CALDERWOOD & HARKNESS LLP 375 Park Avenue, 40th Floor New York, NY 10152
Telephone: (212) 848-6000 Facsimile: (212) 848-6001
September 22, 2022
Northgate Wireless Americas Inc. 2200 Wilson Boulevard, Suite 1450 Arlington, VA 22201
Attention: Claire Matsuda, VP, U.S. Operations
Ridgeline Wireless Holdings LLC 450 South Virginia Street, Suite 800 Reno, NV 89501
Attention: Garrett Nolan, Founder & Managing Member
Re: Consent of Pinnacle Growth Capital Fund II LP to Assignment of FCC Spectrum Licenses Pursuant to Asset Purchase Agreement dated September 22, 2022
Ladies and Gentlemen:
This side letter (this "Side Letter") is delivered by Pinnacle Growth Capital Fund II LP, a Delaware limited partnership ("Pinnacle Fund II"), acting through its duly authorized general partner, Pinnacle Growth Capital Management LLC, a Delaware limited liability company ("Pinnacle GP"), to set forth the consent of Pinnacle Fund II to the transaction described herein. This Side Letter is executed by Robert Almeda, Managing Director of Pinnacle GP, who is duly authorized to act on behalf of Pinnacle GP in its capacity as the general partner of Pinnacle Fund II. The principal office of Pinnacle Fund II and Pinnacle GP is located at 600 Lexington Avenue, 28th Floor, New York, NY 10022.
Background
A. Membership Interest in Ridgeline. Pinnacle Fund II holds a twelve percent (12%) membership interest in Ridgeline Wireless Holdings LLC, a Nevada limited liability company (NV SOS Entity No. E0428716302) ("Ridgeline"). The remaining membership interests in Ridgeline are held as follows: (i) Garrett Nolan, in his capacity as Founder and Managing Member, holds a sixty-two percent (62%) membership interest; (ii) Diane Chua, in her capacity as Co-Managing Member and Chief Operating Officer, holds an eighteen percent (18%) membership interest; and (iii) Crestwood Family Office LLC, as a passive member, holds an eight percent (8%) membership interest. The foregoing membership interests, together with the membership interest held by Pinnacle Fund II, represent one hundred percent (100%) of the issued and outstanding membership interests of Ridgeline.
B. Consent Right Under the LLC Agreement. Reference is hereby made to that certain Amended and Restated Limited Liability Company Agreement of Ridgeline Wireless Holdings LLC, dated as of April 14, 2019, as amended from time to time (the "LLC Agreement"). Pursuant to the terms and provisions of the LLC Agreement, Pinnacle Fund II holds certain consent rights with respect to change-of-control transactions involving Ridgeline or the material assets of Ridgeline, including but not limited to the sale, assignment, transfer, or other disposition of all or substantially all of Ridgeline's FCC wireless radio service licenses. The transaction contemplated by the Asset Purchase Agreement described below constitutes a change-of-control transaction within the meaning of the LLC Agreement and, accordingly, requires the prior written consent of Pinnacle Fund II before Ridgeline may execute, deliver, and perform its obligations thereunder.
C. Description of the Transaction. Ridgeline Wireless Holdings LLC (in its capacity as Seller and Assignor) and Northgate Wireless Americas Inc., a Delaware corporation (Delaware File No. 7284619) (in its capacity as Buyer and Assignee) ("Northgate"), have negotiated and propose to enter into that certain Asset Purchase Agreement, dated as of September 22, 2022 (the "APA"), pursuant to which Ridgeline will sell, assign, transfer, and convey to Northgate fourteen (14) FCC Wireless Radio Service licenses issued under Part 27 of the Rules of the Federal Communications Commission, 47 C.F.R. Part 27 (Meridian Technologies-3 / Band 66 spectrum). The licenses subject to the APA comprise thirty-nine megahertz (39 MHz) of paired spectrum and are identified by call signs WQAB201 through WQAB214, inclusive. The license areas covered by the foregoing licenses encompass Economic Areas in the State of Nevada, eastern portions of the State of California, and southern portions of the State of Oregon, covering an aggregate population of approximately three million eight hundred forty thousand (3,840,000) POPs. The aggregate purchase price for the licenses under the APA is One Hundred Twenty-Six Million Five Hundred Thousand Dollars ($126,500,000). In connection with the execution of the APA, Northgate has funded, or has agreed to fund, an earnest money deposit in the amount of Four Million Five Hundred Thousand Dollars ($4,500,000) into an escrow account established with Meridian National Bank, N.A. (acting as Escrow Agent), with such deposit to be funded on or before September 30, 2022, in accordance with the terms of the APA.
