REPRESENTATIONS AND WARRANTIES INSURANCE APPLICATION

REPRESENTATIONS AND WARRANTIES INSURANCE APPLICATION
Named Submission
Submitted to:
Oakbridge Omnivrel Insurance Group 175 Water Street, Suite 2800 New York, NY 10038
Attention: Neil Carmichael, Senior Vice President
Submitted by:
Calderwood & Harkness LLP 787 Seventh Avenue, 38th Floor New York, NY 10019
On behalf of
Harrowgate Private Equity Fund IV LP
Date: February 21, 2025
Matter Reference: Calderwood & Harkness Matter No. 1003-00003
CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT
This submission supersedes the no-names submission delivered on February 10, 2025 and constitutes the named submission for purposes of underwriting. This document is protected by the attorney-client privilege and the work product doctrine. Distribution is limited to Oakbridge Omnivrel Insurance Group and its authorized representatives for the sole purpose of evaluating the representations and warranties insurance application described herein.
Right-click to update Table of Contents
I. INTRODUCTION AND OVERVIEW
1.1 Purpose of Submission
Calderwood & Harkness LLP ("Calderwood & Harkness" or "Counsel"), acting as outside legal counsel to Harrowgate Private Equity Fund IV LP ("HPE Fund IV" or the "Buyer"), respectfully submits this named representations and warranties insurance application to Oakbridge Omnivrel Insurance Group ("Oakbridge" or the "Insurer") in connection with the Buyer's proposed acquisition of VeloPay Systems, Inc. ("VeloPay" or the "Target"). This named submission supersedes in its entirety the no-names submission that was delivered by Calderwood & Harkness to Oakbridge on February 10, 2025, and constitutes the named submission for purposes of the Insurer's underwriting process.
The Buyer seeks a buyer-side representations and warranties insurance policy (the "Policy") to supplement the indemnification protections that will be available to the Buyer under the definitive Agreement and Plan of Merger (the "Merger Agreement") to be entered into between HPE Fund IV, Harrowgate Velocity Merger Sub Inc. ("Merger Sub"), and VeloPay. The proposed Policy is intended to provide the Buyer with additional protection against losses arising from breaches of the representations and warranties made by VeloPay in the Merger Agreement, beyond the indemnification escrow and other contractual remedies available to the Buyer.
The requested policy limit is $190,000,000, representing ten percent (10%) of the aggregate merger consideration of $1,900,000,000. The proposed retention (self-insured amount) is $19,000,000, representing one percent (1%) of the aggregate deal value. The retention is structured such that the first $9,500,000 will be borne by the Seller through the indemnification escrow established under the Merger Agreement, and the remaining $9,500,000 will be borne by the Buyer. This retention structure is consistent with current market practice for transactions of this size and profile.
This submission contains a comprehensive summary of the proposed transaction, the parties involved, the terms of the Merger Agreement (in current draft form), the due diligence scope and methodology employed by the Buyer and its advisors, the key due diligence findings and risk areas identified to date, and the requested Policy terms. Supporting documentation is included in the Exhibits and Attachments referenced in Section X below.
1.2 Contact Information
All correspondence and communications regarding this application should be directed to the following individuals:
Primary Contact:
Sandra Tung, Partner Calderwood & Harkness LLP 787 Seventh Avenue, 38th Floor New York, NY 10019 Telephone: (212) 558-4100
Email: stung@calderwoodharkness.com
Secondary Contact:
Megan Chu, Associate Calderwood & Harkness LLP 787 Seventh Avenue, 38th Floor New York, NY 10019 Telephone: (212) 558-4237
Email: mchu@calderwoodharkness.com
Client Contact:
Priya Deshmukh, Managing Partner, Fund IV Harrowgate Capital Management IV LLC 300 King Street, Suite 4200 Wilmington, DE 19801 Telephone: (302) 427-8800
Email: pdeshmukh@harrowgatecapital.com
Transaction Lead:
Thomas Eriksen, Partner, Head of Financial Technology Harrowgate Capital Management IV LLC 300 King Street, Suite 4200 Wilmington, DE 19801 Telephone: (302) 427-8815
Email: teriksen@harrowgatecapital.com
1.3 Buyer's Financial Advisor
The Buyer has retained Pendleton Hawkes & Co. as its financial advisor in connection with the proposed transaction. Pendleton Hawkes has conducted, and continues to conduct, financial and commercial due diligence in parallel with Calderwood & Harkness's legal due diligence efforts.
Pendleton Hawkes & Co. 383 Madison Avenue, 17th Floor New York, NY 10179
Lead Managing Director: David Constantinou Telephone: (212) 403-7500
Email: dconstantinou@pendletonhawkes.com
II. TRANSACTION SUMMARY
2.1 Transaction Structure
The proposed transaction will be structured as a reverse triangular merger pursuant to Section 251 of the Delaware General Corporation Law (the "DGCL"). In the merger, Harrowgate Velocity Merger Sub Inc. ("Merger Sub"), a newly formed Delaware corporation and wholly-owned subsidiary of HPE Fund IV, will merge with and into VeloPay Systems, Inc. At the effective time of the merger (the "Effective Time"), VeloPay will survive as the surviving corporation and will become a wholly-owned subsidiary of HPE Fund IV. Merger Sub will cease to exist at the Effective Time. At the Effective Time, each outstanding share of VeloPay common stock (other than shares owned by VeloPay, HPE Fund IV, Merger Sub, or any of their respective subsidiaries, and shares held by stockholders who have properly exercised and perfected appraisal rights under Section 262 of the DGCL) will be cancelled and converted into the right to receive the per-share merger consideration described in Section 2.3 below.
The reverse triangular merger structure was selected to preserve VeloPay's existing contracts, licenses, permits, and regulatory authorizations, which is of particular importance given VeloPay's money transmitter licenses across forty-seven states and the District of Columbia. By causing VeloPay to survive the merger as the continuing legal entity, the transaction minimizes the risk of contractual assignment issues and facilitates the continuation of VeloPay's regulatory approvals, subject to any required change of control notifications and approvals described in this submission.
Merger Sub will be incorporated as a Delaware corporation under the laws of the State of Delaware. Incorporation is scheduled for February 24, 2025 and is expected to occur prior to the signing of the Merger Agreement. The registered agent for Merger Sub will be Capitol Registered Agents LLC, located at 1209 Orange Street, Wilmington, Delaware 19801. Merger Sub has been formed solely for the purpose of effectuating the reverse triangular merger described herein and will not conduct any business or operations prior to the closing of the merger.
