1022-00002 · Northgate Telecommunications PLC · Dormancy & Reactivation

draft-letter-northgate-strategic-recommendations.docx DOCUMENT Finance & Banking

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PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION DRAFT — FOR DISCUSSION PURPOSES ONLY

CALDERWOOD & HARKNESS LLP 375 Park Avenue, 40th Floor New York, NY 10152 Telephone: (212) 409-7200 Facsimile: (212) 409-7201

Washington, D.C. Office: 1875 K Street NW, Suite 600 Washington, DC 20006

London Office: One Bishops Square London E1 6AD United Kingdom

www.calderwoodharkness.com

[Draft — for finalization approximately late January / early February 2024]

VIA E-MAIL AND SECURE DOCUMENT PORTAL

Priya Dasgupta, Esq. General Counsel Northgate Telecommunications PLC 14 Cavendish Square London W1G 0BX United Kingdom

Thomas Brennan Senior Vice President, Regulatory Affairs Northgate Telecommunications PLC 14 Cavendish Square London W1G 0BX United Kingdom

cc: Claire Matsuda, Vice President, U.S. Operations, Northgate Wireless Americas Inc., 2200 Wilson Boulevard, Suite 1450, Arlington, VA 22201

cc: Marcus Enfield, Chief Executive Officer, Northgate Telecommunications PLC, 14 Cavendish Square, London W1G 0BX, United Kingdom (distribution at Northgate's discretion)

Re: Strategic Recommendations — FCC File No. 0010287-EX; Asset Purchase Agreement dated September 22, 2022 (Ridgeline Wireless Holdings LLC) Calderwood & Harkness Matter No. 1018-00009

Dear Priya and Thomas:

I. Introduction and Purpose of Letter

We write on behalf of the Calderwood & Harkness engagement team to provide Northgate Telecommunications PLC ("NTP" or "Northgate") with a comprehensive strategic assessment and set of recommendations regarding the current dormant status of both (a) the FCC application pending before the Wireless Telecommunications Bureau under FCC File No. 0010287-EX (the "FCC Application") and (b) the stalled Asset Purchase Agreement dated September 22, 2022 (the "APA"), between Northgate Wireless Americas Inc. ("NWA") and Ridgeline Wireless Holdings LLC ("Ridgeline"). This letter has been prepared by the undersigned, Sylvia Hartwell, as the Responsible Partner for this engagement, with substantial input from Harold Wren (Of Counsel, Communications & Regulatory Practice), Simone Laroche (Lead Associate, Litigation), and Jeffrey Park (Working Associate, Litigation).

This letter synthesizes the analysis contained in multiple internal memoranda prepared by the engagement team over the past several months. Those memoranda addressed discrete legal questions relating to the FCC Application, the termination provisions of the APA, and the status of the earnest money deposit held in escrow. This letter consolidates that work into a single strategic framework intended to guide Northgate's decision-making at a critical juncture in this matter.

We have identified three principal areas of concern that require Northgate's prompt attention:

1. The Dormant FCC Application and Risk of Dismissal. The FCC Application has been pending without any substantive activity since approximately February 2023. Informal signals from Wireless Telecommunications Bureau staff indicate that the application is at risk of dismissal for failure to prosecute.

2. The Status of the APA and Associated Termination Rights. The extended Long-Stop Date of September 30, 2023 has passed without closing, yet neither party has issued a formal termination notice. The APA remains in a state of legal ambiguity — technically in effect, but with suspended performance obligations — and the implications of this posture require careful evaluation.

3. The $4,500,000 Earnest Money Deposit Held in Escrow. The deposit remains with Meridian National Bank, N.A., and its ultimate disposition depends on the manner in which the APA is resolved. Northgate's actions (or inactions) with respect to the APA and the FCC Application will directly affect the risk of forfeiture or the prospect of recovery of this deposit.

We strongly recommend scheduling a call or meeting with the Northgate team — including Priya Dasgupta, Thomas Brennan, and Claire Matsuda — and the Calderwood & Harkness team to discuss these recommendations before any action is taken with respect to the FCC, Ridgeline, or any other party. We suggest this meeting be held within the next seven to ten business days, and we are available to travel to London, Arlington, or any other location convenient to the Northgate team. We also have the capacity to conduct this discussion via secure videoconference if that is preferred.

No action will be taken with the FCC, with Ridgeline or its counsel, or with any other third party absent express instruction from Northgate.

II. Background and Current Status

For the convenience of the Northgate team, and to ensure that all decision-makers have a common factual foundation, we set forth below a summary of the transaction background, the price dispute, and the current status of the FCC Application. This summary draws upon the transaction records in our possession and is intended to be comprehensive, though we are of course available to address any additional factual questions.

A. Transaction Summary

Northgate Telecommunications PLC, through its wholly owned U.S. subsidiaries — Northgate US Holdings LLC, a Delaware limited liability company ("NUS Holdings"), and Northgate Wireless Americas Inc., a Delaware corporation (Delaware Division of Corporations File No. 7284619) ("NWA") — entered into the APA with Ridgeline Wireless Holdings LLC (Nevada Secretary of State Entity No. E0428716302) on September 22, 2022. The APA provides for the acquisition by NWA of fourteen (14) FCC Wireless Radio Service licenses in the Advanced Wireless Services-3 band (Meridian Technologies-3 / Band 66), bearing FCC call signs WQAB201 through WQAB214 (collectively, the "Licenses"). The Licenses cover Economic Areas in the states of Nevada, eastern California, and southern Oregon.

The aggregate spectrum subject to the transaction comprises 39 MHz of paired spectrum, representing 78 MHz of total paired bandwidth. The covered population, based on U.S. Census estimates utilized at the time of the transaction, is approximately 3.84 million POPs (Points of Presence). The agreed purchase price under APA Section 3.1 is $126,500,000, which was structured as a fixed price. This equates to a per-MHz-POP price of approximately $0.845, a level that was supported by the valuation report prepared by Vantage Spectrum Consultants Inc. dated September 12, 2022.

The transaction is structured as a "bare license" transfer. Ridgeline is a privately held regional wireless operator with approximately 142,000 subscribers, but the subscribers, network infrastructure, and operating business are not being acquired; only the Licenses and certain associated regulatory assets transfer under the APA. Ridgeline's ownership is held as follows: Garrett Nolan (62%), Diane Chua (18%), Pinnacle Growth Capital Fund II LP (12%, with certain consent rights under the Ridgeline LLC Agreement), and Crestwood Family Office LLC (8%).

Ridgeline is represented in this transaction by the law firm of Hargrove, Sato & Caldwell LLP, with Kevin Sato serving as lead partner. Stonebridge Advisory Group LLC served as the sell-side financial advisor to Ridgeline; Helen Tran, Managing Director, was the lead banker on the engagement.

The FCC Application — consisting of FCC Form 603 (Application for Assignment of Authorization) and a concurrent petition for declaratory ruling under Section 310(b)(4) of the Communications Act — was filed with the FCC's Wireless Telecommunications Bureau on October 14, 2022. The application was accepted for filing on October 28, 2022, and the FCC issued a public notice of the filing on November 3, 2022.

B. Purchase Price Dispute and APA Standstill

On December 14, 2022, Ridgeline delivered a written notice to Northgate demanding an upward adjustment of $14,200,000 to the agreed purchase price, which would have increased the aggregate consideration from $126,500,000 to $140,700,000. Ridgeline asserted that this adjustment was warranted based on an alleged competing bid for the California licenses covering Economic Area Nos. 155 and 159. Ridgeline did not identify the purported competing bidder and did not provide documentation to substantiate the alleged competing offer, notwithstanding Northgate's subsequent requests for such information.

On December 19, 2022, this firm, acting on behalf of Northgate, formally rejected Ridgeline's demand in writing. Our rejection letter cited the fixed-price provision set forth in APA Section 3.1 and noted the complete absence of any contractual price-adjustment mechanism in the APA. We further noted that the APA contains a comprehensive integration clause (Section 11.6) and that no side agreement, amendment, or understanding existed between the parties that would provide a basis for the demanded adjustment.

As a consequence of Ridgeline's demand and Northgate's rejection, the APA entered a de facto standstill effective December 19, 2022. Neither party took further action to advance the transaction toward closing following that date.

The original Long-Stop Date specified in the APA was March 15, 2023. In light of the price dispute and the desire of both parties (at that time) to preserve the possibility of reaching a resolution, the parties negotiated and executed an Extension Agreement dated April 22, 2023, which extended the Long-Stop Date to September 30, 2023. The Extension Agreement expressly provided that the extension was entered into "without prejudice to either party's position" regarding the price dispute. The Extension Agreement was executed by authorized signatories of both NWA and Ridgeline and was accompanied by a corresponding amendment to the Escrow Agreement with Meridian National Bank.

The extended Long-Stop Date of September 30, 2023 has now passed without closing of the transaction. Critically, however, neither Northgate nor Ridgeline has issued a formal termination notice under the APA. As discussed in greater detail in Section IV below, the APA remains technically in effect, and the implications of this posture are significant for Northgate's strategic options.

The last substantive communication between the parties — or, more precisely, between their respective counsel — was a letter from Hargrove, Sato & Caldwell LLP to Calderwood & Harkness dated November 8, 2023. That letter was relatively brief and did not constitute a termination notice or a demand for specific performance. Rather, it referenced the passage of the Long-Stop Date and stated that Ridgeline was "evaluating its options," without further elaboration. We responded on November 15, 2023 with a similarly reserved letter preserving Northgate's rights and noting our client's continued willingness to close on the terms set forth in the APA.

C. FCC Application Status

The FCC Application was filed on October 14, 2022 as FCC File No. 0010287-EX. It seeks FCC consent to the assignment of the fourteen Meridian Technologies-3 licenses from Ridgeline to NWA, together with a petition for declaratory ruling under Section 310(b)(4) of the Communications Act of 1934, as amended, 47 U.S.C. § 310(b)(4).

The comment period following issuance of the public notice closed on December 5, 2022. No formal petitions to deny were filed. One informal objection was filed on November 28, 2022 by the Great Basin Rural Broadband Cooperative ("Great Basin"), a rural broadband provider based in Elko, Nevada. The Great Basin objection raised concerns under Section 310(b)(4) regarding indirect foreign ownership of NWA through NTP, which is organized under the laws of England and Wales and whose shares are listed on the London Stock Exchange (LSE: NGTL). Calderwood & Harkness, in coordination with Broadfield Whitaker LLP, filed an opposition to the Great Basin objection on December 9, 2022, addressing each of the foreign-ownership concerns raised and demonstrating that the proposed ownership structure complies fully with the Commission's policies as set forth in the Foreign Ownership Second Report and Order (FCC 16-128).

