1022-00006 · Northgate Telecommunications PLC · Diligence

change-of-control-analysis-memo.docx DOCUMENT M&A / Corporate

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MEMORANDUM

PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT

TO: Oliver Mackenzie, Responsible Partner, Mergers & Acquisitions

FROM: Naomi Petersen, Working Associate, Mergers & Acquisitions

CC: Andrew Fitzpatrick, Lead Associate, Mergers & Acquisitions; Harrison Wexford, Billing Partner, Mergers & Acquisitions

DATE: March 17, 2025

RE: Change of Control Analysis — Cascadia Fiber Networks, Inc. Contracts and Instruments

MATTER NO.: 1022-00006

BILLING NO.: 78432.001

CLIENT: Northgate Telecommunications PLC

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I. Executive Summary

This memorandum identifies and analyzes all material contracts, agreements, and instruments of Cascadia Fiber Networks, Inc. ("Cascadia" or "CFN") that contain "change of control" provisions that would be triggered by the proposed forward merger of NTP Acquisition Sub, Inc. ("Merger Sub"), a newly formed, wholly owned subsidiary of Northgate Telecommunications PLC ("Northgate" or "NTP"), with and into Cascadia pursuant to Section 251 of the Delaware General Corporation Law (the "DGCL"), following which Cascadia will survive the merger as a wholly owned subsidiary of Northgate (the "Merger" or the "Transaction"). The aggregate merger consideration is $750,000,000, payable entirely in cash at closing.

The purpose of this memorandum is to provide the deal team with a comprehensive assessment of each identified change of control provision, including the specific definitional language triggering the provision, the consequences of a change of control under each agreement, the risk profile associated with each provision, and recommended strategies and timelines for addressing each provision in connection with the anticipated signing and closing of the Transaction. This analysis is intended to inform the drafting of the merger agreement, the preparation of the disclosure schedules, the coordination of the financing workstream, and the development of the third-party consent strategy.

Based on our review of the documents produced in the due diligence process by Cascadia and its counsel, Whitmore, Kessler & Braun LLP ("WKB"), we have identified five categories of agreements and instruments containing change of control provisions that are triggered by the Merger:

(1) Elkhorn Capital Markets, LLC — Term Loan Agreement. The existing term loan agreement requires mandatory prepayment of the outstanding principal balance of $82,600,000, plus a prepayment premium of 1.0% ($826,000), upon a change of control. This is a self-executing provision that does not require lender consent; rather, it requires payoff at closing.

(2) Master Services Agreement — Pacific Ridge Data Centers, LLC. The master services agreement between Cascadia and Pacific Ridge Data Centers, LLC ("Pacific Ridge") requires Cascadia to obtain Pacific Ridge's prior written consent before consummating any change of control transaction. Consent is at Pacific Ridge's sole discretion, without any reasonableness qualifier. Annual revenue attributable to this agreement is approximately $22,000,000, representing approximately 11.7% of Cascadia's fiscal year 2024 revenue.

(3) Wholesale Fiber IRU Agreement — Clearpath Internet Services, Inc. The wholesale fiber indefeasible right of use agreement requires the consent of Clearpath Internet Services, Inc. ("Clearpath") prior to a change of control; however, the agreement provides that consent shall not be unreasonably withheld, conditioned, or delayed, and further provides for a 30-day deemed-consent mechanism.

(4) Oregon Municipal Broadband Cooperative Agreement. The cooperative agreement between Cascadia and the Oregon Municipal Broadband Cooperative (the "Cooperative") requires the prior approval of the Cooperative's board of directors before Cascadia may undergo a change of control. Without board approval, the Cooperative may terminate the agreement upon 60 days' written notice.

(5) Cascadia Fiber Networks, Inc. 2016 Equity Incentive Plan. The equity incentive plan provides for single-trigger acceleration of all outstanding and unvested equity awards (stock options and restricted stock units) upon a change of control. This acceleration is automatic and is already factored into the fully diluted share count of 47,500,000 shares used to calculate the per-share merger consideration of $15.79.

