketed under the "VeloPay Insights" and "VeloPay Shield" brands, respectively), and (iii) per-transaction gateway fees. For the fiscal year ended December 31, 2024, VeloPay reported audited revenue of $412.3 million, representing year-over-year growth of approximately 18% from FY2023.
Data Room and Counterparty Counsel. The materials reviewed herein were provided by VeloPay and its outside counsel, Whitford Jessup & Crane LLP (Rebecca Thornton-Hayes, Partner, and James Okoro, Associate), through VeloPay's virtual data room, which was opened to Calderwood & Harkness and HPE Fund IV's advisors on December 12, 2024. Additional materials were provided in response to supplemental diligence requests submitted on January 8, 2025, January 22, 2025, and February 10, 2025.
II. Methodology and Sources
A. Data Room Review
All contracts reviewed in connection with this memorandum were obtained from VeloPay's virtual data room hosted on Thackeray Solutions (Project Neptune), which was opened on December 12, 2024. As of the date of this memorandum, the data room contains approximately 3,400 documents organized into the following folders relevant to this analysis:
• Folder 3.1: Customer Agreements (Top 25)
• Folder 3.2: Customer Agreements (Other Material Customers)
• Folder 3.3: Standard Form Customer Agreements and Templates
• Folder 4.1: Vendor and Supplier Agreements (Material)
• Folder 4.2: Vendor and Supplier Agreements (Other)
• Folder 5.1: Technology Licenses (Third-Party Software)
• Folder 5.2: Technology Licenses (Open-Source)
• Folder 6.1: Partnership and Strategic Alliance Agreements
• Folder 7.1: Intercompany Agreements
• Folder 8.1: Real Property Leases
• Folder 9.1: Employment Agreements and Offer Letters
• Folder 10.1: Credit Facility and Financing Documents
B. Contract Categorization and Selection Criteria
Contracts were organized by category and assessed for materiality based on the following criteria. A contract was classified as "material" and included in this memorandum if it met one or more of the following thresholds:
(i) the contract generates more than $5 million in annual revenue to VeloPay, or involves more than $2 million in annual spend by VeloPay;
(ii) the contract has a remaining term in excess of 3 years, creating a long-duration obligation;
(iii) the contract contains a change of control provision, assignment restriction, exclusivity clause, or most-favored-nation pricing provision that may be implicated by or affect the Transaction; or
(iv) the contract was identified by VeloPay management as material to the Company's ongoing operations, even if it does not meet the foregoing quantitative thresholds.
C. Management Interviews
The diligence information derived from the data room review was supplemented by management interviews and follow-up discussions conducted with the following VeloPay executives:
• Nathan Aldridge, Chief Executive Officer — participated in management presentation on January 6, 2025, and follow-up calls on January 24, 2025, and February 14, 2025; provided strategic context on customer relationships and partnership arrangements;
• Sonia Reyes-Watkins, Chief Technology Officer — participated in technology diligence session on January 9, 2025; provided background on technology licenses, platform architecture, and the integration of PayStream Gateway LLC;
• Marcus Langford, Chief Financial Officer — participated in financial diligence sessions on January 6, 2025, and January 15, 2025; provided revenue breakdowns by customer and by product, vendor spend analysis, and detail on the Meridian Commercial Credit Corp. credit facility;
• Danielle Moreau, General Counsel — participated in legal diligence sessions on January 8, 2025, January 17, 2025, February 3, 2025, and February 21, 2025; provided context on contract negotiations, change of control provisions, ongoing disputes (none material), and the Company's consent solicitation strategy.
D. Excluded Categories
The following categories of contracts are excluded from this memorandum and are addressed in separate Calderwood & Harkness work product:
• Real property leases: Addressed in the Real Property Due Diligence Memorandum (prepared by Rachel Steinberg); a high-level summary is included in Section V.H below for convenience;
• Employment agreements, offer letters, and benefit plans: Addressed in the Employment and Benefits Due Diligence Memorandum (prepared by Allison Brandt);
• intellectual property assignments, open-source license compliance, and trademark/patent matters: Addressed in the IP Due Diligence Memorandum (prepared by Thomas Ashworth);
• Regulatory licenses, money transmitter permits, and related compliance matters: Addressed in the Regulatory and Licensing Due Diligence Memorandum (prepared by Christine Falk); and
• Tax-related matters, including intercompany transfer pricing compliance: Addressed in the Tax Due Diligence Memorandum (prepared by Leonard Cross).
III. Summary of Key Findings and Risk Items
Based on our review of VeloPay's material contracts, the following key findings and risk items have been identified. Each is discussed in greater detail in the relevant section of this memorandum.
1. Change of Control Provisions — 14 Material Customer Contracts. Fourteen of the top 25 customer agreements contain change of control provisions that will be triggered by the Merger. These provisions variously require prior written consent from the counterparty, notification to the counterparty within a specified period, or provide the counterparty with a right to terminate the agreement upon a change of control. The reverse triangular merger structure — in which a newly-formed acquisition subsidiary merges with and into VeloPay, with VeloPay surviving as a wholly-owned subsidiary of HPE Fund IV — will trigger these provisions because "change of control" is generally defined in VeloPay's contracts to include any transaction in which a third party acquires a majority of VeloPay's equity or voting power, or all or substantially all of VeloPay's assets. Although VeloPay will continue to exist as the surviving entity following the Merger, the shift in equity ownership to HPE Fund IV constitutes a change of control under the applicable definitions.
2. Anti-Assignment Provisions. Three customer agreements within the top 25 contain anti-assignment provisions without express change of control clauses. Because the reverse triangular merger does not result in a transfer or assignment of VeloPay's contractual rights (VeloPay remains the surviving entity and continues as the party to each contract), the Merger should not constitute an "assignment" under these provisions. This conclusion is consistent with Delaware law and the law of most other jurisdictions. The risk of an adverse interpretation is low, but we recommend monitoring these three agreements and, if counterparty relationships permit, providing informal notice of the Transaction.
