memo-termination-rights-long-stop-date.docx

1022-00002 · Northgate Telecommunications PLC · Dispute & Litigation

memo-termination-rights-long-stop-date.docx DOCUMENT Finance & Banking

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CALDERWOOD & HARKNESS LLP 375 Park Avenue, 40th Floor New York, New York 10152

MEMORANDUM

I. Executive Summary

The purpose of this memorandum is to analyze the termination rights of both parties under the Asset Purchase Agreement dated September 22, 2022 (the "APA"), by and between Ridgeline Wireless Holdings LLC ("Ridgeline" or "Seller") and Northgate Wireless Americas Inc. ("NWA" or "Buyer"), following the passage of the extended Long-Stop Date of September 30, 2023, without the consummation of the closing contemplated thereunder. This analysis is undertaken at the request of the deal team to evaluate the current legal status of the APA and to advise on the strategic options available to our client, Northgate Telecommunications PLC ("NTP" or "Northgate"), the ultimate parent entity of NWA.

The APA governs the purchase and assignment of fourteen (14) FCC Wireless Radio Service licenses in the Meridian Technologies-3/Band 66 spectrum block (call signs WQAB201 through WQAB214) for a fixed purchase price of $126,500,000. The licenses cover Economic Areas in Nevada, eastern California, and southern Oregon, representing approximately 39 MHz of paired spectrum (78 MHz total paired bandwidth) and covering approximately 3.84 million POPs. The transaction was structured as a bare license transfer; Ridgeline's approximately 142,000 subscriber accounts were not included in the sale.

The original Long-Stop Date under the APA was March 15, 2023. Following the failure of the closing to occur by that date — principally as a result of a dispute over Ridgeline's unilateral demand for a $14,200,000 upward purchase price adjustment — the parties executed an Extension Agreement dated April 22, 2023, which extended the Long-Stop Date to September 30, 2023, expressly without prejudice to either party's position regarding the underlying price dispute. The extended Long-Stop Date of September 30, 2023 has now passed without the closing having occurred.

As of the date of this memorandum, neither party has delivered a written termination notice pursuant to Section 9.1 of the APA or any other termination provision. The last substantive communication between the parties occurred on November 8, 2023, when Hargrove, Sato & Caldwell LLP, counsel to Ridgeline, transmitted a letter to Calderwood & Harkness LLP, the substance of which is discussed further below. That letter has not been formally responded to by this firm.

The central questions addressed in this memorandum are: (1) whether the APA has been effectively terminated by operation of its terms following the passage of the Long-Stop Date; (2) whether the APA continues in a state of suspended performance; and (3) what rights and obligations remain available to each party under the current circumstances.

Our summary conclusion is as follows: The APA has not been automatically terminated. The Long-Stop Date provisions of Section 9.1 create a right to terminate but require the affirmative exercise of that right by delivery of a written notice in accordance with the APA's notice provisions. No such notice has been delivered by either party. Accordingly, the APA likely persists in a state of suspended animation, with both parties retaining the right to terminate and, conversely, the theoretical right to demand performance, subject to the fulfillment of all outstanding closing conditions (including, critically, FCC consent and Committee for the Assessment of Foreign Participation clearance, neither of which has been obtained). Prolonged inaction by both parties creates meaningful risks, including potential waiver and estoppel arguments, FCC application dismissal, and strategic disadvantage, and we recommend that Northgate take immediate steps to preserve its position.

II. Background and Transaction Summary

A. The Parties

Buyer. The Buyer under the APA is Northgate Wireless Americas Inc. ("NWA"), a corporation organized under the laws of the State of Delaware (Secretary of State File No. 7284619), with its principal office at 2200 Wilson Boulevard, Suite 1450, Arlington, Virginia 22201. NWA is a wholly owned subsidiary of Northgate US Holdings LLC, a Delaware limited liability company, which is itself wholly owned by Northgate Telecommunications PLC ("NTP" or "Northgate"), a public limited company incorporated under the laws of England and Wales (Companies House No. 08473291), whose ordinary shares are listed on the London Stock Exchange under the ticker symbol NGTL. NTP is a diversified telecommunications group with operations in the United Kingdom, continental Europe, and, through its NWA subsidiary, a growing presence in the United States wireless market. The NTP group's interest in acquiring the Ridgeline spectrum licenses reflects its strategic objective of building a U.S. wireless footprint in the western region.

Seller. The Seller and assignor under the APA is Ridgeline Wireless Holdings LLC ("Ridgeline"), a limited liability company organized under the laws of the State of Nevada (Nevada Secretary of State Entity No. E0428716302), with its principal office at 450 South Virginia Street, Suite 800, Reno, Nevada 89501. Ridgeline is a privately held wireless operator that has held the subject spectrum licenses since 2018, when it acquired certain of them from the FCC through the Meridian Technologies-3 auction (Auction 97) and the remainder through secondary market transactions.

The membership interests in Ridgeline are held as follows: Garrett Nolan (62%, Founder and Managing Member), Diane Chua (18%, Co-Managing Member and Chief Operating Officer), Pinnacle Growth Capital Fund II LP (12%, a private equity fund with contractual change-of-control consent rights under Ridgeline's operating agreement), and Crestwood Family Office LLC (8%, passive investor with no management or governance rights). The participation of Pinnacle Growth Capital Fund II LP as a member with change-of-control consent rights is potentially relevant to the transaction structure, as any assignment of the APA or modification of the deal terms may require Pinnacle's approval. We have not been asked to analyze the Ridgeline operating agreement, and our analysis herein is limited to the APA and ancillary transaction documents.

Ridgeline is represented in this transaction by Hargrove, Sato & Caldwell LLP, with Kevin Sato serving as lead partner and Mariana Quelibo as working associate. All formal communications between the parties have been channeled through their respective outside counsel.

B. Transaction Structure

The transaction is structured as an asset purchase of fourteen (14) FCC spectrum licenses in the Meridian Technologies-3/Band 66 frequency band, governed by Part 27 of the FCC's Rules. The licenses cover designated Economic Areas ("EAs") in the states of Nevada, eastern California, and southern Oregon. Together, the fourteen licenses represent 39 MHz of paired spectrum (78 MHz total paired bandwidth, including both uplink and downlink), covering a population base of approximately 3.84 million POPs.

The transaction is a bare license transfer. Ridgeline's wireless subscriber base of approximately 142,000 accounts, together with all associated customer contracts, network infrastructure, tower leases, and operational assets, are excluded from the scope of the APA. The parties' intent, as reflected in the APA's recitals and definitions, was for NWA to acquire the spectrum licenses free and clear of any operational encumbrances, permitting NWA to deploy the spectrum in accordance with Northgate's broader U.S. wireless strategy.

The aggregate purchase price for the fourteen licenses is $126,500,000 (one hundred twenty-six million five hundred thousand dollars), payable in cash at closing. This price is fixed under Section 3.1 of the APA. There is no adjustment mechanism, no market-flex provision, no re-pricing clause, and no earn-out or contingent consideration component. On a per-MHz-POP basis, the purchase price equates to approximately $0.845 per MHz-POP, which was consistent with comparable Meridian Technologies-3 secondary market transactions at the time of execution.

To secure Buyer's performance obligations under the APA, NWA funded an earnest money deposit in the amount of $4,500,000 into an escrow account maintained by Meridian National Bank, N.A. (the "Escrow Agent"), under the supervision of Sandra Okonkwo, Senior Vice President and Escrow Officer. The earnest money deposit was funded on September 30, 2022, in accordance with the terms of a separate Escrow Agreement of even date (the "Escrow Agreement"). The disposition of the earnest money deposit upon termination of the APA is governed by the terms of the Escrow Agreement, which is analyzed in a separate Calderwood & Harkness memorandum cross-referenced herein.

C. Key Timeline

The following is a chronological summary of the principal events in the transaction:

• June 15, 2022: Letter of Intent ("LOI") executed by NWA and Ridgeline, establishing exclusivity and key commercial terms.

• September 22, 2022: Asset Purchase Agreement executed by NWA (as Buyer) and Ridgeline (as Seller).

• September 30, 2022: Earnest money deposit of $4,500,000 funded by NWA into the Meridian National Bank, N.A. escrow account pursuant to the Escrow Agreement of even date.

• October 14, 2022: FCC Form 603 (Application for Assignment of Authorization) and accompanying Section 310(b)(4) petition filed with the FCC Wireless Telecommunications Bureau ("WTB"), seeking consent to the assignment of all fourteen licenses from Ridgeline to NWA and a declaratory ruling permitting indirect foreign ownership of NWA by NTP (a UK-incorporated entity). The filing was assigned FCC File No. 0010287-EX.

• October 28, 2022: FCC accepted the application for filing and placed it on public notice for the commencement of the comment period.

• November 3, 2022: FCC issued public notice of the application; thirty-day comment and petition-to-deny period opened.

• November 28, 2022: Great Basin Rural Broadband Cooperative ("Great Basin") filed an informal objection to the application, raising concerns regarding the Section 310(b)(4) foreign ownership implications of the transaction and alleging potential competitive harm in the rural Nevada service areas. Great Basin did not file a formal petition to deny.

• December 5, 2022: Comment and petition-to-deny period closed. No formal petitions to deny were filed. The Great Basin informal objection was the only adverse filing.

• December 9, 2022: Northgate, through Broadfield Whitaker LLP (regulatory counsel), filed an opposition to the Great Basin informal objection, arguing that the objection failed to meet the standing requirements for a petition to deny and that the Section 310(b)(4) analysis was straightforward given the United Kingdom's status as a close U.S. ally with a well-established regulatory framework.

• December 14, 2022: Ridgeline, through Hargrove, Sato & Caldwell LLP, delivered a letter to Calderwood & Harkness LLP demanding an upward purchase price adjustment of $14,200,000 (from $126,500,000 to $140,700,000). The demand was based on Ridgeline's allegation of a post-signing competing bid from an unnamed third party for the California-market licenses (EA Nos. 155 and 159). This letter precipitated the price dispute that has stalled the transaction.

• December 19, 2022: Northgate, through Calderwood & Harkness LLP, delivered a letter to Hargrove, Sato & Caldwell LLP rejecting the price adjustment demand in its entirety, citing the fixed-price provision of APA Section 3.1 and the absence of any contractual basis for post-signing revaluation. Northgate expressly reserved all rights under the APA. The transaction standstill effectively commenced on this date.

• January 19, 2023: FCC WTB issued an information request letter to NWA, requesting additional details regarding NTP's corporate governance structure, board composition, shareholder register, and foreign government ownership or control, in connection with the pending Section 310(b)(4) petition.

• February 10, 2023: NWA, through Broadfield Whitaker LLP, filed a comprehensive response to the WTB information request, providing detailed corporate governance and ownership disclosures. This was the last substantive filing made in FCC File No. 0010287-EX.

• March 15, 2023: Original APA Long-Stop Date passed without closing. Neither party delivered a termination notice.

• April 22, 2023: Extension Agreement executed by NWA and Ridgeline, extending the Long-Stop Date from March 15, 2023 to September 30, 2023. The Extension Agreement was entered into expressly "without prejudice to either party's position regarding the Purchase Price and the Seller's December 14, 2022 correspondence." No other terms of the APA were modified.

• September 30, 2023: Extended Long-Stop Date passed without closing. No termination notice was delivered by either party on or after this date.

• November 8, 2023: Hargrove, Sato & Caldwell LLP (Kevin Sato) transmitted a letter to Calderwood & Harkness LLP (Sylvia Hartwell). This is the last substantive inter-party communication. The full substance of this letter requires confirmation and review; our understanding, based on internal notes, is that the letter addressed the status of the transaction and the price dispute but did not purport to deliver a formal termination notice. This letter has not been formally responded to by Calderwood & Harkness.

• January 15, 2024: Internal Calderwood & Harkness dormancy status memorandum prepared (this memorandum).