2.2 Parties
2.2.1 Buyer.  
Full Legal Name: Harrowgate Private Equity Fund IV LP
Entity Type: Delaware limited partnership
General Partner: Harrowgate Capital Management IV LLC, a Delaware limited liability company
Headquarters: 300 King Street, Suite 4200, Wilmington, DE 19801
Employer Identification Number (EIN): 87-4231956
Fund Size: $6.8 billion (vintage 2022)
HPE Fund IV is a private equity fund managed by Harrowgate Capital Management IV LLC (the "General Partner"). The fund focuses on growth and buyout investments in financial services technology, infrastructure software, and data analytics. HPE Fund IV represents the fourth institutional fund raised by the Harrowgate Capital platform, which was founded by Richard Harrowgate. The current leadership of the fund and the General Partner includes the following individuals:
•  Richard Harrowgate — Founder and Chairman, Harrowgate Capital Management IV LLC
•  Priya Deshmukh — Managing Partner, Fund IV
•  Thomas Eriksen — Partner, Head of Financial Technology
HPE Fund IV has significant experience in the financial technology and payments sector, having made three prior platform investments in payments infrastructure and financial technology companies. The fund's investment thesis for the VeloPay acquisition is predicated on VeloPay's market position in cloud-native payments processing for mid-market and enterprise customers, its strong recurring revenue profile, and the opportunity to accelerate growth through geographic expansion, product enhancement, and strategic acquisitions.
The capital committed by HPE Fund IV to this transaction is $1,140,000,000 in equity, representing approximately sixty percent (60%) of the aggregate deal value. The remaining $760,000,000 of deal value will be funded through committed debt financing, as described in Section 2.5 below.
2.2.2 Acquisition Subsidiary
Full Legal Name: Harrowgate Velocity Merger Sub Inc.
Entity Type: Delaware corporation, newly formed
Sole Shareholder: Harrowgate Private Equity Fund IV LP
Purpose: Formed solely to effectuate the reverse triangular merger described herein
As noted in Section 2.1 above, Merger Sub is a special-purpose entity incorporated solely for the purpose of consummating the reverse triangular merger. It has no assets, liabilities, employees, or operations and will cease to exist at the Effective Time. Incorporation is anticipated on or about February 24, 2025.
2.2.3 Target.  
Full Legal Name: VeloPay Systems, Inc.
Entity Type: Delaware corporation
Delaware File Number: 5748392
Employer Identification Number (EIN): 82-3019478
Headquarters: 1455 Innovation Parkway, Suite 800, Austin, TX 78759
Year Founded: 2014
VeloPay Systems, Inc. is a cloud-native payments processing and merchant acquiring platform serving mid-market and enterprise customers. The company processes approximately $87 billion in annualized gross payment volume across more than 14,000 merchants. VeloPay's revenue model is comprised of three principal components: (i) interchange-plus processing fees earned on transaction volumes processed through its platform; (ii) SaaS subscription fees for its analytics dashboard and fraud detection suite; and (iii) gateway transaction fees charged to merchants utilizing VeloPay's payment gateway technology.
VeloPay was founded in 2014 and has grown both organically and through acquisition, including the 2021 acquisition of PayStream Gateway LLC, a payment gateway technology company, for $45 million. The company employs approximately 1,340 employees across four locations: Austin, Texas (headquarters); Denver, Colorado; Toronto, Ontario, Canada; and Lisbon, Portugal.
The current executive officers and board of directors of VeloPay are as follows:
Executive Officers:
•  Nathan Aldridge — Chief Executive Officer and Co-Founder (14.2% equity holder)
•  Sonia Reyes-Watkins — Chief Technology Officer and Co-Founder (9.7% equity holder)
•  Marcus Langford — Chief Financial Officer (1.3% equity holder)
•  Danielle Moreau — General Counsel (0.6% equity holder)
Board of Directors:
•  Nathan Aldridge — Chairman of the Board
•  Sonia Reyes-Watkins — Director
•  Janet Gould — Independent Director
•  Kwame Asante — Director (Ridgeline Ventures representative)
•  Catherine Lindström — Director (Apex Growth Partners representative)
•  Philip Rosenthal — Independent Director
2.3 Consideration and Valuation
The aggregate merger consideration payable in the transaction is $1,900,000,000 (one billion nine hundred million dollars), payable entirely in cash. The per-share merger consideration is $20.00 per share, calculated on a fully diluted, as-converted basis.
The fully diluted share count of VeloPay is 95,000,000 shares, comprised of the following:
The implied enterprise valuation multiples for the transaction are as follows:
•  EV/Revenue: 4.61x ($1,900,000,000 ÷ $412,300,000 LTM Revenue)
•  EV/Adjusted EBITDA: 19.37x ($1,900,000,000 ÷ $98,100,000 LTM Adjusted EBITDA)
These multiples are within the range of comparable transactions in the financial technology and payments processing sector, as assessed by Pendleton Hawkes & Co. in its financial analysis.
2.4 Treatment of Equity Awards
At the Effective Time, all outstanding equity awards of VeloPay will be treated as follows under the Merger Agreement:
Vested Stock Options. Each vested and exercisable stock option that is outstanding immediately prior to the Effective Time will be cancelled and converted into the right to receive a cash payment equal to the product of (i) the excess, if any, of $20.00 over the applicable per-share exercise price, multiplied by (ii) the number of shares of VeloPay common stock subject to such vested option (the "net spread"). Any option with an exercise price equal to or greater than $20.00 will be cancelled for no consideration.
Unvested Stock Options. Each unvested stock option that is outstanding immediately prior to the Effective Time will be cancelled and treated as follows: fifty percent (50%) of such unvested options will accelerate and be paid out at closing at the net spread value described above; the remaining fifty percent (50%) will be converted into replacement awards of HPE Fund IV that will vest ratably over a twenty-four (24) month period following the closing, subject to continued employment with VeloPay or its successor.
Restricted Stock Units (RSUs). All unvested RSUs that are outstanding immediately prior to the Effective Time will fully accelerate and will be converted into the right to receive a cash payment of $20.00 per RSU at the closing.
Warrants. Each outstanding warrant will be cancelled and converted into the right to receive a cash payment equal to $11.50 per warrant ($20.00 per-share merger consideration minus $8.50 per-warrant exercise price). The total aggregate consideration payable in respect of all 1,800,000 warrants is $20,700,000.