The consummation of the transactions contemplated by the APA is subject to, among other conditions, the prior consent of the Federal Communications Commission, which the parties intend to obtain by filing FCC Form 603 (Application for Assignment of Authorization) and 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), in light of the foreign ownership interests in Northgate. Northgate is an indirect wholly owned subsidiary of Northgate Telecommunications PLC, a public limited company organized under the laws of England and Wales (Companies House No. 08473291), the ordinary shares of which are listed on the London Stock Exchange under the ticker symbol LSE: NGTL. The ownership chain through which Northgate Telecommunications PLC holds its interest in Northgate is as follows: Northgate Wireless Americas Inc. is a direct wholly owned subsidiary of Northgate US Holdings LLC, a Delaware limited liability company, which is in turn a direct wholly owned subsidiary of Northgate Telecommunications PLC.
D. Nature of Asset Transfer. The parties acknowledge and agree that the transaction contemplated by the APA involves solely the transfer of bare FCC spectrum licenses; Ridgeline's operating business, subscriber accounts (comprising approximately one hundred forty-two thousand (142,000) active subscribers as of the date hereof), network infrastructure, equipment, intellectual property, contracts (other than the licenses being assigned), and all other assets of Ridgeline are retained by Ridgeline and are not being sold, assigned, or transferred to Northgate pursuant to the APA. Ridgeline will undertake, separately and independently of the transactions contemplated by the APA, to transition its existing subscribers to alternative spectrum arrangements or, as applicable, to wind down certain operational activities in the affected license areas, in each case in accordance with applicable law and the terms of the LLC Agreement.
Terms of Consent
In consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Section 1. Grant of Consent. Pinnacle Fund II hereby irrevocably consents to the execution, delivery, and performance by Ridgeline of the APA and to the consummation of all transactions contemplated thereby, including, without limitation, the sale, assignment, and transfer of the fourteen (14) FCC Wireless Radio Service licenses identified by call signs WQAB201 through WQAB214 from Ridgeline to Northgate Wireless Americas Inc., upon the terms and subject to the conditions set forth in the APA. This consent is given by Pinnacle Fund II pursuant to, and in satisfaction of, the applicable provisions of the LLC Agreement requiring the prior written consent of Pinnacle Fund II for change-of-control transactions. This consent further extends to all filings, applications, petitions, and requests for regulatory approvals that are necessary or advisable to consummate the transactions contemplated by the APA, including, without limitation, the filing of FCC Form 603 (Application for Assignment of Authorization) with the Federal Communications Commission (FCC File No. to be assigned upon filing) and the filing of a petition for declaratory ruling pursuant to Section 310(b)(4) of the Communications Act of 1934, as amended, together with all ancillary filings, amendments, supplements, and correspondence related thereto.
Section 2. Representations and Warranties of Pinnacle Fund II. Pinnacle Fund II hereby represents and warrants to Northgate and Ridgeline as follows:
(a) Due Formation and Valid Existence. Pinnacle Fund II is a limited partnership duly formed, validly existing, and in good standing under the laws of the State of Delaware, and has all requisite limited partnership power and authority to enter into this Side Letter and to perform its obligations hereunder.