The Section 310(b)(4) petition filed concurrently with the Form 603 sought approval for up to 100% indirect foreign ownership of NWA by NTP. The ownership chain presented to the FCC is as follows: NWA (the licensee, a Delaware corporation) is wholly owned by NUS Holdings LLC (a Delaware limited liability company), which is in turn wholly owned by NTP (a public limited company organized under the laws of England and Wales). The petition identified the following significant shareholders of NTP: Thornhill Asset Management LLP (9.7%), Sovereign Capital Partners AG (6.3%), Dunmore Pension Trust (5.1%), and the public float (78.9%). We invoked the WTO-member-country presumption applicable to shareholders from the United Kingdom and Switzerland, as set forth in the Commission's foreign-ownership policies.

On January 19, 2023, the FCC's Wireless Telecommunications Bureau issued an informal information request directed to counsel for NWA, seeking additional information regarding the proposed ownership structure and certain corporate governance matters. Calderwood & Harkness, in coordination with Broadfield Whitaker LLP (Annette Galvez and Daniel Fong), filed a comprehensive response to this request on February 10, 2023.

Since the filing of that response, there has been no further action by the FCC on the application. The FCC Application has been dormant since approximately February 2023 — a period of nearly one year as of the date of this letter.

In addition to the FCC's review, a national security review by the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector (the "Committee"), established pursuant to Executive Order 13913 (April 4, 2020), was initiated in connection with the FCC Application. This review, which involves consultation among the Department of Justice, the Department of Homeland Security, the Department of Defense, and other relevant executive-branch agencies, has not been concluded. Formal clearance has not been issued, though no adverse findings or concerns have been communicated to counsel as of our last informal inquiry with the Committee's designees.

We are aware, through informal channels, that Wireless Telecommunications Bureau staff have indicated that the FCC Application may be subject to dismissal for failure to prosecute if the underlying transaction is not reactivated. The informal guidance received by Broadfield Whitaker LLP suggested that this dismissal risk was most acute beginning in approximately Q4 2023. That informal deadline has now passed, and the application remains pending, though we cannot predict how much additional time the Bureau will permit the application to remain on its pending docket without further communication from the parties.

III. FCC Application — Options and Recommendations

The dormant status of FCC File No. 0010287-EX presents Northgate with three principal options, each carrying distinct advantages and risks. We address each in turn and conclude this section with our recommendation.

A. Option 1: Maintain the Application on the Pending Docket (Unilateral Status Update)

Under this option, NWA's counsel would file a status update letter with the Wireless Telecommunications Bureau explaining that the underlying transaction remains under active negotiation between the parties and requesting that the FCC maintain FCC File No. 0010287-EX on its pending docket. The letter would not seek any formal procedural relief but would serve to demonstrate that the applicant has not abandoned the application and that there remains a reasonable basis for the FCC to continue to hold the matter in its pending queue.

A draft of such a letter has been prepared by Broadfield Whitaker LLP for this purpose. The draft has been reviewed by Harold Wren and is, in our view, in substantially final form, though it has not been filed and will not be filed without Northgate's express authorization.

Advantages. This approach preserves the FCC Application and the substantial work product invested in its preparation, including the Section 310(b)(4) petition and the opposition to the Great Basin informal objection. It avoids the cost and delay that would be associated with withdrawing and re-filing the application at a later date if the transaction is reactivated. It also maintains the FCC staff's familiarity with the application, which can be a significant practical advantage in facilitating prompt action when the matter is ready to proceed.

Risks. The FCC is under no obligation to maintain a dormant application on its pending docket indefinitely. Wireless Telecommunications Bureau staff have already informally signaled that the application is at risk of dismissal for failure to prosecute, and a unilateral status update letter, without the participation of the seller (Ridgeline), may be viewed skeptically by FCC staff, particularly if the staff is aware (or becomes aware) that the underlying transaction has been in a standstill for over a year. There is no guarantee that a status update letter will prevent the Bureau from exercising its discretion to dismiss the application. Furthermore, maintaining the application without a credible path to closing may invite questions from the Bureau about the genuineness of the parties' intent to consummate the transaction.

When this option is appropriate. We recommend this option if Northgate has a realistic prospect of reactivating the transaction within the next three to six months and if Ridgeline is unwilling to cooperate in a joint filing (see Option 2 below).

B. Option 2: Seek Joint Abeyance with Ridgeline

Under this option, counsel for both NWA and Ridgeline would file a joint request — in the form of a stipulation signed by authorized representatives of both parties or their counsel — asking the FCC to hold the FCC Application in abeyance pending resolution of the purchase price dispute between the parties to the APA.

A draft stipulation has been prepared by the Calderwood & Harkness and Broadfield Whitaker LLP engagement teams for potential submission. The draft has not yet been shared with, or agreed to by, Hargrove, Sato & Caldwell LLP on behalf of Ridgeline. Any outreach to Ridgeline's counsel for this purpose would require Northgate's prior authorization and careful strategic consideration, as discussed below.

The cooperation of Ridgeline would be required for this option. Given the adversarial posture of the parties on the price dispute and the absence of any substantive communications since November 2023, Ridgeline's willingness to participate in a joint filing is uncertain.

Advantages. A joint filing by both parties carries significantly more weight with the FCC than a unilateral status update by only one party. Joint requests for abeyance are routinely granted by the Wireless Telecommunications Bureau when both parties to a transaction request such relief, and they establish a formal procedural basis for the dormancy of the application that the Bureau is likely to respect. Such a filing also demonstrates the ongoing good faith of both parties and reduces the risk that the Bureau will dismiss the application sua sponte. From a broader strategic perspective, cooperation with Ridgeline on a procedural matter such as this could, if handled carefully, serve as a bridge to re-engagement on the substantive commercial dispute.

Risks. Ridgeline may refuse to cooperate. Alternatively, Ridgeline may condition its cooperation on concessions regarding the price dispute — for example, by agreeing to join the FCC filing only if Northgate agrees to resume price negotiations or to accept a partial price adjustment. Approaching Ridgeline for this purpose carries the inherent risk of restarting a dialogue that Northgate may prefer to defer, and could be interpreted by Ridgeline as a signal that Northgate is eager to preserve the deal, which may embolden Ridgeline's negotiating position. Finally, Ridgeline could use the opportunity of renewed contact to demand concessions unrelated to the FCC filing, or to deliver a termination notice in response to Northgate's outreach.

When this option is appropriate. We recommend this as the preferred option if Northgate determines that diplomatic engagement with Ridgeline is feasible and if Northgate is willing to accept the risks associated with re-opening a line of communication. Coordination with Broadfield Whitaker LLP is necessary before any outreach to Hargrove, Sato & Caldwell LLP, and we recommend that any such outreach be conducted through counsel rather than through commercial contacts.

C. Option 3: Voluntarily Withdraw the Application

Under this option, NWA's counsel would file a request with the Wireless Telecommunications Bureau to withdraw FCC File No. 0010287-EX. The application would be terminated by the Bureau upon the filing of such a request, and the proceeding would be closed.

Advantages. Voluntary withdrawal provides a clean resolution of the FCC proceeding and eliminates the risk that the Bureau will dismiss the application for failure to prosecute. A dismissal for failure to prosecute, while not typically accompanied by any formal adverse finding, creates a procedural record that could be cited by objectors in future proceedings involving NWA or NTP. Voluntary withdrawal avoids this risk entirely. Additionally, withdrawal eliminates the ongoing costs associated with monitoring the application and coordinating with co-counsel Broadfield Whitaker LLP on FCC-related matters. This option is appropriate if Northgate has determined that the Ridgeline transaction is unlikely to proceed under any circumstances.

Risks. Voluntary withdrawal results in the loss of all investment in the application process, including the preparation of the Form 603, the Section 310(b)(4) petition, the opposition to the Great Basin informal objection, and the response to the WTB's January 2023 information request. If the transaction is later revived, a new Form 603 and a new Section 310(b)(4) petition would need to be filed, incurring additional legal and consulting fees, new filing timelines, and a new comment period during which new petitions to deny or informal objections could be filed. The Great Basin informal objection, and any future objections, would need to be addressed de novo. The Committee for the Assessment of Foreign Participation review would also need to restart from the beginning, potentially adding months to the regulatory timeline.

When this option is appropriate. We do not recommend this option unless Northgate has made a definitive and irrevocable decision to abandon the acquisition of the Ridgeline Licenses.

D. Recommendation

Based on our analysis, Calderwood & Harkness's recommendation is as follows:

Northgate should pursue Option 2 (joint abeyance with Ridgeline) as the primary strategy. If Ridgeline declines to cooperate in a joint filing, or if Northgate determines that approaching Ridgeline at this time is inadvisable for strategic reasons, Northgate should pursue Option 1 (unilateral status update) as a fallback.

Timing is critical. Given the informal warning from WTB staff targeting approximately Q4 2023 as the period by which the application could be subject to dismissal for failure to prosecute — a deadline that has now passed — any filing with the FCC should be made as promptly as practicable following Northgate's decision on strategy. Each day of continued silence increases the risk that the Bureau will act to dismiss the application without further notice.

As a preliminary step, and before any formal filing is made, we suggest that Harold Wren of Calderwood & Harkness and Annette Galvez of Broadfield Whitaker LLP make informal contact with WTB staff to gauge the Bureau's current posture regarding the application. This informal outreach, which would not require any filing or formal communication, would allow us to assess the urgency of the situation and to calibrate the form and timing of any subsequent filing. We request Northgate's authorization to proceed with this informal contact.

IV. APA Termination Rights and Status

A. Analysis of the Long-Stop Date

As noted above, the extended Long-Stop Date of September 30, 2023 has passed without closing of the transaction contemplated by the APA. This fact gives rise to important questions regarding the legal status of the APA and the rights and obligations of the parties thereunder.

Under the APA (Section 9.1(b)(ii)), the passage of the Long-Stop Date gives each party the right to terminate the Agreement by delivering written notice to the other party. Critically, however, termination under this provision is not automatic. The APA expressly requires "affirmative written notice" of termination, and the right to terminate upon the passage of the Long-Stop Date is permissive rather than mandatory. The provision states, in relevant part, that "this Agreement may be terminated . . . by either Buyer or Seller, if the Closing shall not have occurred on or prior to the Long-Stop Date" (emphasis added).

Neither Northgate (nor NWA) nor Ridgeline has issued such a notice. In the absence of a termination notice, the APA remains technically in effect, though the parties' obligations under the Agreement are in a state of suspended performance. The pre-closing covenants requiring the parties to use commercially reasonable efforts to obtain regulatory approvals and to consummate the transaction (APA Sections 6.3 and 6.4) are arguably still operative, though it is unclear how a court would interpret the scope of these obligations given the prolonged standstill and the unresolved price dispute.

This posture creates a degree of legal ambiguity. The APA is neither formally terminated nor actively being performed. The parties are in a state of limbo — each retaining the contractual right to terminate, but neither having exercised that right. As a practical matter, this means that the APA could be revived by mutual agreement of the parties (if the price dispute is resolved), or it could be terminated by either party at any time by the delivery of a written notice.

B. Strategic Considerations

The question of whether Northgate should issue a termination notice — or should refrain from doing so — is principally a commercial and strategic judgment, but it has significant legal consequences.