Summary Risk Assessment. The Elkhorn mandatory prepayment is a known closing cost that has been factored into the closing mechanics and the funds flow memorandum. The equity plan acceleration is similarly a known, quantifiable cost already incorporated into the deal economics. The Pacific Ridge consent presents the highest commercial risk given the magnitude of the revenue exposure (approximately $22,000,000 annually) and the discretionary nature of the consent standard, and should be prioritized in the consent strategy. The Clearpath and Oregon Municipal Broadband Cooperative consents are assessed as obtainable with proactive engagement, though each requires timely attention to ensure alignment with the anticipated closing timeline. We note that none of the identified provisions present a legal impediment to the closing of the Transaction, but the Pacific Ridge consent in particular warrants careful consideration in the context of merger agreement negotiation and closing condition design.

Recommended Timeline. We recommend addressing each consent in parallel with the regulatory approval timeline. Based on current projections, the target signing date for the merger agreement is April 7, 2025. Regulatory filings (Hart-Scott-Rodino, Federal Communications Commission, state public utility commissions, and the Committee on Foreign Investment in the United States) are expected to require 90 to 150 days from signing for completion. Accordingly, the estimated closing date is in August 2025, with an outside date of September 30, 2025 (subject to a mutual 60-day extension to November 29, 2025 if regulatory approvals remain the sole outstanding condition). Third-party consent efforts should be initiated promptly after signing and managed on a timeline that ensures resolution well in advance of the expected closing date.

II. Scope and Methodology

A. Documents Reviewed

This analysis is based on our review of all material contracts, credit agreements, equity plans, and other instruments of Cascadia as produced to the Calderwood & Harkness LLP electronic data room (the "Data Room"), supplemented by Cascadia's written responses to the comprehensive due diligence request list dated February 12, 2025 (the "Request List"), as updated by supplemental responses received through March 14, 2025. The Data Room currently contains approximately 3,420 documents organized across 47 folders. Our review has focused on the following categories of documents, which represent the universe of agreements most likely to contain change of control provisions:

(a) credit agreements, loan agreements, notes, guarantees, and related financing documents;

(b) material commercial contracts with customers, vendors, and service providers, including master services agreements, indefeasible rights of use agreements, interconnection agreements, and wholesale agreements;

(d) equity incentive plans, stock option agreements, restricted stock unit agreements, and other compensatory equity arrangements;

(e) real property leases and subleases;

(f) intellectual property licenses and technology agreements;

(g) government contracts and municipal agreements; and

(h) any other agreements identified by Cascadia management or WKB as containing assignment restrictions, consent requirements, or change of control provisions.

B. Definitional Approach

For purposes of this analysis, we have construed the concept of "change of control" broadly to capture the full range of contractual formulations that may be triggered by the Merger. Across the universe of Cascadia's agreements, we have encountered and analyzed the following variant formulations: "change of control," "change in control," "change of ownership," "transfer of control," "assignment by operation of law," "assignment without consent," "merger, consolidation, or reorganization," "sale of all or substantially all assets," and similar triggers. Each identified provision has been evaluated against the specific structure of the proposed Transaction — a forward merger under DGCL § 251 in which Merger Sub merges with and into Cascadia, with Cascadia as the surviving corporation — to determine whether the provision is in fact triggered.

C. Transaction Structure Considerations

The proposed Transaction is structured as a forward merger under DGCL § 251. Under this structure, Merger Sub will merge with and into Cascadia, and Cascadia will survive the Merger as a wholly owned subsidiary of Northgate. This structure has important implications for the change of control analysis:

(a) Equity Transfer. The ultimate beneficial ownership of 100% of Cascadia's outstanding equity will transfer to Northgate at closing. All outstanding shares of Cascadia common stock (other than treasury shares and dissenting shares) will be converted into the right to receive the per-share merger consideration. This transfer of beneficial ownership triggers change of control provisions that reference the acquisition of a specified percentage of voting equity or ownership interests.