2.5 Financing
The aggregate merger consideration and related transaction costs will be funded through a combination of equity from HPE Fund IV and committed debt financing, as set forth below.
Equity Contribution. HPE Fund IV will contribute $1,140,000,000 in equity to fund the transaction, representing approximately sixty percent (60%) of the aggregate deal value. An Equity Commitment Letter was executed on February 14, 2025 by Harrowgate Capital Management IV LLC, in its capacity as general partner of HPE Fund IV, committing to fund the equity contribution at the closing of the merger.
Senior Secured Term Loan. Tralvendo National Bank, as administrative agent, has provided a commitment for a $500,000,000 senior secured term loan with a seven-year maturity and an interest rate of SOFR plus 375 basis points. The Commitment Letter (Reference No. CRE-2025-SPF-0441) was executed on February 14, 2025. Proceeds of the term loan will be used to fund a portion of the merger consideration and to refinance VeloPay's existing $112,000,000 senior secured term loan with Meridian Commercial Credit Corp.
Senior Secured Revolving Credit Facility. Prairie State Bank, N.A., as administrative agent, has committed to provide a $260,000,000 senior secured revolving credit facility with a five-year maturity and an interest rate of SOFR plus 325 basis points. The revolving credit facility is expected to be partially drawn at closing to fund a portion of the merger consideration and related transaction costs.
Total Debt Commitment: $760,000,000.
Lender Counsel: Maplewood & Strauss LLP (lead partner: Gordon Strauss), One International Place, Suite 3600, Boston, MA 02110.
Target Existing Debt. VeloPay currently maintains a $112,000,000 senior secured term loan with Meridian Commercial Credit Corp. This facility contains a change of control mandatory prepayment provision and will be refinanced and paid off at the closing of the merger from proceeds of the new senior secured term loan.
Target Cash on Hand. As of the most recent audited financial statements (FY2024), VeloPay had $53,800,000 in cash and cash equivalents. A portion of this cash on hand will be used as a source of funds to consummate the transaction.
2.6 Sources and Uses (Estimated)
The following table sets forth the estimated sources and uses of funds for the transaction:
Uses of Funds:
Sources of Funds:
A detailed sources and uses summary is provided as Exhibit G to this submission.
2.7 Key Stockholders
The following table summarizes the principal equity holders of VeloPay as of the date of this submission:
2.8 Rollover Equity
In connection with the closing of the merger, certain members of VeloPay's management team will reinvest a portion of their merger proceeds into Harrowgate Velocity Co-Invest LP, a Delaware limited partnership established as a co-investment vehicle for the transaction. The general partner of Harrowgate Velocity Co-Invest LP is Harrowgate Capital Management IV LLC.
The anticipated rollover investments are as follows:
•  Nathan Aldridge — will reinvest $14,200,000 of his merger proceeds
•  Sonia Reyes-Watkins — will reinvest $9,700,000 of her merger proceeds
•  Total rollover equity: $23,900,000
The rollover equity arrangements are subject to the execution of definitive subscription agreements and co-investment documentation, which are expected to be finalized prior to the signing of the Merger Agreement. The rollover investments will be made on economic terms consistent with HPE Fund IV's investment in the surviving corporation and are intended to align management's interests with the Buyer's post-closing ownership.
2.9 Target's Counsel
VeloPay is represented in the transaction by:
Whitford Jessup & Crane LLP 600 Congress Avenue, Suite 2400 Austin, TX 78701
Lead Partner: Rebecca Thornton-Hayes Lead Associate: James Okoro Tax Partner: Ellen Fairchild
2.10 Target's Financial Advisor
VeloPay's financial advisor in the transaction is:
Velthryn Greer & Associates 2000 McKinney Avenue, Suite 1500 Dallas, TX 75201
Lead Managing Director: Patricia Navarro
Velthryn Greer & Associates is expected to deliver a fairness opinion to the VeloPay Board of Directors opining that the per-share merger consideration of $20.00 is fair, from a financial point of view, to the holders of VeloPay common stock.
2.11 Target's Independent Auditor
VeloPay's independent auditor is:
Vance Thornbury & Co. LLP 1700 Market Street, Suite 2900 Philadelphia, PA 19103
Engagement Partner: Robert Paulsen
Vance Thornbury & Co. LLP has audited VeloPay's consolidated financial statements for the fiscal year ended December 31, 2024 and has issued a clean (unqualified) audit opinion with respect thereto.
III. TARVEX FINANCIAL OVERVIEW
3.1 Audited Financial Summary (FY2024)
The following table summarizes VeloPay's key financial metrics for the fiscal year ended December 31, 2024, as reported in the audited consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and audited by Vance Thornbury & Co. LLP:
VeloPay's revenue of $412,300,000 represents growth driven by both organic merchant acquisition and the continued maturation of its SaaS analytics and fraud detection platform. The company's Adjusted EBITDA margin of 23.79% reflects the operating leverage inherent in its cloud-native platform and recurring revenue model. Net income of $41,700,000 reflects the company's profitability after accounting for interest expense on its existing credit facility with Meridian Commercial Credit Corp., depreciation and amortization, and income tax expense. Total assets of $689,400,000 include intangible assets arising from the 2021 acquisition of PayStream Gateway LLC. A detailed financial summary is provided as Exhibit C to this submission.
3.2 Capitalization Table (Fully Diluted)
The fully diluted capitalization of VeloPay as of the date of this submission is as follows:
A detailed capitalization table, including a breakout by holder and equity instrument type, is provided as Exhibit D to this submission. The capitalization has been reconciled against VeloPay's corporate records, option plan documentation, and transfer agent records as part of the due diligence process.
3.3 Target Subsidiaries
VeloPay conducts its business through the parent corporation and five wholly-owned subsidiaries. The subsidiaries are as follows:
All subsidiaries are wholly-owned by VeloPay Systems, Inc. and have been confirmed to be in good standing in their respective jurisdictions of organization. A complete list of VeloPay's subsidiaries, together with their jurisdictions of organization and foreign qualifications, is provided as Exhibit H to this submission.