If Northgate desires to preserve the option to proceed with the acquisition at the original purchase price of $126,500,000, it should not issue a termination notice. Issuing such a notice would crystallize the termination of the APA, extinguish any remaining possibility of closing on the agreed terms, and trigger the escrow-release provisions of the Escrow Agreement (with consequences discussed in Section V below). As long as the APA remains in effect, Northgate retains the legal position that it is ready, willing, and able to close on the agreed terms — a position that may be relevant in any future dispute over the allocation of the escrow deposit.

If Northgate has decided to abandon the acquisition, issuing a termination notice may be advantageous in order to trigger the return of the earnest money deposit under the Escrow Agreement. However, the prospect of recovery depends on the interpretation of the APA's fault-based termination provisions, as discussed in Section V below. Issuing a termination notice is not risk-free, because the manner in which the notice is characterized (i.e., whether the termination is attributable to Buyer or Seller fault) may be contested by Ridgeline.

Ridgeline's failure to issue a termination notice is itself strategically significant. There are several possible explanations for Ridgeline's inaction: Ridgeline may wish to preserve its own option to proceed with the transaction (at the adjusted price); Ridgeline may be deferring termination in order to maintain leverage over the price dispute; or Ridgeline may simply be evaluating its options, as its November 8, 2023 letter suggested. Regardless of the reason, Ridgeline's silence does not prejudice Northgate so long as Northgate continues to preserve its own rights under the APA.

Risk. Ridgeline retains the right to issue a termination notice at any time, and if it does so, the allocation of the escrow deposit upon termination will depend on the interpretation of the APA's fault provisions — a question that may give rise to a dispute, as discussed in Section V below.

C. Recommendation

We recommend that Northgate not issue a termination notice at this time unless Northgate has made a definitive decision to abandon the transaction. The current posture — in which the APA remains technically in effect and neither party has acted to terminate — preserves Northgate's maximum flexibility. Northgate retains the option to close (if the price dispute is resolved), to terminate (if it decides to abandon the transaction), or simply to continue in a holding pattern while evaluating its strategic alternatives.

We further recommend that Northgate continue to preserve all of its rights and remedies under the APA, including by refraining from any communication or action that could be construed as a waiver, an abandonment, or an anticipatory repudiation of the APA.

Finally, we recommend that the Northgate team and Calderwood & Harkness continue to monitor for any communication from Ridgeline or Hargrove, Sato & Caldwell LLP that could constitute a termination notice, an anticipatory repudiation, or a demand for escrow release. Any such communication should be forwarded to Calderwood & Harkness immediately upon receipt to enable a timely and appropriate response.

V. Escrow Deposit — Recovery and Forfeiture Risk

A. Current Status

Pursuant to the Escrow Agreement dated September 30, 2022 (the "Escrow Agreement"), among NWA (as Buyer), Ridgeline (as Seller), and Meridian National Bank, N.A. (as Escrow Agent), an earnest money deposit in the amount of $4,500,000 (the "Deposit") was funded by NWA on September 30, 2022 and is currently held in a segregated escrow account at Meridian National Bank, N.A. The Deposit represents approximately 3.56% of the $126,500,000 purchase price.

The designated Escrow Officer at Meridian is Sandra Okonkwo, whose office is located at 333 South Hope Street, Suite 4800, Los Angeles, CA 90071. An annual escrow maintenance fee of $12,500 is payable by Northgate (through NWA) and has been paid through the current annual period.

The Escrow Agreement provides for release of the Deposit to Ridgeline (as Seller) upon consummation of the Closing, at which point the Deposit would be credited toward the purchase price. In the event of termination of the APA, the Escrow Agreement provides for return of the Deposit to NWA (as Buyer) or release of the Deposit to Ridgeline, depending on the specific termination circumstances and the allocation of fault under the APA.

B. Scenarios and Risk Analysis

We have analyzed the likely disposition of the Deposit under each of the plausible scenarios for resolution of the matter:

Scenario 1 — Transaction Closes. If the APA is reactivated and the transaction proceeds to closing, the Deposit would be applied toward the purchase price at closing in accordance with APA Section 3.2 and the Escrow Agreement. No recovery issue arises in this scenario.

Scenario 2 — Northgate Terminates for Convenience or Inability to Close. If Northgate issues a termination notice and the termination is attributable to Northgate's decision not to proceed (as opposed to a failure of a closing condition within Ridgeline's control), there is a risk that the Deposit may be forfeited to Ridgeline as liquidated damages under APA Section 9.2(b). The operative question under this scenario is whether the FCC's failure to act on the application, or the price-dispute deadlock, constitutes a "Buyer-fault" termination event under the APA. Our preliminary analysis suggests that neither of these circumstances should be characterized as Buyer fault, given that (i) the FCC's delay is attributable to the parties' collective failure to advance the transaction, not to any deficiency in Northgate's regulatory qualifications, and (ii) the price dispute was initiated by Ridgeline, not by Northgate. However, the question is not free from doubt, and Ridgeline may argue that Northgate's refusal to agree to the price adjustment caused the deadlock and therefore constitutes a failure to perform in good faith. This argument, in our view, lacks merit, but it cannot be dismissed out of hand.

Scenario 3 — Ridgeline Terminates Due to Northgate's Alleged Breach. Under this scenario, Ridgeline issues a termination notice asserting that Northgate has breached the APA (for example, by failing to use commercially reasonable efforts to consummate the transaction), and Ridgeline claims the Deposit. It is our view that Northgate has not breached the APA. The price dispute was initiated by Ridgeline's demand for an adjustment not contemplated by the APA, and Northgate's rejection of that demand was well within its contractual rights. The standstill that ensued was a consequence of Ridgeline's actions, not Northgate's. Accordingly, we believe Ridgeline should be precluded from claiming a Buyer-fault termination under these circumstances. If Ridgeline were to pursue this theory, we would be prepared to contest it vigorously, including through the dispute-resolution mechanisms provided in the Escrow Agreement (which include escalation to a neutral arbitrator if the parties cannot agree on joint instructions to the Escrow Agent).

Scenario 4 — Mutual Termination or Long-Stop Date Termination Without Fault. If the parties mutually agree to terminate the APA, or if either party terminates solely by reason of the passage of the Long-Stop Date without attributing fault to the other party, the Deposit should be returned to NWA under most reasonable interpretations of the APA and Escrow Agreement. The APA provides that in the event of termination under Section 9.1(b)(ii) (Long-Stop Date termination), the parties shall deliver joint instructions to the Escrow Agent directing return of the Deposit to Buyer, provided that the termination is not attributable to Buyer's breach. However, even in this seemingly straightforward scenario, there is a risk that Ridgeline may contest the characterization and argue that Northgate's refusal to negotiate on price constitutes a breach giving rise to a Seller's right to the Deposit. We regard this argument as weak but acknowledge the possibility of a dispute.

Scenario 5 — Continued Dormancy (No Termination by Either Party). Under the current posture, in which neither party has issued a termination notice, the Deposit remains in escrow indefinitely. NWA continues to bear the annual escrow maintenance fee of $12,500 per year. The Deposit earns modest interest (currently at the Meridian money market rate), which accrues for the benefit of the party ultimately entitled to receive the Deposit. There is no recovery and no forfeiture until a triggering event occurs — specifically, until a closing or a valid termination under the APA.

C. Recommendation

We recommend that Northgate preserve the status quo on the escrow for the time being. Specifically:

• Northgate should not take any action — whether with respect to the FCC Application, the APA, or otherwise — that could be construed as triggering a Buyer-fault termination event or as providing a basis for Ridgeline to claim the Deposit.

• If and when a termination of the APA occurs (whether initiated by Northgate or by Ridgeline), Northgate should be prepared to promptly deliver joint instructions to Meridian National Bank directing the return of the Deposit, or, if the characterization of the termination is disputed, to invoke the Escrow Agreement's dispute-resolution mechanism without delay.

• Northgate should monitor for any unilateral communications from Ridgeline, Hargrove, Sato & Caldwell LLP, or any other party to Sandra Okonkwo at Meridian regarding the escrow. Under the Escrow Agreement, the Escrow Agent is required to act only upon joint written instructions from both parties (or upon an order of a court of competent jurisdiction or an arbitrator's award), but it is prudent to remain vigilant against any attempt by Ridgeline to circumvent this requirement.

VI. Additional Regulatory Considerations

In addition to the three principal areas of concern identified above, we bring to Northgate's attention several ancillary regulatory and transactional considerations that may affect Northgate's decision-making and that would become directly relevant if the transaction is reactivated.

A. FCC Buildout Compliance Risk — Three Oregon Licenses

Three of the fourteen Licenses — specifically, WQAB212, WQAB213, and WQAB214, covering Economic Areas in southern Oregon — have not met the FCC's interim construction benchmarks applicable to Meridian Technologies-3 licensees. Under the FCC's rules, Meridian Technologies-3 licensees are required to demonstrate that they are providing reliable signal coverage and service to a specified percentage of the population within their licensed geographic areas within defined timeframes. The interim construction benchmark for these licenses is due in approximately March 2025, with the final construction deadline in approximately March 2028.

The remaining eleven of the fourteen Licenses have met their respective interim benchmarks, and no buildout compliance issue exists with respect to those licenses.

If Northgate acquires the Licenses, it will inherit the buildout obligations associated with all fourteen Licenses, including the three Oregon licenses that are currently behind on their benchmarks. Failure to meet FCC construction benchmarks can result in a range of enforcement actions, including, in the most severe cases, potential license revocation or reduced license terms. More commonly, the FCC may impose a requirement that the licensee demonstrate compliance on an accelerated timeline or may reduce the geographic scope of the license.

Ridgeline's failure to meet interim benchmarks on the three Oregon licenses pre-closing presents a diligence concern. Depending on the reasons for the shortfall and the current state of Ridgeline's infrastructure deployment in southern Oregon, the cost and difficulty of achieving compliance after closing could be material. This issue may also affect the value properly attributed to these specific licenses and should be reflected in any purchase price allocation or, if negotiations are reopened, in the overall transaction economics.

Recommendation. If the transaction is reactivated, Northgate should seek updated representations and warranties from Ridgeline regarding the buildout status of all fourteen Licenses, with particular focus on WQAB212, WQAB213, and WQAB214. Northgate should also consider whether a purchase price allocation or adjustment should account for the buildout risk on the Oregon licenses, and whether any bring-down condition should be structured to address the possibility that the buildout status deteriorates further before closing.

B. Anti-Trafficking / Unjust Enrichment Rules

The FCC's anti-trafficking rules, codified at 47 C.F.R. § 1.2111, may apply to certain of the Licenses originally acquired by Ridgeline at FCC auction. Under these rules, if a licensee that acquired spectrum at auction with the benefit of designated-entity or small-business bidding credits transfers its licenses within a specified holding period, the transferor (or, in certain cases, the transferee) may be required to make unjust enrichment payments to the United States Treasury. The amount of any such payment depends on the size of the original bidding credit, the holding period elapsed at the time of transfer, and the terms of the transfer.