3. Vendor Exclusivity Restrictions. Two vendor contracts contain exclusivity provisions that restrict VeloPay's ability to engage alternative providers for certain services during the term of the agreement. These exclusivity obligations should be evaluated in the context of post-acquisition integration planning, particularly if HPE Fund IV intends to rationalize VeloPay's vendor relationships or consolidate services with vendors used by other portfolio companies.
4. Cloud Infrastructure Agreement — Favorable Terms. VeloPay's primary cloud infrastructure agreement with Stratosphere Cloud Services, Inc. has a remaining term of approximately 3 years, includes favorable pricing with predictable annual escalators, and does not contain a change of control termination right. This is a favorable finding, given that the Stratosphere relationship underpins VeloPay's entire payment processing platform.
5. Meridian Commercial Credit Corp. — Mandatory Prepayment. VeloPay's existing senior secured term loan with Meridian Commercial Credit Corp. ($112 million outstanding principal) contains a mandatory prepayment trigger upon a change of control of VeloPay. The Merger will trigger this provision. The credit facility will be paid off in full at the closing of the Transaction, with an estimated payoff amount of approximately $113,230,000 (including accrued interest through the anticipated closing date of July 22, 2025), and will be replaced by the new credit facilities committed by Tralvendo National Bank and Prairie State Bank, N.A. All existing liens on VeloPay's assets will be released at closing, and UCC termination statements will be filed. The payoff of the Meridian facility is a closing condition under the Merger Agreement.
6. Technology License Anti-Assignment Language. Several of VeloPay's third-party technology licenses contain restrictions on sublicensing or assignment that could, depending on their drafting, be interpreted to encompass a change of control. Two licenses in particular — the Irongate Software, Inc. database license and the CipherVault Technologies, Inc. tokenization license — contain language that warrants careful review. We recommend obtaining consent from these licensors as a precautionary measure.
7. PayStream Gateway LLC — No Outstanding Obligations. The 2021 acquisition agreement for PayStream Gateway LLC ($45 million purchase price) contains surviving representations and an earnout provision that has been fully earned and paid. The standard survival period for representations and warranties has expired. There are no outstanding contingent payment obligations or indemnification claims. The PayStream technology has been fully integrated into VeloPay Processing LLC's infrastructure.
8. BIN Sponsorship and Settlement Banking — Critical Consent Requirements. The BIN sponsorship agreement with Trident Merchant Bank, N.A. and the settlement banking agreement with Commonwealth Settlement Bank, N.A. both require change of control consent. These agreements are operationally critical — VeloPay cannot process card transactions without a BIN sponsor, and merchant settlement cannot occur without the settlement banking relationship. We classify both as HIGH risk and recommend that consent outreach be prioritized alongside the largest customer consent (Hawthorne Retail Group, Inc.).
IV. Top 25 Customer Agreements
A. Overview. VeloPay serves more than 14,000 merchants across multiple verticals, including retail, e-commerce, hospitality, healthcare, financial services, digital media, and education. Revenue is concentrated among enterprise and upper-mid-market customers. The top 25 customers by revenue contribution represent approximately 58% of VeloPay's FY2024 audited revenue, or approximately $239 million of $412.3 million.
VeloPay's standard customer agreement structure consists of a Master Services Agreement ("MSA") that governs the provision of payment processing services. The MSA is supplemented by one or more order forms or service schedules that add specific service lines, including:
• Payment Processing Services: Interchange-plus model, with VeloPay charging a per-transaction processing fee on top of the applicable card network interchange rate;
• VeloPay Insights (Analytics Dashboard): SaaS subscription, billed as a fixed monthly fee based on the number of merchant locations and transaction volume tier;
• VeloPay Shield (Fraud Detection Suite): SaaS subscription, billed as a fixed monthly fee plus a per-transaction scoring fee for high-volume merchants; and
• Gateway Services: Per-transaction fee for routing transactions through VeloPay's payment gateway to card networks and acquiring banks.
The standard contractual term is a 3-year initial term, with automatic 1-year renewal periods unless either party provides written notice of non-renewal at least 90 days prior to the expiration of the then-current term. Pricing is typically set at execution and subject to annual escalation provisions (generally CPI-based or a fixed percentage increase) applicable at each renewal.
Several of VeloPay's enterprise-level customer agreements deviate from the standard form in material respects, including negotiated pricing, extended terms, bespoke service level agreements, enhanced data protection obligations, exclusivity or MFN pricing provisions, and change of control or assignment restrictions. These deviations are addressed on a contract-by-contract basis below.
B. Individual Customer Agreement Summaries (Top 25)
Set forth below is a summary of each of the top 25 customer agreements, organized in order of estimated annual revenue contribution (largest to smallest).
Customer 1: Hawthorne Retail Group, Inc. Counterparty: Hawthorne Retail Group, Inc. ("Hawthorne"), a Delaware corporation headquartered in Bentonville, Arkansas. Hawthorne operates approximately 1,200 retail locations across the United States and processes in-store and e-commerce transactions through VeloPay's platform.
Contract Date: March 15, 2021 (initial MSA); amended and restated on July 1, 2023 (the "A&R MSA").
Term and Renewal: The A&R MSA has an initial term of 5 years, expiring July 1, 2028. The agreement automatically renews for successive 2-year periods unless either party provides written notice of non-renewal at least 180 days prior to the expiration of the then-current term.
Estimated Annual Revenue: Approximately $28 million (FY2024), making Hawthorne VeloPay's largest customer by revenue contribution, representing approximately 6.8% of total FY2024 revenue.
Services: Payment processing (interchange-plus), VeloPay Shield (fraud detection suite), VeloPay Insights (analytics dashboard), and gateway services. Hawthorne also utilizes VeloPay's real-time transaction monitoring API for integration with Hawthorne's proprietary inventory management system.
Change of Control Provision: Section 14.3 of the A&R MSA provides that VeloPay may not undergo a "Change of Control" without the prior written consent of Hawthorne. "Change of Control" is defined as any transaction or series of related transactions in which (a) any person or group acquires, directly or indirectly, more than 50% of the voting power or equity interests of VeloPay, (b) VeloPay sells, transfers, or disposes of all or substantially all of its assets, or (c) VeloPay merges or consolidates with or into another entity, unless VeloPay is the surviving entity and no change in voting power or equity interests occurs as described in clause (a). If a Change of Control occurs without Hawthorne's prior written consent, Hawthorne has the right to terminate the A&R MSA upon 60 days' written notice to VeloPay. This provision is triggered by the Merger. This contract is one of the 14 material contracts requiring change of control consent.