(b) Authority of General Partner. Pinnacle Growth Capital Management LLC is the duly appointed general partner of Pinnacle Fund II pursuant to the limited partnership agreement of Pinnacle Fund II and has full power and authority to execute and deliver this Side Letter on behalf of Pinnacle Fund II and to bind Pinnacle Fund II to the terms and provisions hereof.
(c) Authorization of Signatory. Robert Almeda, in his capacity as Managing Director of Pinnacle GP, is duly authorized to execute this Side Letter on behalf of Pinnacle GP, acting in its capacity as the general partner of Pinnacle Fund II, and no further action, consent, approval, or authorization on the part of any partner, member, manager, officer, board, committee, or other governing body of Pinnacle Fund II or Pinnacle GP is required in connection with the execution, delivery, or performance of this Side Letter.
(d) Membership Interest. Pinnacle Fund II holds a twelve percent (12%) membership interest in Ridgeline, as reflected in the LLC Agreement and the records of Ridgeline. Pinnacle Fund II has not sold, transferred, assigned, pledged, hypothecated, encumbered, or otherwise disposed of any portion of such membership interest, and such membership interest is held by Pinnacle Fund II free and clear of all liens, claims, encumbrances, security interests, options, or other restrictions of any kind, other than restrictions imposed by the LLC Agreement or applicable securities laws.
(e) No Conflict. The execution and delivery of this Side Letter by Pinnacle Fund II, and the performance by Pinnacle Fund II of its obligations hereunder, do not and will not (i) violate or conflict with any provision of the certificate of limited partnership, limited partnership agreement, certificate of formation, limited liability company agreement, or other organizational documents of Pinnacle Fund II or Pinnacle GP; (ii) violate, conflict with, result in a breach of, or constitute a default (with or without the giving of notice or the passage of time, or both) under any contract, agreement, indenture, mortgage, lease, or other instrument to which Pinnacle Fund II or Pinnacle GP is a party or by which any of their respective properties or assets are bound; or (iii) violate any applicable law, statute, rule, regulation, order, judgment, injunction, decree, or other requirement of any governmental authority having jurisdiction over Pinnacle Fund II or Pinnacle GP.
(f) Enforceability. This Side Letter has been duly executed and delivered by Pinnacle Fund II and constitutes a legal, valid, and binding obligation of Pinnacle Fund II, enforceable against Pinnacle Fund II in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer, or similar laws of general applicability relating to or affecting creditors' rights and by general equitable principles (regardless of whether enforcement is sought in a proceeding at law or in equity).
Section 3. Scope and Limitations of Consent. The consent granted by Pinnacle Fund II pursuant to Section 1 of this Side Letter is limited solely to the transaction as described in the APA and the related regulatory filings referenced herein. The consent granted herein shall not be construed or interpreted as, and does not constitute, a consent to any other transaction, sale, assignment, transfer, disposition, amendment, or modification of the LLC Agreement, or any other action by Ridgeline or its members that would otherwise require the consent of Pinnacle Fund II under the LLC Agreement. Nothing in this Side Letter shall be deemed to waive, release, modify, or otherwise affect any rights, remedies, or privileges of Pinnacle Fund II under the LLC Agreement with respect to any future transactions, amendments, modifications, waivers, or other matters that may require the consent or approval of Pinnacle Fund II under the LLC Agreement. Without limiting the generality of the foregoing, the consent granted herein does not constitute an approval of, or consent to, any amendment, modification, supplement, or waiver of the purchase price, the identity of the buyer, or any other material term or condition of the APA, any of which would require a separate consent of Pinnacle Fund II to the extent required under the LLC Agreement. Pinnacle Fund II hereby expressly reserves all rights, remedies, and privileges available to it under the LLC Agreement, at law, or in equity, except to the extent expressly waived or modified by this Side Letter.