IV. PROPOSED MERGER AGREEMENT — KEY PROVISIONS
4.1 Status of Merger Agreement
The initial draft of the Agreement and Plan of Merger was prepared by Calderwood & Harkness LLP on behalf of the Buyer and circulated to VeloPay's counsel, Whitford Jessup & Crane LLP, on January 17, 2025. As of the date of this submission, negotiations on the Merger Agreement are ongoing between Calderwood & Harkness and Whitford Jessup & Crane. The parties have exchanged multiple rounds of comments on the draft Merger Agreement, and key open issues remain under discussion, including certain provisions related to the indemnification framework, the scope and specificity of certain representations and warranties, interim operating covenants, and closing conditions.
The target signing date for the Merger Agreement is mid-March 2025. The Buyer expects that the Merger Agreement will be in substantially final form by early March, and anticipates that the R&W insurance policy will be bound in the early-to-mid March timeframe, concurrently with or shortly before the signing of the Merger Agreement.
A copy of the draft Merger Agreement, as circulated on January 17, 2025, is attached hereto as Exhibit A. The Buyer notes that subsequent markups have been exchanged and that the final executed version of the Merger Agreement will incorporate changes from the version included as Exhibit A. Calderwood & Harkness will provide the Insurer with a near-final or execution version of the Merger Agreement promptly upon its availability.
4.2 Indemnification Framework
The Merger Agreement provides for a post-closing indemnification framework under which VeloPay's former stockholders (through the Stockholder Representative) will indemnify the Buyer for losses arising from breaches of the Target's representations and warranties, breaches of pre-closing covenants, and certain other specified matters. The key terms of the indemnification framework, as currently drafted and subject to ongoing negotiation, are as follows:
General Indemnification Cap. The aggregate liability of the former VeloPay stockholders for indemnifiable losses under the general representations and warranties is capped at twelve percent (12%) of the aggregate merger consideration, or $228,000,000.
Fundamental Representations. Indemnification obligations with respect to the fundamental representations — specifically, the representations relating to organization and good standing, authority and enforceability, capitalization, tax matters, and ERISA compliance — will survive until the expiration of the applicable statute of limitations and are not subject to the general indemnification cap. Instead, the fundamental representations are subject to a separate cap equal to the aggregate merger consideration.
General Survival Period. The general representations and warranties of VeloPay will survive the closing for a period of eighteen (18) months. Based on the expected closing timeline (estimated Q3 2025, approximately July 2025), the general survival period would expire in approximately January 2027.
De Minimis Threshold and Deductible Basket. The Merger Agreement is expected to include both a per-claim de minimis threshold below which individual claims will not be counted toward the deductible basket, and an aggregate deductible basket below which the Seller will have no indemnification liability. The specific dollar amounts of the de minimis threshold and deductible basket remain under negotiation between the parties and are expected to be set at customary levels relative to the deal size.
Primary Source of Indemnification. The indemnification escrow (described in Section 4.3 below) will serve as the primary source of indemnification for claims against the former VeloPay stockholders. Recovery from the escrow will be the Buyer's first recourse for indemnifiable losses.
4.3 Escrow Provisions
The Merger Agreement provides for the establishment of an indemnification escrow at the closing of the merger. The key terms of the escrow arrangement are as follows:
Escrow Amount: $133,000,000, representing seven percent (7%) of the aggregate merger consideration.
Escrow Agent: Garrison Trust Company, One Liberty Plaza, 42nd Floor, New York, NY 10006. The designated contact at Garrison Trust Company is Valerie Drummond, Vice President, Corporate Trust.
Release Schedule: Fifty percent (50%) of the escrow amount ($66,500,000) will be released to the Stockholder Representative on behalf of the former VeloPay stockholders at the twelve (12) month anniversary of the closing, less any amounts subject to pending or unresolved indemnification claims. The remaining balance will be released at the eighteen (18) month anniversary of the closing (i.e., upon expiration of the general survival period), less any amounts subject to pending or unresolved indemnification claims at that time.
The escrow agreement will be entered into at closing among HPE Fund IV (or VeloPay as the surviving corporation), the Stockholder Representative, and Garrison Trust Company. The escrow amount will be withheld from the aggregate merger consideration at closing and deposited with the Escrow Agent.
4.4 Material Adverse Effect Definition
The Merger Agreement includes a customary Material Adverse Effect ("MAE") definition. As currently drafted, a "Material Adverse Effect" means any event, change, effect, or occurrence that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the business, financial condition, or results of operations of VeloPay and its subsidiaries, taken as a whole.
The MAE definition includes the following customary carve-outs, such that the following matters will not constitute or be taken into account in determining whether a Material Adverse Effect has occurred:
(i) pandemics, epidemics, or public health emergencies (including COVID-19 and any future pandemic or epidemic);
(ii) war, armed hostilities, military action, terrorism, acts of war, or other geopolitical events;
(iii) general economic or financial market conditions (including changes in interest rates, exchange rates, or credit markets);
(iv) changes, events, or conditions generally affecting the fintech, payments, or financial services industries;
(v) changes in applicable law, regulation, or accounting standards (including changes in GAAP or its interpretation);
(vi) the failure of VeloPay to meet any internal or external projections, forecasts, or estimates of revenue, earnings, or other financial metrics (provided that the underlying causes of such failure are not excluded from the determination of whether a Material Adverse Effect has occurred); and
(vii) the announcement, execution, or pendency of the Merger Agreement or the transactions contemplated thereby, including any impact on relationships with customers, suppliers, employees, or governmental authorities.
The foregoing carve-outs are subject to customary exceptions providing that items described in clauses (i) through (v) may be taken into account to the extent they have a disproportionate adverse effect on VeloPay relative to other companies operating in the same industry and geographic markets.
4.5 No-Shop and Termination Provisions
No-Shop Covenant. From and after the signing of the Merger Agreement through the earlier of the closing or the valid termination of the Merger Agreement, VeloPay will be subject to a customary no-shop covenant prohibiting VeloPay and its representatives from soliciting, initiating, or knowingly encouraging or facilitating any inquiries, proposals, or offers from third parties relating to alternative acquisition transactions.
Fiduciary Out. The Merger Agreement includes a customary fiduciary-out exception that permits the VeloPay Board of Directors to engage with a third party that has submitted a bona fide, unsolicited acquisition proposal that the VeloPay Board determines in good faith (after consultation with outside legal counsel and financial advisors) constitutes or is reasonably likely to lead to a Superior Proposal, as defined in the Merger Agreement.
