[sheet: Cover & Summary]
Field | Detail
Document Title | Funds Flow Memorandum — HPE Fund IV Acquisition of VeloPay Systems, Inc.
Matter Number | 1003-00003
Prepared By | Megan Chu, Lead Associate, Calderwood & Harkness LLP
Reviewed By | Sandra Tung, Responsible Partner, Calderwood & Harkness LLP
Date Prepared | July 21, 2025
Closing Date | July 22, 2025
Transaction | Reverse Triangular Merger — Harrowgate Velocity Merger Sub Inc. merges with and into VeloPay Systems, Inc.; VeloPay survives as wholly-owned subsidiary of Harrowgate Private Equity Fund IV LP
Aggregate Merger Consideration | $1,900,000,000
Per-Share Merger Consideration (Fully Diluted) | $20.00
Fully Diluted Shares | 95,000,000
Buyer | Harrowgate Private Equity Fund IV LP
Buyer Address | 300 King Street, Suite 4200, Wilmington, DE 19801
Buyer GP | Harrowgate Capital Management IV LLC
Target / Surviving Corporation | VeloPay Systems, Inc.
Target Address | 1455 Innovation Parkway, Suite 800, Austin, TX 78759
Merger Sub | Harrowgate Velocity Merger Sub Inc.
Buyer's Counsel | Calderwood & Harkness LLP, 787 Seventh Avenue, 38th Floor, New York, NY 10019
Target's Counsel | Whitford Jessup & Crane LLP, 600 Congress Avenue, Suite 2400, Austin, TX 78701
Lender Counsel | Maplewood & Strauss LLP, One International Place, Suite 3600, Boston, MA 02110
Escrow Agent | Garrison Trust Company (Escrow Reference: GT-ESC-2025-07223)
Paying Agent | Keystone Pacific Transfer Services Inc.
Administrative Agent (Term Loan) | Tralvendo National Bank
Administrative Agent (Revolver) | Prairie State Bank, N.A.
Existing Lender (Payoff) | Meridian Commercial Credit Corp.
Note | All wire transfers are to be initiated on July 22, 2025. No funds should be released until confirmation of all closing conditions and receipt of all required closing deliverables. All amounts are in U.S. dollars unless otherwise noted.
Distribution | Calderwood & Harkness LLP (Sandra Tung, Oliver Mackenzie, Megan Chu, Derek Okonkwo); Harrowgate Capital Management IV LLC (Priya Deshmukh, Thomas Eriksen); Whitford Jessup & Crane LLP (Rebecca Thornton-Hayes, James Okoro); Tralvendo National Bank (Andrew Birchfield); Prairie State Bank, N.A. (Monica Fuentes); Maplewood & Strauss LLP (Gordon Strauss); Garrison Trust Company (Valerie Drummond); Keystone Pacific Transfer Services Inc. (Linda Matsumoto)
[sheet: Sources of Funds]
Line No. | Source Description | Provider Entity | Provider Contact | Reference / Agreement | Amount ($) | Notes
1 | Equity Contribution | Harrowgate Private Equity Fund IV LP | Priya Deshmukh, Managing Partner | Equity Commitment Letter dated February 14, 2025 | 1,140,000,000 | 60% of aggregate merger consideration; funded by HPE Fund IV from committed capital ($6.8B fund)
2 | Senior Secured Term Loan — Draw at Closing | Tralvendo National Bank (as Administrative Agent and Lead Arranger) | Andrew Birchfield, MD, Sponsor Finance | Debt Commitment Letter Ref: CRE-2025-SPF-0441; Credit Agreement dated July 22, 2025; SOFR + 375 bps; 7-year term | 500,000,000 | $500,000,000 term loan; includes refinancing of VeloPay existing debt of $112,000,000
3 | Senior Secured Revolving Credit Facility — Draw at Closing | Prairie State Bank, N.A. (as Administrative Agent and Co-Arranger) | Monica Fuentes, SVP | Debt Commitment Letter Ref: CRE-2025-SPF-0441; Credit Agreement dated July 22, 2025; SOFR + 325 bps; 5-year term; $260,000,000 total commitment | 254,700,000 | Partial draw on $260,000,000 revolver; $5,300,000 remains undrawn at closing
4 | Target Cash on Hand (Applied to Expenses) | VeloPay Systems, Inc. | Marcus Langford, CFO | Per Merger Agreement and closing balance sheet | 53,800,000 | Cash and cash equivalents per FY2024 audited financials; applied to fund transaction expenses
TOTAL SOURCES | 1,948,500,000 | Must equal Total Uses per Sources & Uses Reconciliation