Assignment Clause: Section 14.1 provides that neither party may assign the agreement or any rights or obligations hereunder without the prior written consent of the other party, not to be unreasonably withheld, conditioned, or delayed. Assignment without consent is void.
Exclusivity/MFN: Section 8.2 contains an MFN pricing clause. VeloPay represents and warrants that the pricing provided to Hawthorne under the A&R MSA is, and shall at all times remain, no less favorable than the pricing offered to any other VeloPay customer with comparable transaction volume and a comparable service scope. If VeloPay offers more favorable pricing to another similarly situated customer, Hawthorne is entitled to receive the benefit of such pricing retroactive to the date it became available. VeloPay management reports that the Hawthorne pricing is currently competitive, and no MFN adjustment has been requested or paid during the term of the A&R MSA.
Termination Provisions: In addition to the change of control termination right described above, the A&R MSA provides for (a) termination for cause upon a material breach that remains uncured for 30 days following written notice, and (b) termination for convenience by either party upon 180 days' prior written notice, exercisable only after the expiration of the initial term.
Service Level Agreement: The A&R MSA includes a bespoke SLA requiring 99.99% platform uptime, with service credits applicable if VeloPay fails to meet the uptime target in any calendar month. VeloPay management reports no material SLA credit claims from Hawthorne in the past 12 months.
Governing Law: State of Delaware.
Risk Assessment: HIGH. Hawthorne is VeloPay's largest customer, and the loss of this contract would have a material adverse effect on VeloPay's revenue and operations. The change of control consent requirement is a critical item for the Transaction. VeloPay management, including CEO Nathan Aldridge, has expressed confidence that Hawthorne will consent to the Merger, citing a strong and longstanding commercial relationship. However, consent has not yet been obtained as of the date of this memorandum. We recommend prioritizing outreach to Hawthorne's legal and procurement teams.
Customer 2: Meridian Commerce Holdings LLC. Counterparty: Meridian Commerce Holdings LLC ("Meridian Commerce"), a Delaware limited liability company headquartered in San Francisco, California. Meridian Commerce operates a leading e-commerce marketplace platform with approximately 85,000 active third-party sellers.
Contract Date: September 1, 2022 (MSA and initial order forms).
Term and Renewal: 3-year initial term expiring September 1, 2025, with automatic 1-year renewals and 90-day notice of non-renewal.
Estimated Annual Revenue: Approximately $22 million (FY2024), representing approximately 5.3% of total FY2024 revenue.
Services: Payment processing (interchange-plus), gateway services, and VeloPay Shield (fraud detection suite). Meridian Commerce also utilizes VeloPay's batch settlement and disbursement services for seller payouts.
Change of Control Provision: Section 12.5 of the MSA requires VeloPay to notify Meridian Commerce in writing within 30 days of any Change of Control. No prior consent is required. However, if the entity that acquires control of VeloPay is a "Direct Competitor" (defined as any person or entity that derives more than 25% of its annual revenue from the provision of payment processing or merchant services), Meridian Commerce has the right to terminate the MSA upon 90 days' written notice following receipt of such notification. HPE Fund IV is a private equity fund and does not derive any revenue from the provision of payment processing or merchant services. Accordingly, the Direct Competitor termination right should not be triggered.
Assignment Clause: Section 12.1 provides that neither party may assign the agreement without the prior written consent of the other party. The reverse triangular merger structure, in which VeloPay survives as the contracting entity, should not constitute an "assignment" under this provision.
Exclusivity/MFN: None.
Termination Provisions: Termination for cause upon material breach with a 30-day cure period; termination for convenience on 120 days' notice after the initial term.
Governing Law: State of California.
Risk Assessment: LOW. While the notification requirement must be satisfied within the applicable timeframe, HPE Fund IV's status as a financial sponsor (and not a Direct Competitor) means the termination right should not be triggered. We recommend prompt notification following the signing or closing of the Transaction, as applicable, and inclusion of a brief statement in the notification confirming that HPE Fund IV does not constitute a Direct Competitor.
Customer 3: Lakeview Hospitality Group, Inc. Counterparty: Lakeview Hospitality Group, Inc. ("Lakeview"), a Nevada corporation headquartered in Las Vegas, Nevada. Lakeview operates a portfolio of approximately 60 hotel and resort properties across North America.
Contract Date: June 1, 2022 (MSA); supplemental order form for VeloPay Insights added August 15, 2023.
Term and Renewal: 4-year initial term expiring June 1, 2026, with automatic 1-year renewals and 90-day notice of non-renewal.
Estimated Annual Revenue: Approximately $19 million (FY2024), representing approximately 4.6% of total FY2024 revenue.
Services: Payment processing (interchange-plus) for all hotel and resort properties, VeloPay Shield (fraud detection suite with enhanced chargeback management module), and VeloPay Insights (analytics dashboard).
Change of Control Provision: Section 13.2 of the MSA requires VeloPay to obtain the prior written consent of Lakeview before any Change of Control, defined consistently with the Hawthorne definition. If VeloPay undergoes a Change of Control without Lakeview's consent, Lakeview may terminate the MSA upon 45 days' written notice. The 45-day cure period provides VeloPay with some additional time relative to other contracts (which may provide only 30 days or no cure period). This contract is one of the 14 material contracts requiring change of control consent.
Assignment Clause: Standard anti-assignment without consent; not to be unreasonably withheld.
Exclusivity/MFN: None.
Termination Provisions: Termination for cause with 30-day cure; termination for convenience on 120 days' notice after the initial term.
Governing Law: State of Nevada.
Risk Assessment: MODERATE-HIGH. Lakeview is a significant customer, and the 45-day termination right following an unconsented change of control creates meaningful risk. VeloPay management reports a positive relationship with Lakeview and anticipates that consent will be obtained. Consent outreach has been initiated.