Match Right. Prior to the VeloPay Board's ability to change its recommendation or terminate the Merger Agreement in connection with a Superior Proposal, HPE Fund IV will have a five (5) business day match right during which HPE Fund IV may propose modifications to the terms of the Merger Agreement. VeloPay must negotiate in good faith with HPE Fund IV during the match period.
VeloPay Termination Fee. If the Merger Agreement is terminated by VeloPay in connection with a Superior Proposal (or under certain other specified circumstances), VeloPay will be required to pay HPE Fund IV a termination fee of $76,000,000, representing four percent (4%) of the aggregate deal value.
HPE Fund IV Reverse Termination Fee. If the Merger Agreement is terminated due to a failure of HPE Fund IV to consummate the merger as a result of a financing failure (or under certain other specified circumstances attributable to the Buyer), HPE Fund IV will be required to pay VeloPay a reverse termination fee of $57,000,000, representing three percent (3%) of the aggregate deal value. The reverse termination fee obligation is backed by a limited guarantee from Harrowgate Capital Management IV LLC.
4.6 Representations and Warranties — Scope
The Merger Agreement contains comprehensive representations and warranties from both VeloPay and the Buyer. The following is a summary of the key representations and warranties to be made by each party.
Target Representations and Warranties. VeloPay will make representations and warranties concerning the following subjects:
•  Organization, existence, and good standing in Delaware and each foreign jurisdiction in which VeloPay and its subsidiaries are qualified to do business
•  Corporate authority, board and stockholder approval, and enforceability of the Merger Agreement
•  Capitalization, including authorized and outstanding shares, options, RSUs, warrants, and other equity interests
•  Financial statements and the accuracy and completeness thereof in accordance with GAAP
•  Absence of undisclosed liabilities
•  Absence of any Material Adverse Effect since the date of the latest balance sheet
•  Compliance with applicable laws, rules, and regulations
•  Tax matters, including the accuracy of tax returns, absence of material tax deficiencies, and status of tax positions
•  intellectual property ownership, validity, and non-infringement
•  Material contracts, including the enforceability and absence of default under such contracts
•  Real property (leased premises)
•  Employee benefits and ERISA compliance
•  Labor and employment matters
•  Environmental compliance
•  Insurance coverage
•  Data privacy and security, including PCI-DSS compliance
•  Anti-corruption and FCPA compliance
•  Money transmitter licensing and regulatory compliance
•  Litigation, claims, and proceedings
•  Related party transactions
•  Brokers' fees and financial advisor arrangements
Buyer Representations and Warranties. HPE Fund IV will make representations and warranties concerning the following subjects:
•  Organization and good standing
•  Authority and enforceability
•  Availability of sufficient funds to consummate the merger
•  Absence of conflicts with organizational documents, applicable law, or material agreements
•  Litigation
•  Solvency of the surviving corporation after giving effect to the merger and the financing
•  Investment purpose (acquisition for investment, not with a view to distribution)
4.7 Change of Control Provisions
The proposed merger constitutes a "change of control" under several of VeloPay's existing contractual arrangements, as follows:
Existing Credit Facility. VeloPay's existing $112,000,000 senior secured term loan with Meridian Commercial Credit Corp. contains a change of control mandatory prepayment provision. This facility will be refinanced and paid off in full at the closing of the merger from proceeds of the new senior secured term loan from Tralvendo National Bank, thereby satisfying the mandatory prepayment obligation.
Material Customer Contracts. Through the due diligence process, the Buyer has identified fourteen (14) material customer contracts that contain change of control consent or notification requirements. The specific contracts and associated risk assessments are discussed in greater detail in Section 6.5 below and are tracked on a detailed change of control consent matrix prepared by Calderwood & Harkness.
Executive Employment Agreements. The employment agreements of VeloPay's executive officers (Nathan Aldridge, Sonia Reyes-Watkins, Marcus Langford, and Danielle Moreau) contain change of control provisions that may trigger accelerated vesting of equity awards and severance payment obligations, as discussed in Section 6.7 below.
The Merger Agreement requires VeloPay to use commercially reasonable efforts to obtain all required change of control consents and to provide all required change of control notifications prior to the closing of the merger.
4.8 Stockholder Approval Mechanism
The Merger Agreement will be approved by the stockholders of VeloPay through the execution and delivery of a written consent in lieu of a stockholders' meeting, as permitted under Section 228 of the DGCL. The following stockholders have agreed to deliver their written consents concurrently with the signing of the Merger Agreement, pursuant to a Stockholder Support Agreement to be executed at signing:
The combined ownership of these stockholders represents approximately 63.1% of the outstanding shares of VeloPay common stock, which is sufficient to constitute the requisite stockholder approval under the DGCL (requiring a majority of the outstanding shares entitled to vote). The Stockholder Support Agreement will require each signatory to vote (or consent in writing) in favor of the merger and against any competing acquisition proposals, and will include customary transfer restrictions on the stockholders' shares during the pendency of the transaction.
Following delivery of the written consent, VeloPay will be required to mail an Information Statement to the non-consenting stockholders of VeloPay within ten (10) days of the date of the written consent, as required by Section 228(e) of the DGCL. The Information Statement will describe the terms of the merger, the consideration to be received by stockholders, and the stockholders' appraisal rights under Section 262 of the DGCL.
V. DUE DILIGENCE SCOPE AND METHODOLOGY
5.1 Overall Diligence Process
The Buyer's due diligence process for the proposed acquisition of VeloPay commenced in early October 2024 and has continued through the date of this submission. The overall timeline and key milestones for the diligence process are as follows:
•  October 7, 2024: Calderwood & Harkness LLP formally engaged by HPE Fund IV as outside legal counsel for the transaction.
•  November 15, 2024: HPE Fund IV delivered a non-binding letter of intent to VeloPay.
•  December 6, 2024: Exclusivity agreement executed between HPE Fund IV and VeloPay, granting HPE Fund IV an exclusive period in which to negotiate and consummate the transaction.
•  December 12, 2024: Virtual data room opened by VeloPay and its counsel, Whitford Jessup & Crane LLP, providing the Buyer and its advisors access to corporate, financial, legal, and operational documentation.
The legal due diligence has been conducted by a dedicated Calderwood & Harkness team led by Sandra Tung (responsible partner) and Megan Chu (lead associate), with the following additional team members and specialist advisors:
•  Oliver Mackenzie — Billing Partner, M&A Group
•  Derek Okonkwo — Working Associate, M&A Group
•  Leonard Cross — Tax Specialist Partner
•  Howard Bellamy — Antitrust Specialist Partner
In addition to the legal due diligence conducted by Calderwood & Harkness, the Buyer's financial advisor, Pendleton Hawkes & Co. (led by David Constantinou), has conducted parallel financial, accounting, and commercial due diligence, including a detailed quality of earnings analysis and commercial market assessment. The Buyer has also engaged third-party consultants to conduct a technology infrastructure assessment.