D. The Purchase Price Dispute

The transaction standstill is attributable to a dispute over the purchase price. On December 14, 2022, Ridgeline, through Hargrove, Sato & Caldwell LLP, delivered a letter to Calderwood & Harkness LLP demanding an upward purchase price adjustment of $14,200,000. Ridgeline asserted that it had received a post-signing competing bid from an unnamed third party for the California-market licenses (specifically, the licenses covering Economic Area Nos. 155 and 159), and that the existence of this competing bid materially altered the value of the license portfolio. Ridgeline demanded that the aggregate purchase price be increased from $126,500,000 to $140,700,000 — an increase of approximately 11.2%.

Northgate rejected this demand on December 19, 2022, citing the unambiguous fixed-price provision of APA Section 3.1, which establishes the purchase price at $126,500,000 without any adjustment mechanism, market-flex provision, or re-pricing clause. Northgate's position, which we believe is well-supported by the plain language of the APA, is that no contractual basis exists for a post-signing price adjustment and that Ridgeline's demand constitutes an attempt to unilaterally renegotiate the economic terms of a binding agreement. Northgate expressly reserved all rights under the APA, including the right to seek specific performance and damages.

This dispute is the primary reason the transaction has not progressed to closing. Since the exchange of the December 2022 letters, neither party has taken affirmative steps to advance the transaction toward closing, and the FCC application has remained dormant since approximately February 2023.

The legal analysis of Ridgeline's price adjustment demand under APA Section 3.1 — including whether the demand constitutes an anticipatory repudiation or material breach — is the subject of a separate Calderwood & Harkness memorandum, which is cross-referenced in Section X of this memorandum.

III. Relevant APA Provisions

This section summarizes the APA provisions most relevant to the termination rights analysis. All section references are to the APA unless otherwise noted.

A. Section 3.1 — Purchase Price

Section 3.1 of the APA establishes the purchase price for the fourteen spectrum licenses at a fixed amount of $126,500,000, payable in immediately available funds at closing. The provision is unambiguous: it states that the purchase price is "fixed and shall not be subject to adjustment for any reason." The APA contains no market-flex clause, no re-pricing mechanism, no earn-out provision, and no contractual basis for post-signing revaluation based on third-party competing bids or changes in market conditions.

The relevance of this provision to the termination rights analysis is significant. Ridgeline's refusal to proceed to closing at the agreed purchase price — and its insistence on an additional $14,200,000 — may constitute a breach of Ridgeline's obligations under the APA, or at minimum, an unequivocal refusal to perform its closing obligations at the contractually specified price. This characterization bears directly on the analysis of termination rights under Sections 9.1 and 9.2, as discussed in Sections IV and V below.

B. Closing Conditions (Section 7)

The APA sets forth detailed closing conditions that must be satisfied or waived as a prerequisite to the obligation of either party to consummate the closing. These conditions fall into three categories: mutual conditions (Section 7.1), conditions to Buyer's obligation to close (Section 7.2), and conditions to Seller's obligation to close (Section 7.3).

Mutual conditions to closing (Section 7.1) include:

(a) FCC consent to the assignment of all fourteen licenses, as evidenced by the grant of the FCC Form 603 application (FCC File No. 0010287-EX);

(b) A declaratory ruling by the FCC pursuant to Section 310(b)(4) of the Communications Act approving the indirect foreign ownership of NWA by NTP;

(c) Clearance by the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Market (established by Executive Order 13913), or the expiration of the applicable review period without adverse action;

(d) The absence of any governmental order, injunction, or decree prohibiting or restraining the consummation of the closing.

Conditions to Buyer's obligation to close (Section 7.2) include the accuracy in all material respects of Seller's representations and warranties as of the closing date, Seller's compliance in all material respects with its pre-closing covenants, and the delivery by Seller of all required closing deliverables (including executed assignment applications, officer's certificates, and legal opinions).

Conditions to Seller's obligation to close (Section 7.3) include the accuracy in all material respects of Buyer's representations and warranties as of the closing date, Buyer's compliance in all material respects with its pre-closing covenants, and the delivery by Buyer of the purchase price.

Current status of conditions. As of the date of this memorandum, the following mutual closing conditions remain outstanding:

• FCC consent: The FCC Form 603 application (FCC File No. 0010287-EX) remains pending but has been effectively dormant since approximately February 2023, when NWA filed its response to the WTB information request. No grant has been issued. The application has not been denied or dismissed.

• Section 310(b)(4) declaratory ruling: No ruling has been issued. The WTB's review of the Section 310(b)(4) petition is bound up with the FCC Form 603 application and has likewise been dormant.

• Committee for the Assessment of Foreign Participation clearance: The Committee review has been initiated but no formal clearance has been issued. No adverse findings have been communicated to NWA or its regulatory counsel, Broadfield Whitaker LLP, but the absence of formal clearance means this condition remains unsatisfied.

The failure to satisfy any one of these mutual closing conditions would excuse both parties from the obligation to close. As discussed further below, the dormancy of the FCC application is a direct consequence of the transaction standstill precipitated by the purchase price dispute.

C. Long-Stop Date Provision (Section 9.1)

Section 9.1 of the APA, titled "Termination for Failure to Close by the Long-Stop Date," is the provision most directly at issue in this analysis. As originally drafted, Section 9.1 provided that either party "may terminate this Agreement by written notice to the other party" if the closing had not occurred on or before March 15, 2023 (the "Long-Stop Date").

The Extension Agreement dated April 22, 2023 amended Section 9.1 to substitute September 30, 2023 for March 15, 2023 as the Long-Stop Date. All other terms of Section 9.1 remained unchanged.

The operative language of Section 9.1, as amended, provides in relevant part:

"If the Closing shall not have occurred on or before September 30, 2023 (the 'Long-Stop Date'), either Buyer or Seller may terminate this Agreement by delivering written notice of such termination to the other party in accordance with Section 12.3."

Several features of this provision are critical to the analysis:

First, the Long-Stop Date provision is permissive, not mandatory. The use of the word "may" — as opposed to "shall" or "is hereby terminated" — creates an option to terminate, not an automatic termination trigger. The APA does not self-execute upon the passage of the Long-Stop Date.

Second, the termination right under Section 9.1 requires affirmative exercise by the party electing to terminate. The mechanism for exercise is the delivery of a written notice to the other party in accordance with the APA's formal notice provisions (Section 12.3).

Third, no termination notice has been delivered by either party under Section 9.1 as of the date of this memorandum.

Whether Section 9.1 contains a "contributing-fault carve-out" — i.e., a provision barring a party from invoking Section 9.1 if that party's own breach or failure to perform contributed to the failure to close by the Long-Stop Date — is a question that requires further review of the APA text. Many comparable long-stop provisions include such a carve-out, and its presence or absence will materially affect the analysis of each party's right to terminate under this section. We have flagged this as an open question in Section X below.

D. Termination for Breach (Section 9.2)

Section 9.2 of the APA provides that either party may terminate the Agreement if the other party is in material breach of any representation, warranty, covenant, or agreement contained in the APA and such breach is not cured within thirty (30) days after the non-breaching party has delivered written notice thereof to the breaching party. Section 9.2 operates independently of Section 9.1 and provides an alternative basis for termination.

The applicability of Section 9.2 to the current circumstances raises two principal analytical questions:

First, whether Ridgeline's demand for a $14,200,000 purchase price adjustment — and its implied refusal to close at the contractual price of $126,500,000 — constitutes a material breach of APA Section 3.1, or alternatively, an anticipatory repudiation of Ridgeline's closing obligations. If so, Northgate may be entitled to deliver a breach notice under Section 9.2 and, following expiration of the 30-day cure period, terminate the APA for cause.

Second, whether Northgate's failure to actively prosecute the FCC application during the standstill period (from approximately December 2022 through the present) could be characterized by Ridgeline as a breach of Northgate's covenant under Section 6.3 to use commercially reasonable efforts to obtain FCC consent. If so, Ridgeline could argue that it has independent grounds for termination under Section 9.2.

These questions are analyzed in greater detail in Section V below.

E. Mutual Termination (Section 9.3)

Section 9.3 provides that the APA may be terminated at any time by the mutual written agreement of Buyer and Seller. This is a standard mutual termination provision and requires no further analysis except to note that no mutual termination agreement has been executed, and any such agreement would necessarily require negotiation of the escrow deposit disposition, mutual releases, and related matters.

F. Effect of Termination (Section 9.4)

Section 9.4 sets forth the consequences of a valid termination of the APA. Upon termination in accordance with Section 9.1, 9.2, or 9.3, the APA "shall become void and of no further force or effect," and no party shall have any further liability or obligation to the other party under the APA, except that the following provisions survive termination:

(a) The confidentiality obligations of the parties under Section 6.7;

(b) The indemnification obligations of the parties with respect to any breach occurring prior to the date of termination, as set forth in Article 10;

(d) The general provisions of Article 12 (including governing law, dispute resolution, and notices).

The survival of the Escrow Agreement provisions is particularly significant, as the disposition of the $4,500,000 earnest money deposit will be governed by the terms of the Escrow Agreement rather than the APA itself. The escrow deposit disposition analysis is the subject of a separate Calderwood & Harkness memorandum, which is cross-referenced in Sections VIII and X of this memorandum.

G. Effort Covenants (Section 6.3)

Section 6.3 of the APA imposes reciprocal obligations on both parties to use "commercially reasonable efforts" to obtain FCC consent to the assignment of the fourteen spectrum licenses and to satisfy all regulatory closing conditions as promptly as practicable. The covenant extends to both the FCC Form 603 assignment application and the Section 310(b)(4) petition, as well as the Committee for the Assessment of Foreign Participation review.

The scope and content of the "commercially reasonable efforts" standard is significant to the analysis of potential breach arguments by either party:

Northgate's position: The FCC application was timely filed on October 14, 2022, and actively prosecuted through February 10, 2023, including the filing of a comprehensive response to the WTB information request. The standstill in the FCC proceeding was directly caused by Ridgeline's wrongful and extra-contractual demand for a $14,200,000 price adjustment, which rendered it impractical for either party to advance the transaction toward closing. Northgate continued to respond to FCC inquiries and maintained the application in filed status. No affirmative step by Northgate could have advanced the application in the absence of Ridgeline's cooperation and willingness to close on the contractual terms.

Ridgeline's potential argument: Northgate has not taken any affirmative steps to advance the FCC application since February 2023 — a period of nearly eleven months — and has not engaged with the WTB or the Committee for the Assessment of Foreign Participation to move the review process forward. This prolonged inaction, Ridgeline could argue, constitutes a failure to use commercially reasonable efforts in violation of Section 6.3, regardless of the cause of the underlying standstill.

We believe Northgate's position is the stronger one, as the standstill was precipitated by Ridgeline's own conduct, but the argument is not free from risk, particularly if Ridgeline can point to specific steps Northgate could have taken to advance the FCC review independently of the price dispute. This issue is analyzed further in Section V.C below.

H. Notice Provisions (Section 12.3)

Section 12.3 of the APA sets forth the requirements for all notices, requests, demands, and other communications required or permitted under the APA. All such communications are required to be in writing and are deemed duly given only if delivered by hand, by nationally recognized overnight courier service, or by certified mail, return receipt requested, postage prepaid, to the addresses specified in the APA.

The notice addresses are as follows:

If to Buyer: Northgate Wireless Americas Inc. 2200 Wilson Boulevard, Suite 1450 Arlington, Virginia 22201

Attention: General Counsel

With a copy (which shall not constitute notice) to: Calderwood & Harkness LLP 375 Park Avenue, 40th Floor New York, New York 10152

Attention: Sylvia Hartwell, Esq.

If to Seller: Ridgeline Wireless Holdings LLC 450 South Virginia Street, Suite 800 Reno, Nevada 89501

Attention: Garrett Nolan, Managing Member

With a copy (which shall not constitute notice) to: Hargrove, Sato & Caldwell LLP [Address on file]

Attention: Kevin Sato, Esq.

The significance of the notice provisions to the termination analysis cannot be overstated. A purported termination that does not comply with the formal notice requirements of Section 12.3 — for example, a termination communicated solely by email, telephone, or informal correspondence — may not be effective to terminate the APA. As discussed in Section IV.B below, neither party has delivered a formal termination notice in compliance with these requirements.

IV. Analysis: Has the APA Been Terminated?

A. Automatic Termination vs. Permissive Termination

The threshold question is whether the passage of the Long-Stop Date, without more, effectuated an automatic termination of the APA. We conclude that it did not.