(b) Board Composition. Cascadia's board of directors will be reconstituted at the effective time of the Merger. The surviving corporation's directors will be designated by Northgate pursuant to the merger agreement. This change in board composition may independently trigger change of control provisions that reference changes in the composition or control of the board of directors, although none of the provisions identified herein rely solely on a board composition trigger.

(c) Survival of the Entity. Because Cascadia survives the Merger, the Transaction does not constitute a dissolution or liquidation of Cascadia, and Cascadia's legal existence continues uninterrupted. Contracts that restrict "assignment" of the agreement may or may not be triggered by a forward merger where the contracting party survives, depending on the specific language of the restriction and applicable governing law. Under Delaware law, a merger in which the contracting party survives does not constitute an "assignment by operation of law" absent specific contractual language to the contrary. We have analyzed each provision with this principle in mind.

(d) Not a Sale of Assets. The Transaction is structured as a merger, not as an asset purchase. Provisions that are triggered solely by a "sale of all or substantially all assets" of Cascadia are not triggered by the Merger. However, several provisions employ disjunctive formulations (e.g., "merger, consolidation, or sale of all or substantially all assets") that capture the Merger regardless.

D. Coordination with Cascadia's Counsel

We have coordinated with Jonathan Kessler and Megan Tsai of WKB in confirming the completeness of the document production. On March 3, 2025, we provided WKB with a supplemental request specifically identifying the categories of provisions at issue and requesting confirmation that all contracts containing such provisions had been produced to the Data Room. On March 10, 2025, Ms. Tsai confirmed in writing that, to WKB's knowledge, the Data Room production includes all material contracts of Cascadia that contain change of control, consent-to-assignment, or similar provisions. We have relied on this confirmation in preparing this memorandum, subject to the caveat that our analysis is necessarily limited to the documents produced and information provided to us. We recommend that the merger agreement include a representation by Cascadia regarding the completeness of the disclosure of all contracts containing change of control provisions, and that such contracts be listed on the applicable disclosure schedule.

III. Detailed Analysis of Change of Control Provisions

A. Elkhorn Capital Markets, LLC — Term Loan Agreement

1. Agreement Identification. The agreement at issue is the Term Loan Agreement, dated as of September 15, 2021, by and between Cascadia Fiber Networks, Inc., as Borrower, and Elkhorn Capital Markets, LLC, as Lender and Administrative Agent (as amended by the First Amendment to Term Loan Agreement, dated as of March 22, 2023, and the Second Amendment to Term Loan Agreement, dated as of November 8, 2024, collectively, the "Elkhorn Term Loan Agreement"). The Elkhorn Term Loan Agreement was entered into in connection with Cascadia's acquisition of certain fiber network assets in Idaho and Nevada and the expansion of Cascadia's backbone infrastructure in the Pacific Northwest.

As of March 1, 2025, the outstanding principal balance under the Elkhorn Term Loan Agreement is $82,600,000. The facility bears interest at Term SOFR plus 275 basis points, with a maturity date of September 15, 2028. The Elkhorn Term Loan Agreement is secured by a first-priority lien on substantially all of Cascadia's tangible and intangible assets, including fiber optic network infrastructure, equipment, real property interests, intellectual property, and accounts receivable, as documented in the Security Agreement and related collateral documents.

We note for the deal team's awareness that Elkhorn Capital Markets, LLC also participates as a syndicate member in the Pinnacle Atlantic Bank acquisition financing facility, with a $75,000,000 commitment in the $500,000,000 new senior secured credit facility. This dual role — as the existing lender being paid off at closing and as a participant in the new acquisition financing — gives rise to potential conflict-of-interest considerations that are addressed separately in the Conflict Check Memorandum dated March 12, 2025 (prepared by Andrew Fitzpatrick). The dual role does not affect the change of control analysis set forth herein, but it underscores the importance of coordinating the payoff and lien release mechanics with the financing closing mechanics.