Customer 4: Pinnacle Software Solutions, Inc. Counterparty: Pinnacle Software Solutions, Inc. ("Pinnacle"), a Delaware corporation headquartered in Raleigh, North Carolina. Pinnacle is a SaaS company that offers enterprise resource planning software and utilizes VeloPay for embedded payment processing within its platform.
Contract Date: January 15, 2023 (MSA and integration agreement).
Term and Renewal: 3-year initial term expiring January 15, 2026, with automatic 1-year renewals and 90-day notice of non-renewal.
Estimated Annual Revenue: Approximately $16 million (FY2024), representing approximately 3.9% of total FY2024 revenue.
Services: Payment processing (interchange-plus), gateway services, and a customized API integration enabling Pinnacle's end users to process transactions natively within Pinnacle's ERP platform.
Change of Control Provision: The Pinnacle MSA does not contain a change of control provision. No action is required in connection with the Transaction with respect to change of control.
Assignment Clause: Section 11.1 contains a standard anti-assignment clause providing that neither party may assign the agreement without the prior written consent of the other party. The clause is silent on change of control. Because VeloPay will remain the surviving entity in the reverse triangular merger and will continue as the contracting party, the Merger should not constitute an "assignment" under this provision.
Exclusivity/MFN: None.
Termination Provisions: Standard termination for cause with 30-day cure; termination for convenience on 90 days' notice after the initial term.
Governing Law: State of North Carolina.
Risk Assessment: LOW. No change of control provision. The anti-assignment clause should not be implicated by the reverse triangular merger structure.
Customer 5: Brindoval Health Systems, Inc. Counterparty: Brindoval Health Systems, Inc. ("Brindoval"), a Delaware corporation headquartered in Nashville, Tennessee. Brindoval operates a network of approximately 35 hospitals and 120 outpatient clinics across the southeastern United States.
Contract Date: April 1, 2022 (MSA); HIPAA Business Associate Agreement ("BAA") executed simultaneously.
Term and Renewal: 5-year initial term expiring April 1, 2027, with automatic 1-year renewals and 120-day notice of non-renewal (extended notice period relative to standard).
Estimated Annual Revenue: Approximately $14 million (FY2024), representing approximately 3.4% of total FY2024 revenue.
Services: Payment processing for patient billing and payment collection, VeloPay Shield (fraud detection with enhanced healthcare transaction monitoring), and gateway services. VeloPay processes credit card, debit card, ACH, and HSA/FSA transactions for Brindoval.
Change of Control Provision: Section 15.1 of the MSA requires VeloPay to obtain the prior written consent of Brindoval before any Change of Control. "Change of Control" is defined broadly to include any transaction in which a third party acquires, directly or indirectly, more than 50% of VeloPay's equity or voting interests, or in which VeloPay merges or consolidates with another entity (regardless of the surviving entity). If consent is not obtained, Brindoval may terminate the MSA upon 60 days' written notice. This contract is one of the 14 material contracts requiring change of control consent.
HIPAA Business Associate Agreement: The BAA imposes enhanced data protection obligations on VeloPay with respect to the handling of protected health information ("PHI") transmitted through VeloPay's payment processing platform. The BAA requires VeloPay to maintain HIPAA-compliant security safeguards, provide breach notification within 10 business days, and submit to periodic security audits. The BAA also restricts VeloPay's ability to use or disclose PHI except as permitted by the MSA and applicable law. The BAA includes its own assignment restriction, which mirrors the MSA's change of control consent requirement. VeloPay's HIPAA compliance posture is addressed in the Regulatory and Licensing Due Diligence Memorandum prepared by Christine Falk.
Assignment Clause: Standard anti-assignment without consent; mirrors the change of control provision.
Exclusivity/MFN: None.
Termination Provisions: Termination for cause with 30-day cure; no termination for convenience during the initial term; termination for convenience on 180 days' notice during renewal periods only.
Governing Law: State of Tennessee.
Risk Assessment: MODERATE-HIGH. Brindoval is a significant customer, and the healthcare vertical presents enhanced data privacy considerations under HIPAA. The change of control consent requirement applies to both the MSA and the BAA. VeloPay management reports that the Brindoval relationship is strong and expects consent to be obtainable. However, the healthcare industry's heightened sensitivity to changes in vendor ownership adds complexity to the consent process. We recommend involving VeloPay's privacy/security team in the consent outreach.
Customers 6 through 25. Set forth below are summaries of the remaining 20 customer agreements within the top 25, organized in descending order of estimated annual revenue contribution.
Customer 6: Ridgeline Automotive Group, Inc.
Counterparty: Ridgeline Automotive Group, Inc. ("Ridgeline"), a Texas corporation headquartered in Dallas, Texas, operating approximately 180 automobile dealerships.
Contract Date: November 1, 2021 (MSA).
Term and Renewal: 4-year initial term expiring November 1, 2025; automatic 1-year renewals; 90-day notice of non-renewal.
Estimated Annual Revenue: Approximately $12 million (FY2024).
Services: Payment processing (interchange-plus) and gateway services for in-dealership and online vehicle purchase and service transactions.
Change of Control Provision: Section 12.4 requires VeloPay to provide written notification to Ridgeline within 30 days of any Change of Control. Ridgeline has a termination right exercisable within 60 days of receiving notification if the acquirer is a Direct Competitor (defined as an entity that derives more than 30% of its revenue from payment processing). HPE Fund IV does not meet this definition. This contract is one of the 14 material contracts requiring notification.
Assignment Clause: Standard anti-assignment without consent.
Exclusivity/MFN: None.
Governing Law: State of Texas.
Risk Assessment: LOW. Notification requirement only; HPE Fund IV is not a Direct Competitor.
Customer 7: Northland Financial Services Corp.
Counterparty: Northland Financial Services Corp. ("Northland"), a Delaware corporation headquartered in Chicago, Illinois. Northland operates a network of approximately 4,500 financial advisors and independent broker-dealers, each of which accepts client payments through VeloPay's platform.