The Long-Stop Date provision of Section 9.1 does not operate as an automatic termination trigger. The operative phrase — "may terminate this Agreement by written notice" — is unambiguously permissive. It creates an option available to either party, not a self-executing mechanism. The word "may" denotes a grant of discretionary authority, not a mandatory consequence. Had the parties intended for the APA to terminate automatically upon the passage of the Long-Stop Date, they would have used language such as "this Agreement shall automatically terminate" or "this Agreement shall be deemed terminated, without further action by either party." No such language appears in Section 9.1.

This interpretation is consistent with well-established contract law principles in virtually all U.S. jurisdictions. Under both Nevada and New York law — the two most likely candidates for the APA's governing law, depending on the choice-of-law clause, which we have flagged as an open question requiring confirmation — a contractual provision that uses permissive language to describe a party's right to terminate does not effectuate automatic termination absent an express statement to that effect.

Under Nevada law, contract interpretation follows the plain meaning of the language used by the parties. See Galardi v. Naples Polaris, LLC, 129 Nev. 306, 309 (2013) ("When a contract is clear on its face, it will be construed from the written language and enforced as written."). The word "may" in a contract provision is generally interpreted as granting a party discretion rather than imposing an obligation. See Reno Harborline Enterprises Resort Corp. v. Verderber, 121 Nev. 1, 5 (2005).

Similarly, under New York law, the Court of Appeals has consistently held that contractual termination provisions employing permissive language create rights that must be affirmatively exercised. See Kel Kim Corp. v. Central Markets, Inc., 70 N.Y.2d 900, 902 (1987) (noting that contractual provisions are interpreted according to their plain meaning). In the specific context of "drop-dead" or "long-stop" dates in acquisition agreements, New York courts have recognized that such provisions typically create options to terminate rather than automatic termination events. See, e.g., Genworth Fin., Inc. v. Vireo Assurance Fin. Prods. Corp., No. 09 Civ. 1644 (DAB), 2009 WL 3150907, at *6 (S.D.N.Y. Sept. 30, 2009).

The prevailing view in M&A practice and scholarship further supports this interpretation. Leading commentators on acquisition agreements uniformly treat long-stop date provisions with permissive language as creating optional termination rights rather than automatic termination events. See 1 Lou R. Kling & Eileen T. Nugent, Negotiated Acquisitions of Companies, Subsidiaries and Divisions § 13.06 (2023 ed.); Glenn D. West & W. Benton Lewis Jr., Contracting to Avoid Extra-Contractual Liability — Can Your Contractual Deal Ever Really Be the "Entire" Deal?, 64 Bus. Law. 999, 1034–35 (2009).

Accordingly, we conclude that the passage of the Long-Stop Date on September 30, 2023 did not, by itself, terminate the APA. The APA was not automatically terminated on that date, and it has not been automatically terminated at any point thereafter.

B. Neither Party Has Delivered a Termination Notice

As noted above, the exercise of the termination right under Section 9.1 requires the delivery of a written termination notice in accordance with the formal notice provisions of APA Section 12.3. Our review of the matter file confirms that no written termination notice has been delivered by either Northgate/NWA or Ridgeline pursuant to Section 9.1, Section 9.2, or any other provision of the APA.

The last substantive communication between the parties was the November 8, 2023 letter from Hargrove, Sato & Caldwell LLP (Kevin Sato) to Calderwood & Harkness LLP (Sylvia Hartwell). Based on our review of the internal file notes regarding this letter — the full text of which we recommend be retrieved and reviewed in its entirety — the letter addressed the status of the transaction and the ongoing price dispute but did not purport to constitute a formal termination notice under Section 9.1 or any other APA provision. The letter did not use the word "terminate" in an operative sense, and it was not framed as a notice delivered in accordance with Section 12.3. We note, however, that the precise language of the letter must be carefully reviewed to confirm this characterization, and we have flagged this as an open question in Section X below. If the letter contained language that could reasonably be construed as a termination notice — even if not formally denominated as such — the analysis would require further consideration.

The Extension Agreement dated April 22, 2023 further supports the conclusion that neither party intended to terminate the APA as of that date. The Extension Agreement was executed expressly "without prejudice to either party's position regarding the Purchase Price and the Seller's December 14, 2022 correspondence," confirming that both parties continued to treat the APA as a binding agreement with ongoing obligations. The execution of an amendment extending the Long-Stop Date is fundamentally inconsistent with any argument that either party had previously terminated or intended to terminate the APA.

Moreover, no oral communications, emails, or other informal statements by either party — to the extent any such communications occurred — would satisfy the written notice requirement of Section 9.1 as implemented through Section 12.3. The APA's notice provisions are specific and mandatory, requiring delivery by hand, overnight courier, or certified mail to the designated addresses. An email from Kevin Sato to Sylvia Hartwell, a telephone conversation between Garrett Nolan and Claire Matsuda, or any other informal communication would not constitute a valid termination notice under the APA, regardless of its content.

C. Conclusion: The APA Has Not Been Terminated

Based on the foregoing analysis, we conclude that the APA has not been terminated. The Long-Stop Date provision of Section 9.1 is permissive, not self-executing. Neither party has delivered a formal written termination notice in accordance with Section 9.1 and Section 12.3. No mutual termination agreement has been executed under Section 9.3. And no termination for breach has been effected under Section 9.2.

The APA therefore remains technically in force. Both parties continue to be bound by its terms, including their respective representations, warranties, covenants, and obligations. However, the APA exists in a state of suspended performance — neither party is actively pursuing closing, but neither has formally ended the contractual relationship. This state of affairs creates both opportunities and risks for Northgate, as discussed in the following sections.

V. Analysis: What Are Each Party's Termination Rights Now?

Having concluded that the APA has not been terminated, we turn to the question of what termination rights are currently available to each party. This analysis addresses the rights of both Northgate and Ridgeline under Section 9.1 (Long-Stop Date termination), Section 9.2 (termination for breach), and Section 9.3 (mutual termination).

A. Northgate's Right to Terminate Under Section 9.1

Northgate retains the right to terminate the APA under Section 9.1 by delivering a written termination notice to Ridgeline, citing the passage of the Long-Stop Date without closing. Because the Long-Stop Date has passed and the closing has not occurred, the textual prerequisites for the exercise of this right have been satisfied. Northgate may exercise this right at any time by delivering a notice that complies with the requirements of Section 12.3.

However, the exercise of this right is potentially subject to an important limitation. Many long-stop date provisions in acquisition agreements include a "contributing-fault carve-out" — a clause providing that a party may not terminate under the long-stop provision if that party's own breach of the agreement, or its failure to perform its obligations, was a proximate cause of the failure to close by the Long-Stop Date. The presence or absence of such a carve-out in Section 9.1 of the APA is a critical question that we have not been able to resolve definitively without a fresh review of the full APA text. We have flagged this as an open question in Section X below and strongly recommend that the APA be reviewed to confirm whether such a carve-out exists.

If Section 9.1 contains a contributing-fault carve-out, it will be necessary to evaluate whether Northgate's conduct during the standstill period constitutes a "contributing" breach or failure to perform. Ridgeline could argue that Northgate's failure to actively prosecute the FCC application after February 2023 contributed to the failure to close by the Long-Stop Date, and that this failure bars Northgate from invoking Section 9.1.

We believe this argument is weak. The standstill was precipitated by Ridgeline's December 14, 2022 demand for a $14,200,000 price adjustment — a demand that had no basis in the APA and that effectively rendered further prosecution of the FCC application futile in the absence of a resolution of the price dispute. Northgate's decision to pause active prosecution of the FCC application was a reasonable and commercially rational response to Ridgeline's unilateral disruption of the transaction. Moreover, Northgate did not abandon the FCC application; it maintained the application in filed status and responded to the WTB's information request in February 2023. The proximate cause of the failure to close was Ridgeline's wrongful price demand, not any inaction by Northgate.

If Section 9.1 does not contain a contributing-fault carve-out, Northgate's right to terminate under Section 9.1 is essentially unconditional, subject only to the procedural requirement of delivering a written notice.

B. Ridgeline's Right to Terminate Under Section 9.1

Ridgeline equally retains the textual right to terminate the APA under Section 9.1 by delivering written notice, as the Long-Stop Date has passed and the closing has not occurred. However, the same contributing-fault analysis applies in reverse, and with greater force against Ridgeline.

If Section 9.1 contains a contributing-fault carve-out, Ridgeline's right to invoke Section 9.1 may be barred. Ridgeline's demand for a $14,200,000 price adjustment — which had no contractual basis under the fixed-price provision of Section 3.1 — was the primary cause of the transaction standstill. Ridgeline's implied refusal to close at the agreed purchase price, communicated through its December 14, 2022 letter, was the event that precipitated the failure to close by either the original or extended Long-Stop Date. If Ridgeline's conduct constitutes a breach of the APA (as we believe it does, subject to the analysis in the separate C&H memorandum on the price adjustment demand), then Ridgeline may be precluded from invoking Section 9.1 to terminate the APA.

Ridgeline's potential counterargument is that no breach has occurred because it merely proposed a price adjustment and never formally refused to close at the agreed price. Ridgeline could argue that its December 14, 2022 letter was a negotiating communication, not an anticipatory repudiation, and that it remained willing to close at the agreed price if its price adjustment proposal was not accepted. We view this argument as difficult for Ridgeline to sustain given the plain language of its December 14, 2022 letter, which we understand to have conditioned Ridgeline's willingness to close on the payment of the increased price. However, the precise language of the letter would need to be carefully parsed to assess the strength of this counterargument.

If Section 9.1 does not contain a contributing-fault carve-out, Ridgeline would retain the theoretical right to terminate, but its exercise of that right would not insulate Ridgeline from liability for any pre-termination breach. Northgate could still pursue claims for damages arising from Ridgeline's wrongful price demand, even after termination.

C. Termination for Breach Under Section 9.2

Section 9.2 provides an alternative basis for termination that is independent of the Long-Stop Date. Under this provision, either party may terminate the APA if the other party is in material breach of any representation, warranty, covenant, or agreement and such breach is not cured within thirty (30) days after written notice thereof.

Northgate's potential Section 9.2 claim. Northgate may have grounds to terminate the APA for Ridgeline's material breach of Section 3.1 (fixed purchase price). If Ridgeline's December 14, 2022 demand for a $14,200,000 price adjustment, coupled with its implied refusal to close at $126,500,000, constitutes an anticipatory repudiation of the fixed-price obligation, then Northgate could deliver a Section 9.2 breach notice identifying this conduct as a material breach.

The principal analytical question is whether a demand for a price adjustment, without an express and unequivocal refusal to perform, rises to the level of material breach or anticipatory repudiation under applicable law. Under the Restatement (Second) of Contracts § 250, an anticipatory repudiation requires "a statement by the obligor to the obligee indicating that the obligor will commit a breach that would of itself give the obligee a claim for damages for total breach." A conditional demand for additional consideration, standing alone, may not satisfy this standard if it is framed as a negotiating position rather than an absolute refusal to perform. However, if Ridgeline's December 14, 2022 letter can be read as making Ridgeline's willingness to close contingent on the payment of an additional $14,200,000 — and if Ridgeline has consistently maintained this position for over a year without retreating from it — the argument for anticipatory repudiation becomes considerably stronger.

If Northgate elects to pursue termination under Section 9.2, it would need to deliver a formal breach notice to Ridgeline identifying the material breach with specificity and allowing Ridgeline thirty (30) days to cure. If Ridgeline fails to cure within the cure period — and the cure in this case would presumably require Ridgeline to retract its price adjustment demand and confirm its willingness to close at $126,500,000 — Northgate would then be entitled to terminate the APA for cause.

Ridgeline's potential Section 9.2 claim. Ridgeline could attempt to assert a cross-claim for termination under Section 9.2, arguing that Northgate has materially breached its obligation under Section 6.3 to use commercially reasonable efforts to obtain FCC consent. As discussed in Section III.G above, Ridgeline could point to Northgate's failure to take any affirmative steps to advance the FCC application since February 2023 as evidence of a breach of the efforts covenant.