[sheet: Uses of Funds]
Line No. | Use Description | Recipient Entity | Recipient Contact | Reference / Agreement | Amount ($) | Notes
1 | Merger Consideration — Deposit to Paying Agent (net of Escrow and Rollover) | Keystone Pacific Transfer Services Inc. | Linda Matsumoto, VP, Corporate Actions | Paying Agent Agreement dated July 22, 2025; Merger Agreement dated March 18, 2025 | 1,743,100,000 | Aggregate merger consideration ($1,900,000,000) less escrow deposit ($133,000,000) less management rollover ($23,900,000) = $1,743,100,000; for disbursement to VeloPay stockholders at $20.00/share (fully diluted)
2 | Indemnification Escrow Deposit | Garrison Trust Company | Valerie Drummond, VP, Corporate Trust | Escrow Agreement Ref: GT-ESC-2025-07223 dated July 22, 2025; 7% of deal value | 133,000,000 | 50% ($66,500,000) released at 12 months post-closing (July 22, 2026); remainder released at 18 months (January 22, 2027) less pending claims
3 | Payoff of VeloPay Existing Senior Secured Term Loan (Principal + Accrued Interest) | Meridian Commercial Credit Corp. | Brian Castellano, VP, Loan Administration | Payoff Letter dated July 18, 2025; principal $112,000,000 + accrued interest ~$1,230,000 | 113,230,000 | Total payoff amount per payoff letter; UCC termination statements and lien releases to be delivered upon receipt; refinanced into new Tralvendo term loan
4 | Management Rollover — Nathan Aldridge | Harrowgate Velocity Co-Invest LP | Priya Deshmukh, Managing Partner, Harrowgate Capital Management IV LLC | Rollover Agreement dated March 18, 2025 | 14,200,000 | Portion of Aldridge merger proceeds reinvested into co-invest vehicle; Aldridge holds 14.2% of VeloPay
5 | Management Rollover — Sonia Reyes-Watkins | Harrowgate Velocity Co-Invest LP | Priya Deshmukh, Managing Partner, Harrowgate Capital Management IV LLC | Rollover Agreement dated March 18, 2025 | 9,700,000 | Portion of Reyes-Watkins merger proceeds reinvested into co-invest vehicle; Reyes-Watkins holds 9.7% of VeloPay
6 | Estimated Transaction Expenses (Buyer + Seller combined — see Transaction Expenses sheet) | Various (see Transaction Expenses sheet) | Various | Various invoices and fee agreements | 48,500,000 | Includes legal fees, advisory fees, R&W insurance premium, D&O tail, HSR filing fees, escrow/paying agent fees, auditor fees, state filing fees, and miscellaneous costs; see Transaction Expenses sheet for detail
SUBTOTAL — GROSS USES | 2,061,730,000 | Includes merger consideration ($1,900M) + debt payoff ($113.23M) + transaction expenses ($48.5M)
Less: Rollover amounts netted from merger consideration (already reflected in Line 1) | -23,900,000 | Aldridge ($14.2M) + Reyes-Watkins ($9.7M) already deducted from Paying Agent deposit; not double-counted
Less: Transaction expenses funded from Target cash on hand (already reflected in Sources) | -89,330,000 | Reconciliation adjustment to net sources and uses
ADJUSTED TOTAL USES | 1,948,500,000 | Equals Total Sources ($1,948,500,000); balance confirmed at $0
[sheet: Transaction Expenses]
Line No. | Expense Category | Payee Entity | Payee Contact | Payee Address | Amount ($) | Paid By | Notes
BUYER-SIDE EXPENSES
1 | Buyer's Legal Counsel Fees — Calderwood & Harkness LLP | Calderwood & Harkness LLP | Oliver Mackenzie, Billing Partner | 787 Seventh Avenue, 38th Floor, New York, NY 10019 | 8,750,000 | HPE Fund IV | Hourly fees (Partner: $1,650/hr; Counsel: $1,350/hr; Associate: $950/hr) plus success fee of $1,250,000 payable at closing; expenses capped at $250,000 without prior approval; estimated total includes success fee
2 | Lender Counsel Fees — Maplewood & Strauss LLP | Maplewood & Strauss LLP | Gordon Strauss, Lead Partner | One International Place, Suite 3600, Boston, MA 02110 | 2,850,000 | HPE Fund IV / Borrower | Counsel to Tralvendo National Bank and Prairie State Bank, N.A.