Our analysis of the anti-trafficking implications for the Ridgeline Licenses is ongoing. Harold Wren and Annette Galvez of Broadfield Whitaker LLP are conducting a license-by-license review to determine which, if any, of the fourteen Licenses were acquired at auction, whether any bidding credits were applied, the applicable holding periods, and the amount of any potential unjust enrichment obligations. This analysis requires review of FCC auction records, Ridgeline's licensing history, and the applicable regulatory provisions.

Recommendation. The anti-trafficking analysis should be completed before any decision is made to reactivate the transaction. If unjust enrichment payments are required, the amounts could be substantial and should be factored into the economics of the transaction. As a contractual matter, the APA allocates responsibility for unjust enrichment payments to Ridgeline (APA Section 6.8), but contractual allocation may not fully mitigate the risk if Ridgeline contests the allocation or if the FCC imposes payment obligations directly on the transferee.

C. National Security Review

As noted in Section II.C above, the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector, established pursuant to Executive Order 13913 (April 4, 2020), initiated a national security review of the proposed transaction in connection with the FCC Application. This review has not been concluded, and formal clearance has not been issued.

No adverse findings have been communicated to counsel, and we are not aware of any substantive concerns raised by the Committee's constituent agencies (the Department of Justice, the Department of Homeland Security, the Department of Defense, and other relevant executive-branch agencies). If the FCC Application is maintained on the pending docket (under Option 1 or Option 2 as described in Section III above) or is reactivated following a period of dormancy, the Committee review will also need to resume and ultimately be concluded before the FCC can grant the application.

The involvement of shareholders from the United Kingdom (Thornhill Asset Management LLP) and Switzerland (Sovereign Capital Partners AG) should not, in our assessment, present issues under the Committee's review framework, given the WTO-member-country status of both jurisdictions and the absence of any known national security concerns associated with these entities. However, formal clearance remains outstanding, and the Committee's review process is not subject to any statutory timeline, which means that the length of the review is inherently uncertain.

D. Representations and Warranties Insurance

In connection with the APA, Northgate engaged Apex Continental Insurance Ltd. ("Apex Continental") to provide a representations and warranties insurance policy to cover losses arising from breaches of Ridgeline's representations and warranties under the APA. Apex Continental, through Fiona Ashworth (Underwriter), issued an indicative term sheet for the R&W policy. Apex Continental is domiciled in Bermuda, with a U.S. branch office located at 140 Broadway, Suite 3500, New York, NY 10005.

The indicative premium for the R&W policy was $1,012,000, representing approximately 0.8% of the $126,500,000 purchase price. The policy was never bound, as the transaction did not progress to closing and the R&W policy was structured to be bound simultaneously with the closing of the APA.

If the transaction is reactivated, the R&W policy will need to be re-underwritten. The original indicative terms have almost certainly expired given the passage of time (over 16 months since the indicative term sheet was issued), and changes in the insurance market, as well as changes in the underlying risk profile of the transaction (including the price dispute, the dormancy of the FCC Application, and the buildout compliance issues on the Oregon licenses), may affect the availability and pricing of coverage. Updated diligence materials and refreshed representations from Ridgeline may also be required by the insurer.

Recommendation. If deal reactivation is pursued, Northgate should engage with Apex Continental at an early stage to determine whether the indicative terms can be refreshed, the expected premium under current market conditions, and the scope and timeline of any re-underwriting process. Early engagement will help to avoid delays in the closing timeline if the transaction is revived.

VII. Budget and Fee Status

We take this opportunity to provide Northgate with a summary of the current fee status for this engagement, including fees billed and outstanding, and to address certain budgetary matters.

A. Calderwood & Harkness Fees

At the outset of the engagement, the parties agreed to a Phase 1 fee cap of $1,250,000 for work relating to the FCC Application and regulatory approvals. The current status of fees against this cap is as follows:

We note that the Phase 1 fee cap applies exclusively to work relating to the FCC Application and regulatory approvals. Work relating to the purchase price dispute, APA termination analysis, escrow matters, and litigation assessment is not subject to the Phase 1 fee cap and has been billed separately at the engagement's blended hourly rate of approximately $875 per hour. Substantial additional work has been performed in these areas, and further work will be required if the matter continues in any form — whether that involves maintenance of the FCC Application, reactivation of the transaction, withdrawal of the FCC Application, APA dispute resolution, or litigation.

B. Co-Counsel and Other Costs

In addition to Calderwood & Harkness's fees, the following co-counsel and consultant fees have been incurred and billed or paid:

C. Request

We respectfully request prompt payment of the outstanding $112,600 in accounts receivable, which represents invoices issued in October, November, and December 2023. Our standard engagement terms provide for payment within thirty (30) days of invoice date, and the oldest of these invoices is now approaching ninety days outstanding.

We also request Northgate's approval to continue incurring fees in connection with the recommended near-term actions described in this letter, including preparation and filing of an FCC status update or joint abeyance request, potential outreach to Ridgeline's counsel, informal contact with WTB staff, and ongoing monitoring of the FCC Application, the APA, and the escrow. We will provide a detailed estimate of anticipated additional fees for these activities upon receiving Northgate's instructions as to the preferred course of action.

VIII. Proposed Next Steps and Action Items

Based on the foregoing analysis, we propose the following action items for discussion with the Northgate team:

1. Schedule a Call or Meeting. We recommend that Priya Dasgupta, Thomas Brennan, Claire Matsuda, and the Calderwood & Harkness team (Sylvia Hartwell, Harold Wren, and Simone Laroche) convene a call or meeting to discuss the recommendations set forth in this letter and to provide instructions to outside counsel. We suggest that this meeting be held within the next seven to ten business days, given the time-sensitive nature of the FCC application issue. We are available to travel to London or Arlington, or to participate via secure videoconference, at Northgate's preference.

2. FCC Application. Upon instruction from Northgate, authorize Broadfield Whitaker LLP and Harold Wren to make informal contact with Wireless Telecommunications Bureau staff to gauge the current posture of the Bureau regarding FCC File No. 0010287-EX. Following that informal outreach, prepare to file either a unilateral status update letter (Option 1) or a joint abeyance request (Option 2), depending on Northgate's strategic decision and Ridgeline's willingness to cooperate.

3. Ridgeline Engagement. Determine whether Northgate wishes to re-engage with Ridgeline and Hargrove, Sato & Caldwell LLP to (a) attempt resolution of the purchase price dispute, (b) pursue joint abeyance at the FCC, (c) negotiate a mutual termination of the APA and agreed disposition of the escrow deposit, or (d) allow the matter to remain dormant for an additional period. This determination should be made at the earliest practicable time, as it will inform all other strategic decisions.

4. Termination Posture. Maintain the current position of not issuing an APA termination notice. Continue to monitor all communications from Ridgeline and Hargrove, Sato & Caldwell LLP for any language that could be construed as a termination notice, an anticipatory repudiation, or a waiver of rights.

5. Escrow. No action is required with respect to the escrow at this time. Continue to monitor for any communications from Ridgeline, Hargrove Sato, or Meridian National Bank regarding the escrow. Ensure that the annual escrow maintenance fee remains current.

6. Buildout Risk. If deal reactivation is considered, commission an updated assessment of Ridgeline's buildout compliance status on the three Oregon licenses (WQAB212, WQAB213, WQAB214) in advance of the approximately March 2025 interim construction benchmark deadline. This assessment may require information from Ridgeline, and the request for such information should be coordinated with any broader re-engagement strategy.

7. Anti-Trafficking Analysis. Complete the license-by-license unjust enrichment analysis under 47 C.F.R. § 1.2111 currently being prepared by Harold Wren and Annette Galvez. This analysis should be finalized before any decision is made to reactivate the transaction.

8. R&W Insurance. If deal reactivation is pursued, contact Fiona Ashworth at Apex Continental Insurance Ltd. to determine the current status of the indicative R&W policy, the feasibility of refreshing the indicative terms, and the anticipated cost and timeline for re-underwriting.

9. Outstanding Invoices. Arrange for payment of the $112,600 in outstanding Calderwood & Harkness invoices at Northgate's earliest convenience.

IX. Closing

Calderwood & Harkness remains fully available to discuss the matters addressed in this letter at Northgate's convenience. We recognize that the strategic decisions outlined above involve significant commercial considerations that are ultimately within Northgate's business judgment, and we are committed to supporting Northgate's decision-making process with the best legal analysis and counsel available.

We wish to reiterate that no action will be taken with the FCC, with Ridgeline or Hargrove, Sato & Caldwell LLP, with Meridian National Bank, or with any other third party without express instruction from Northgate. We will await Northgate's direction on each of the action items identified in this letter before proceeding.

We also note that Broadfield Whitaker LLP (Annette Galvez and Daniel Fong) remains engaged as FCC regulatory co-counsel and is available to participate in any discussions with the Northgate team regarding the FCC Application. Whitfield & Grainger LLP (Nigel Pemberton, Engagement Partner) continues to coordinate with our team on UK tax matters that may arise in connection with the transaction, and other advisors — including Vantage Spectrum Consultants Inc. and Stonebridge Advisory Group LLC — stand ready to assist as needed.

Finally, we note that this letter is a draft prepared for discussion purposes and will be finalized following receipt of client input. We welcome any comments, corrections, or additional questions from the Northgate team and will revise this letter as appropriate before it is issued in final form.

We look forward to hearing from you and to discussing these matters at the earliest opportunity.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Sylvia Hartwell Partner Telephone: (212) 409-7218

Email: shartwell@calderwoodharkness.com

Harold Wren Of Counsel Telephone: (202) 814-3305

Email: hwren@calderwoodharkness.com

Enclosures:

1. Draft Letter to FCC — Request for Extension of Time / Status Update (FCC File No. 0010287-EX) (Prepared by Broadfield Whitaker LLP; reviewed by Harold Wren)

2. Draft Stipulation — Joint Request to Hold FCC Application in Abeyance (FCC File No. 0010287-EX) (Prepared by Calderwood & Harkness LLP; not yet shared with Hargrove, Sato & Caldwell LLP)

3. Summary of Key APA Dates and Deadlines (Prepared by Simone Laroche and Jeffrey Park)

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION DRAFT — FOR DISCUSSION PURPOSES ONLY This letter and its enclosures are protected by the attorney-client privilege and the work product doctrine. They are intended solely for the use of the addressees and are not to be distributed, disclosed, or relied upon by any other person or entity without the prior written consent of Calderwood & Harkness LLP.