We believe this argument faces significant obstacles. The commercially reasonable efforts standard does not require a party to take steps that would be futile or commercially irrational in light of the other party's own breach. Northgate's decision to pause prosecution of the FCC application was a direct and reasonable response to Ridgeline's unilateral disruption of the transaction. Moreover, Northgate maintained the application in filed status and responded to FCC inquiries through February 2023 — the point at which the standstill effectively foreclosed further progress. A court is unlikely to find that Northgate breached its efforts covenant by declining to invest resources in advancing a regulatory process for a transaction that Ridgeline had unilaterally rendered non-viable by its price demand.

Nevertheless, the argument is not frivolous, and Northgate should be aware that Ridgeline may raise it as a defense or counterclaim if termination or litigation is pursued.

D. Mutual Termination Under Section 9.3

Mutual termination under Section 9.3 remains available at any time if both parties agree in writing to terminate the APA. This may ultimately be the cleanest path to resolution if both parties determine that the transaction is no longer viable and wish to formalize the wind-down of their contractual relationship.

However, mutual termination requires negotiation, and the parties' competing interests make negotiation complex. The principal issues that would need to be addressed in a mutual termination agreement include: (i) the disposition of the $4,500,000 earnest money deposit (the most significant economic point); (ii) the scope of mutual releases; (iii) the withdrawal of the FCC application; and (iv) the termination of the Escrow Agreement. Given the unresolved price dispute and the parties' divergent positions regarding fault for the failure to close, mutual termination negotiations could be contentious.

VI. Status of the APA During Suspended Performance

A. Ongoing Obligations

If the APA has not been terminated — and we have concluded that it has not — then the APA's covenants and obligations continue to bind both parties, at least in theory. The following ongoing obligations are potentially relevant:

Commercially reasonable efforts (Section 6.3). Both parties remain technically obligated to use commercially reasonable efforts to obtain FCC consent and satisfy all regulatory closing conditions. As a practical matter, performance of this covenant has been suspended since approximately December 2022, and neither party has taken affirmative steps to advance the FCC application in nearly eleven months. The legal significance of this suspension is discussed in Section V.C above; the practical consequence is that the FCC application is at risk of administrative dismissal.

Confidentiality (Section 6.7). The parties' confidentiality obligations under the APA remain in full force and effect. Both parties are bound to maintain the confidentiality of all non-public information exchanged in connection with the transaction, including the terms of the APA, the purchase price, the structure of the transaction, and all due diligence materials. These obligations survive termination under Section 9.4 and will remain in effect regardless of whether the APA is ultimately terminated.

Exclusivity and no-shop provisions. We recommend confirming whether the APA contains any exclusivity or no-shop provisions applicable to Ridgeline's spectrum licenses. If such provisions exist, Ridgeline would be prohibited from soliciting or entertaining competing offers for the licenses during the term of the APA. If Ridgeline has engaged in discussions with other potential buyers during the standstill period — which is possible given Ridgeline's reference to a "competing bid" in its December 14, 2022 letter — such conduct could constitute a breach of any applicable exclusivity or no-shop covenant. This is flagged as an open question in Section X below.

Cooperation obligations. To the extent the APA imposes affirmative cooperation obligations on the parties — for example, obligations to provide information, execute ancillary documents, or participate in regulatory proceedings — those obligations remain in effect. The practical enforceability of such obligations during a transaction standstill is uncertain, but they remain legally binding until the APA is terminated.

B. Risk of Waiver or Estoppel

The prolonged period of inaction by both parties — now extending over thirteen months since the original Long-Stop Date and over three months since the extended Long-Stop Date — creates a meaningful risk of implied waiver or estoppel arguments.

Waiver. Under general contract law principles, a party may be deemed to have waived a contractual right if it fails to exercise that right within a reasonable time after the right accrues and the other party reasonably relies on the non-exercise. Here, Northgate's failure to deliver a termination notice under Section 9.1 for more than three months after the passage of the extended Long-Stop Date could, in theory, be characterized by Ridgeline as a waiver of Northgate's right to terminate. The strength of this argument depends on the applicable law's treatment of waiver in the context of contractual termination rights. Under both Nevada and New York law, waiver generally requires an intentional relinquishment of a known right, and mere silence or delay does not automatically constitute waiver. See, e.g., Clark County v. Bonanza No. 1, 96 Nev. 643, 650 (1980); Fundamental Portfolio Advisors, Inc. v. Tocqueville Asset Mgmt., L.P., 7 N.Y.3d 96, 104 (2006). Nevertheless, the risk increases with the passage of time, and we recommend that Northgate take steps to forestall any waiver argument.

Estoppel. Similarly, if Northgate's silence or inaction since November 2023 could be shown to have induced reasonable reliance by Ridgeline — for example, if Ridgeline took some action (such as entering into discussions with a third party) in reliance on a belief that Northgate had abandoned the transaction — Ridgeline could assert an estoppel defense to Northgate's exercise of its termination rights or breach claims.

Acquiescence. Northgate should also consider whether its failure to respond to the November 8, 2023 Hargrove Sato letter could be construed as acquiescence to any position asserted by Ridgeline in that letter. If the letter asserted, for example, that the APA had been effectively terminated or that Ridgeline was entitled to retain the escrow deposit, Northgate's silence could be argued to support an inference of agreement.

Recommendation. To mitigate these risks, we recommend that Northgate promptly send a formal reservation-of-rights letter to Ridgeline (through Hargrove, Sato & Caldwell LLP) confirming that: (i) Northgate does not waive any rights under the APA, including the right to terminate under Section 9.1 and the right to pursue claims for breach; (ii) the APA remains in full force and effect; and (iii) Northgate reserves all remedies available to it under the APA, at law, and in equity. A draft of such a letter can be prepared upon instruction from the deal team.

C. Statute of Limitations Considerations

The ongoing dormancy of the transaction also implicates statute-of-limitations considerations. If either party intends to assert claims for breach of contract arising from the other party's conduct, the applicable statute of limitations will govern the time period within which such claims must be commenced.

Accrual date. The statute of limitations for breach of contract claims generally begins to run upon the date of the breach or upon the date when the claimant knew or should have known of the breach. If Ridgeline's December 14, 2022 price adjustment demand is treated as the date of breach (or, alternatively, as the date of anticipatory repudiation), the statute of limitations for Northgate's breach claim began running on that date. However, if the breach is characterized as a continuing breach or a failure to perform at closing, the accrual date could be later — potentially as late as the Long-Stop Date or the date on which Northgate demanded performance.

Applicable limitation periods. The statute of limitations for breach of a written contract is six (6) years under both Nevada law (NRS § 11.190(1)(b)) and New York law (CPLR § 213(2)). Taking December 14, 2022 as the earliest potential accrual date, the statute of limitations would not expire until December 14, 2028, at the earliest. Accordingly, there is no immediate statute-of-limitations concern as of the date of this memorandum.

Nevertheless, ongoing dormancy compresses the window for asserting claims, and unexpected developments — such as a change in law, the discovery of additional facts, or the need to join claims with a shorter limitations period — could alter the calculus. We recommend that the limitations period be monitored as part of the overall matter management.

VII. Implications for the FCC Application

The status of the APA is inextricably linked to the status of the pending FCC application. FCC File No. 0010287-EX — the Form 603 assignment application and Section 310(b)(4) petition — remains pending before the FCC Wireless Telecommunications Bureau but has been effectively dormant since approximately February 2023, when NWA filed its response to the WTB's information request letter.

If the APA is terminated, the FCC application becomes moot and should be promptly withdrawn. Under FCC rules and practice, an applicant that no longer intends to consummate the underlying transaction should withdraw the assignment application to avoid burdening the Commission's administrative resources. Failure to withdraw a moot application could also create complications if Northgate or Ridgeline subsequently seeks to file a new assignment application involving any of the same licenses. Withdrawal would be accomplished by filing a letter with the WTB requesting dismissal of FCC File No. 0010287-EX.

If the APA is not terminated, the FCC application should be maintained or, at minimum, placed in abeyance to preserve Northgate's optionality. However, maintaining the application in its current dormant state creates risks. WTB staff have informally indicated to Broadfield Whitaker LLP (Annette Galvez) that the application may be subject to dismissal for failure to prosecute if the underlying transaction is not reactivated. Our understanding is that the WTB staff communicated this concern in approximately Q3 2023, suggesting that the application could face dismissal action if no progress is shown by approximately Q4 2023 — a window that may already have passed. Broadfield Whitaker should be consulted immediately to assess the current WTB posture and any pending dismissal risk.

If the FCC dismisses the application, and the parties subsequently determine to reactivate the transaction, they would need to refile the Form 603 and Section 310(b)(4) petition, effectively restarting the entire regulatory review process. This would include a new public notice period, a new comment and petition-to-deny period, a new WTB review, and a new Committee for the Assessment of Foreign Participation review — a process that could take six to twelve months or longer, depending on the complexity of the issues and the Commission's workload. The refiling would also provide Great Basin Rural Broadband Cooperative (or any other interested party) with a new opportunity to file objections or petitions to deny.

If the APA is to be maintained in force and the FCC application is to be preserved, the parties would ideally file a joint status update or a joint request for abeyance with the WTB, advising the Commission that the transaction remains pending and requesting that the application be held in abeyance pending resolution of a commercial dispute between the parties. Such a filing would require Ridgeline's cooperation, which is uncertain given the current state of the parties' relationship. If Ridgeline is unwilling to cooperate in filing a joint status update, NWA could file a unilateral status report advising the WTB that the transaction remains pending, but the effectiveness of such a filing in forestalling a dismissal action is less certain.

An additional regulatory concern relates to three of the fourteen licenses — specifically, the Oregon licenses with call signs WQAB212, WQAB213, and WQAB214. These licenses are subject to interim buildout benchmarks under the FCC's performance requirements for Meridian Technologies-3 licensees. Our understanding is that the next interim buildout benchmark for these licenses falls in March 2025. If Ridgeline fails to meet these buildout requirements — which may become increasingly difficult if the spectrum is tied up in a dormant transaction — the licenses could face adverse regulatory action, including potential automatic termination by the FCC. Prolonged dormancy of the APA and the FCC application therefore increases regulatory risk for these specific licenses, which in turn could affect the value and viability of the overall transaction.

Cross-reference is made to separate Calderwood & Harkness memoranda on FCC application options (maintain, revive, or withdraw) and regulatory timeline and dismissal risk, which should be reviewed in conjunction with this memorandum.

VIII. Implications for the Escrow Deposit

The $4,500,000 earnest money deposit funded by NWA on September 30, 2022 remains held by Meridian National Bank, N.A. (the Escrow Agent, Sandra Okonkwo) pursuant to the terms of the Escrow Agreement of even date. The disposition of the escrow deposit upon termination of the APA is governed by the Escrow Agreement, not the APA itself, although the APA's termination provisions interact with the Escrow Agreement's release conditions.

The key question is: under what APA termination scenarios is the deposit returned to Northgate, and under what scenarios is the deposit released to Ridgeline?

The following scenarios require analysis:

Scenario 1: Northgate terminates under Section 9.1 (Long-Stop Date). If Northgate delivers a valid termination notice under Section 9.1, the Escrow Agreement provisions governing deposit disposition upon a Long-Stop Date termination must be examined. Many escrow agreements in comparable transactions provide for the return of the earnest money deposit to the buyer upon a Long-Stop Date termination, on the rationale that the failure to close is attributable to the non-satisfaction of mutual conditions precedent (in this case, FCC consent) rather than to the buyer's default. However, the specific terms of the Escrow Agreement must be reviewed to confirm this result. If the Escrow Agreement conditions deposit return on the absence of buyer default, Ridgeline could argue that Northgate's alleged failure to use commercially reasonable efforts to advance the FCC application constitutes a default that forfeits the deposit.