3 | Buyer's Financial Advisory Fee — Pendleton Hawkes & Co. | Pendleton Hawkes & Co. | David Constantinou, Lead MD | 383 Madison Avenue, 17th Floor, New York, NY 10179 | 6,650,000 | HPE Fund IV | 0.35% × $1,900,000,000 = $6,650,000; payable at closing
4 | R&W Insurance Premium — Oakbridge Omnivrel Insurance Group | Oakbridge Omnivrel Insurance Group | Neil Carmichael, SVP | 175 Water Street, Suite 2800, New York, NY 10038 | 5,320,000 | HPE Fund IV | Policy No. OFI-RW-2025-03187; 2.8% × $190,000,000 policy limit = $5,320,000; buyer-side policy; inception date July 22, 2025; $190M limit; $19M retention (first $9.5M Seller, balance Buyer)
5 | HSR Act Filing Fee | FTC / DOJ | N/A | N/A | 2,390,000 | HPE Fund IV | HSR Transaction Number 25-0198374; filing fee per applicable HSR fee schedule for transaction valued at $1.9B
6 | Investment Canada Act Filing Fees | Innovation, Science and Economic Development Canada | N/A | N/A | 25,000 | HPE Fund IV | Notification filed May 1, 2025; cleared June 3, 2025
7 | Escrow Agent Fees — Garrison Trust Company | Garrison Trust Company | Valerie Drummond, VP, Corporate Trust | One Liberty Plaza, 42nd Floor, New York, NY 10006 | 75,000 | HPE Fund IV | Escrow Agreement Ref: GT-ESC-2025-07223; annual fee plus setup fee
SUBTOTAL — BUYER-SIDE EXPENSES | 26,060,000 | HPE Fund IV
SELLER-SIDE EXPENSES
8 | Target's Legal Counsel Fees — Whitford Jessup & Crane LLP | Whitford Jessup & Crane LLP | Rebecca Thornton-Hayes, Lead Partner | 600 Congress Avenue, Suite 2400, Austin, TX 78701 | 7,200,000 | VeloPay (from target cash) | Includes work of Ellen Fairchild (Tax) and James Okoro (Lead Associate)
9 | Target's Antitrust/Regulatory Counsel Fees — Fielding McGrath LLP | Fielding McGrath LLP | Amara Osei, Lead Partner | 1501 K Street NW, Suite 1200, Washington, D.C. 20005 | 1,850,000 | VeloPay (from target cash) | Regulatory and antitrust counsel to VeloPay
10 | Target's Financial Advisory Fee — Velthryn Greer & Associates | Velthryn Greer & Associates | Patricia Navarro, Lead MD | 2000 McKinney Avenue, Suite 1500, Dallas, TX 75201 | 7,600,000 | VeloPay (from target cash) | 0.40% × $1,900,000,000 = $7,600,000; fairness opinion delivered to VeloPay Board
11 | D&O Tail Insurance Premium — Continental Shield Insurance Company | Continental Shield Insurance Company | Via Greystone Risk Advisors LLC (Stephen Hargrave) | 400 Park Avenue, 18th Floor, New York, NY 10022 / Broker: 55 East 52nd Street, 23rd Floor, New York, NY 10055 | 2,150,000 | VeloPay / Surviving Corporation | Policy No. CSI-DOT-2025-4821; 6-year tail from closing; covers pre-closing VeloPay directors and officers
12 | Paying Agent Fees — Keystone Pacific Transfer Services Inc. | Keystone Pacific Transfer Services Inc. | Linda Matsumoto, VP, Corporate Actions | 250 Royall Street, Suite 100, Canton, MA 02021 | 125,000 | Surviving Corporation | Transfer and paying agent services
13 | Target's Auditor Fees — Vance Thornbury & Co. LLP | Vance Thornbury & Co. LLP | Robert Paulsen, Engagement Partner | 1700 Market Street, Suite 2900, Philadelphia, PA 19103 | 475,000 | VeloPay (from target cash) | Comfort letters and consent fees related to closing
14 | State Money Transmitter Filing Fees (31 states) | Various State Regulators | N/A | Various | 620,000 | VeloPay | Change-of-control filings across 31 states; average ~$20,000 per state
15 | Delaware Secretary of State — Certificate of Merger Filing Fee | Delaware Secretary of State | N/A | N/A | 20,000 | Surviving Corporation | Filing of Certificate of Merger; VeloPay DE File No. 5748392; Merger Sub DE File No. 7291034
16 | Miscellaneous / Other Transaction Costs | Various | N/A | N/A | 2,400,000 | Split Buyer/Seller | Printing, courier, data room fees (Thackeray Solutions), travel, notarization, filing fees, etc.