2. Change of Control Definition. Section 7.01(e) of the Elkhorn Term Loan Agreement defines "Change of Control" as follows:

"Change of Control" means (i) any transaction or series of related transactions (including any merger, consolidation, recapitalization, or reorganization) the result of which is that any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) other than the Existing Equity Holders (as defined in Schedule 1.01 hereto) shall have acquired, directly or indirectly, beneficial ownership of more than 50% of the Voting Equity Interests of the Borrower; or (ii) the Borrower shall have sold, transferred, or otherwise disposed of all or substantially all of its assets (other than to a wholly owned Subsidiary of the Borrower).

The proposed Merger clearly triggers prong (i) of this definition. Upon consummation of the Merger, Northgate will acquire beneficial ownership of 100% of the Voting Equity Interests of Cascadia. Northgate is not an "Existing Equity Holder" as defined in Schedule 1.01 to the Elkhorn Term Loan Agreement (which lists the equity holders of Cascadia as of the closing date of the term loan, including the co-founders Derek Holmgren and Priya Ramachandran, certain venture capital investors, and employee option holders). Accordingly, the Merger constitutes a "Change of Control" under the Elkhorn Term Loan Agreement.

3. Consequences of Change of Control. Section 2.05(b) of the Elkhorn Term Loan Agreement provides that upon the occurrence of a Change of Control, the Borrower shall be required to prepay the entire outstanding principal amount of the Term Loans, together with all accrued and unpaid interest thereon and all applicable fees and premiums, on the date of such Change of Control (or, if the Change of Control is the result of a merger or similar transaction, on the closing date of such transaction). This is a mandatory prepayment obligation — it is self-executing and does not require any consent, waiver, or approval from Elkhorn.

Section 2.05(b)(ii) further provides for a prepayment premium in connection with any mandatory prepayment triggered by a Change of Control, calculated as follows:

"In connection with any mandatory prepayment of the Term Loans pursuant to this Section 2.05(b), the Borrower shall pay to the Lender a prepayment premium equal to 1.0% of the aggregate principal amount of Term Loans being prepaid."

Based on the current outstanding principal balance of $82,600,000, the prepayment premium is $826,000 (i.e., $82,600,000 × 1.0%).

Section 2.05(c) requires the Borrower to provide the Lender and Administrative Agent with not less than 10 business days' prior written notice of the anticipated Change of Control, specifying the nature of the transaction, the expected closing date, and the estimated prepayment amount. This notice requirement is a condition to the orderly administration of the prepayment but is not a consent mechanism — Elkhorn has no right to block the Change of Control or to refuse the prepayment.

4. Timing and Strategy. Because the Elkhorn Term Loan Agreement does not require consent or approval from Elkhorn, but rather mandates prepayment upon a Change of Control, the primary workstream for this provision is the preparation and execution of the payoff mechanics:

(a) Payoff Letter. We are currently preparing a draft payoff letter for delivery to Elkhorn. The payoff letter will request a statement of the total payoff amount as of an estimated closing date (currently projected for August 2025), including outstanding principal, accrued and unpaid interest through the anticipated payoff date, the prepayment premium, and any other fees or costs. The payoff amount will be confirmed two business days prior to closing, consistent with standard practice, to account for the per diem interest accrual.

(b) Estimated Payoff Amount. Based on current information, the estimated total payoff is as follows:

(c) Lien Releases. The release of Elkhorn's security interests in Cascadia's assets is a critical closing mechanic. Under the Pinnacle Atlantic Bank commitment letter for the new $500,000,000 senior secured credit facility, the grant of first-priority security interests in Cascadia's assets is a condition precedent to funding. Accordingly, Elkhorn must deliver UCC-3 termination statements, mortgage releases, intellectual property lien releases, and other applicable lien release documentation at closing, simultaneously with the payoff. We are coordinating with Elkhorn's counsel to prepare the requisite release documentation.

(d) Funds Flow Integration. The Elkhorn payoff must be incorporated into the funds flow memorandum for the Transaction. The funds flow will reflect the following sources and uses:

Note: The figures above are illustrative and will be refined as the funds flow memorandum is finalized. Andrew Fitzpatrick is leading the financing workstream and will coordinate the integration of the Elkhorn payoff into the final funds flow.