Scenario 2: Ridgeline terminates for Northgate's alleged breach. If Ridgeline delivers a termination notice under Section 9.2 alleging Northgate's material breach of the efforts covenant, the escrow deposit may be at risk of forfeiture to Ridgeline. Many escrow agreements provide for the release of the earnest money deposit to the seller as liqu

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT This memorandum is a privileged and confidential attorney-client communication and attorney work product. It is intended solely for the use of the addressees identified herein. Any disclosure, distribution, or copying of this memorandum or its contents to any person other than the addressees or their authorized representatives is strictly prohibited. If you have received this memorandum in error, please notify Calderwood & Harkness LLP immediately.
CALDERWOOD & HARKNESS LLP 375 Park Avenue, 40th Floor New York, New York 10152
MEMORANDUM
I. Executive Summary
The purpose of this memorandum is to analyze the termination rights of both parties under the Asset Purchase Agreement dated September 22, 2022 (the "APA"), by and between Ridgeline Wireless Holdings LLC ("Ridgeline" or "Seller") and Northgate Wireless Americas Inc. ("NWA" or "Buyer"), following the passage of the extended Long-Stop Date of September 30, 2023, without the consummation of the closing contemplated thereunder. This analysis is undertaken at the request of the deal team to evaluate the current legal status of the APA and to advise on the strategic options available to our client, Northgate Telecommunications PLC ("NTP" or "Northgate"), the ultimate parent entity of NWA.
The APA governs the purchase and assignment of fourteen (14) FCC Wireless Radio Service licenses in the Meridian Technologies-3/Band 66 spectrum block (call signs WQAB201 through WQAB214) for a fixed purchase price of $126,500,000. The licenses cover Economic Areas in Nevada, eastern California, and southern Oregon, representing approximately 39 MHz of paired spectrum (78 MHz total paired bandwidth) and covering approximately 3.84 million POPs. The transaction was structured as a bare license transfer; Ridgeline's approximately 142,000 subscriber accounts were not included in the sale.
The original Long-Stop Date under the APA was March 15, 2023. Following the failure of the closing to occur by that date — principally as a result of a dispute over Ridgeline's unilateral demand for a $14,200,000 upward purchase price adjustment — the parties executed an Extension Agreement dated April 22, 2023, which extended the Long-Stop Date to September 30, 2023, expressly without prejudice to either party's position regarding the underlying price dispute. The extended Long-Stop Date of September 30, 2023 has now passed without the closing having occurred.
As of the date of this memorandum, neither party has delivered a written termination notice pursuant to Section 9.1 of the APA or any other termination provision. The last substantive communication between the parties occurred on November 8, 2023, when Hargrove, Sato & Caldwell LLP, counsel to Ridgeline, transmitted a letter to Calderwood & Harkness LLP, the substance of which is discussed further below. That letter has not been formally responded to by this firm.
The central questions addressed in this memorandum are: (1) whether the APA has been effectively terminated by operation of its terms following the passage of the Long-Stop Date; (2) whether the APA continues in a state of suspended performance; and (3) what rights and obligations remain available to each party under the current circumstances.
Our summary conclusion is as follows: The APA has not been automatically terminated. The Long-Stop Date provisions of Section 9.1 create a right to terminate but require the affirmative exercise of that right by delivery of a written notice in accordance with the APA's notice provisions. No such notice has been delivered by either party. Accordingly, the APA likely persists in a state of suspended animation, with both parties retaining the right to terminate and, conversely, the theoretical right to demand performance, subject to the fulfillment of all outstanding closing conditions (including, critically, FCC consent and Committee for the Assessment of Foreign Participation clearance, neither of which has been obtained). Prolonged inaction by both parties creates meaningful risks, including potential waiver and estoppel arguments, FCC application dismissal, and strategic disadvantage, and we recommend that Northgate take immediate steps to preserve its position.
II. Background and Transaction Summary
A. The Parties
Buyer. The Buyer under the APA is Northgate Wireless Americas Inc. ("NWA"), a corporation organized under the laws of the State of Delaware (Secretary of State File No. 7284619), with its principal office at 2200 Wilson Boulevard, Suite 1450, Arlington, Virginia 22201. NWA is a wholly owned subsidiary of Northgate US Holdings LLC, a Delaware limited liability company, which is itself wholly owned by Northgate Telecommunications PLC ("NTP" or "Northgate"), a public limited company incorporated under the laws of England and Wales (Companies House No. 08473291), whose ordinary shares are listed on the London Stock Exchange under the ticker symbol NGTL. NTP is a diversified telecommunications group with operations in the United Kingdom, continental Europe, and, through its NWA subsidiary, a growing presence in the United States wireless market. The NTP group's interest in acquiring the Ridgeline spectrum licenses reflects its strategic objective of building a U.S. wireless footprint in the western region.
Seller. The Seller and assignor under the APA is Ridgeline Wireless Holdings LLC ("Ridgeline"), a limited liability company organized under the laws of the State of Nevada (Nevada Secretary of State Entity No. E0428716302), with its principal office at 450 South Virginia Street, Suite 800, Reno, Nevada 89501. Ridgeline is a privately held wireless operator that has held the subject spectrum licenses since 2018, when it acquired certain of them from the FCC through the Meridian Technologies-3 auction (Auction 97) and the remainder through secondary market transactions.
The membership interests in Ridgeline are held as follows: Garrett Nolan (62%, Founder and Managing Member), Diane Chua (18%, Co-Managing Member and Chief Operating Officer), Pinnacle Growth Capital Fund II LP (12%, a private equity fund with contractual change-of-control consent rights under Ridgeline's operating agreement), and Crestwood Family Office LLC (8%, passive investor with no management or governance rights). The participation of Pinnacle Growth Capital Fund II LP as a member with change-of-control consent rights is potentially relevant to the transaction structure, as any assignment of the APA or modification of the deal terms may require Pinnacle's approval. We have not been asked to analyze the Ridgeline operating agreement, and our analysis herein is limited to the APA and ancillary transaction documents.
Ridgeline is represented in this transaction by Hargrove, Sato & Caldwell LLP, with Kevin Sato serving as lead partner and Mariana Quelibo as working associate. All formal communications between the parties have been channeled through their respective outside counsel.
B. Transaction Structure
The transaction is structured as an asset purchase of fourteen (14) FCC spectrum licenses in the Meridian Technologies-3/Band 66 frequency band, governed by Part 27 of the FCC's Rules. The licenses cover designated Economic Areas ("EAs") in the states of Nevada, eastern California, and southern Oregon. Together, the fourteen licenses represent 39 MHz of paired spectrum (78 MHz total paired bandwidth, including both uplink and downlink), covering a population base of approximately 3.84 million POPs.
The transaction is a bare license transfer. Ridgeline's wireless subscriber base of approximately 142,000 accounts, together with all associated customer contracts, network infrastructure, tower leases, and operational assets, are excluded from the scope of the APA. The parties' intent, as reflected in the APA's recitals and definitions, was for NWA to acquire the spectrum licenses free and clear of any operational encumbrances, permitting NWA to deploy the spectrum in accordance with Northgate's broader U.S. wireless strategy.
The aggregate purchase price for the fourteen licenses is $126,500,000 (one hundred twenty-six million five hundred thousand dollars), payable in cash at closing. This price is fixed under Section 3.1 of the APA. There is no adjustment mechanism, no market-flex provision, no re-pricing clause, and no earn-out or contingent consideration component. On a per-MHz-POP basis, the purchase price equates to approximately $0.845 per MHz-POP, which was consistent with comparable Meridian Technologies-3 secondary market transactions at the time of execution.
To secure Buyer's performance obligations under the APA, NWA funded an earnest money deposit in the amount of $4,500,000 into an escrow account maintained by Meridian National Bank, N.A. (the "Escrow Agent"), under the supervision of Sandra Okonkwo, Senior Vice President and Escrow Officer. The earnest money deposit was funded on September 30, 2022, in accordance with the terms of a separate Escrow Agreement of even date (the "Escrow Agreement"). The disposition of the earnest money deposit upon termination of the APA is governed by the terms of the Escrow Agreement, which is analyzed in a separate Calderwood & Harkness memorandum cross-referenced herein.
C. Key Timeline
The following is a chronological summary of the principal events in the transaction:
• June 15, 2022: Letter of Intent ("LOI") executed by NWA and Ridgeline, establishing exclusivity and key commercial terms.
• September 22, 2022: Asset Purchase Agreement executed by NWA (as Buyer) and Ridgeline (as Seller).
• September 30, 2022: Earnest money deposit of $4,500,000 funded by NWA into the Meridian National Bank, N.A. escrow account pursuant to the Escrow Agreement of even date.
• October 14, 2022: FCC Form 603 (Application for Assignment of Authorization) and accompanying Section 310(b)(4) petition filed with the FCC Wireless Telecommunications Bureau ("WTB"), seeking consent to the assignment of all fourteen licenses from Ridgeline to NWA and a declaratory ruling permitting indirect foreign ownership of NWA by NTP (a UK-incorporated entity). The filing was assigned FCC File No. 0010287-EX.
• October 28, 2022: FCC accepted the application for filing and placed it on public notice for the commencement of the comment period.
• November 3, 2022: FCC issued public notice of the application; thirty-day comment and petition-to-deny period opened.
• November 28, 2022: Great Basin Rural Broadband Cooperative ("Great Basin") filed an informal objection to the application, raising concerns regarding the Section 310(b)(4) foreign ownership implications of the transaction and alleging potential competitive harm in the rural Nevada service areas. Great Basin did not file a formal petition to deny.
• December 5, 2022: Comment and petition-to-deny period closed. No formal petitions to deny were filed. The Great Basin informal objection was the only adverse filing.
• December 9, 2022: Northgate, through Broadfield Whitaker LLP (regulatory counsel), filed an opposition to the Great Basin informal objection, arguing that the objection failed to meet the standing requirements for a petition to deny and that the Section 310(b)(4) analysis was straightforward given the United Kingdom's status as a close U.S. ally with a well-established regulatory framework.
• December 14, 2022: Ridgeline, through Hargrove, Sato & Caldwell LLP, delivered a letter to Calderwood & Harkness LLP demanding an upward purchase price adjustment of $14,200,000 (from $126,500,000 to $140,700,000). The demand was based on Ridgeline's allegation of a post-signing competing bid from an unnamed third party for the California-market licenses (EA Nos. 155 and 159). This letter precipitated the price dispute that has stalled the transaction.
• December 19, 2022: Northgate, through Calderwood & Harkness LLP, delivered a letter to Hargrove, Sato & Caldwell LLP rejecting the price adjustment demand in its entirety, citing the fixed-price provision of APA Section 3.1 and the absence of any contractual basis for post-signing revaluation. Northgate expressly reserved all rights under the APA. The transaction standstill effectively commenced on this date.
• January 19, 2023: FCC WTB issued an information request letter to NWA, requesting additional details regarding NTP's corporate governance structure, board composition, shareholder register, and foreign government ownership or control, in connection with the pending Section 310(b)(4) petition.
• February 10, 2023: NWA, through Broadfield Whitaker LLP, filed a comprehensive response to the WTB information request, providing detailed corporate governance and ownership disclosures. This was the last substantive filing made in FCC File No. 0010287-EX.
• March 15, 2023: Original APA Long-Stop Date passed without closing. Neither party delivered a termination notice.
• April 22, 2023: Extension Agreement executed by NWA and Ridgeline, extending the Long-Stop Date from March 15, 2023 to September 30, 2023. The Extension Agreement was entered into expressly "without prejudice to either party's position regarding the Purchase Price and the Seller's December 14, 2022 correspondence." No other terms of the APA were modified.
• September 30, 2023: Extended Long-Stop Date passed without closing. No termination notice was delivered by either party on or after this date.
• November 8, 2023: Hargrove, Sato & Caldwell LLP (Kevin Sato) transmitted a letter to Calderwood & Harkness LLP (Sylvia Hartwell). This is the last substantive inter-party communication. The full substance of this letter requires confirmation and review; our understanding, based on internal notes, is that the letter addressed the status of the transaction and the price dispute but did not purport to deliver a formal termination notice. This letter has not been formally responded to by Calderwood & Harkness.
• January 15, 2024: Internal Calderwood & Harkness dormancy status memorandum prepared (this memorandum).
D. The Purchase Price Dispute
The transaction standstill is attributable to a dispute over the purchase price. On December 14, 2022, Ridgeline, through Hargrove, Sato & Caldwell LLP, delivered a letter to Calderwood & Harkness LLP demanding an upward purchase price adjustment of $14,200,000. Ridgeline asserted that it had received a post-signing competing bid from an unnamed third party for the California-market licenses (specifically, the licenses covering Economic Area Nos. 155 and 159), and that the existence of this competing bid materially altered the value of the license portfolio. Ridgeline demanded that the aggregate purchase price be increased from $126,500,000 to $140,700,000 — an increase of approximately 11.2%.