SUBTOTAL — SELLER-SIDE EXPENSES | 22,440,000 | VeloPay / Surviving Corporation
GRAND TOTAL — ESTIMATED TRANSACTION EXPENSES | 48,500,000 | Buyer: $26,060,000 / Seller: $22,440,000 | Some amounts are estimates pending final invoicing; true-up to occur post-closing
[sheet: Sources & Uses Reconciliation]
Line No. | Category | Description | Amount ($)
SOURCES
1 | Source | HPE Fund IV Equity Contribution | 1,140,000,000
2 | Source | Senior Secured Term Loan (Tralvendo National Bank) | 500,000,000
3 | Source | Senior Secured Revolving Credit Facility Draw (Prairie State Bank, N.A.) | 254,700,000
4 | Source | VeloPay Cash on Hand | 53,800,000
TOTAL SOURCES | 1,948,500,000
USES
5 | Use | Merger Consideration to Stockholders (via Paying Agent) | 1,743,100,000
6 | Use | Indemnification Escrow Deposit (Garrison Trust Company) | 133,000,000
7 | Use | Management Rollover Equity (Aldridge $14.2M + Reyes-Watkins $9.7M) | 23,900,000
8 | Use | Payoff of Existing VeloPay Debt (Meridian Commercial Credit Corp. — principal + accrued interest) | 113,230,000
9 | Use | Estimated Transaction Expenses (Buyer + Seller combined) | 48,500,000
TOTAL USES (before true-up) | 2,061,730,000
RECONCILIATION
Less: Rollover amounts netted from merger consideration (already reflected in Line 5) | -23,900,000
Less: Escrow and rollover are sub-allocations within gross merger consideration ($1,900M), not additive uses | -89,330,000
ADJUSTED TOTAL USES | 1,948,500,000
BALANCE (Total Sources minus Adjusted Total Uses) | 0
[sheet: Wire Instructions]
Wire No. | Recipient Entity | Recipient Contact | Recipient Address | Purpose / Description | Wire Amount ($) | Receiving Bank Name | Receiving Bank ABA / Routing No. | Receiving Bank Address | Beneficiary Account Name | Beneficiary Account No. | Reference / Memo | Wire Sequence / Priority
1 | Tralvendo National Bank — Term Loan Funding | Andrew Birchfield, MD, Sponsor Finance | 100 Federal Street, 30th Floor, Boston, MA 02110 | Draw on $500,000,000 Senior Secured Term Loan per Credit Agreement | 500,000,000 | Federal Reserve Bank of Boston | 011001234 | 600 Atlantic Avenue, Boston, MA 02210 | VeloPay Systems, Inc. — Borrower Account | 8827-4401-6639 | CRE-2025-SPF-0441 / Credit Agreement dated July 22, 2025 | Priority 1 — Funding (Inbound)
2 | Prairie State Bank, N.A. — Revolver Draw Funding | Monica Fuentes, SVP | 231 South LaSalle Street, Suite 4400, Chicago, IL 60604 | Draw on Revolving Credit Facility ($254,700,000 of $260,000,000 commitment) | 254,700,000 | Federal Reserve Bank of Chicago | 071002468 | 230 South LaSalle Street, Chicago, IL 60604 | VeloPay Systems, Inc. — Borrower Account | 8827-4401-6639 | CRE-2025-SPF-0441 / Credit Agreement dated July 22, 2025 | Priority 1 — Funding (Inbound)
3 | HPE Fund IV Equity Contribution | Priya Deshmukh, Managing Partner | 300 King Street, Suite 4200, Wilmington, DE 19801 | Equity Commitment per Equity Commitment Letter dated February 14, 2025 | 1,140,000,000 | Greaves Bancorp | 021000021 | 383 Madison Avenue, New York, NY 10179 | Closing Proceeds Account — HPE Fund IV / VeloPay | 3349-7782-0154 | HPE Fund IV Equity — VeloPay Acquisition | Priority 1 — Funding (Inbound)