Contract Date: February 15, 2022 (MSA).
Term and Renewal: 5-year initial term expiring February 15, 2027; automatic 2-year renewals; 180-day notice of non-renewal.
Estimated Annual Revenue: Approximately $11.5 million (FY2024).
Services: Payment processing (interchange-plus), gateway services, and VeloPay Insights (analytics dashboard).
Change of Control Provision: Section 14.1 requires prior written consent for any Change of Control. If consent is not obtained, Northland may terminate on 90 days' notice. This contract is one of the 14 material contracts requiring change of control consent.
Assignment Clause: Standard anti-assignment without consent.
Exclusivity Clause: Section 9.3 provides that VeloPay shall be the exclusive payment processor for Northland's merchant network during the term of the MSA. In consideration of this exclusivity, Northland guarantees a minimum annual processing volume of $4.5 billion through VeloPay's platform. If Northland fails to meet the minimum volume commitment, VeloPay is entitled to a shortfall payment equal to the difference between the actual processing fees earned and the fees that would have been earned on the minimum volume. This exclusivity provision is notable because it creates a locked-in revenue stream for VeloPay, but also obligates VeloPay to maintain service levels and pricing competitive enough to support the relationship.
Governing Law: State of Illinois.
Risk Assessment: MODERATE-HIGH. The consent requirement and the exclusivity arrangement make this a relationship of particular importance. Loss of the Northland contract would result in a loss of guaranteed minimum volume and associated revenue. VeloPay management reports that Northland's primary concern is service continuity and that early outreach is advisable.
Customer 8: Summit Education Corporation
Counterparty: Summit Education Corporation ("Summit"), a Massachusetts corporation headquartered in Boston, Massachusetts, operating a network of approximately 45 private K-12 schools and a tuition management platform.
Contract Date: May 1, 2023 (MSA).
Term and Renewal: 3-year initial term expiring May 1, 2026; automatic 1-year renewals; 90-day notice of non-renewal.
Estimated Annual Revenue: Approximately $10.8 million (FY2024).
Services: Payment processing (ACH and credit card), tuition billing integration, and gateway services.
Change of Control Provision: Section 11.5 requires VeloPay to provide written notification within 20 business days of any Change of Control. No consent is required, and no termination right is triggered by the Change of Control itself. This contract is one of the 14 material contracts requiring notification.
Assignment Clause: Standard anti-assignment without consent.
Exclusivity/MFN: None.
Governing Law: Commonwealth of Massachusetts.
Risk Assessment: LOW. Notification requirement only; no termination right.
Customer 9: Cascadia Fresh Markets, Inc.
Counterparty: Cascadia Fresh Markets, Inc. ("Cascadia"), a Washington corporation headquartered in Seattle, Washington, operating approximately 90 organic and specialty grocery stores in the Pacific Northwest.
Contract Date: August 1, 2022 (MSA).
Term and Renewal: 3-year initial term expiring August 1, 2025; automatic 1-year renewals; 90-day notice of non-renewal.
Estimated Annual Revenue: Approximately $10.2 million (FY2024).
Services: Payment processing (interchange-plus), POS integration, and VeloPay Shield (fraud detection suite).
Change of Control Provision: Section 13.1 requires prior written consent for any Change of Control. Cascadia may terminate on 30 days' notice if consent is not obtained. This contract is one of the 14 material contracts requiring change of control consent.
Assignment Clause: Standard anti-assignment without consent.
Exclusivity/MFN: None.
Governing Law: State of Washington.
Risk Assessment: MODERATE. The 30-day termination period following unconsented change of control is relatively short. VeloPay management reports a positive relationship with Cascadia.
Customer 10: Alderman Digital Media LLC
Counterparty: Alderman Digital Media LLC ("Alderman"), a California limited liability company headquartered in Los Angeles, California, operating a digital content subscription platform with approximately 2.4 million paying subscribers.
Contract Date: October 1, 2020 (MSA).
Term and Renewal: 3-year initial term expired October 1, 2023; currently continuing on a month-to-month basis (neither party provided notice of non-renewal, and the agreement's automatic renewal provision was inadvertently not triggered due to an administrative oversight).
Estimated Annual Revenue: Approximately $9.5 million (FY2024).
Services: Payment processing (interchange-plus and subscription recurring billing), gateway services, and VeloPay Shield.
Change of Control Provision: None.
Assignment Clause: Section 10.1 contains a standard anti-assignment provision without consent. The agreement is silent on change of control.
Exclusivity/MFN: None.
Termination Provisions: Because the agreement is currently operating on a month-to-month basis, either party may terminate upon 30 days' written notice.
Governing Law: State of California.
Risk Assessment: MODERATE. Although there is no change of control provision, the month-to-month status means that either party can terminate on 30 days' notice for any reason. We recommend that VeloPay negotiate a formal renewal of this agreement, ideally for a multi-year term, either before or promptly after the closing of the Transaction. VeloPay management reports that the Alderman relationship is strong and that both parties have been operating under the assumption that the agreement would be renewed; however, no formal amendment or renewal has been executed.
Customer 11: Greystone Property Management, Inc.
Counterparty: Greystone Property Management, Inc. ("Greystone"), a Texas corporation headquartered in Houston, Texas, managing approximately 25,000 residential rental units.
Contract Date: March 1, 2023 (MSA).
Term and Renewal: 3-year initial term expiring March 1, 2026; automatic 1-year renewals; 90-day notice.
Estimated Annual Revenue: Approximately $8.8 million (FY2024).
Services: Payment processing (ACH and credit card) for tenant rent payments; gateway services.
Change of Control Provision: Section 12.2 requires VeloPay to provide written notification within 30 days of any Change of Control. Greystone has a right to terminate within 60 days of receipt of notification if the acquiring entity is a Direct Competitor. HPE Fund IV is not a Direct Competitor. This contract is one of the 14 material contracts requiring notification.
Assignment Clause: Standard anti-assignment.
Exclusivity/MFN: None.
Governing Law: State of Texas.
Risk Assessment: LOW. Notification only; HPE Fund IV not a Direct Competitor.