Northgate rejected this demand on December 19, 2022, citing the unambiguous fixed-price provision of APA Section 3.1, which establishes the purchase price at $126,500,000 without any adjustment mechanism, market-flex provision, or re-pricing clause. Northgate's position, which we believe is well-supported by the plain language of the APA, is that no contractual basis exists for a post-signing price adjustment and that Ridgeline's demand constitutes an attempt to unilaterally renegotiate the economic terms of a binding agreement. Northgate expressly reserved all rights under the APA, including the right to seek specific performance and damages.
This dispute is the primary reason the transaction has not progressed to closing. Since the exchange of the December 2022 letters, neither party has taken affirmative steps to advance the transaction toward closing, and the FCC application has remained dormant since approximately February 2023.
The legal analysis of Ridgeline's price adjustment demand under APA Section 3.1 — including whether the demand constitutes an anticipatory repudiation or material breach — is the subject of a separate Calderwood & Harkness memorandum, which is cross-referenced in Section X of this memorandum.
III. Relevant APA Provisions
This section summarizes the APA provisions most relevant to the termination rights analysis. All section references are to the APA unless otherwise noted.
A. Section 3.1 — Purchase Price
Section 3.1 of the APA establishes the purchase price for the fourteen spectrum licenses at a fixed amount of $126,500,000, payable in immediately available funds at closing. The provision is unambiguous: it states that the purchase price is "fixed and shall not be subject to adjustment for any reason." The APA contains no market-flex clause, no re-pricing mechanism, no earn-out provision, and no contractual basis for post-signing revaluation based on third-party competing bids or changes in market conditions.
The relevance of this provision to the termination rights analysis is significant. Ridgeline's refusal to proceed to closing at the agreed purchase price — and its insistence on an additional $14,200,000 — may constitute a breach of Ridgeline's obligations under the APA, or at minimum, an unequivocal refusal to perform its closing obligations at the contractually specified price. This characterization bears directly on the analysis of termination rights under Sections 9.1 and 9.2, as discussed in Sections IV and V below.
B. Closing Conditions (Section 7)
The APA sets forth detailed closing conditions that must be satisfied or waived as a prerequisite to the obligation of either party to consummate the closing. These conditions fall into three categories: mutual conditions (Section 7.1), conditions to Buyer's obligation to close (Section 7.2), and conditions to Seller's obligation to close (Section 7.3).
Mutual conditions to closing (Section 7.1) include:
(a) FCC consent to the assignment of all fourteen licenses, as evidenced by the grant of the FCC Form 603 application (FCC File No. 0010287-EX);
(b) A declaratory ruling by the FCC pursuant to Section 310(b)(4) of the Communications Act approving the indirect foreign ownership of NWA by NTP;
(c) Clearance by the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Market (established by Executive Order 13913), or the expiration of the applicable review period without adverse action;
(d) The absence of any governmental order, injunction, or decree prohibiting or restraining the consummation of the closing.
Conditions to Buyer's obligation to close (Section 7.2) include the accuracy in all material respects of Seller's representations and warranties as of the closing date, Seller's compliance in all material respects with its pre-closing covenants, and the delivery by Seller of all required closing deliverables (including executed assignment applications, officer's certificates, and legal opinions).
Conditions to Seller's obligation to close (Section 7.3) include the accuracy in all material respects of Buyer's representations and warranties as of the closing date, Buyer's compliance in all material respects with its pre-closing covenants, and the delivery by Buyer of the purchase price.
Current status of conditions. As of the date of this memorandum, the following mutual closing conditions remain outstanding:
• FCC consent: The FCC Form 603 application (FCC File No. 0010287-EX) remains pending but has been effectively dormant since approximately February 2023, when NWA filed its response to the WTB information request. No grant has been issued. The application has not been denied or dismissed.
• Section 310(b)(4) declaratory ruling: No ruling has been issued. The WTB's review of the Section 310(b)(4) petition is bound up with the FCC Form 603 application and has likewise been dormant.
• Committee for the Assessment of Foreign Participation clearance: The Committee review has been initiated but no formal clearance has been issued. No adverse findings have been communicated to NWA or its regulatory counsel, Broadfield Whitaker LLP, but the absence of formal clearance means this condition remains unsatisfied.
The failure to satisfy any one of these mutual closing conditions would excuse both parties from the obligation to close. As discussed further below, the dormancy of the FCC application is a direct consequence of the transaction standstill precipitated by the purchase price dispute.
C. Long-Stop Date Provision (Section 9.1)
Section 9.1 of the APA, titled "Termination for Failure to Close by the Long-Stop Date," is the provision most directly at issue in this analysis. As originally drafted, Section 9.1 provided that either party "may terminate this Agreement by written notice to the other party" if the closing had not occurred on or before March 15, 2023 (the "Long-Stop Date").
The Extension Agreement dated April 22, 2023 amended Section 9.1 to substitute September 30, 2023 for March 15, 2023 as the Long-Stop Date. All other terms of Section 9.1 remained unchanged.
The operative language of Section 9.1, as amended, provides in relevant part:
"If the Closing shall not have occurred on or before September 30, 2023 (the 'Long-Stop Date'), either Buyer or Seller may terminate this Agreement by delivering written notice of such termination to the other party in accordance with Section 12.3."
Several features of this provision are critical to the analysis:
First, the Long-Stop Date provision is permissive, not mandatory. The use of the word "may" — as opposed to "shall" or "is hereby terminated" — creates an option to terminate, not an automatic termination trigger. The APA does not self-execute upon the passage of the Long-Stop Date.
Second, the termination right under Section 9.1 requires affirmative exercise by the party electing to terminate. The mechanism for exercise is the delivery of a written notice to the other party in accordance with the APA's formal notice provisions (Section 12.3).
Third, no termination notice has been delivered by either party under Section 9.1 as of the date of this memorandum.
Whether Section 9.1 contains a "contributing-fault carve-out" — i.e., a provision barring a party from invoking Section 9.1 if that party's own breach or failure to perform contributed to the failure to close by the Long-Stop Date — is a question that requires further review of the APA text. Many comparable long-stop provisions include such a carve-out, and its presence or absence will materially affect the analysis of each party's right to terminate under this section. We have flagged this as an open question in Section X below.
D. Termination for Breach (Section 9.2)
Section 9.2 of the APA provides that either party may terminate the Agreement if the other party is in material breach of any representation, warranty, covenant, or agreement contained in the APA and such breach is not cured within thirty (30) days after the non-breaching party has delivered written notice thereof to the breaching party. Section 9.2 operates independently of Section 9.1 and provides an alternative basis for termination.
The applicability of Section 9.2 to the current circumstances raises two principal analytical questions:
First, whether Ridgeline's demand for a $14,200,000 purchase price adjustment — and its implied refusal to close at the contractual price of $126,500,000 — constitutes a material breach of APA Section 3.1, or alternatively, an anticipatory repudiation of Ridgeline's closing obligations. If so, Northgate may be entitled to deliver a breach notice under Section 9.2 and, following expiration of the 30-day cure period, terminate the APA for cause.
Second, whether Northgate's failure to actively prosecute the FCC application during the standstill period (from approximately December 2022 through the present) could be characterized by Ridgeline as a breach of Northgate's covenant under Section 6.3 to use commercially reasonable efforts to obtain FCC consent. If so, Ridgeline could argue that it has independent grounds for termination under Section 9.2.
These questions are analyzed in greater detail in Section V below.
E. Mutual Termination (Section 9.3)
Section 9.3 provides that the APA may be terminated at any time by the mutual written agreement of Buyer and Seller. This is a standard mutual termination provision and requires no further analysis except to note that no mutual termination agreement has been executed, and any such agreement would necessarily require negotiation of the escrow deposit disposition, mutual releases, and related matters.
F. Effect of Termination (Section 9.4)
Section 9.4 sets forth the consequences of a valid termination of the APA. Upon termination in accordance with Section 9.1, 9.2, or 9.3, the APA "shall become void and of no further force or effect," and no party shall have any further liability or obligation to the other party under the APA, except that the following provisions survive termination:
(a) The confidentiality obligations of the parties under Section 6.7;
(b) The indemnification obligations of the parties with respect to any breach occurring prior to the date of termination, as set forth in Article 10;
(c) The provisions of the Escrow Agreement governing the disposition of the earnest money deposit; and
(d) The general provisions of Article 12 (including governing law, dispute resolution, and notices).
The survival of the Escrow Agreement provisions is particularly significant, as the disposition of the $4,500,000 earnest money deposit will be governed by the terms of the Escrow Agreement rather than the APA itself. The escrow deposit disposition analysis is the subject of a separate Calderwood & Harkness memorandum, which is cross-referenced in Sections VIII and X of this memorandum.
G. Effort Covenants (Section 6.3)
Section 6.3 of the APA imposes reciprocal obligations on both parties to use "commercially reasonable efforts" to obtain FCC consent to the assignment of the fourteen spectrum licenses and to satisfy all regulatory closing conditions as promptly as practicable. The covenant extends to both the FCC Form 603 assignment application and the Section 310(b)(4) petition, as well as the Committee for the Assessment of Foreign Participation review.
The scope and content of the "commercially reasonable efforts" standard is significant to the analysis of potential breach arguments by either party:
Northgate's position: The FCC application was timely filed on October 14, 2022, and actively prosecuted through February 10, 2023, including the filing of a comprehensive response to the WTB information request. The standstill in the FCC proceeding was directly caused by Ridgeline's wrongful and extra-contractual demand for a $14,200,000 price adjustment, which rendered it impractical for either party to advance the transaction toward closing. Northgate continued to respond to FCC inquiries and maintained the application in filed status. No affirmative step by Northgate could have advanced the application in the absence of Ridgeline's cooperation and willingness to close on the contractual terms.
Ridgeline's potential argument: Northgate has not taken any affirmative steps to advance the FCC application since February 2023 — a period of nearly eleven months — and has not engaged with the WTB or the Committee for the Assessment of Foreign Participation to move the review process forward. This prolonged inaction, Ridgeline could argue, constitutes a failure to use commercially reasonable efforts in violation of Section 6.3, regardless of the cause of the underlying standstill.
We believe Northgate's position is the stronger one, as the standstill was precipitated by Ridgeline's own conduct, but the argument is not free from risk, particularly if Ridgeline can point to specific steps Northgate could have taken to advance the FCC review independently of the price dispute. This issue is analyzed further in Section V.C below.
H. Notice Provisions (Section 12.3)
Section 12.3 of the APA sets forth the requirements for all notices, requests, demands, and other communications required or permitted under the APA. All such communications are required to be in writing and are deemed duly given only if delivered by hand, by nationally recognized overnight courier service, or by certified mail, return receipt requested, postage prepaid, to the addresses specified in the APA.
The notice addresses are as follows:
If to Buyer: Northgate Wireless Americas Inc. 2200 Wilson Boulevard, Suite 1450 Arlington, Virginia 22201
Attention: General Counsel
With a copy (which shall not constitute notice) to: Calderwood & Harkness LLP 375 Park Avenue, 40th Floor New York, New York 10152
Attention: Sylvia Hartwell, Esq.
If to Seller: Ridgeline Wireless Holdings LLC 450 South Virginia Street, Suite 800 Reno, Nevada 89501
Attention: Garrett Nolan, Managing Member
With a copy (which shall not constitute notice) to: Hargrove, Sato & Caldwell LLP [Address on file]
Attention: Kevin Sato, Esq.
The significance of the notice provisions to the termination analysis cannot be overstated. A purported termination that does not comply with the formal notice requirements of Section 12.3 — for example, a termination communicated solely by email, telephone, or informal correspondence — may not be effective to terminate the APA. As discussed in Section IV.B below, neither party has delivered a formal termination notice in compliance with these requirements.
IV. Analysis: Has the APA Been Terminated?
A. Automatic Termination vs. Permissive Termination
The threshold question is whether the passage of the Long-Stop Date, without more, effectuated an automatic termination of the APA. We conclude that it did not.