Category	Amount
Phase 1 Fee Cap (FCC Application / Regulatory Approvals)	$1,250,000
Total Fees Billed Through January 2024	$847,320
Percentage of Phase 1 Cap Utilized	67.8%
Unbilled Work-in-Progress	$23,450
Outstanding Accounts Receivable (Oct., Nov., Dec. 2023 Invoices)	$112,600
Vendor	Amount	Payment
Broadfield Whitaker LLP (FCC regulatory co-counsel)	$318,750	Passed through to Northgate
Vantage Spectrum Consultants Inc. (spectrum valuation)	$175,000	Paid directly by Northgate
Meridian National Bank, N.A. (annual escrow fee)	$12,500/year	Paid directly by Northgate

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION DRAFT — FOR DISCUSSION PURPOSES ONLY
CALDERWOOD & HARKNESS LLP 375 Park Avenue, 40th Floor New York, NY 10152 Telephone: (212) 409-7200 Facsimile: (212) 409-7201
Washington, D.C. Office: 1875 K Street NW, Suite 600 Washington, DC 20006
London Office: One Bishops Square London E1 6AD United Kingdom
www.calderwoodharkness.com
[Draft — for finalization approximately late January / early February 2024]
VIA E-MAIL AND SECURE DOCUMENT PORTAL
Priya Dasgupta, Esq. General Counsel Northgate Telecommunications PLC 14 Cavendish Square London W1G 0BX United Kingdom
Thomas Brennan Senior Vice President, Regulatory Affairs Northgate Telecommunications PLC 14 Cavendish Square London W1G 0BX United Kingdom
cc: Claire Matsuda, Vice President, U.S. Operations, Northgate Wireless Americas Inc., 2200 Wilson Boulevard, Suite 1450, Arlington, VA 22201
cc: Marcus Enfield, Chief Executive Officer, Northgate Telecommunications PLC, 14 Cavendish Square, London W1G 0BX, United Kingdom (distribution at Northgate's discretion)
Re: Strategic Recommendations — FCC File No. 0010287-EX; Asset Purchase Agreement dated September 22, 2022 (Ridgeline Wireless Holdings LLC) Calderwood & Harkness Matter No. 1018-00009
Dear Priya and Thomas:
I. Introduction and Purpose of Letter
We write on behalf of the Calderwood & Harkness engagement team to provide Northgate Telecommunications PLC ("NTP" or "Northgate") with a comprehensive strategic assessment and set of recommendations regarding the current dormant status of both (a) the FCC application pending before the Wireless Telecommunications Bureau under FCC File No. 0010287-EX (the "FCC Application") and (b) the stalled Asset Purchase Agreement dated September 22, 2022 (the "APA"), between Northgate Wireless Americas Inc. ("NWA") and Ridgeline Wireless Holdings LLC ("Ridgeline"). This letter has been prepared by the undersigned, Sylvia Hartwell, as the Responsible Partner for this engagement, with substantial input from Harold Wren (Of Counsel, Communications & Regulatory Practice), Simone Laroche (Lead Associate, Litigation), and Jeffrey Park (Working Associate, Litigation).
This letter synthesizes the analysis contained in multiple internal memoranda prepared by the engagement team over the past several months. Those memoranda addressed discrete legal questions relating to the FCC Application, the termination provisions of the APA, and the status of the earnest money deposit held in escrow. This letter consolidates that work into a single strategic framework intended to guide Northgate's decision-making at a critical juncture in this matter.
We have identified three principal areas of concern that require Northgate's prompt attention:
1. The Dormant FCC Application and Risk of Dismissal. The FCC Application has been pending without any substantive activity since approximately February 2023. Informal signals from Wireless Telecommunications Bureau staff indicate that the application is at risk of dismissal for failure to prosecute.
2. The Status of the APA and Associated Termination Rights. The extended Long-Stop Date of September 30, 2023 has passed without closing, yet neither party has issued a formal termination notice. The APA remains in a state of legal ambiguity — technically in effect, but with suspended performance obligations — and the implications of this posture require careful evaluation.
3. The $4,500,000 Earnest Money Deposit Held in Escrow. The deposit remains with Meridian National Bank, N.A., and its ultimate disposition depends on the manner in which the APA is resolved. Northgate's actions (or inactions) with respect to the APA and the FCC Application will directly affect the risk of forfeiture or the prospect of recovery of this deposit.
We strongly recommend scheduling a call or meeting with the Northgate team — including Priya Dasgupta, Thomas Brennan, and Claire Matsuda — and the Calderwood & Harkness team to discuss these recommendations before any action is taken with respect to the FCC, Ridgeline, or any other party. We suggest this meeting be held within the next seven to ten business days, and we are available to travel to London, Arlington, or any other location convenient to the Northgate team. We also have the capacity to conduct this discussion via secure videoconference if that is preferred.
No action will be taken with the FCC, with Ridgeline or its counsel, or with any other third party absent express instruction from Northgate.
II. Background and Current Status
For the convenience of the Northgate team, and to ensure that all decision-makers have a common factual foundation, we set forth below a summary of the transaction background, the price dispute, and the current status of the FCC Application. This summary draws upon the transaction records in our possession and is intended to be comprehensive, though we are of course available to address any additional factual questions.
A. Transaction Summary
Northgate Telecommunications PLC, through its wholly owned U.S. subsidiaries — Northgate US Holdings LLC, a Delaware limited liability company ("NUS Holdings"), and Northgate Wireless Americas Inc., a Delaware corporation (Delaware Division of Corporations File No. 7284619) ("NWA") — entered into the APA with Ridgeline Wireless Holdings LLC (Nevada Secretary of State Entity No. E0428716302) on September 22, 2022. The APA provides for the acquisition by NWA of fourteen (14) FCC Wireless Radio Service licenses in the Advanced Wireless Services-3 band (Meridian Technologies-3 / Band 66), bearing FCC call signs WQAB201 through WQAB214 (collectively, the "Licenses"). The Licenses cover Economic Areas in the states of Nevada, eastern California, and southern Oregon.
The aggregate spectrum subject to the transaction comprises 39 MHz of paired spectrum, representing 78 MHz of total paired bandwidth. The covered population, based on U.S. Census estimates utilized at the time of the transaction, is approximately 3.84 million POPs (Points of Presence). The agreed purchase price under APA Section 3.1 is $126,500,000, which was structured as a fixed price. This equates to a per-MHz-POP price of approximately $0.845, a level that was supported by the valuation report prepared by Vantage Spectrum Consultants Inc. dated September 12, 2022.
The transaction is structured as a "bare license" transfer. Ridgeline is a privately held regional wireless operator with approximately 142,000 subscribers, but the subscribers, network infrastructure, and operating business are not being acquired; only the Licenses and certain associated regulatory assets transfer under the APA. Ridgeline's ownership is held as follows: Garrett Nolan (62%), Diane Chua (18%), Pinnacle Growth Capital Fund II LP (12%, with certain consent rights under the Ridgeline LLC Agreement), and Crestwood Family Office LLC (8%).
Ridgeline is represented in this transaction by the law firm of Hargrove, Sato & Caldwell LLP, with Kevin Sato serving as lead partner. Stonebridge Advisory Group LLC served as the sell-side financial advisor to Ridgeline; Helen Tran, Managing Director, was the lead banker on the engagement.
The FCC Application — consisting of FCC Form 603 (Application for Assignment of Authorization) and a concurrent petition for declaratory ruling under Section 310(b)(4) of the Communications Act — was filed with the FCC's Wireless Telecommunications Bureau on October 14, 2022. The application was accepted for filing on October 28, 2022, and the FCC issued a public notice of the filing on November 3, 2022.
B. Purchase Price Dispute and APA Standstill
On December 14, 2022, Ridgeline delivered a written notice to Northgate demanding an upward adjustment of $14,200,000 to the agreed purchase price, which would have increased the aggregate consideration from $126,500,000 to $140,700,000. Ridgeline asserted that this adjustment was warranted based on an alleged competing bid for the California licenses covering Economic Area Nos. 155 and 159. Ridgeline did not identify the purported competing bidder and did not provide documentation to substantiate the alleged competing offer, notwithstanding Northgate's subsequent requests for such information.
On December 19, 2022, this firm, acting on behalf of Northgate, formally rejected Ridgeline's demand in writing. Our rejection letter cited the fixed-price provision set forth in APA Section 3.1 and noted the complete absence of any contractual price-adjustment mechanism in the APA. We further noted that the APA contains a comprehensive integration clause (Section 11.6) and that no side agreement, amendment, or understanding existed between the parties that would provide a basis for the demanded adjustment.
As a consequence of Ridgeline's demand and Northgate's rejection, the APA entered a de facto standstill effective December 19, 2022. Neither party took further action to advance the transaction toward closing following that date.
The original Long-Stop Date specified in the APA was March 15, 2023. In light of the price dispute and the desire of both parties (at that time) to preserve the possibility of reaching a resolution, the parties negotiated and executed an Extension Agreement dated April 22, 2023, which extended the Long-Stop Date to September 30, 2023. The Extension Agreement expressly provided that the extension was entered into "without prejudice to either party's position" regarding the price dispute. The Extension Agreement was executed by authorized signatories of both NWA and Ridgeline and was accompanied by a corresponding amendment to the Escrow Agreement with Meridian National Bank.
The extended Long-Stop Date of September 30, 2023 has now passed without closing of the transaction. Critically, however, neither Northgate nor Ridgeline has issued a formal termination notice under the APA. As discussed in greater detail in Section IV below, the APA remains technically in effect, and the implications of this posture are significant for Northgate's strategic options.
The last substantive communication between the parties — or, more precisely, between their respective counsel — was a letter from Hargrove, Sato & Caldwell LLP to Calderwood & Harkness dated November 8, 2023. That letter was relatively brief and did not constitute a termination notice or a demand for specific performance. Rather, it referenced the passage of the Long-Stop Date and stated that Ridgeline was "evaluating its options," without further elaboration. We responded on November 15, 2023 with a similarly reserved letter preserving Northgate's rights and noting our client's continued willingness to close on the terms set forth in the APA.
C. FCC Application Status
The FCC Application was filed on October 14, 2022 as FCC File No. 0010287-EX. It seeks FCC consent to the assignment of the fourteen Meridian Technologies-3 licenses from Ridgeline to NWA, together with a petition for declaratory ruling under Section 310(b)(4) of the Communications Act of 1934, as amended, 47 U.S.C. § 310(b)(4).
The comment period following issuance of the public notice closed on December 5, 2022. No formal petitions to deny were filed. One informal objection was filed on November 28, 2022 by the Great Basin Rural Broadband Cooperative ("Great Basin"), a rural broadband provider based in Elko, Nevada. The Great Basin objection raised concerns under Section 310(b)(4) regarding indirect foreign ownership of NWA through NTP, which is organized under the laws of England and Wales and whose shares are listed on the London Stock Exchange (LSE: NGTL). Calderwood & Harkness, in coordination with Broadfield Whitaker LLP, filed an opposition to the Great Basin objection on December 9, 2022, addressing each of the foreign-ownership concerns raised and demonstrating that the proposed ownership structure complies fully with the Commission's policies as set forth in the Foreign Ownership Second Report and Order (FCC 16-128).
The Section 310(b)(4) petition filed concurrently with the Form 603 sought approval for up to 100% indirect foreign ownership of NWA by NTP. The ownership chain presented to the FCC is as follows: NWA (the licensee, a Delaware corporation) is wholly owned by NUS Holdings LLC (a Delaware limited liability company), which is in turn wholly owned by NTP (a public limited company organized under the laws of England and Wales). The petition identified the following significant shareholders of NTP: Thornhill Asset Management LLP (9.7%), Sovereign Capital Partners AG (6.3%), Dunmore Pension Trust (5.1%), and the public float (78.9%). We invoked the WTO-member-country presumption applicable to shareholders from the United Kingdom and Switzerland, as set forth in the Commission's foreign-ownership policies.