The due diligence process has involved the review of thousands of documents uploaded to the virtual data room, supplemented by management presentations, question-and-answer sessions with VeloPay management and VeloPay's counsel, and site visits to VeloPay's Austin, Texas headquarters. The diligence process is substantially complete as of the date of this submission, with certain limited workstreams remaining ongoing (as noted in the relevant sections below).
5.2 Diligence Workstreams Completed or In Progress
The following diligence workstreams have been completed or are currently in progress as of the date of this submission:
1.  Corporate Organization and Governance. Review of VeloPay's and each subsidiary's organizational documents (certificates of incorporation, bylaws, operating agreements, articles of association), board and stockholder minutes, capitalization records, option plan documentation, warrant agreements, foreign qualifications, and good standing certificates.
2.  Material Contracts. Review of VeloPay's top twenty-five (25) customer agreements by revenue, key vendor contracts, technology licensing agreements, partnership and channel arrangements, co-marketing agreements, and other material commercial contracts, with particular focus on change of control provisions, exclusivity obligations, non-compete restrictions, termination rights, and assignability.
3.  intellectual Property. Comprehensive review of VeloPay's patent portfolio, trademark registrations, trade secret protections, domain name registrations, open-source software usage (including license compliance analysis), IP assignment agreements from employees and contractors, and all intellectual property acquired in connection with the 2021 PayStream Gateway LLC acquisition.
4.  Regulatory and Licensing. Review of VeloPay's money transmitter licenses across forty-seven (47) states and the District of Columbia, including license terms, renewal schedules, surety bond requirements, and change of control notification and approval requirements. Review of PCI-DSS Level 1 compliance documentation and most recent compliance assessment. Assessment of Canadian regulatory requirements applicable to VeloPay Canada Inc. under Ontario and federal Canadian payment services regulation. Assessment of Portuguese regulatory framework applicable to VeloPay Europe, Unipessoal Lda. Analysis of the Investment Canada Act notification requirement for the transaction.
5.  Litigation and Contingent Liabilities. Review of all pending, threatened, or reasonably anticipated litigation, arbitration, or administrative proceedings involving VeloPay and its subsidiaries. Assessment of contingent liability exposure.
6.  Employment and Benefits. Review of executive employment agreements (for Nathan Aldridge, Sonia Reyes-Watkins, Marcus Langford, and Danielle Moreau), equity compensation plans (stock option plan, RSU plan), ERISA compliance for VeloPay's 401(k) plan and health and welfare benefit plans, and Section 280G parachute payment exposure analysis.
7.  Tax. Review of VeloPay's federal, state, and international tax positions, including the accuracy and completeness of tax returns, assessment of net operating loss ("NOL") carryforwards and potential Section 382 limitations arising from the change of ownership, analysis of intercompany transfer pricing arrangements between VeloPay's U.S. entities and VeloPay Canada Inc. and VeloPay Europe, Unipessoal Lda., and evaluation of Section 338(h)(10) election considerations.
8.  Real Property. Review of VeloPay's lease agreements for its office spaces in Austin, Texas; Denver, Colorado; Toronto, Ontario, Canada; and Lisbon, Portugal. VeloPay does not own any real property.
9.  Insurance. Review of VeloPay's insurance program, including general liability, directors' and officers' liability, cyber liability, errors and omissions, and property insurance policies.
10.  Environmental. Assessment of environmental compliance matters. Given that VeloPay is a technology company that leases all of its office space and does not engage in manufacturing or industrial activities, environmental exposure is minimal.
11.  Data Privacy and Cybersecurity. Review of VeloPay's data privacy policies, data processing agreements with merchants and third parties, cybersecurity infrastructure (at a high level), CCPA compliance, state privacy law compliance, Canadian PIPEDA compliance, and PCI-DSS compliance documentation.
12.  Anti-Corruption and FCPA. Review of VeloPay's anti-corruption compliance program and FCPA policies, with particular attention to VeloPay's international operations in Canada and Portugal. Sanctions screening of key counterparties and principals.
5.3 Third-Party Reports Reviewed
In connection with the due diligence process, the Buyer and its advisors have reviewed the following third-party reports and assessments:
•  VeloPay FY2024 Audited Financial Statements. Prepared in accordance with U.S. GAAP and audited by Vance Thornbury & Co. LLP, with a clean (unqualified) audit opinion.
•  Quality of Earnings Report. Prepared by the Buyer's independent accounting advisor in connection with the financial due diligence process. The quality of earnings report analyzed VeloPay's historical financial performance, revenue recognition practices, EBITDA adjustments, working capital trends, and the sustainability and quality of the company's earnings profile.
•  Technology Assessment and Infrastructure Review. Prepared by an independent technology consulting firm engaged by the Buyer to assess VeloPay's cloud-native payments processing platform, scalability, technical debt, disaster recovery capabilities, and technology roadmap.
•  PCI-DSS Compliance Certification. Most recent annual PCI-DSS Level 1 assessment, confirming VeloPay's compliance with the Payment Card Industry Data Security Standard.
Copies of or references to these reports have been provided in the virtual data room or directly to the Calderwood & Harkness diligence team. Key findings from these reports are reflected in the due diligence summary set forth in Section VI below.
VI. KEY DUE DILIGENCE FINDINGS AND RISK AREAS
This Section VI summarizes the key findings and risk areas identified through the due diligence process described in Section V above. Calderwood & Harkness has prepared detailed due diligence memoranda for each workstream, which are cross-referenced in the summary of key due diligence findings attached as Exhibit F to this submission. The following discussion is intended to provide the Insurer with a comprehensive understanding of the due diligence findings most relevant to the underwriting analysis.
6.1 Corporate and Organizational Matters
VeloPay Systems, Inc. and all five of its wholly-owned subsidiaries have been confirmed to be in good standing in their respective jurisdictions of organization. Calderwood & Harkness obtained and reviewed current good standing certificates for each entity.
VeloPay's capitalization has been verified and reconciled to the fully diluted share count of 95,000,000 shares. The option pool, RSU plan, and warrant instruments have been reviewed against VeloPay's corporate records, equity plan documentation, and transfer agent records. No discrepancies were identified.