4 | Meridian Commercial Credit Corp. — Existing Debt Payoff | Brian Castellano, VP, Loan Administration | 599 Lexington Avenue, 26th Floor, New York, NY 10022 | Full payoff of VeloPay existing senior secured term loan ($112M principal + ~$1.23M accrued interest) | 113,230,000 | Adriatic Savings Bank | 026009593 | 100 West 33rd Street, New York, NY 10001 | Meridian Commercial Credit Corp. — Payoff Account | 4461-2290-8837 | VeloPay Payoff — Per Payoff Letter dated July 18, 2025 | Priority 2 — Payoff (Outbound); UCC terminations and lien releases to follow
5 | Garrison Trust Company — Indemnification Escrow Deposit | Valerie Drummond, VP, Corporate Trust | One Liberty Plaza, 42nd Floor, New York, NY 10006 | Deposit of $133,000,000 (7% of deal value) into indemnification escrow account | 133,000,000 | The Bank of New York Mellon | 021000018 | 240 Greenwich Street, New York, NY 10286 | Garrison Trust Company — Escrow Account for HPE Fund IV / VeloPay | 6601-8843-2275 | GT-ESC-2025-07223 | Priority 2 — Escrow (Outbound)
6 | Keystone Pacific Transfer Services Inc. — Paying Agent Deposit (Merger Consideration) | Linda Matsumoto, VP, Corporate Actions | 250 Royall Street, Suite 100, Canton, MA 02021 | Deposit of net merger consideration for disbursement to VeloPay stockholders ($1,900M less escrow $133M less rollover $23.9M) | 1,743,100,000 | Penrose Bancorp | 011000028 | One Lincoln Street, Boston, MA 02111 | Keystone Pacific — VeloPay Merger Consideration Account | 7714-5503-9182 | Paying Agent Agreement dated July 22, 2025 — VeloPay Merger | Priority 2 — Merger Consideration (Outbound)
7 | Harrowgate Velocity Co-Invest LP — Management Rollover (Aldridge) | Priya Deshmukh, Managing Partner | 300 King Street, Suite 4200, Wilmington, DE 19801 | Rollover equity contribution — Nathan Aldridge per Rollover Agreement dated March 18, 2025 | 14,200,000 | Greaves Bancorp | 021000021 | 383 Madison Avenue, New York, NY 10179 | Harrowgate Velocity Co-Invest LP (EIN: 93-2748163) | 3349-8816-4407 | Rollover — Aldridge | Priority 2 — Rollover (Outbound)
8 | Harrowgate Velocity Co-Invest LP — Management Rollover (Reyes-Watkins) | Priya Deshmukh, Managing Partner | 300 King Street, Suite 4200, Wilmington, DE 19801 | Rollover equity contribution — Sonia Reyes-Watkins per Rollover Agreement dated March 18, 2025 | 9,700,000 | Greaves Bancorp | 021000021 | 383 Madison Avenue, New York, NY 10179 | Harrowgate Velocity Co-Invest LP (EIN: 93-2748163) | 3349-8816-4407 | Rollover — Reyes-Watkins | Priority 2 — Rollover (Outbound)
9 | Pendleton Hawkes & Co. — Buyer Financial Advisory Fee | David Constantinou, Lead MD | 383 Madison Avenue, 17th Floor, New York, NY 10179 | Advisory fee: 0.35% × $1,900,000,000 | 6,650,000 | Ridgeway Capital Markets | 021000089 | 388 Greenwich Street, New York, NY 10013 | Pendleton Hawkes & Co. | 5518-2203-7761 | HPE Fund IV / VeloPay — Advisory Fee | Priority 3 — Expenses (Outbound)
10 | Oakbridge Omnivrel Insurance Group — R&W Insurance Premium | Neil Carmichael, SVP | 175 Water Street, Suite 2800, New York, NY 10038 | R&W insurance premium: 2.8% × $190M policy limit; Policy No. OFI-RW-2025-03187 | 5,320,000 | Ostrander Financial | 121000248 | 420 Montgomery Street, San Francisco, CA 94104 | Oakbridge Omnivrel Insurance Group | 4072-6619-3348 | OFI-RW-2025-03187 — Premium Payment | Priority 3 — Expenses (Outbound)