The Long-Stop Date provision of Section 9.1 does not operate as an automatic termination trigger. The operative phrase — "may terminate this Agreement by written notice" — is unambiguously permissive. It creates an option available to either party, not a self-executing mechanism. The word "may" denotes a grant of discretionary authority, not a mandatory consequence. Had the parties intended for the APA to terminate automatically upon the passage of the Long-Stop Date, they would have used language such as "this Agreement shall automatically terminate" or "this Agreement shall be deemed terminated, without further action by either party." No such language appears in Section 9.1.
This interpretation is consistent with well-established contract law principles in virtually all U.S. jurisdictions. Under both Nevada and New York law — the two most likely candidates for the APA's governing law, depending on the choice-of-law clause, which we have flagged as an open question requiring confirmation — a contractual provision that uses permissive language to describe a party's right to terminate does not effectuate automatic termination absent an express statement to that effect.
Under Nevada law, contract interpretation follows the plain meaning of the language used by the parties. See Galardi v. Naples Polaris, LLC, 129 Nev. 306, 309 (2013) ("When a contract is clear on its face, it will be construed from the written language and enforced as written."). The word "may" in a contract provision is generally interpreted as granting a party discretion rather than imposing an obligation. See Reno Harborline Enterprises Resort Corp. v. Verderber, 121 Nev. 1, 5 (2005).
Similarly, under New York law, the Court of Appeals has consistently held that contractual termination provisions employing permissive language create rights that must be affirmatively exercised. See Kel Kim Corp. v. Central Markets, Inc., 70 N.Y.2d 900, 902 (1987) (noting that contractual provisions are interpreted according to their plain meaning). In the specific context of "drop-dead" or "long-stop" dates in acquisition agreements, New York courts have recognized that such provisions typically create options to terminate rather than automatic termination events. See, e.g., Genworth Fin., Inc. v. Vireo Assurance Fin. Prods. Corp., No. 09 Civ. 1644 (DAB), 2009 WL 3150907, at *6 (S.D.N.Y. Sept. 30, 2009).
The prevailing view in M&A practice and scholarship further supports this interpretation. Leading commentators on acquisition agreements uniformly treat long-stop date provisions with permissive language as creating optional termination rights rather than automatic termination events. See 1 Lou R. Kling & Eileen T. Nugent, Negotiated Acquisitions of Companies, Subsidiaries and Divisions § 13.06 (2023 ed.); Glenn D. West & W. Benton Lewis Jr., Contracting to Avoid Extra-Contractual Liability — Can Your Contractual Deal Ever Really Be the "Entire" Deal?, 64 Bus. Law. 999, 1034–35 (2009).
Accordingly, we conclude that the passage of the Long-Stop Date on September 30, 2023 did not, by itself, terminate the APA. The APA was not automatically terminated on that date, and it has not been automatically terminated at any point thereafter.
B. Neither Party Has Delivered a Termination Notice
As noted above, the exercise of the termination right under Section 9.1 requires the delivery of a written termination notice in accordance with the formal notice provisions of APA Section 12.3. Our review of the matter file confirms that no written termination notice has been delivered by either Northgate/NWA or Ridgeline pursuant to Section 9.1, Section 9.2, or any other provision of the APA.
The last substantive communication between the parties was the November 8, 2023 letter from Hargrove, Sato & Caldwell LLP (Kevin Sato) to Calderwood & Harkness LLP (Sylvia Hartwell). Based on our review of the internal file notes regarding this letter — the full text of which we recommend be retrieved and reviewed in its entirety — the letter addressed the status of the transaction and the ongoing price dispute but did not purport to constitute a formal termination notice under Section 9.1 or any other APA provision. The letter did not use the word "terminate" in an operative sense, and it was not framed as a notice delivered in accordance with Section 12.3. We note, however, that the precise language of the letter must be carefully reviewed to confirm this characterization, and we have flagged this as an open question in Section X below. If the letter contained language that could reasonably be construed as a termination notice — even if not formally denominated as such — the analysis would require further consideration.
The Extension Agreement dated April 22, 2023 further supports the conclusion that neither party intended to terminate the APA as of that date. The Extension Agreement was executed expressly "without prejudice to either party's position regarding the Purchase Price and the Seller's December 14, 2022 correspondence," confirming that both parties continued to treat the APA as a binding agreement with ongoing obligations. The execution of an amendment extending the Long-Stop Date is fundamentally inconsistent with any argument that either party had previously terminated or intended to terminate the APA.
Moreover, no oral communications, emails, or other informal statements by either party — to the extent any such communications occurred — would satisfy the written notice requirement of Section 9.1 as implemented through Section 12.3. The APA's notice provisions are specific and mandatory, requiring delivery by hand, overnight courier, or certified mail to the designated addresses. An email from Kevin Sato to Sylvia Hartwell, a telephone conversation between Garrett Nolan and Claire Matsuda, or any other informal communication would not constitute a valid termination notice under the APA, regardless of its content.
C. Conclusion: The APA Has Not Been Terminated
Based on the foregoing analysis, we conclude that the APA has not been terminated. The Long-Stop Date provision of Section 9.1 is permissive, not self-executing. Neither party has delivered a formal written termination notice in accordance with Section 9.1 and Section 12.3. No mutual termination agreement has been executed under Section 9.3. And no termination for breach has been effected under Section 9.2.
The APA therefore remains technically in force. Both parties continue to be bound by its terms, including their respective representations, warranties, covenants, and obligations. However, the APA exists in a state of suspended performance — neither party is actively pursuing closing, but neither has formally ended the contractual relationship. This state of affairs creates both opportunities and risks for Northgate, as discussed in the following sections.
V. Analysis: What Are Each Party's Termination Rights Now?
Having concluded that the APA has not been terminated, we turn to the question of what termination rights are currently available to each party. This analysis addresses the rights of both Northgate and Ridgeline under Section 9.1 (Long-Stop Date termination), Section 9.2 (termination for breach), and Section 9.3 (mutual termination).
A. Northgate's Right to Terminate Under Section 9.1
Northgate retains the right to terminate the APA under Section 9.1 by delivering a written termination notice to Ridgeline, citing the passage of the Long-Stop Date without closing. Because the Long-Stop Date has passed and the closing has not occurred, the textual prerequisites for the exercise of this right have been satisfied. Northgate may exercise this right at any time by delivering a notice that complies with the requirements of Section 12.3.
However, the exercise of this right is potentially subject to an important limitation. Many long-stop date provisions in acquisition agreements include a "contributing-fault carve-out" — a clause providing that a party may not terminate under the long-stop provision if that party's own breach of the agreement, or its failure to perform its obligations, was a proximate cause of the failure to close by the Long-Stop Date. The presence or absence of such a carve-out in Section 9.1 of the APA is a critical question that we have not been able to resolve definitively without a fresh review of the full APA text. We have flagged this as an open question in Section X below and strongly recommend that the APA be reviewed to confirm whether such a carve-out exists.
If Section 9.1 contains a contributing-fault carve-out, it will be necessary to evaluate whether Northgate's conduct during the standstill period constitutes a "contributing" breach or failure to perform. Ridgeline could argue that Northgate's failure to actively prosecute the FCC application after February 2023 contributed to the failure to close by the Long-Stop Date, and that this failure bars Northgate from invoking Section 9.1.
We believe this argument is weak. The standstill was precipitated by Ridgeline's December 14, 2022 demand for a $14,200,000 price adjustment — a demand that had no basis in the APA and that effectively rendered further prosecution of the FCC application futile in the absence of a resolution of the price dispute. Northgate's decision to pause active prosecution of the FCC application was a reasonable and commercially rational response to Ridgeline's unilateral disruption of the transaction. Moreover, Northgate did not abandon the FCC application; it maintained the application in filed status and responded to the WTB's information request in February 2023. The proximate cause of the failure to close was Ridgeline's wrongful price demand, not any inaction by Northgate.
If Section 9.1 does not contain a contributing-fault carve-out, Northgate's right to terminate under Section 9.1 is essentially unconditional, subject only to the procedural requirement of delivering a written notice.
B. Ridgeline's Right to Terminate Under Section 9.1
Ridgeline equally retains the textual right to terminate the APA under Section 9.1 by delivering written notice, as the Long-Stop Date has passed and the closing has not occurred. However, the same contributing-fault analysis applies in reverse, and with greater force against Ridgeline.
If Section 9.1 contains a contributing-fault carve-out, Ridgeline's right to invoke Section 9.1 may be barred. Ridgeline's demand for a $14,200,000 price adjustment — which had no contractual basis under the fixed-price provision of Section 3.1 — was the primary cause of the transaction standstill. Ridgeline's implied refusal to close at the agreed purchase price, communicated through its December 14, 2022 letter, was the event that precipitated the failure to close by either the original or extended Long-Stop Date. If Ridgeline's conduct constitutes a breach of the APA (as we believe it does, subject to the analysis in the separate C&H memorandum on the price adjustment demand), then Ridgeline may be precluded from invoking Section 9.1 to terminate the APA.
Ridgeline's potential counterargument is that no breach has occurred because it merely proposed a price adjustment and never formally refused to close at the agreed price. Ridgeline could argue that its December 14, 2022 letter was a negotiating communication, not an anticipatory repudiation, and that it remained willing to close at the agreed price if its price adjustment proposal was not accepted. We view this argument as difficult for Ridgeline to sustain given the plain language of its December 14, 2022 letter, which we understand to have conditioned Ridgeline's willingness to close on the payment of the increased price. However, the precise language of the letter would need to be carefully parsed to assess the strength of this counterargument.
If Section 9.1 does not contain a contributing-fault carve-out, Ridgeline would retain the theoretical right to terminate, but its exercise of that right would not insulate Ridgeline from liability for any pre-termination breach. Northgate could still pursue claims for damages arising from Ridgeline's wrongful price demand, even after termination.
C. Termination for Breach Under Section 9.2
Section 9.2 provides an alternative basis for termination that is independent of the Long-Stop Date. Under this provision, either party may terminate the APA if the other party is in material breach of any representation, warranty, covenant, or agreement and such breach is not cured within thirty (30) days after written notice thereof.
Northgate's potential Section 9.2 claim. Northgate may have grounds to terminate the APA for Ridgeline's material breach of Section 3.1 (fixed purchase price). If Ridgeline's December 14, 2022 demand for a $14,200,000 price adjustment, coupled with its implied refusal to close at $126,500,000, constitutes an anticipatory repudiation of the fixed-price obligation, then Northgate could deliver a Section 9.2 breach notice identifying this conduct as a material breach.
The principal analytical question is whether a demand for a price adjustment, without an express and unequivocal refusal to perform, rises to the level of material breach or anticipatory repudiation under applicable law. Under the Restatement (Second) of Contracts § 250, an anticipatory repudiation requires "a statement by the obligor to the obligee indicating that the obligor will commit a breach that would of itself give the obligee a claim for damages for total breach." A conditional demand for additional consideration, standing alone, may not satisfy this standard if it is framed as a negotiating position rather than an absolute refusal to perform. However, if Ridgeline's December 14, 2022 letter can be read as making Ridgeline's willingness to close contingent on the payment of an additional $14,200,000 — and if Ridgeline has consistently maintained this position for over a year without retreating from it — the argument for anticipatory repudiation becomes considerably stronger.
If Northgate elects to pursue termination under Section 9.2, it would need to deliver a formal breach notice to Ridgeline identifying the material breach with specificity and allowing Ridgeline thirty (30) days to cure. If Ridgeline fails to cure within the cure period — and the cure in this case would presumably require Ridgeline to retract its price adjustment demand and confirm its willingness to close at $126,500,000 — Northgate would then be entitled to terminate the APA for cause.
Ridgeline's potential Section 9.2 claim. Ridgeline could attempt to assert a cross-claim for termination under Section 9.2, arguing that Northgate has materially breached its obligation under Section 6.3 to use commercially reasonable efforts to obtain FCC consent. As discussed in Section III.G above, Ridgeline could point to Northgate's failure to take any affirmative steps to advance the FCC application since February 2023 as evidence of a breach of the efforts covenant.