Section 4. No Third-Party Beneficiary Rights. This Side Letter is entered into for the sole benefit of Pinnacle Fund II, Northgate Wireless Americas Inc., and Ridgeline Wireless Holdings LLC, together with their respective successors and permitted assigns, and is not intended to confer upon any other person or entity any rights, remedies, obligations, or liabilities of any nature whatsoever. No person or entity other than the foregoing shall be deemed a third-party beneficiary of this Side Letter or any provision hereof, and no person or entity other than the foregoing shall have any right to enforce any term or provision of this Side Letter.
Section 5. Reliance. Pinnacle Fund II acknowledges and agrees that Northgate Wireless Americas Inc. and Ridgeline Wireless Holdings LLC are entitled to rely, and will rely, upon the consent granted and the representations and warranties made by Pinnacle Fund II in this Side Letter in connection with the execution, delivery, and performance of the APA and the consummation of the transactions contemplated thereby, including, without limitation, in connection with any and all filings, applications, and submissions to the Federal Communications Commission. Pinnacle Fund II further acknowledges and agrees that this Side Letter may be attached as an exhibit, appendix, or supporting document to any filing made with the Federal Communications Commission in connection with the transactions contemplated by the APA, including filings under FCC File No. 0010287-EX or such other file number or numbers as may be assigned by the FCC in connection with the processing of FCC Form 603 and the Section 310(b)(4) petition for declaratory ruling.
Section 6. Governing Law. This Side Letter shall be governed by, and construed and enforced in accordance with, the laws of the State of Nevada, without regard to conflicts-of-law principles that would require the application of the laws of any other jurisdiction. The selection of the State of Nevada as the governing law jurisdiction is consistent with the governing law provision of the LLC Agreement and the jurisdiction of formation of Ridgeline.
Section 7. Counterparts; Electronic Execution. This Side Letter may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of this Side Letter by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document shall have the same force and effect as delivery of an original ink-signed counterpart. The words "execution," "signed," "signature," and words of similar import in this Side Letter shall be deemed to include electronic or digital signatures and the keeping of records in electronic form, each of which shall be of the same legal effect, validity, and enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the fullest extent permitted by applicable law, including the Federal Electronic Signatures in Global and National Commerce Act (15 U.S.C. §§ 7001–7006), the Uniform Electronic Transactions Act, and any other similar state or federal law.
Section 8. Entire Agreement; Amendment. This Side Letter, together with the LLC Agreement and the APA (and all schedules, exhibits, and annexes thereto), constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, representations, warranties, and negotiations, whether written or oral, with respect to such subject matter. This Side Letter may not be amended, modified, supplemented, restated, or waived except by a written instrument duly executed by all parties hereto. No waiver of any provision of this Side Letter shall be effective unless set forth in a written instrument signed by the party against which enforcement of such waiver is sought, and no such waiver shall constitute a waiver of any other provision of this Side Letter or a continuing waiver of the provision so waived.
IN WITNESS WHEREOF, the undersigned has executed this Side Letter as of the date first written above.
PINNACLE GROWTH CAPITAL FUND II LP
By: Pinnacle Growth Capital Management LLC,
its General Partner
By: ________
Name: Robert Almeda
Title: Managing Director
Date: ________
Address for Notices: 600 Lexington Avenue, 28th Floor New York, NY 10022
Attention: Robert Almeda, Managing Director
ACKNOWLEDGED AND AGREED:
RIDGELINE WIRELESS HOLDINGS LLC
By: ________
Name: Garrett Nolan
Title: Founder & Managing Member
Date: ________
Address for Notices: 450 South Virginia Street, Suite 800 Reno, NV 89501
Attention: Garrett Nolan, Founder & Managing Member
NORTHGATE WIRELESS AMERICAS INC.
By: ________
Name: Claire Matsuda
Title: VP, U.S. Operations
Date: ________
Address for Notices: 2200 Wilson Boulevard, Suite 1450 Arlington, VA 22201
Attention: Claire Matsuda, VP, U.S. Operations
Drafted by Calderwood & Harkness LLP, counsel to Northgate Wireless Americas Inc. — Matter No. 1018-00009