(e) Notice. Written notice of the anticipated Change of Control must be delivered to Elkhorn not less than 10 business days prior to closing. Assuming an August 2025 closing, this notice should be delivered no later than approximately mid-July 2025. However, given Elkhorn's dual role in the new facility, Elkhorn will have independent awareness of the Transaction timeline through its participation in the Pinnacle Atlantic Bank syndicate.

Risk Assessment: Low. The Elkhorn payoff is a mechanical closing condition. The amounts are known, quantifiable, and budgeted. There is no discretionary consent element. The primary execution risk relates to the timely delivery of lien release documentation, which is being proactively managed.

B. Master Services Agreement — Pacific Ridge Data Centers, LLC

1. Agreement Identification. The agreement at issue is the Master Services Agreement, dated as of January 12, 2019, by and between Cascadia Fiber Networks, Inc., as Service Provider, and Pacific Ridge Data Centers, LLC, as Customer (as amended by Amendment No. 1, dated as of June 30, 2020, and Amendment No. 2, dated as of February 15, 2022, collectively, the "Pacific Ridge MSA"). Under the Pacific Ridge MSA, Cascadia provides lit and dark fiber connectivity services, wavelength transport services, and related network services to Pacific Ridge's data center facilities located in Portland, Oregon; Hillsboro, Oregon; and Seattle, Washington. The Pacific Ridge MSA has an initial term expiring on January 12, 2029, with two successive automatic renewal periods of three years each, absent notice of non-renewal by either party not less than 12 months prior to the expiration of the then-current term.

Pacific Ridge is one of Cascadia's largest single customers. Annual revenue attributable to the Pacific Ridge MSA for fiscal year 2024 was approximately $22,000,000, representing approximately 11.7% of Cascadia's total fiscal year 2024 revenue of $187,400,000. The revenue is generated primarily through monthly recurring charges under multiple service orders governed by the MSA, with additional revenue from installation fees, excess usage charges, and professional services. The relationship is strategically significant for Cascadia, as Pacific Ridge operates high-density colocation and hyperscale data center campuses that serve major cloud service providers and enterprise customers, creating a stable, long-term demand profile for fiber connectivity.

2. Change of Control Definition. Section 14.3 of the Pacific Ridge MSA defines "Change of Control" as follows:

"Change of Control" means, with respect to either party, (a) any merger, consolidation, reorganization, or similar transaction involving such party, (b) the sale or transfer of all or substantially all of the assets of such party, or (c) any other transaction or series of related transactions that results in a change in the person or entity that, directly or indirectly, owns or controls more than fifty percent (50%) of the voting power or equity interests of such party.

The proposed Merger falls squarely within this definition on multiple grounds. First, the Merger is a "merger" involving Cascadia (prong (a)). Second, upon consummation of the Merger, Northgate will directly own 100% of the equity interests and voting power of Cascadia, representing a change in the person that controls more than 50% of the voting power and equity interests of Cascadia (prong (c)). Accordingly, there is no ambiguity — the Merger constitutes a "Change of Control" under the Pacific Ridge MSA.

3. Consequences of Change of Control. Section 14.4 of the Pacific Ridge MSA provides the following consequences upon a Change of Control:

"Neither party may undergo a Change of Control without the prior written consent of the other party. In the event that a party undergoes a Change of Control without obtaining such prior written consent, the other party shall have the right, exercisable in its sole discretion, to terminate this Agreement upon not less than thirty (30) days' prior written notice, such termination to be effective as of the date specified in the notice. Any termination pursuant to this Section 14.4 shall not relieve the terminating party of its obligation to pay all amounts due and owing under this Agreement through the effective date of termination, nor shall it relieve the breaching party of liability for damages arising from the breach."

