Contract analysis

I. Executive Summary This memorandum analyzes whether the proposed acquisition of fourteen (14) FCC Meridian Technologies-3 (Band 66) wireless spectrum licenses by Northgate Wireless Americas Inc. ("NWA"), a Delaware corporation, from Ridgeline Wireless Holdings LLC ("Ridgeline" or "RWH"), a Nevada limited liability company, triggers withholding obligations under the Foreign Investment in Real Property Tax Act of 198

II. Factual Background A. The Parties Buyer/Assignee. Northgate Wireless Americas Inc. ("NWA") is a Delaware corporation (Delaware Secretary of State File No. 7284619), incorporated on August 22, 2022, with its principal offices at 2200 Wilson Boulevard, Suite 1450, Arlington, Virginia 22201. NWA was formed as a special-purpose acquisition vehicle for the express purpose of holding FCC wireless spectrum licenses and

III. Legal Framework — FIRPTA Overview A. Statutory and Regulatory Structure The Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA") was enacted as part of the Omnibus Reconciliation Act of 1980 (Pub. L. No. 96-499) to ensure that foreign persons who realize gain on the disposition of U.S. real property interests are subject to U.S. federal income tax on such gain. Prior to FIRPTA's enactment, foreign inve

Section 1445 provides several exceptions and safe harbors to the general withholding requirement, including: • Non-Foreign Affidavit (IRC § 1445(b)(2)): No withholding is required if the transferor furnishes the transferee with an affidavit, signed under penalties of perjury, stating that the transferor is not a foreign person and providing the transferor's name, U.S. taxpayer identification number, and home address

IV. Analysis — Are FCC Spectrum Licenses USRPIs? A. FCC Licenses as Intangible Personal Property The threshold substantive question in this FIRPTA analysis is whether FCC wireless spectrum licenses constitute "United States real property interests" within the meaning of IRC § 897(c). For the reasons set forth below, we conclude that they do not. FCC spectrum licenses are licenses granted by the federal government und

V. Analysis — Is the Transferor (Ridgeline) a "Foreign Person"? A. Ridgeline's Domestic Status Independently of the analysis in Part IV, FIRPTA withholding does not apply to this transaction because the transferor, Ridgeline, is not a "foreign person" within the meaning of IRC § 1445. Ridgeline Wireless Holdings LLC is a limited liability company formed and organized under the laws of the State of Nevada (NV Secretar

VI. Alternative / Hypothetical Analysis — What If FIRPTA Were Applicable? Although we have concluded that FIRPTA withholding does not apply to this transaction on two independent grounds — (1) FCC spectrum licenses are not USRPIs, and (2) Ridgeline is not a foreign person — we provide the following alternative analysis to address the hypothetical scenario in which FIRPTA were somehow applicable. This analysis is inte

VII. USRPHC Analysis — Transfer of Ridgeline Membership Interests (Not Applicable Here but Noted) A. Background. For completeness, we address the FIRPTA implications that would arise if NWA were acquiring membership interests in Ridgeline (rather than bare FCC licenses). Under IRC § 897(c)(1)(A)(ii), a USRPI includes "any interest (other than an interest solely as a creditor) in any domestic corporation which was a U

VIII. State Tax Withholding Considerations In addition to the federal FIRPTA analysis, we have considered whether any state-level withholding obligations apply to the transfer of the fourteen FCC licenses. The licenses cover Economic Areas in three states: Nevada, California, and Oregon. We address each state below. A. Nevada. Nevada does not impose a state individual income tax, a state corporate income tax, or a st

IX. Interaction with Cross-Border Tax Planning This FIRPTA analysis intersects with several other aspects of the cross-border tax planning for the spectrum acquisition. We note the following coordination points for the engagement team's reference: Companion Memoranda. This memorandum should be read in conjunction with the companion memorandum on U.S. tax structuring for the cross-border spectrum acquisition (prepared