On January 19, 2023, the FCC's Wireless Telecommunications Bureau issued an informal information request directed to counsel for NWA, seeking additional information regarding the proposed ownership structure and certain corporate governance matters. Calderwood & Harkness, in coordination with Broadfield Whitaker LLP (Annette Galvez and Daniel Fong), filed a comprehensive response to this request on February 10, 2023.
Since the filing of that response, there has been no further action by the FCC on the application. The FCC Application has been dormant since approximately February 2023 — a period of nearly one year as of the date of this letter.
In addition to the FCC's review, a national security review by the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector (the "Committee"), established pursuant to Executive Order 13913 (April 4, 2020), was initiated in connection with the FCC Application. This review, which involves consultation among the Department of Justice, the Department of Homeland Security, the Department of Defense, and other relevant executive-branch agencies, has not been concluded. Formal clearance has not been issued, though no adverse findings or concerns have been communicated to counsel as of our last informal inquiry with the Committee's designees.
We are aware, through informal channels, that Wireless Telecommunications Bureau staff have indicated that the FCC Application may be subject to dismissal for failure to prosecute if the underlying transaction is not reactivated. The informal guidance received by Broadfield Whitaker LLP suggested that this dismissal risk was most acute beginning in approximately Q4 2023. That informal deadline has now passed, and the application remains pending, though we cannot predict how much additional time the Bureau will permit the application to remain on its pending docket without further communication from the parties.
III. FCC Application — Options and Recommendations
The dormant status of FCC File No. 0010287-EX presents Northgate with three principal options, each carrying distinct advantages and risks. We address each in turn and conclude this section with our recommendation.
A. Option 1: Maintain the Application on the Pending Docket (Unilateral Status Update)
Under this option, NWA's counsel would file a status update letter with the Wireless Telecommunications Bureau explaining that the underlying transaction remains under active negotiation between the parties and requesting that the FCC maintain FCC File No. 0010287-EX on its pending docket. The letter would not seek any formal procedural relief but would serve to demonstrate that the applicant has not abandoned the application and that there remains a reasonable basis for the FCC to continue to hold the matter in its pending queue.
A draft of such a letter has been prepared by Broadfield Whitaker LLP for this purpose. The draft has been reviewed by Harold Wren and is, in our view, in substantially final form, though it has not been filed and will not be filed without Northgate's express authorization.
Advantages. This approach preserves the FCC Application and the substantial work product invested in its preparation, including the Section 310(b)(4) petition and the opposition to the Great Basin informal objection. It avoids the cost and delay that would be associated with withdrawing and re-filing the application at a later date if the transaction is reactivated. It also maintains the FCC staff's familiarity with the application, which can be a significant practical advantage in facilitating prompt action when the matter is ready to proceed.
Risks. The FCC is under no obligation to maintain a dormant application on its pending docket indefinitely. Wireless Telecommunications Bureau staff have already informally signaled that the application is at risk of dismissal for failure to prosecute, and a unilateral status update letter, without the participation of the seller (Ridgeline), may be viewed skeptically by FCC staff, particularly if the staff is aware (or becomes aware) that the underlying transaction has been in a standstill for over a year. There is no guarantee that a status update letter will prevent the Bureau from exercising its discretion to dismiss the application. Furthermore, maintaining the application without a credible path to closing may invite questions from the Bureau about the genuineness of the parties' intent to consummate the transaction.
When this option is appropriate. We recommend this option if Northgate has a realistic prospect of reactivating the transaction within the next three to six months and if Ridgeline is unwilling to cooperate in a joint filing (see Option 2 below).
B. Option 2: Seek Joint Abeyance with Ridgeline
Under this option, counsel for both NWA and Ridgeline would file a joint request — in the form of a stipulation signed by authorized representatives of both parties or their counsel — asking the FCC to hold the FCC Application in abeyance pending resolution of the purchase price dispute between the parties to the APA.
A draft stipulation has been prepared by the Calderwood & Harkness and Broadfield Whitaker LLP engagement teams for potential submission. The draft has not yet been shared with, or agreed to by, Hargrove, Sato & Caldwell LLP on behalf of Ridgeline. Any outreach to Ridgeline's counsel for this purpose would require Northgate's prior authorization and careful strategic consideration, as discussed below.
The cooperation of Ridgeline would be required for this option. Given the adversarial posture of the parties on the price dispute and the absence of any substantive communications since November 2023, Ridgeline's willingness to participate in a joint filing is uncertain.
Advantages. A joint filing by both parties carries significantly more weight with the FCC than a unilateral status update by only one party. Joint requests for abeyance are routinely granted by the Wireless Telecommunications Bureau when both parties to a transaction request such relief, and they establish a formal procedural basis for the dormancy of the application that the Bureau is likely to respect. Such a filing also demonstrates the ongoing good faith of both parties and reduces the risk that the Bureau will dismiss the application sua sponte. From a broader strategic perspective, cooperation with Ridgeline on a procedural matter such as this could, if handled carefully, serve as a bridge to re-engagement on the substantive commercial dispute.
Risks. Ridgeline may refuse to cooperate. Alternatively, Ridgeline may condition its cooperation on concessions regarding the price dispute — for example, by agreeing to join the FCC filing only if Northgate agrees to resume price negotiations or to accept a partial price adjustment. Approaching Ridgeline for this purpose carries the inherent risk of restarting a dialogue that Northgate may prefer to defer, and could be interpreted by Ridgeline as a signal that Northgate is eager to preserve the deal, which may embolden Ridgeline's negotiating position. Finally, Ridgeline could use the opportunity of renewed contact to demand concessions unrelated to the FCC filing, or to deliver a termination notice in response to Northgate's outreach.
When this option is appropriate. We recommend this as the preferred option if Northgate determines that diplomatic engagement with Ridgeline is feasible and if Northgate is willing to accept the risks associated with re-opening a line of communication. Coordination with Broadfield Whitaker LLP is necessary before any outreach to Hargrove, Sato & Caldwell LLP, and we recommend that any such outreach be conducted through counsel rather than through commercial contacts.
C. Option 3: Voluntarily Withdraw the Application
Under this option, NWA's counsel would file a request with the Wireless Telecommunications Bureau to withdraw FCC File No. 0010287-EX. The application would be terminated by the Bureau upon the filing of such a request, and the proceeding would be closed.
Advantages. Voluntary withdrawal provides a clean resolution of the FCC proceeding and eliminates the risk that the Bureau will dismiss the application for failure to prosecute. A dismissal for failure to prosecute, while not typically accompanied by any formal adverse finding, creates a procedural record that could be cited by objectors in future proceedings involving NWA or NTP. Voluntary withdrawal avoids this risk entirely. Additionally, withdrawal eliminates the ongoing costs associated with monitoring the application and coordinating with co-counsel Broadfield Whitaker LLP on FCC-related matters. This option is appropriate if Northgate has determined that the Ridgeline transaction is unlikely to proceed under any circumstances.
Risks. Voluntary withdrawal results in the loss of all investment in the application process, including the preparation of the Form 603, the Section 310(b)(4) petition, the opposition to the Great Basin informal objection, and the response to the WTB's January 2023 information request. If the transaction is later revived, a new Form 603 and a new Section 310(b)(4) petition would need to be filed, incurring additional legal and consulting fees, new filing timelines, and a new comment period during which new petitions to deny or informal objections could be filed. The Great Basin informal objection, and any future objections, would need to be addressed de novo. The Committee for the Assessment of Foreign Participation review would also need to restart from the beginning, potentially adding months to the regulatory timeline.
When this option is appropriate. We do not recommend this option unless Northgate has made a definitive and irrevocable decision to abandon the acquisition of the Ridgeline Licenses.
D. Recommendation
Based on our analysis, Calderwood & Harkness's recommendation is as follows:
Northgate should pursue Option 2 (joint abeyance with Ridgeline) as the primary strategy. If Ridgeline declines to cooperate in a joint filing, or if Northgate determines that approaching Ridgeline at this time is inadvisable for strategic reasons, Northgate should pursue Option 1 (unilateral status update) as a fallback.
Timing is critical. Given the informal warning from WTB staff targeting approximately Q4 2023 as the period by which the application could be subject to dismissal for failure to prosecute — a deadline that has now passed — any filing with the FCC should be made as promptly as practicable following Northgate's decision on strategy. Each day of continued silence increases the risk that the Bureau will act to dismiss the application without further notice.
As a preliminary step, and before any formal filing is made, we suggest that Harold Wren of Calderwood & Harkness and Annette Galvez of Broadfield Whitaker LLP make informal contact with WTB staff to gauge the Bureau's current posture regarding the application. This informal outreach, which would not require any filing or formal communication, would allow us to assess the urgency of the situation and to calibrate the form and timing of any subsequent filing. We request Northgate's authorization to proceed with this informal contact.
IV. APA Termination Rights and Status
A. Analysis of the Long-Stop Date
As noted above, the extended Long-Stop Date of September 30, 2023 has passed without closing of the transaction contemplated by the APA. This fact gives rise to important questions regarding the legal status of the APA and the rights and obligations of the parties thereunder.
Under the APA (Section 9.1(b)(ii)), the passage of the Long-Stop Date gives each party the right to terminate the Agreement by delivering written notice to the other party. Critically, however, termination under this provision is not automatic. The APA expressly requires "affirmative written notice" of termination, and the right to terminate upon the passage of the Long-Stop Date is permissive rather than mandatory. The provision states, in relevant part, that "this Agreement may be terminated . . . by either Buyer or Seller, if the Closing shall not have occurred on or prior to the Long-Stop Date" (emphasis added).
Neither Northgate (nor NWA) nor Ridgeline has issued such a notice. In the absence of a termination notice, the APA remains technically in effect, though the parties' obligations under the Agreement are in a state of suspended performance. The pre-closing covenants requiring the parties to use commercially reasonable efforts to obtain regulatory approvals and to consummate the transaction (APA Sections 6.3 and 6.4) are arguably still operative, though it is unclear how a court would interpret the scope of these obligations given the prolonged standstill and the unresolved price dispute.
This posture creates a degree of legal ambiguity. The APA is neither formally terminated nor actively being performed. The parties are in a state of limbo — each retaining the contractual right to terminate, but neither having exercised that right. As a practical matter, this means that the APA could be revived by mutual agreement of the parties (if the price dispute is resolved), or it could be terminated by either party at any time by the delivery of a written notice.
B. Strategic Considerations
The question of whether Northgate should issue a termination notice — or should refrain from doing so — is principally a commercial and strategic judgment, but it has significant legal consequences.