Critically, the Pacific Ridge MSA does not qualify the consent requirement with a "reasonableness" standard. Section 14.4 requires "prior written consent" without any limitation on the grounds upon which consent may be withheld. This means that Pacific Ridge has the contractual right to withhold consent for any reason, or for no reason at all. The absence of a reasonableness qualifier materially increases the risk profile of this consent, as it provides Pacific Ridge with significant leverage in any consent negotiation.

If Cascadia were to consummate the Merger without obtaining Pacific Ridge's prior written consent, the failure to obtain consent would constitute a material breach of the Pacific Ridge MSA. Pacific Ridge would then have the right to terminate the MSA upon 30 days' written notice. Termination of the MSA would result in the loss of approximately $22,000,000 in annual recurring revenue, with additional potential exposure for early termination damages under the individual service orders.

4. Timing and Strategy. This consent represents the highest-risk change of control provision identified in our review, and we recommend that it be treated as a priority item in the deal team's consent strategy. The following considerations inform our recommended approach:

(a) Early Engagement. We recommend engaging Pacific Ridge on the consent request promptly after the signing of the merger agreement (target signing date: April 7, 2025). Delay in initiating the consent discussion increases the risk that Pacific Ridge may perceive the request as an afterthought or may feel pressured, either of which could complicate negotiations. Early engagement also provides maximum time to negotiate and resolve any conditions that Pacific Ridge may attach to its consent.

(b) Business Case for Consent. Northgate's strategic rationale for the acquisition should be communicated to Pacific Ridge as part of the consent request. Key talking points should include: (i) Northgate's planned deployment of its proprietary NetOrchestra SaaS network management platform across Cascadia's infrastructure, which will enhance service quality, reliability, and operational transparency for Cascadia's customers, including Pacific Ridge; (ii) Northgate's commitment to continued and enhanced service delivery under the existing MSA, with no planned reduction in service levels, staffing, or network investment; (iii) Northgate's significant balance sheet and capital resources, which will enable accelerated network expansion and infrastructure investment to support Pacific Ridge's growing data center operations; and (iv) Northgate's track record of successful integration of acquired fiber network operators in other markets, with demonstrated continuity of service to existing customers. We recommend coordinating with Liam Sutherland (VP, Corporate Development, Northgate) to develop and refine the commercial talking points for the Pacific Ridge engagement.

(c) Potential for Commercial Concessions. Given Pacific Ridge's leverage under the consent provision, we should anticipate the possibility that Pacific Ridge may seek commercial concessions as a condition of granting consent. Such concessions could include pricing reductions or rate freezes, extended contract terms, enhanced service level agreements (SLAs) with increased credits for service failures, capacity guarantees, most-favored-customer provisions, or other favorable modifications to the MSA. The deal team should evaluate the acceptable parameters for such concessions in advance, in consultation with Northgate's commercial team, so that the consent negotiation can proceed efficiently.

(d) Merger Agreement Provisions. We recommend that the merger agreement include a specific covenant requiring Cascadia to use commercially reasonable efforts to obtain Pacific Ridge's written consent prior to closing. The scope of the "commercially reasonable efforts" obligation should be carefully defined to address, among other things, whether Cascadia is required to offer commercial concessions to obtain the consent, and if so, the parameters of any concessions that Cascadia is authorized to offer without Northgate's prior approval. Additionally, the merger agreement should address whether the failure to obtain Pacific Ridge's consent prior to closing constitutes a condition to Northgate's obligation to close. This is a significant negotiating point: Northgate may seek to include Pacific Ridge's consent as a closing condition, while Cascadia (through WKB) may resist such a condition on the ground that it gives Northgate an "out" if the consent is not obtained. We anticipate this issue will be the subject of focused negotiation between the parties and their respective counsel.

(e) Alternative Structures. In the event that Pacific Ridge withholds consent and it becomes apparent that consent will not be obtained prior to closing, the deal team should evaluate alternative structures to mitigate the risk, including the possibility of deferring the merger closing with respect to Pacific Ridge-related operations, or structuring the post-closing integration to minimize disruption to Pacific Ridge's services and thereby reduce the commercial incentive for Pacific Ridge to exercise its termination right.