Customer 12: Ironwood Sports & Entertainment Holdings, Inc.
Counterparty: Ironwood Sports & Entertainment Holdings, Inc. ("Ironwood"), a New York corporation headquartered in New York, New York, operating live entertainment venues and ticketing operations across the eastern United States.
Contract Date: July 1, 2021 (MSA); amended January 15, 2024.
Term and Renewal: 4-year initial term expiring July 1, 2025; automatic 2-year renewals; 120-day notice.
Estimated Annual Revenue: Approximately $8.3 million (FY2024).
Services: Payment processing (interchange-plus), real-time transaction authorization for ticketing, gateway services, and VeloPay Insights.
Change of Control Provision: Section 14.2 requires prior written consent for any Change of Control. Ironwood may terminate on 60 days' notice if consent is not obtained. This contract is one of the 14 material contracts requiring change of control consent.
Assignment Clause: Standard anti-assignment without consent.
Exclusivity/MFN: MFN pricing clause applicable to per-transaction processing fees only.
Governing Law: State of New York.
Risk Assessment: MODERATE. Consent required; VeloPay management reports Ironwood relationship is positive. MFN clause applies to processing fees only and is not expected to be an issue.
Customer 13: Harborline Shipping & Logistics Corp.
Counterparty: Harborline Shipping & Logistics Corp. ("Harborline"), a Delaware corporation headquartered in Jacksonville, Florida, providing freight and logistics services.
Contract Date: December 1, 2022 (MSA).
Term and Renewal: 3-year initial term expiring December 1, 2025; automatic 1-year renewals; 90-day notice.
Estimated Annual Revenue: Approximately $7.6 million (FY2024).
Services: Payment processing (interchange-plus and ACH), gateway services.
Change of Control Provision: None.
Assignment Clause: Section 10.3 contains an anti-assignment provision without consent. No reference to change of control. The reverse triangular merger should not trigger this provision.
Exclusivity/MFN: None.
Governing Law: State of Florida.
Risk Assessment: LOW. No change of control provision; anti-assignment clause should not be implicated.
Customer 14: Westfield Dental Partners, PLLC
Counterparty: Westfield Dental Partners, PLLC ("Westfield"), a Texas professional limited liability company headquartered in San Antonio, Texas, operating approximately 140 dental practice locations.
Contract Date: September 1, 2023 (MSA).
Term and Renewal: 3-year initial term expiring September 1, 2026; automatic 1-year renewals; 90-day notice.
Estimated Annual Revenue: Approximately $7.1 million (FY2024).
Services: Payment processing (credit card and patient financing integration), gateway services.
Change of Control Provision: Section 12.6 requires prior written consent for any Change of Control. Westfield may terminate on 45 days' notice if consent not obtained. This contract is one of the 14 material contracts requiring change of control consent.
Assignment Clause: Standard anti-assignment.
Exclusivity/MFN: None.
Governing Law: State of Texas.
Risk Assessment: MODERATE. Consent required. VeloPay management confident in the relationship.
Customer 15: Timberline Adventure Resorts LLC
Counterparty: Timberline Adventure Resorts LLC ("Timberline"), a Colorado limited liability company headquartered in Denver, Colorado, operating ski resorts and outdoor recreation properties.
Contract Date: November 15, 2022 (MSA).
Term and Renewal: 3-year initial term expiring November 15, 2025; automatic 1-year renewals; 90-day notice.
Estimated Annual Revenue: Approximately $6.9 million (FY2024).
Services: Payment processing (interchange-plus), POS integration for resort retail and lodging, gateway services, and VeloPay Shield.
Change of Control Provision: None.
Assignment Clause: Standard anti-assignment without consent. Silent on change of control.
Exclusivity/MFN: None.
Governing Law: State of Colorado.
Risk Assessment: LOW. No change of control provision.
Customer 16: Pacific Rim Trading Co., Inc.
Counterparty: Pacific Rim Trading Co., Inc. ("Pacific Rim"), a California corporation headquartered in Oakland, California, an import/export trading company.
Contract Date: February 1, 2023 (MSA).
Term and Renewal: 3-year initial term expiring February 1, 2026; automatic 1-year renewals; 90-day notice.
Estimated Annual Revenue: Approximately $6.5 million (FY2024).
Services: Payment processing (interchange-plus and international wire/ACH), gateway services.
Change of Control Provision: Section 13.4 requires notification to Pacific Rim within 30 days of any Change of Control. No consent required and no termination right. This contract is one of the 14 material contracts requiring notification.
Assignment Clause: Standard anti-assignment.
Exclusivity/MFN: None.
Governing Law: State of California.
Risk Assessment: LOW. Notification only.
Customer 17: Fieldstone Agricultural Supply Co.
Counterparty: Fieldstone Agricultural Supply Co. ("Fieldstone"), an Iowa corporation headquartered in Des Moines, Iowa, a farm supply and equipment retailer.
Contract Date: April 15, 2022 (MSA).
Term and Renewal: 4-year initial term expiring April 15, 2026; automatic 1-year renewals; 90-day notice.
Estimated Annual Revenue: Approximately $6.1 million (FY2024).
Services: Payment processing (interchange-plus), gateway services, and VeloPay Insights.
Change of Control Provision: None.
Assignment Clause: Standard anti-assignment without consent. Silent on change of control.
Exclusivity/MFN: None.
Governing Law: State of Iowa.
Risk Assessment: LOW. No change of control provision.
Customer 18: Belmont University Press, Inc.
Counterparty: Belmont University Press, Inc. ("Belmont"), a New York corporation headquartered in New York, New York, an academic publishing house with a direct-to-consumer e-commerce platform.
Contract Date: June 1, 2023 (MSA).
Term and Renewal: 3-year initial term expiring June 1, 2026; automatic 1-year renewals; 90-day notice.
Estimated Annual Revenue: Approximately $5.7 million (FY2024).
Services: Payment processing (interchange-plus and subscription billing), gateway services.
Change of Control Provision: Section 14.5 requires prior written consent of Belmont for any Change of Control. Belmont may terminate on 60 days' notice if consent not obtained. This contract is one of the 14 material contracts requiring change of control consent.