We believe this argument faces significant obstacles. The commercially reasonable efforts standard does not require a party to take steps that would be futile or commercially irrational in light of the other party's own breach. Northgate's decision to pause prosecution of the FCC application was a direct and reasonable response to Ridgeline's unilateral disruption of the transaction. Moreover, Northgate maintained the application in filed status and responded to FCC inquiries through February 2023 — the point at which the standstill effectively foreclosed further progress. A court is unlikely to find that Northgate breached its efforts covenant by declining to invest resources in advancing a regulatory process for a transaction that Ridgeline had unilaterally rendered non-viable by its price demand.
Nevertheless, the argument is not frivolous, and Northgate should be aware that Ridgeline may raise it as a defense or counterclaim if termination or litigation is pursued.
D. Mutual Termination Under Section 9.3
Mutual termination under Section 9.3 remains available at any time if both parties agree in writing to terminate the APA. This may ultimately be the cleanest path to resolution if both parties determine that the transaction is no longer viable and wish to formalize the wind-down of their contractual relationship.
However, mutual termination requires negotiation, and the parties' competing interests make negotiation complex. The principal issues that would need to be addressed in a mutual termination agreement include: (i) the disposition of the $4,500,000 earnest money deposit (the most significant economic point); (ii) the scope of mutual releases; (iii) the withdrawal of the FCC application; and (iv) the termination of the Escrow Agreement. Given the unresolved price dispute and the parties' divergent positions regarding fault for the failure to close, mutual termination negotiations could be contentious.
VI. Status of the APA During Suspended Performance
A. Ongoing Obligations
If the APA has not been terminated — and we have concluded that it has not — then the APA's covenants and obligations continue to bind both parties, at least in theory. The following ongoing obligations are potentially relevant:
Commercially reasonable efforts (Section 6.3). Both parties remain technically obligated to use commercially reasonable efforts to obtain FCC consent and satisfy all regulatory closing conditions. As a practical matter, performance of this covenant has been suspended since approximately December 2022, and neither party has taken affirmative steps to advance the FCC application in nearly eleven months. The legal significance of this suspension is discussed in Section V.C above; the practical consequence is that the FCC application is at risk of administrative dismissal.
Confidentiality (Section 6.7). The parties' confidentiality obligations under the APA remain in full force and effect. Both parties are bound to maintain the confidentiality of all non-public information exchanged in connection with the transaction, including the terms of the APA, the purchase price, the structure of the transaction, and all due diligence materials. These obligations survive termination under Section 9.4 and will remain in effect regardless of whether the APA is ultimately terminated.
Exclusivity and no-shop provisions. We recommend confirming whether the APA contains any exclusivity or no-shop provisions applicable to Ridgeline's spectrum licenses. If such provisions exist, Ridgeline would be prohibited from soliciting or entertaining competing offers for the licenses during the term of the APA. If Ridgeline has engaged in discussions with other potential buyers during the standstill period — which is possible given Ridgeline's reference to a "competing bid" in its December 14, 2022 letter — such conduct could constitute a breach of any applicable exclusivity or no-shop covenant. This is flagged as an open question in Section X below.
Cooperation obligations. To the extent the APA imposes affirmative cooperation obligations on the parties — for example, obligations to provide information, execute ancillary documents, or participate in regulatory proceedings — those obligations remain in effect. The practical enforceability of such obligations during a transaction standstill is uncertain, but they remain legally binding until the APA is terminated.
B. Risk of Waiver or Estoppel
The prolonged period of inaction by both parties — now extending over thirteen months since the original Long-Stop Date and over three months since the extended Long-Stop Date — creates a meaningful risk of implied waiver or estoppel arguments.
Waiver. Under general contract law principles, a party may be deemed to have waived a contractual right if it fails to exercise that right within a reasonable time after the right accrues and the other party reasonably relies on the non-exercise. Here, Northgate's failure to deliver a termination notice under Section 9.1 for more than three months after the passage of the extended Long-Stop Date could, in theory, be characterized by Ridgeline as a waiver of Northgate's right to terminate. The strength of this argument depends on the applicable law's treatment of waiver in the context of contractual termination rights. Under both Nevada and New York law, waiver generally requires an intentional relinquishment of a known right, and mere silence or delay does not automatically constitute waiver. See, e.g., Clark County v. Bonanza No. 1, 96 Nev. 643, 650 (1980); Fundamental Portfolio Advisors, Inc. v. Tocqueville Asset Mgmt., L.P., 7 N.Y.3d 96, 104 (2006). Nevertheless, the risk increases with the passage of time, and we recommend that Northgate take steps to forestall any waiver argument.
Estoppel. Similarly, if Northgate's silence or inaction since November 2023 could be shown to have induced reasonable reliance by Ridgeline — for example, if Ridgeline took some action (such as entering into discussions with a third party) in reliance on a belief that Northgate had abandoned the transaction — Ridgeline could assert an estoppel defense to Northgate's exercise of its termination rights or breach claims.
Acquiescence. Northgate should also consider whether its failure to respond to the November 8, 2023 Hargrove Sato letter could be construed as acquiescence to any position asserted by Ridgeline in that letter. If the letter asserted, for example, that the APA had been effectively terminated or that Ridgeline was entitled to retain the escrow deposit, Northgate's silence could be argued to support an inference of agreement.
Recommendation. To mitigate these risks, we recommend that Northgate promptly send a formal reservation-of-rights letter to Ridgeline (through Hargrove, Sato & Caldwell LLP) confirming that: (i) Northgate does not waive any rights under the APA, including the right to terminate under Section 9.1 and the right to pursue claims for breach; (ii) the APA remains in full force and effect; and (iii) Northgate reserves all remedies available to it under the APA, at law, and in equity. A draft of such a letter can be prepared upon instruction from the deal team.
C. Statute of Limitations Considerations
The ongoing dormancy of the transaction also implicates statute-of-limitations considerations. If either party intends to assert claims for breach of contract arising from the other party's conduct, the applicable statute of limitations will govern the time period within which such claims must be commenced.
Accrual date. The statute of limitations for breach of contract claims generally begins to run upon the date of the breach or upon the date when the claimant knew or should have known of the breach. If Ridgeline's December 14, 2022 price adjustment demand is treated as the date of breach (or, alternatively, as the date of anticipatory repudiation), the statute of limitations for Northgate's breach claim began running on that date. However, if the breach is characterized as a continuing breach or a failure to perform at closing, the accrual date could be later — potentially as late as the Long-Stop Date or the date on which Northgate demanded performance.
Applicable limitation periods. The statute of limitations for breach of a written contract is six (6) years under both Nevada law (NRS § 11.190(1)(b)) and New York law (CPLR § 213(2)). Taking December 14, 2022 as the earliest potential accrual date, the statute of limitations would not expire until December 14, 2028, at the earliest. Accordingly, there is no immediate statute-of-limitations concern as of the date of this memorandum.
Nevertheless, ongoing dormancy compresses the window for asserting claims, and unexpected developments — such as a change in law, the discovery of additional facts, or the need to join claims with a shorter limitations period — could alter the calculus. We recommend that the limitations period be monitored as part of the overall matter management.
VII. Implications for the FCC Application
The status of the APA is inextricably linked to the status of the pending FCC application. FCC File No. 0010287-EX — the Form 603 assignment application and Section 310(b)(4) petition — remains pending before the FCC Wireless Telecommunications Bureau but has been effectively dormant since approximately February 2023, when NWA filed its response to the WTB's information request letter.
If the APA is terminated, the FCC application becomes moot and should be promptly withdrawn. Under FCC rules and practice, an applicant that no longer intends to consummate the underlying transaction should withdraw the assignment application to avoid burdening the Commission's administrative resources. Failure to withdraw a moot application could also create complications if Northgate or Ridgeline subsequently seeks to file a new assignment application involving any of the same licenses. Withdrawal would be accomplished by filing a letter with the WTB requesting dismissal of FCC File No. 0010287-EX.
If the APA is not terminated, the FCC application should be maintained or, at minimum, placed in abeyance to preserve Northgate's optionality. However, maintaining the application in its current dormant state creates risks. WTB staff have informally indicated to Broadfield Whitaker LLP (Annette Galvez) that the application may be subject to dismissal for failure to prosecute if the underlying transaction is not reactivated. Our understanding is that the WTB staff communicated this concern in approximately Q3 2023, suggesting that the application could face dismissal action if no progress is shown by approximately Q4 2023 — a window that may already have passed. Broadfield Whitaker should be consulted immediately to assess the current WTB posture and any pending dismissal risk.
If the FCC dismisses the application, and the parties subsequently determine to reactivate the transaction, they would need to refile the Form 603 and Section 310(b)(4) petition, effectively restarting the entire regulatory review process. This would include a new public notice period, a new comment and petition-to-deny period, a new WTB review, and a new Committee for the Assessment of Foreign Participation review — a process that could take six to twelve months or longer, depending on the complexity of the issues and the Commission's workload. The refiling would also provide Great Basin Rural Broadband Cooperative (or any other interested party) with a new opportunity to file objections or petitions to deny.
If the APA is to be maintained in force and the FCC application is to be preserved, the parties would ideally file a joint status update or a joint request for abeyance with the WTB, advising the Commission that the transaction remains pending and requesting that the application be held in abeyance pending resolution of a commercial dispute between the parties. Such a filing would require Ridgeline's cooperation, which is uncertain given the current state of the parties' relationship. If Ridgeline is unwilling to cooperate in filing a joint status update, NWA could file a unilateral status report advising the WTB that the transaction remains pending, but the effectiveness of such a filing in forestalling a dismissal action is less certain.
An additional regulatory concern relates to three of the fourteen licenses — specifically, the Oregon licenses with call signs WQAB212, WQAB213, and WQAB214. These licenses are subject to interim buildout benchmarks under the FCC's performance requirements for Meridian Technologies-3 licensees. Our understanding is that the next interim buildout benchmark for these licenses falls in March 2025. If Ridgeline fails to meet these buildout requirements — which may become increasingly difficult if the spectrum is tied up in a dormant transaction — the licenses could face adverse regulatory action, including potential automatic termination by the FCC. Prolonged dormancy of the APA and the FCC application therefore increases regulatory risk for these specific licenses, which in turn could affect the value and viability of the overall transaction.
Cross-reference is made to separate Calderwood & Harkness memoranda on FCC application options (maintain, revive, or withdraw) and regulatory timeline and dismissal risk, which should be reviewed in conjunction with this memorandum.
VIII. Implications for the Escrow Deposit
The $4,500,000 earnest money deposit funded by NWA on September 30, 2022 remains held by Meridian National Bank, N.A. (the Escrow Agent, Sandra Okonkwo) pursuant to the terms of the Escrow Agreement of even date. The disposition of the escrow deposit upon termination of the APA is governed by the Escrow Agreement, not the APA itself, although the APA's termination provisions interact with the Escrow Agreement's release conditions.
The key question is: under what APA termination scenarios is the deposit returned to Northgate, and under what scenarios is the deposit released to Ridgeline?
The following scenarios require analysis:
Scenario 1: Northgate terminates under Section 9.1 (Long-Stop Date). If Northgate delivers a valid termination notice under Section 9.1, the Escrow Agreement provisions governing deposit disposition upon a Long-Stop Date termination must be examined. Many escrow agreements in comparable transactions provide for the return of the earnest money deposit to the buyer upon a Long-Stop Date termination, on the rationale that the failure to close is attributable to the non-satisfaction of mutual conditions precedent (in this case, FCC consent) rather than to the buyer's default. However, the specific terms of the Escrow Agreement must be reviewed to confirm this result. If the Escrow Agreement conditions deposit return on the absence of buyer default, Ridgeline could argue that Northgate's alleged failure to use commercially reasonable efforts to advance the FCC application constitutes a default that forfeits the deposit.
Scenario 2: Ridgeline terminates for Northgate's alleged breach. If Ridgeline delivers a termination notice under Section 9.2 alleging Northgate's material breach of the efforts covenant, the escrow deposit may be at risk of forfeiture to Ridgeline. Many escrow agreements provide for the release of the earnest money deposit to the seller as liqu

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