If Northgate desires to preserve the option to proceed with the acquisition at the original purchase price of $126,500,000, it should not issue a termination notice. Issuing such a notice would crystallize the termination of the APA, extinguish any remaining possibility of closing on the agreed terms, and trigger the escrow-release provisions of the Escrow Agreement (with consequences discussed in Section V below). As long as the APA remains in effect, Northgate retains the legal position that it is ready, willing, and able to close on the agreed terms — a position that may be relevant in any future dispute over the allocation of the escrow deposit.
If Northgate has decided to abandon the acquisition, issuing a termination notice may be advantageous in order to trigger the return of the earnest money deposit under the Escrow Agreement. However, the prospect of recovery depends on the interpretation of the APA's fault-based termination provisions, as discussed in Section V below. Issuing a termination notice is not risk-free, because the manner in which the notice is characterized (i.e., whether the termination is attributable to Buyer or Seller fault) may be contested by Ridgeline.
Ridgeline's failure to issue a termination notice is itself strategically significant. There are several possible explanations for Ridgeline's inaction: Ridgeline may wish to preserve its own option to proceed with the transaction (at the adjusted price); Ridgeline may be deferring termination in order to maintain leverage over the price dispute; or Ridgeline may simply be evaluating its options, as its November 8, 2023 letter suggested. Regardless of the reason, Ridgeline's silence does not prejudice Northgate so long as Northgate continues to preserve its own rights under the APA.
Risk. Ridgeline retains the right to issue a termination notice at any time, and if it does so, the allocation of the escrow deposit upon termination will depend on the interpretation of the APA's fault provisions — a question that may give rise to a dispute, as discussed in Section V below.
C. Recommendation
We recommend that Northgate not issue a termination notice at this time unless Northgate has made a definitive decision to abandon the transaction. The current posture — in which the APA remains technically in effect and neither party has acted to terminate — preserves Northgate's maximum flexibility. Northgate retains the option to close (if the price dispute is resolved), to terminate (if it decides to abandon the transaction), or simply to continue in a holding pattern while evaluating its strategic alternatives.
We further recommend that Northgate continue to preserve all of its rights and remedies under the APA, including by refraining from any communication or action that could be construed as a waiver, an abandonment, or an anticipatory repudiation of the APA.
Finally, we recommend that the Northgate team and Calderwood & Harkness continue to monitor for any communication from Ridgeline or Hargrove, Sato & Caldwell LLP that could constitute a termination notice, an anticipatory repudiation, or a demand for escrow release. Any such communication should be forwarded to Calderwood & Harkness immediately upon receipt to enable a timely and appropriate response.
V. Escrow Deposit — Recovery and Forfeiture Risk
A. Current Status
Pursuant to the Escrow Agreement dated September 30, 2022 (the "Escrow Agreement"), among NWA (as Buyer), Ridgeline (as Seller), and Meridian National Bank, N.A. (as Escrow Agent), an earnest money deposit in the amount of $4,500,000 (the "Deposit") was funded by NWA on September 30, 2022 and is currently held in a segregated escrow account at Meridian National Bank, N.A. The Deposit represents approximately 3.56% of the $126,500,000 purchase price.
The designated Escrow Officer at Meridian is Sandra Okonkwo, whose office is located at 333 South Hope Street, Suite 4800, Los Angeles, CA 90071. An annual escrow maintenance fee of $12,500 is payable by Northgate (through NWA) and has been paid through the current annual period.
The Escrow Agreement provides for release of the Deposit to Ridgeline (as Seller) upon consummation of the Closing, at which point the Deposit would be credited toward the purchase price. In the event of termination of the APA, the Escrow Agreement provides for return of the Deposit to NWA (as Buyer) or release of the Deposit to Ridgeline, depending on the specific termination circumstances and the allocation of fault under the APA.
B. Scenarios and Risk Analysis
We have analyzed the likely disposition of the Deposit under each of the plausible scenarios for resolution of the matter:
Scenario 1 — Transaction Closes. If the APA is reactivated and the transaction proceeds to closing, the Deposit would be applied toward the purchase price at closing in accordance with APA Section 3.2 and the Escrow Agreement. No recovery issue arises in this scenario.
Scenario 2 — Northgate Terminates for Convenience or Inability to Close. If Northgate issues a termination notice and the termination is attributable to Northgate's decision not to proceed (as opposed to a failure of a closing condition within Ridgeline's control), there is a risk that the Deposit may be forfeited to Ridgeline as liquidated damages under APA Section 9.2(b). The operative question under this scenario is whether the FCC's failure to act on the application, or the price-dispute deadlock, constitutes a "Buyer-fault" termination event under the APA. Our preliminary analysis suggests that neither of these circumstances should be characterized as Buyer fault, given that (i) the FCC's delay is attributable to the parties' collective failure to advance the transaction, not to any deficiency in Northgate's regulatory qualifications, and (ii) the price dispute was initiated by Ridgeline, not by Northgate. However, the question is not free from doubt, and Ridgeline may argue that Northgate's refusal to agree to the price adjustment caused the deadlock and therefore constitutes a failure to perform in good faith. This argument, in our view, lacks merit, but it cannot be dismissed out of hand.
Scenario 3 — Ridgeline Terminates Due to Northgate's Alleged Breach. Under this scenario, Ridgeline issues a termination notice asserting that Northgate has breached the APA (for example, by failing to use commercially reasonable efforts to consummate the transaction), and Ridgeline claims the Deposit. It is our view that Northgate has not breached the APA. The price dispute was initiated by Ridgeline's demand for an adjustment not contemplated by the APA, and Northgate's rejection of that demand was well within its contractual rights. The standstill that ensued was a consequence of Ridgeline's actions, not Northgate's. Accordingly, we believe Ridgeline should be precluded from claiming a Buyer-fault termination under these circumstances. If Ridgeline were to pursue this theory, we would be prepared to contest it vigorously, including through the dispute-resolution mechanisms provided in the Escrow Agreement (which include escalation to a neutral arbitrator if the parties cannot agree on joint instructions to the Escrow Agent).
Scenario 4 — Mutual Termination or Long-Stop Date Termination Without Fault. If the parties mutually agree to terminate the APA, or if either party terminates solely by reason of the passage of the Long-Stop Date without attributing fault to the other party, the Deposit should be returned to NWA under most reasonable interpretations of the APA and Escrow Agreement. The APA provides that in the event of termination under Section 9.1(b)(ii) (Long-Stop Date termination), the parties shall deliver joint instructions to the Escrow Agent directing return of the Deposit to Buyer, provided that the termination is not attributable to Buyer's breach. However, even in this seemingly straightforward scenario, there is a risk that Ridgeline may contest the characterization and argue that Northgate's refusal to negotiate on price constitutes a breach giving rise to a Seller's right to the Deposit. We regard this argument as weak but acknowledge the possibility of a dispute.
Scenario 5 — Continued Dormancy (No Termination by Either Party). Under the current posture, in which neither party has issued a termination notice, the Deposit remains in escrow indefinitely. NWA continues to bear the annual escrow maintenance fee of $12,500 per year. The Deposit earns modest interest (currently at the Meridian money market rate), which accrues for the benefit of the party ultimately entitled to receive the Deposit. There is no recovery and no forfeiture until a triggering event occurs — specifically, until a closing or a valid termination under the APA.
C. Recommendation
We recommend that Northgate preserve the status quo on the escrow for the time being. Specifically:
• Northgate should not take any action — whether with respect to the FCC Application, the APA, or otherwise — that could be construed as triggering a Buyer-fault termination event or as providing a basis for Ridgeline to claim the Deposit.
• If and when a termination of the APA occurs (whether initiated by Northgate or by Ridgeline), Northgate should be prepared to promptly deliver joint instructions to Meridian National Bank directing the return of the Deposit, or, if the characterization of the termination is disputed, to invoke the Escrow Agreement's dispute-resolution mechanism without delay.
• Northgate should monitor for any unilateral communications from Ridgeline, Hargrove, Sato & Caldwell LLP, or any other party to Sandra Okonkwo at Meridian regarding the escrow. Under the Escrow Agreement, the Escrow Agent is required to act only upon joint written instructions from both parties (or upon an order of a court of competent jurisdiction or an arbitrator's award), but it is prudent to remain vigilant against any attempt by Ridgeline to circumvent this requirement.
VI. Additional Regulatory Considerations
In addition to the three principal areas of concern identified above, we bring to Northgate's attention several ancillary regulatory and transactional considerations that may affect Northgate's decision-making and that would become directly relevant if the transaction is reactivated.
A. FCC Buildout Compliance Risk — Three Oregon Licenses
Three of the fourteen Licenses — specifically, WQAB212, WQAB213, and WQAB214, covering Economic Areas in southern Oregon — have not met the FCC's interim construction benchmarks applicable to Meridian Technologies-3 licensees. Under the FCC's rules, Meridian Technologies-3 licensees are required to demonstrate that they are providing reliable signal coverage and service to a specified percentage of the population within their licensed geographic areas within defined timeframes. The interim construction benchmark for these licenses is due in approximately March 2025, with the final construction deadline in approximately March 2028.
The remaining eleven of the fourteen Licenses have met their respective interim benchmarks, and no buildout compliance issue exists with respect to those licenses.
If Northgate acquires the Licenses, it will inherit the buildout obligations associated with all fourteen Licenses, including the three Oregon licenses that are currently behind on their benchmarks. Failure to meet FCC construction benchmarks can result in a range of enforcement actions, including, in the most severe cases, potential license revocation or reduced license terms. More commonly, the FCC may impose a requirement that the licensee demonstrate compliance on an accelerated timeline or may reduce the geographic scope of the license.
Ridgeline's failure to meet interim benchmarks on the three Oregon licenses pre-closing presents a diligence concern. Depending on the reasons for the shortfall and the current state of Ridgeline's infrastructure deployment in southern Oregon, the cost and difficulty of achieving compliance after closing could be material. This issue may also affect the value properly attributed to these specific licenses and should be reflected in any purchase price allocation or, if negotiations are reopened, in the overall transaction economics.
Recommendation. If the transaction is reactivated, Northgate should seek updated representations and warranties from Ridgeline regarding the buildout status of all fourteen Licenses, with particular focus on WQAB212, WQAB213, and WQAB214. Northgate should also consider whether a purchase price allocation or adjustment should account for the buildout risk on the Oregon licenses, and whether any bring-down condition should be structured to address the possibility that the buildout status deteriorates further before closing.
B. Anti-Trafficking / Unjust Enrichment Rules
The FCC's anti-trafficking rules, codified at 47 C.F.R. § 1.2111, may apply to certain of the Licenses originally acquired by Ridgeline at FCC auction. Under these rules, if a licensee that acquired spectrum at auction with the benefit of designated-entity or small-business bidding credits transfers its licenses within a specified holding period, the transferor (or, in certain cases, the transferee) may be required to make unjust enrichment payments to the United States Treasury. The amount of any such payment depends on the size of the original bidding credit, the holding period elapsed at the time of transfer, and the terms of the transfer.