X. Representations and Warranties Insurance Considerations The parties have engaged Apex Continental Insurance Ltd. ("Apex Continental") to provide representations and warranties ("R&W") insurance in connection with the transaction. Fiona Ashworth, Underwriter at Apex Continental, has issued an indicative R&W insurance policy with a premium of $1,012,000, calculated as 0.8% of the $126,500,000 purchase price. The ind

XI. Practical Recommendations Based on the analysis set forth in this memorandum, we recommend the following actions in connection with the closing of the transaction:

1. Non-Foreign Affidavit. At closing, NWA should require Ridgeline to deliver a non-foreign affidavit (FIRPTA certificate) pursuant to Treas. Reg. § 1.1445-2(b)(2), confirming Ridgeline's U.S. status, its U.S. taxpayer identification number (TIN), and its address. The affidavit should be signed by Garrett Nolan (or another authorized representative of Ridgeline) under penalties of perjury and should be in substantial

2. No FIRPTA Withholding Required. Based on the dual grounds that (a) FCC spectrum licenses are not USRPIs under IRC § 897(c) and (b) Ridgeline is not a "foreign person" under IRC § 1445(f)(3), NWA has no FIRPTA withholding obligation in connection with the payment of the $126,500,000 purchase price. NWA is not required to withhold any portion of the purchase price or to file Forms 8288 or 8288-A with the IRS.

3. APA Tax Representations. The engagement team should confirm that the APA's tax representations include Ridgeline's representation of non-foreign status, the characterization of the transferred assets as intangible personal property (not USRPIs), and compliance with applicable tax withholding obligations. These representations should survive closing for a period consistent with the applicable statute of limitations

4. State Withholding. No state-level real property withholding obligations are triggered by the license transfer. NWA has no state withholding obligations in connection with this transaction in Nevada, California, or Oregon. However, NWA should monitor for any California or Oregon income tax sourcing issues on the seller side, as these may affect the overall transaction economics if Ridgeline seeks indemnification or

5. R&W Policy. The engagement team should coordinate with Apex Continental Insurance Ltd. (Fiona Ashworth, Underwriter) to ensure that FIRPTA-related tax representations are within the scope of the R&W policy coverage. Any exclusions for tax representations or withholding tax matters should be negotiated prior to policy binding.

6. Entity Classification. The engagement team should confirm Ridgeline's federal income tax classification under the check-the-box regulations (Treas. Reg. § 301.7701-3) — specifically, whether Ridgeline is treated as a partnership or has elected to be treated as a corporation. This confirmation is necessary to ensure that the non-foreign affidavit is in the correct form and is signed by the appropriate person. If Ri

7. Escrow Considerations. The $4,500,000 earnest money deposit held by Meridian National Bank, N.A. (Sandra Okonkwo, Escrow Officer) does not implicate FIRPTA withholding. No withholding from the release of the escrow deposit is required. At closing, the deposit will be credited against the purchase price in accordance with the APA's payment provisions, and the remaining balance of the purchase price ($122,000,000) w

8. Future Dispositions. If NWA later disposes of the FCC licenses (whether by sale, assignment, or other transfer), FIRPTA should not apply to such disposition because FCC licenses are not USRPIs. This analysis would need to be revisited, however, if the nature of NWA's asset holdings changes — for example, if NWA acquires real property in connection with a network build-out, cell tower construction, or other infrast

9. Coordination. This memorandum should be read in conjunction with the companion memoranda on (a) U.S. tax structuring for the cross-border spectrum acquisition (prepared by Sylvia Hartwell and Leonard Cross, Calderwood & Harkness LLP) and (b) UK tax implications (prepared by Sylvia Hartwell with input from Whitfield & Grainger LLP, Nigel Pemberton, Engagement Partner). The engagement team should ensure that the FIR

XII. Conclusion Based on the analysis set forth in this memorandum, we conclude as follows: The transfer of fourteen (14) FCC Meridian Technologies-3 spectrum licenses (call signs WQAB201 through WQAB214) from Ridgeline Wireless Holdings LLC to Northgate Wireless Americas Inc. for a fixed purchase price of $126,500,000 does not trigger FIRPTA withholding obligations under IRC §§ 897 and 1445. This conclusion rests on