Assignment Clause: Standard anti-assignment.
Exclusivity/MFN: None.
Governing Law: State of New York.
Risk Assessment: MODERATE. Consent required. VeloPay management views this as a straightforward consent.
Customer 19: Maple Leaf Retailers Inc. (Canada)
Counterparty: Maple Leaf Retailers Inc. ("Maple Leaf"), an Ontario corporation headquartered in Toronto, Ontario, Canada, operating approximately 65 retail locations across Ontario and Quebec. This customer is serviced through VeloPay Canada Inc.
Contract Date: August 15, 2022 (MSA with VeloPay Canada Inc.).
Term and Renewal: 3-year initial term expiring August 15, 2025; automatic 1-year renewals; 90-day notice.
Estimated Annual Revenue: Approximately $5.4 million (FY2024, CAD-denominated, converted at average FY2024 exchange rate).
Services: Payment processing (interchange-plus, Canadian card networks), gateway services.
Change of Control Provision: Section 13.6 requires VeloPay Canada Inc. to obtain the prior written consent of Maple Leaf before any Change of Control of VeloPay Canada Inc. or its ultimate parent entity (VeloPay Systems, Inc.). The Merger will result in a change of control of VeloPay Systems, Inc., which is the ultimate parent of VeloPay Canada Inc., and accordingly triggers this provision. This contract is one of the 14 material contracts requiring change of control consent.
Assignment Clause: Standard anti-assignment without consent.
Exclusivity/MFN: None.
Governing Law: Province of Ontario and the federal laws of Canada applicable therein.
Risk Assessment: MODERATE. Consent required. VeloPay management reports a strong relationship with Maple Leaf. The cross-border nature of the consent (involving a Canadian subsidiary and a Canadian counterparty) may require additional coordination.
Customer 20: Brightwater Energy Solutions Corp.
Counterparty: Brightwater Energy Solutions Corp. ("Brightwater"), a Texas corporation headquartered in Austin, Texas, a renewable energy equipment distributor and installer.
Contract Date: January 1, 2024 (MSA).
Term and Renewal: 3-year initial term expiring January 1, 2027; automatic 1-year renewals; 90-day notice.
Estimated Annual Revenue: Approximately $5.2 million (FY2024).
Services: Payment processing (interchange-plus), gateway services.
Change of Control Provision: None.
Assignment Clause: Section 11.2 contains an anti-assignment provision without consent. Silent on change of control. This is one of the 3 customer agreements with anti-assignment provisions but no express change of control clause; the reverse triangular merger should not trigger the anti-assignment provision.
Exclusivity/MFN: None.
Governing Law: State of Texas.
Risk Assessment: LOW. No change of control provision; anti-assignment clause not expected to be implicated.
Customer 21: Crown Royal Hospitality Ltd. (Canada)
Counterparty: Crown Royal Hospitality Ltd. ("Crown Royal"), an Ontario corporation headquartered in Ottawa, Ontario, Canada, operating a chain of boutique hotels. Serviced through VeloPay Canada Inc.
Contract Date: March 1, 2023 (MSA with VeloPay Canada Inc.).
Term and Renewal: 3-year initial term expiring March 1, 2026; automatic 1-year renewals; 90-day notice.
Estimated Annual Revenue: Approximately $4.9 million (FY2024, CAD-denominated, converted at average FY2024 exchange rate).
Services: Payment processing (interchange-plus, Canadian card networks), POS integration, gateway services.
Change of Control Provision: Section 12.8 requires VeloPay Canada Inc. to obtain the prior written consent of Crown Royal before any Change of Control of VeloPay Canada Inc. or its ultimate parent entity. This is triggered by the Merger. This contract is one of the 14 material contracts requiring change of control consent.
Assignment Clause: Standard anti-assignment.
Exclusivity/MFN: None.
Governing Law: Province of Ontario and the federal laws of Canada applicable therein.
Risk Assessment: MODERATE. Consent required. Same cross-border coordination considerations as with Maple Leaf.
Customer 22: Sentinel Security Services, Inc.
Counterparty: Sentinel Security Services, Inc. ("Sentinel"), a Virginia corporation headquartered in Arlington, Virginia, providing commercial security and monitoring services.
Contract Date: October 1, 2022 (MSA).
Term and Renewal: 3-year initial term expiring October 1, 2025; automatic 1-year renewals; 90-day notice.
Estimated Annual Revenue: Approximately $4.7 million (FY2024).
Services: Payment processing (ACH and credit card) for client billing, gateway services.
Change of Control Provision: None.
Assignment Clause: Section 11.4 contains a standard anti-assignment provision without consent. Silent on change of control. This is one of the 3 customer agreements with anti-assignment provisions only.
Exclusivity/MFN: None.
Governing Law: Commonwealth of Virginia.
Risk Assessment: LOW. No change of control provision.
Customer 23: Verona Luxury Brands, Inc.
Counterparty: Verona Luxury Brands, Inc. ("Verona"), a New York corporation headquartered in New York, New York, a luxury fashion and accessories retailer with approximately 25 boutique locations and a significant e-commerce presence.
Contract Date: May 15, 2023 (MSA).
Term and Renewal: 3-year initial term expiring May 15, 2026; automatic 1-year renewals; 90-day notice.
Estimated Annual Revenue: Approximately $4.5 million (FY2024).
Services: Payment processing (interchange-plus), enhanced fraud detection (VeloPay Shield, premium tier), gateway services, and VeloPay Insights.
Change of Control Provision: Section 15.3 requires notification to Verona within 15 business days of any Change of Control. If the acquirer is a Direct Competitor (defined as a provider of payment processing services with annual revenue exceeding $100 million), Verona may terminate on 60 days' notice. HPE Fund IV is a private equity fund and does not provide payment processing services; accordingly, this termination right should not be triggered. This contract is one of the 14 material contracts requiring notification.
Assignment Clause: Standard anti-assignment.
Exclusivity/MFN: None.
Governing Law: State of New York.
Risk Assessment: LOW. Notification only; HPE Fund IV does not meet the Direct Competitor definition.