The 2021 acquisition of PayStream Gateway LLC, which was completed for an aggregate purchase price of $45,000,000, has been reviewed in detail. Calderwood & Harkness reviewed the asset purchase agreement, bill of sale, assignment of intellectual property, third-party consents, and related closing documentation. No successor liability concerns were identified, and all intellectual property assets acquired in the PayStream Gateway acquisition were properly assigned to VeloPay.
No material organizational deficiencies have been identified. VeloPay's corporate governance practices, board composition, and organizational structure appear to be well-maintained and consistent with a company of its size and stage of development.
Risk Level: Low.
6.2 Financial Statements and Accounting
Calderwood & Harkness's legal due diligence of VeloPay's financial statements has been conducted in coordination with the financial and accounting diligence performed by Pendleton Hawkes & Co. and the Buyer's independent accounting advisor.
VeloPay's FY2024 audited consolidated financial statements reflect revenue of $412,300,000, Adjusted EBITDA of $98,100,000 (representing an Adjusted EBITDA margin of 23.79%), and net income of $41,700,000. The financial statements received a clean (unqualified) audit opinion from Vance Thornbury & Co. LLP.
VeloPay's revenue recognition policies have been reviewed and are consistent with ASC 606 (Revenue from Contracts with Customers) as applicable to its software/SaaS subscription revenue and payment processing transaction revenue. The quality of earnings analysis confirmed that VeloPay's Adjusted EBITDA adjustments are consistent with customary practice in the payments technology industry and do not reflect unusual or aggressive normalization.
No material accounting irregularities have been identified. VeloPay's accounting policies, internal controls over financial reporting, and financial statement preparation practices appear to be in compliance with GAAP and are appropriate for a company of its size.
Note for Underwriter: The intercompany transfer pricing arrangements between VeloPay's U.S. entities and VeloPay Canada Inc. and VeloPay Europe, Unipessoal Lda. remain under review by Leonard Cross, Calderwood & Harkness's tax specialist partner. Based on the review conducted to date, no material exposure has been identified; however, the Buyer has flagged this as an ongoing workstream and will provide the Insurer with an update upon completion of the transfer pricing analysis.
Risk Level: Low.
6.3 intellectual Property
VeloPay's intellectual property portfolio has been reviewed comprehensively as part of the due diligence process. The key findings are as follows:
Patent Portfolio. VeloPay holds a portfolio of issued patents and pending patent applications relating to its cloud-native payments processing technology, fraud detection algorithms, and payment gateway infrastructure. No known third-party infringement claims against VeloPay have been identified, and no pending or threatened litigation relating to VeloPay's patent portfolio has been disclosed.
Trademarks. The "VeloPay" name and related marks have been registered in the United States and key international jurisdictions where VeloPay operates or has a commercial presence. No material trademark disputes or challenges have been identified.
Open-Source Software. VeloPay's use of open-source software components has been reviewed, including an analysis of the applicable open-source licenses. No copyleft license contamination (e.g., GPL or AGPL license requirements that would require disclosure of VeloPay's proprietary source code) has been identified with respect to VeloPay's proprietary codebase.
PayStream Gateway LLC intellectual Property. As noted in Section 6.1 above, all intellectual property acquired in the 2021 PayStream Gateway LLC acquisition was properly assigned to VeloPay pursuant to the transaction documentation, including a formal intellectual property assignment agreement.
Trade Secrets and Employee IP Assignments. VeloPay maintains appropriate employee invention assignment agreements, confidentiality and non-disclosure agreements, and contractor IP assignment agreements. Calderwood & Harkness reviewed a sample of these agreements and confirmed their consistency and enforceability.
Risk Level: Low to Moderate. The moderate risk designation reflects the inherent risks associated with operating a technology platform in the payments industry, including the potential for future intellectual property disputes or challenges from competitors. However, no specific material risks have been identified based on the diligence conducted to date.
6.4 Regulatory and Licensing
VeloPay's regulatory and licensing posture is a significant area of the due diligence process given the highly regulated nature of the payments industry. The key findings are as follows:
Money Transmitter Licenses. VeloPay holds money transmitter licenses in forty-seven (47) states and the District of Columbia. The three remaining states either do not require money transmitter licensure for VeloPay's activities or have de minimis thresholds that VeloPay does not currently exceed. Calderwood & Harkness has reviewed each state license and identified thirty-one (31) states that require some form of change of control approval, notification, or amended application in connection with the proposed merger. The specific requirements vary by state and range from simple post-closing notifications to pre-closing approval processes that may take several months.
PCI-DSS Compliance. VeloPay holds PCI-DSS Level 1 compliance certification, the highest level of compliance under the Payment Card Industry Data Security Standard. The most recent annual assessment is current, and VeloPay has maintained continuous PCI-DSS compliance.
Canadian Regulatory. VeloPay Canada Inc. is subject to Ontario provincial and federal Canadian payment services regulation. Calderwood & Harkness has assessed the regulatory implications of the transaction for VeloPay Canada Inc. and has identified an Investment Canada Act notification requirement in connection with the change of ownership. The Investment Canada Act notification is a standard filing requirement for foreign acquisitions of Canadian businesses above certain thresholds and is not expected to present a material obstacle to the transaction.
Portuguese Regulatory. VeloPay Europe, Unipessoal Lda. is a Portuguese entity engaged primarily in research and development activities. The entity's European regulatory exposure is limited, and no material Portuguese or European Union regulatory approvals or notifications have been identified as required for the transaction.
Risk Area: The primary regulatory risk area identified in the due diligence is the complexity and timing of the thirty-one (31) state change-of-control filings required for VeloPay's money transmitter licenses. While all of these filings are anticipated to be manageable within the expected pre-closing timeline, the processing times and requirements vary significantly by state. Calderwood & Harkness has prepared a detailed state-by-state filing timeline and is coordinating with Whitford Jessup & Crane to ensure that all filings are initiated promptly following the signing of the Merger Agreement. Failure to obtain all required approvals could result in a delay of the closing but is not expected to be a material impediment to the transaction.
No material regulatory violations, enforcement actions, consent orders, or similar regulatory proceedings involving VeloPay or any of its subsidiaries have been identified in the due diligence process.