Our analysis of the anti-trafficking implications for the Ridgeline Licenses is ongoing. Harold Wren and Annette Galvez of Broadfield Whitaker LLP are conducting a license-by-license review to determine which, if any, of the fourteen Licenses were acquired at auction, whether any bidding credits were applied, the applicable holding periods, and the amount of any potential unjust enrichment obligations. This analysis requires review of FCC auction records, Ridgeline's licensing history, and the applicable regulatory provisions.
Recommendation. The anti-trafficking analysis should be completed before any decision is made to reactivate the transaction. If unjust enrichment payments are required, the amounts could be substantial and should be factored into the economics of the transaction. As a contractual matter, the APA allocates responsibility for unjust enrichment payments to Ridgeline (APA Section 6.8), but contractual allocation may not fully mitigate the risk if Ridgeline contests the allocation or if the FCC imposes payment obligations directly on the transferee.
C. National Security Review
As noted in Section II.C above, the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector, established pursuant to Executive Order 13913 (April 4, 2020), initiated a national security review of the proposed transaction in connection with the FCC Application. This review has not been concluded, and formal clearance has not been issued.
No adverse findings have been communicated to counsel, and we are not aware of any substantive concerns raised by the Committee's constituent agencies (the Department of Justice, the Department of Homeland Security, the Department of Defense, and other relevant executive-branch agencies). If the FCC Application is maintained on the pending docket (under Option 1 or Option 2 as described in Section III above) or is reactivated following a period of dormancy, the Committee review will also need to resume and ultimately be concluded before the FCC can grant the application.
The involvement of shareholders from the United Kingdom (Thornhill Asset Management LLP) and Switzerland (Sovereign Capital Partners AG) should not, in our assessment, present issues under the Committee's review framework, given the WTO-member-country status of both jurisdictions and the absence of any known national security concerns associated with these entities. However, formal clearance remains outstanding, and the Committee's review process is not subject to any statutory timeline, which means that the length of the review is inherently uncertain.
D. Representations and Warranties Insurance
In connection with the APA, Northgate engaged Apex Continental Insurance Ltd. ("Apex Continental") to provide a representations and warranties insurance policy to cover losses arising from breaches of Ridgeline's representations and warranties under the APA. Apex Continental, through Fiona Ashworth (Underwriter), issued an indicative term sheet for the R&W policy. Apex Continental is domiciled in Bermuda, with a U.S. branch office located at 140 Broadway, Suite 3500, New York, NY 10005.
The indicative premium for the R&W policy was $1,012,000, representing approximately 0.8% of the $126,500,000 purchase price. The policy was never bound, as the transaction did not progress to closing and the R&W policy was structured to be bound simultaneously with the closing of the APA.
If the transaction is reactivated, the R&W policy will need to be re-underwritten. The original indicative terms have almost certainly expired given the passage of time (over 16 months since the indicative term sheet was issued), and changes in the insurance market, as well as changes in the underlying risk profile of the transaction (including the price dispute, the dormancy of the FCC Application, and the buildout compliance issues on the Oregon licenses), may affect the availability and pricing of coverage. Updated diligence materials and refreshed representations from Ridgeline may also be required by the insurer.
Recommendation. If deal reactivation is pursued, Northgate should engage with Apex Continental at an early stage to determine whether the indicative terms can be refreshed, the expected premium under current market conditions, and the scope and timeline of any re-underwriting process. Early engagement will help to avoid delays in the closing timeline if the transaction is revived.
VII. Budget and Fee Status
We take this opportunity to provide Northgate with a summary of the current fee status for this engagement, including fees billed and outstanding, and to address certain budgetary matters.
A. Calderwood & Harkness Fees
At the outset of the engagement, the parties agreed to a Phase 1 fee cap of $1,250,000 for work relating to the FCC Application and regulatory approvals. The current status of fees against this cap is as follows:
We note that the Phase 1 fee cap applies exclusively to work relating to the FCC Application and regulatory approvals. Work relating to the purchase price dispute, APA termination analysis, escrow matters, and litigation assessment is not subject to the Phase 1 fee cap and has been billed separately at the engagement's blended hourly rate of approximately $875 per hour. Substantial additional work has been performed in these areas, and further work will be required if the matter continues in any form — whether that involves maintenance of the FCC Application, reactivation of the transaction, withdrawal of the FCC Application, APA dispute resolution, or litigation.
B. Co-Counsel and Other Costs
In addition to Calderwood & Harkness's fees, the following co-counsel and consultant fees have been incurred and billed or paid:
C. Request
We respectfully request prompt payment of the outstanding $112,600 in accounts receivable, which represents invoices issued in October, November, and December 2023. Our standard engagement terms provide for payment within thirty (30) days of invoice date, and the oldest of these invoices is now approaching ninety days outstanding.
We also request Northgate's approval to continue incurring fees in connection with the recommended near-term actions described in this letter, including preparation and filing of an FCC status update or joint abeyance request, potential outreach to Ridgeline's counsel, informal contact with WTB staff, and ongoing monitoring of the FCC Application, the APA, and the escrow. We will provide a detailed estimate of anticipated additional fees for these activities upon receiving Northgate's instructions as to the preferred course of action.
VIII. Proposed Next Steps and Action Items
Based on the foregoing analysis, we propose the following action items for discussion with the Northgate team:
1. Schedule a Call or Meeting. We recommend that Priya Dasgupta, Thomas Brennan, Claire Matsuda, and the Calderwood & Harkness team (Sylvia Hartwell, Harold Wren, and Simone Laroche) convene a call or meeting to discuss the recommendations set forth in this letter and to provide instructions to outside counsel. We suggest that this meeting be held within the next seven to ten business days, given the time-sensitive nature of the FCC application issue. We are available to travel to London or Arlington, or to participate via secure videoconference, at Northgate's preference.
2. FCC Application. Upon instruction from Northgate, authorize Broadfield Whitaker LLP and Harold Wren to make informal contact with Wireless Telecommunications Bureau staff to gauge the current posture of the Bureau regarding FCC File No. 0010287-EX. Following that informal outreach, prepare to file either a unilateral status update letter (Option 1) or a joint abeyance request (Option 2), depending on Northgate's strategic decision and Ridgeline's willingness to cooperate.
3. Ridgeline Engagement. Determine whether Northgate wishes to re-engage with Ridgeline and Hargrove, Sato & Caldwell LLP to (a) attempt resolution of the purchase price dispute, (b) pursue joint abeyance at the FCC, (c) negotiate a mutual termination of the APA and agreed disposition of the escrow deposit, or (d) allow the matter to remain dormant for an additional period. This determination should be made at the earliest practicable time, as it will inform all other strategic decisions.
4. Termination Posture. Maintain the current position of not issuing an APA termination notice. Continue to monitor all communications from Ridgeline and Hargrove, Sato & Caldwell LLP for any language that could be construed as a termination notice, an anticipatory repudiation, or a waiver of rights.
5. Escrow. No action is required with respect to the escrow at this time. Continue to monitor for any communications from Ridgeline, Hargrove Sato, or Meridian National Bank regarding the escrow. Ensure that the annual escrow maintenance fee remains current.
6. Buildout Risk. If deal reactivation is considered, commission an updated assessment of Ridgeline's buildout compliance status on the three Oregon licenses (WQAB212, WQAB213, WQAB214) in advance of the approximately March 2025 interim construction benchmark deadline. This assessment may require information from Ridgeline, and the request for such information should be coordinated with any broader re-engagement strategy.
7. Anti-Trafficking Analysis. Complete the license-by-license unjust enrichment analysis under 47 C.F.R. § 1.2111 currently being prepared by Harold Wren and Annette Galvez. This analysis should be finalized before any decision is made to reactivate the transaction.
8. R&W Insurance. If deal reactivation is pursued, contact Fiona Ashworth at Apex Continental Insurance Ltd. to determine the current status of the indicative R&W policy, the feasibility of refreshing the indicative terms, and the anticipated cost and timeline for re-underwriting.
9. Outstanding Invoices. Arrange for payment of the $112,600 in outstanding Calderwood & Harkness invoices at Northgate's earliest convenience.
IX. Closing
Calderwood & Harkness remains fully available to discuss the matters addressed in this letter at Northgate's convenience. We recognize that the strategic decisions outlined above involve significant commercial considerations that are ultimately within Northgate's business judgment, and we are committed to supporting Northgate's decision-making process with the best legal analysis and counsel available.
We wish to reiterate that no action will be taken with the FCC, with Ridgeline or Hargrove, Sato & Caldwell LLP, with Meridian National Bank, or with any other third party without express instruction from Northgate. We will await Northgate's direction on each of the action items identified in this letter before proceeding.
We also note that Broadfield Whitaker LLP (Annette Galvez and Daniel Fong) remains engaged as FCC regulatory co-counsel and is available to participate in any discussions with the Northgate team regarding the FCC Application. Whitfield & Grainger LLP (Nigel Pemberton, Engagement Partner) continues to coordinate with our team on UK tax matters that may arise in connection with the transaction, and other advisors — including Vantage Spectrum Consultants Inc. and Stonebridge Advisory Group LLC — stand ready to assist as needed.
Finally, we note that this letter is a draft prepared for discussion purposes and will be finalized following receipt of client input. We welcome any comments, corrections, or additional questions from the Northgate team and will revise this letter as appropriate before it is issued in final form.
We look forward to hearing from you and to discussing these matters at the earliest opportunity.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Sylvia Hartwell Partner Telephone: (212) 409-7218
Email: shartwell@calderwoodharkness.com
Harold Wren Of Counsel Telephone: (202) 814-3305
Email: hwren@calderwoodharkness.com
Enclosures:
1. Draft Letter to FCC — Request for Extension of Time / Status Update (FCC File No. 0010287-EX) (Prepared by Broadfield Whitaker LLP; reviewed by Harold Wren)
2. Draft Stipulation — Joint Request to Hold FCC Application in Abeyance (FCC File No. 0010287-EX) (Prepared by Calderwood & Harkness LLP; not yet shared with Hargrove, Sato & Caldwell LLP)
3. Summary of Key APA Dates and Deadlines (Prepared by Simone Laroche and Jeffrey Park)
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION DRAFT — FOR DISCUSSION PURPOSES ONLY This letter and its enclosures are protected by the attorney-client privilege and the work product doctrine. They are intended solely for the use of the addressees and are not to be distributed, disclosed, or relied upon by any other person or entity without the prior written consent of Calderwood & Harkness LLP.
Category | Amount
Phase 1 Fee Cap (FCC Application / Regulatory Approvals) | $1,250,000
Total Fees Billed Through January 2024 | $847,320
Percentage of Phase 1 Cap Utilized | 67.8%
Unbilled Work-in-Progress | $23,450
Outstanding Accounts Receivable (Oct., Nov., Dec. 2023 Invoices) | $112,600
Vendor | Amount | Payment
Broadfield Whitaker LLP (FCC regulatory co-counsel) | $318,750 | Passed through to Northgate
Vantage Spectrum Consultants Inc. (spectrum valuation) | $175,000 | Paid directly by Northgate
Meridian National Bank, N.A. (annual escrow fee) | $12,500/year | Paid directly by Northgate

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION DRAFT — FOR DISCUSSION PURPOSES ONLY

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