Customer 24: Trailhead Outdoor Equipment Co.
Counterparty: Trailhead Outdoor Equipment Co. ("Trailhead"), an Oregon corporation headquartered in Portland, Oregon, an outdoor recreation equipment retailer with approximately 40 retail locations and an e-commerce platform.
Contract Date: November 1, 2023 (MSA).
Term and Renewal: 3-year initial term expiring November 1, 2026; automatic 1-year renewals; 90-day notice.
Estimated Annual Revenue: Approximately $4.3 million (FY2024).
Services: Payment processing (interchange-plus), gateway services.
Change of Control Provision: None.
Assignment Clause: Standard anti-assignment without consent. Silent on change of control.
Exclusivity/MFN: None.
Governing Law: State of Oregon.
Risk Assessment: LOW. No change of control provision.
Customer 25: Keystone Industrial Parts, Inc.
Counterparty: Keystone Industrial Parts, Inc. ("Keystone"), a Pennsylvania corporation headquartered in Pittsburgh, Pennsylvania, a distributor of industrial equipment and replacement parts with a significant B2B e-commerce platform.
Contract Date: July 1, 2023 (MSA).
Term and Renewal: 3-year initial term expiring July 1, 2026; automatic 1-year renewals; 90-day notice.
Estimated Annual Revenue: Approximately $4.0 million (FY2024).
Services: Payment processing (interchange-plus), B2B invoicing integration, gateway services.
Change of Control Provision: None.
Assignment Clause: Section 10.6 contains a standard anti-assignment provision without consent. Silent on change of control. This is the third of the 3 customer agreements with anti-assignment provisions but no express change of control clause.
Exclusivity/MFN: None.
Governing Law: Commonwealth of Pennsylvania.
Risk Assessment: LOW. No change of control provision; anti-assignment clause not expected to be implicated.
C. Summary Table — Change of Control Provisions in Top 25 Customer Agreements
The following table summarizes the change of control provisions in VeloPay's top 25 customer agreements. Contracts requiring action in connection with the Transaction are highlighted.
Summary: Of the top 25 customer agreements, 14 contracts require action in connection with the Transaction: 8 require prior written consent from the counterparty; 4 require notification only (2 of which include a termination right triggered only if the acquirer is a Direct Competitor); and 2 additional Canadian contracts require consent with respect to changes in control of the ultimate parent entity. The remaining 11 contracts contain either no change of control provision or only standard anti-assignment clauses that are not expected to be triggered by the reverse triangular merger.
Cross-reference to the Change of Control Consent Tracker (maintained separately by Derek Okonkwo), which includes detailed counterparty contact information, proposed consent request language, and status tracking for all 14 material contracts and additional flagged agreements.
V. Key Vendor and Supplier Contracts
A. Overview. VeloPay's operations depend on approximately 40 significant vendor relationships across multiple service categories, including cloud infrastructure and hosting, card network sponsorship and processing, banking and settlement, telecommunications and network services, fraud detection and data analytics, and professional services and consulting. VeloPay's total annual vendor spend is approximately $185 million, representing a significant portion of the Company's cost structure.
The following sections summarize the key vendor and supplier contracts that are material to VeloPay's operations and relevant to the Transaction. As with the customer agreements, our analysis focuses on change of control provisions, assignment restrictions, termination rights, exclusivity obligations, and other provisions that may be implicated by the Merger.
B. Cloud Infrastructure Agreement
Counterparty: Stratosphere Cloud Services, Inc. ("Stratosphere"), a Delaware corporation headquartered in Reston, Virginia, a major cloud computing and managed services provider.
Contract Date: January 1, 2023 (Enterprise Cloud Services Agreement, or "ECSA").
Term and Renewal: The ECSA has a 5-year initial term expiring December 31, 2027, with approximately 3 years remaining as of the date of this memorandum. The agreement provides for automatic 2-year renewal periods unless either party provides at least 180 days' prior written notice of non-renewal.
Annual Spend: Approximately $31 million (FY2024), making Stratosphere VeloPay's single largest vendor by annual spend.
Services: Stratosphere provides cloud hosting, compute instances, storage, managed database services, content delivery network ("CDN") services, and disaster recovery/business continuity infrastructure for VeloPay's entire payment processing platform. VeloPay's production environment, development and staging environments, and data backup and archival systems are all hosted on Stratosphere's infrastructure.
Change of Control Provision: The ECSA does not contain a change of control termination right. There is no provision requiring VeloPay to notify Stratosphere or obtain Stratosphere's consent in connection with a change of control of VeloPay. This is a favorable finding, given the criticality of the Stratosphere relationship to VeloPay's operations.
Assignment Clause: Section 15.2 of the ECSA provides that neither party may assign the agreement without the prior written consent of the other party, except that either party may assign the agreement to an affiliate or in connection with a merger, acquisition, or sale of all or substantially all of its assets, provided the assignee assumes all obligations under the agreement. The reverse triangular merger, in which VeloPay survives as the contracting party, does not constitute an assignment. In any event, the affiliate and M&A carve-out would appear to permit assignment even if the Merger were construed as one.
Volume Commitment: Section 7.1 requires VeloPay to maintain a minimum annual spend commitment of $28 million. If VeloPay's actual spend in any contract year falls below the minimum commitment, VeloPay is required to pay a shortfall fee equal to the difference between the minimum commitment and actual spend. VeloPay management reports that actual spend has exceeded the minimum commitment in every year since the ECSA's inception, and the Company does not anticipate any risk of shortfall.
Pricing: Pricing is based on published rate cards with negotiated enterprise discounts. Annual escalation is capped at 3% per year. VeloPay management reports that the Stratosphere pricing is competitive relative to market alternatives.
Data Handling: The ECSA includes a comprehensive Data Processing Addendum ("DPA") that governs Stratosphere's handling of VeloPay's data. Under the DPA, all data processed or stored by Stratosphere in connection with VeloPay's services remains the sole property of VeloPay. Stratosphere may not access, use, or disclose VeloPay's data except as necessary to perform the services or as required by applicable law. The DPA includes industry-standard provisi

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