Risk Level: Moderate. The moderate risk designation reflects the inherent regulatory complexity of a payments business operating across multiple state jurisdictions, rather than any identified deficiencies in VeloPay's regulatory compliance program.
6.5 Material Contracts and Change of Control
The due diligence review of VeloPay's material contracts has focused on the company's most significant customer agreements, vendor contracts, and technology licenses, with particular attention to change of control provisions, assignment restrictions, and other provisions that may be implicated by the proposed merger.
Customer Contracts Requiring Change of Control Consent or Notification. Fourteen (14) material customer contracts have been identified as containing change of control consent or notification requirements. These contracts represent a meaningful portion of VeloPay's annual revenue and include agreements with several of VeloPay's largest merchant customers. Calderwood & Harkness has prepared a detailed change of control consent tracker that catalogues each contract, identifies the specific change of control provision, assesses the risk level associated with each consent, and recommends the appropriate course of action (i.e., pre-closing consent request, pre-closing notification, or post-closing notification, as applicable).
Vendor Contracts and Technology Licenses. Key vendor contracts and technology licenses have been reviewed. No material restrictions on assignment or change of control have been identified beyond the fourteen (14) customer contracts referenced above.
Existing Credit Facility. VeloPay's existing $112,000,000 senior secured term loan with Meridian Commercial Credit Corp. contains a mandatory prepayment requirement upon a change of control. This obligation will be fully satisfied at the closing of the merger through the payoff and refinancing of the existing facility from proceeds of the new senior secured term loan.
Risk Area: The principal risk identified in this workstream relates to the procurement of change of control consents for the fourteen (14) material customer contracts. The failure to obtain one or more of these consents could affect revenue continuity in the post-closing period. However, based on Calderwood & Harkness's assessment, the risk of a material customer refusing to provide consent is considered low, as the change of control provisions in most of these contracts are administrative in nature and the continued operation of VeloPay as the surviving entity in the reverse triangular merger mitigates concerns regarding service continuity.
Risk Level: Moderate.
6.6 Litigation and Contingent Liabilities
Calderwood & Harkness has conducted a comprehensive review of all pending, threatened, or reasonably anticipated litigation, arbitration, and administrative proceedings involving VeloPay and its subsidiaries.
No material litigation has been identified that would reasonably be expected to constitute a Material Adverse Effect on VeloPay. The pending and threatened matters identified in the due diligence are of a nature and scope that is customary for a company of VeloPay's size operating in the payments processing industry. These matters include routine commercial disputes, employment-related claims, and other ordinary-course litigation, none of which, individually or in the aggregate, presents a material liability exposure.
No material regulatory inquiries, investigations, or enforcement actions have been identified. VeloPay has not been the subject of any consent orders, settlement agreements with regulatory authorities, or other formal or informal regulatory proceedings.
Contingent liabilities have been assessed and are within the normal range for a payments company of VeloPay's size and operational scope. VeloPay maintains appropriate litigation reserves on its balance sheet for the matters described above.
Risk Level: Low.
6.7 Employment, Benefits, and Section 280G
Calderwood & Harkness has reviewed the executive employment agreements, equity compensation plans, employee benefit plans, and labor and employment matters of VeloPay.
Executive Employment Agreements. The employment agreements of Nathan Aldridge (CEO), Sonia Reyes-Watkins (CTO), Marcus Langford (CFO), and Danielle Moreau (General Counsel) have been reviewed. Each agreement contains change of control provisions that may trigger the following upon a change of control of VeloPay: (i) accelerated vesting of unvested equity awards; and (ii) enhanced severance payment obligations in the event of a qualifying termination of employment within a specified period following the change of control (typically twelve to twenty-four months).
Section 280G Parachute Payment Analysis. A Section 280G parachute payment analysis is in progress, conducted by Calderwood & Harkness's tax group in consultation with the Buyer's tax advisors. Preliminary analysis indicates that the change of control payments and benefits payable to certain key executives — including the combination of accelerated equity vesting, severance payments, and other change of control benefits — may constitute "excess parachute payments" within the meaning of Section 280G of the Internal Revenue Code. Such excess parachute payments would be subject to a twenty percent (20%) excise tax payable by the affected executives under Section 4999 and would be non-deductible by VeloPay under Section 280G.
The Buyer is evaluating the feasibility of mitigating the Section 280G exposure through a stockholder vote safe harbor under Section 280G(b)(5)(B) of the Internal Revenue Code, which would exempt the relevant payments from the excess parachute payment rules if approved by a vote of more than seventy-five percent (75%) of the outstanding shares held by stockholders other than the affected executives. The availability and mechanics of this safe harbor vote are under discussion with VeloPay and its counsel.
ERISA Compliance. VeloPay maintains a Section 401(k) retirement savings plan and standard health and welfare benefit plans for its employees. No material ERISA compliance issues have been identified. VeloPay does not maintain any defined benefit pension plans or retiree health plans.
Labor and Employment. VeloPay employs approximately 1,340 employees across four locations (Austin, Texas; Denver, Colorado; Toronto, Ontario, Canada; and Lisbon, Portugal). None of VeloPay's employees are represented by a labor union or covered by a collective bargaining agreement. No material labor disputes, unfair labor practice charges, or other significant employment-related proceedings have been identified.
Risk Area: The primary risk area in this workstream is the Section 280G parachute payment exposure for key executives and the potential for gross-up obligations under existing employment agreements. The Buyer believes this risk is manageable through structural mitigation measures, including the potential stockholder vote safe harbor and negotiation of waivers or amendments to the relevant employment agreements.
Risk Level: Moderate.
6.8 Tax
The tax due diligence has been conducted by Leonard Cross, Calderwood & Harkness's tax specialist partner, in consultation with the Buyer's tax advisors at Pendleton Hawkes & Co. The key findings are as follows:
Federal and State Tax Positions. VeloPay's federal and state income tax returns have been reviewed for the three most recent tax years. No material unresolved tax controversies, deficiency notices, or audit assessments have been identified. VeloPay's tax positions appear to be reasonable and consistent with applicable tax law.
Net Operating Loss Carryforwards. VeloPay has accumulated NOL carryforwards from its earlier years of operation. A Section 382 limitation analysis is in progress to determine the extent to which the change of ownership resulting from the merger will limit the utilization of these NOL carryforwards by the surviving corporation in post-closing periods. The Section 382 analysis requires a detailed review of VeloPay's ownership history over the applicable testing period.
Transfer Pricing. The intercompany transfer pricing arrangements between V