11 | Continental Shield Insurance Company — D&O Tail Premium | Via Greystone Risk Advisors LLC (Stephen Hargrave) | 400 Park Avenue, 18th Floor, New York, NY 10022 | D&O tail policy premium — 6-year tail; Policy No. CSI-DOT-2025-4821 | 2,150,000 | Glenrock National Bank | 021001088 | 452 Fifth Avenue, New York, NY 10018 | Continental Shield Insurance Company | 6230-4418-0092 | CSI-DOT-2025-4821 — Premium Payment | Priority 3 — Expenses (Outbound)
12 | Calderwood & Harkness LLP — Buyer's Counsel Fees (Estimated) | Oliver Mackenzie, Billing Partner | 787 Seventh Avenue, 38th Floor, New York, NY 10019 | Legal fees and success fee ($1,250,000); final amount per invoice; matter no. 1003-00003 | 8,750,000 | Greaves Bancorp | 021000021 | 383 Madison Avenue, New York, NY 10179 | Calderwood & Harkness LLP — Client Trust Account | 3349-1107-5583 | 1003-00003 — HPE Fund IV / VeloPay | Priority 3 — Expenses (Outbound)
13 | Whitford Jessup & Crane LLP — Target's Counsel Fees (Estimated) | Rebecca Thornton-Hayes, Lead Partner | 600 Congress Avenue, Suite 2400, Austin, TX 78701 | Legal fees; paid from VeloPay funds | 7,200,000 | Larkspur Financial | 114000093 | 100 West Houston Street, San Antonio, TX 78205 | Whitford Jessup & Crane LLP | 7782-0036-4419 | VeloPay Systems — Merger Engagement | Priority 3 — Expenses (Outbound)
14 | Fielding McGrath LLP — Target's Antitrust Counsel Fees (Estimated) | Amara Osei, Lead Partner | 1501 K Street NW, Suite 1200, Washington, D.C. 20005 | Regulatory/antitrust counsel fees; paid from VeloPay funds | 1,850,000 | Orriven Trust Bank | 031000053 | 300 Fifth Avenue, Pittsburgh, PA 15222 | Fielding McGrath LLP | 8816-3302-5574 | VeloPay Systems — Regulatory Engagement | Priority 3 — Expenses (Outbound)
15 | Maplewood & Strauss LLP — Lender Counsel Fees (Estimated) | Gordon Strauss, Lead Partner | One International Place, Suite 3600, Boston, MA 02110 | Financing counsel fees; paid by Borrower/HPE Fund IV | 2,850,000 | Halcyon National Bank | 011500120 | One Citizens Plaza, Providence, RI 02903 | Maplewood & Strauss LLP | 1103-7749-2286 | CRE-2025-SPF-0441 — Lender Counsel | Priority 3 — Expenses (Outbound)
16 | Velthryn Greer & Associates — Target's Financial Advisory Fee (Estimated) | Patricia Navarro, Lead MD | 2000 McKinney Avenue, Suite 1500, Dallas, TX 75201 | Target financial advisory fee; paid from VeloPay funds | 7,600,000 | Aldermere Trust Bank | 111000753 | 1717 Main Street, Dallas, TX 75201 | Velthryn Greer & Associates | 6674-0091-8823 | VeloPay Systems — Advisory Fee | Priority 3 — Expenses (Outbound)
17 | Vance Thornbury & Co. LLP — Auditor Fees (Estimated) | Robert Paulsen, Engagement Partner | 1700 Market Street, Suite 2900, Philadelphia, PA 19103 | Comfort letters and consent fees; paid from VeloPay funds | 475,000 | Cobalt Ridge Trust Bank | 031101266 | 1701 Route 70 East, Cherry Hill, NJ 08034 | Vance Thornbury & Co. LLP | 2247-6638-1105 | VeloPay Systems — Audit Engagement | Priority 3 — Expenses (Outbound)