Priority Technology Holdings, Inc.

16. Commitments and Contingencies

Minimum Annual Commitments with Third-party Processors

The Company has multi-year agreements with third parties to provide certain payment processing services to the Company. The Company pays processing fees under these agreements that are based on the volume and dollar amounts of processed payment transactions. Some of these agreements have minimum annual requirements for processing volumes. Based on existing contracts in place at December 31, 2025, the Company is committed to pay minimum processing fees under these agreements as noted below:

Other Commitments

As of December 31, 2025 and 2024, the Company had a capital contribution commitment of $3.2 million and $12.6 million respectively, to fund operations of certain subsidiaries. The Company is obligated to make the contributions within 10 business days of receiving notice for such contribution from the subsidiary.

The Company committed to funding notes receivables totaling $27.8 million and $11.3 million as of December 31, 2025 and 2024, respectively. The Company is obligated to fulfill requests for funding required within a certain time period once the request is received. As of December 31, 2025 and 2024, the Company funded $16.5 million and $7.1 million respectively.

Merchant Reserves

See Note 4. Settlement Assets and Obligations, for information about merchant reserves.

Contingent/Deferred Consideration

The following table provides a reconciliation of the beginning and ending balance of the Company's contingent and deferred consideration liabilities related to completed acquisitions:

Legal Proceedings

The Company is involved in certain legal proceedings and claims which arise in the ordinary course of business. In the opinion of the Company and based on consultations with inside and outside counsel, the results of any of these matters, individually and in the aggregate, are not expected to have a material effect on the Company's results of operations, financial condition or cash flows. As more information becomes available, and the Company determines that an unfavorable outcome is probable on a claim and that the amount of probable loss that the Company will incur on that claim is reasonably estimable, the Company will record an accrued expense for the claim in question. If and when the Company records such an accrual, it could be material and could adversely impact the Company's results of operations, financial condition and cash flows.

The Company is a party in a case filed on October 11, 2023 in the United States District Court of Northern District of California (the “Complaint”). The Complaint is a putative class action against The Credit Wholesale Company, Inc. (“Wholesale”), Priority Technology Holdings, Inc., Priority Payment Systems (“PPS”), LLC and Wells Fargo Bank, N.A. (“Wells Fargo”). The Complaint alleges that Wholesale as an agent of Priority, PPS and Wells Fargo made non-consensual recordation of telephonic communications with California businesses in violation of California Invasion of Privacy Act (the “Act”). The Complaint seeks to certify a class of affected businesses and an award of $5,000 per violation of the Act. On May 23, 2025, the court approved the final settlement agreement wherein the defendants agree to pay $19.5 million to settle this litigation on a class basis. Final judgment has been entered dismissing all claims against defendants.

Concentration of Risks

The Company's revenue is substantially derived from processing Visa and Mastercard bankcard transactions. Because the Company is not a member bank, to process these bankcard transactions, the Company maintains sponsorship agreements with member banks which require, among other things, that the Company abide by the by-laws and regulations of the card association.

A majority of the Company's cash and restricted cash is held in certain FIs, substantially all of which is in excess of federal deposit insurance corporation limits. The Company does not believe it is exposed to any significant credit risk from these transactions.