(f) Confidentiality. Prior to signing, engagement with Pacific Ridge regarding the Transaction will be constrained by confidentiality considerations. The merger agreement will likely contain provisions governing the timing and manner of communications with customers, including Pacific Ridge. These provisions should be coordinated with the customer communication plan.

Risk Assessment: Medium-High. The discretionary nature of the consent standard, combined with the significant revenue exposure (~$22,000,000 annually, representing ~11.7% of Cascadia's FY2024 revenue), makes this the highest-risk commercial consent identified in our review. Loss of the Pacific Ridge relationship would represent a material adverse impact on Cascadia's revenue base and could have implications for Northgate's post-closing business plan and financial projections. However, we note that Pacific Ridge and Cascadia have a long-standing commercial relationship, that Pacific Ridge's data center operations depend on Cascadia's fiber infrastructure, and that Northgate's acquisition is likely to enhance rather than diminish service quality and reliability. These factors provide a reasonable basis for optimism that consent is obtainable, provided the engagement is handled skillfully and initiated promptly.

C. Wholesale Fiber IRU Agreement — Clearpath Internet Services, Inc.

1. Agreement Identification. The agreement at issue is the Wholesale Fiber Indefeasible Right of Use Agreement, dated as of April 8, 2017, by and between Cascadia Fiber Networks, Inc., as Grantor, and Clearpath Internet Services, Inc. ("Clearpath"), as Grantee (the "Clearpath IRU Agreement"). Under the Clearpath IRU Agreement, Cascadia granted Clearpath a 20-year indefeasible right of use in specified dark fiber strands on designated route segments within Cascadia's fiber optic network in Washington state, including routes between Seattle and Spokane, and between Seattle and Tacoma. The IRU term expires on April 8, 2037.

An indefeasible right of use, or "IRU," is a long-term contractual right to use a specified portion of a fiber optic network's capacity, typically for a fixed term. IRUs are a common commercial arrangement in the telecommunications infrastructure industry and are generally treated as a form of long-term lease or license for the applicable fiber capacity. The Clearpath IRU Agreement provides Clearpath with dedicated dark fiber capacity on the specified routes, which Clearpath uses to support its wholesale internet services business in the Pacific Northwest.

The financial terms of the Clearpath IRU Agreement include an upfront capacity payment made by Clearpath at the inception of the IRU, recognized by Cascadia as deferred revenue over the 20-year term, plus ongoing monthly maintenance and colocation fees. The IRU represents a significant long-term capacity commitment on Cascadia's network and is material to the ongoing utilization and revenue profile of the affected route segments.

2. Change of Control Definition. Section 11.2 of the Clearpath IRU Agreement defines "Change of Control" as follows:

"Change of Control" means any direct or indirect transfer, sale, merger, consolidation, or other transaction or series of related transactions that results in a change of more than fifty percent (50%) of the ownership or voting control of the Grantor from the ownership or voting control existing as of the date of this Agreement.

The proposed Merger triggers this definition. Upon consummation of the Merger, Northgate will acquire 100% of the ownership and voting control of Cascadia, representing a change of more than 50% of the ownership and voting control of the Grantor from the ownership and voting control existing as of April 8, 2017 (the date of the Clearpath IRU Agreement). The existing shareholders of Cascadia as of that date — including the co-founders, venture capital investors, and employee equity holders — will have no continuing ownership interest in Cascadia following the Merger.

3. Consequences of Change of Control. Section 11.3 of the Clearpath IRU Agreement provides as follows:

"The Grantor shall not undergo a Change of Control without the prior written consent of the Grantee; provided, however, that such consent shall not be unreasonably withheld, conditioned, or delayed. In the event that the Grantor provides written notice to the Grantee of an anticipated Change of Control, the Grantee shall have thirty (30) calendar days from the date of receipt of such notice to deliver a written response to the Grantor either granting or withholding consent (and, if withholding consent, specifying in reasonable detail the grounds for such withholding). If the Grantee fails to deliver a written response within such thirty (30) day period, the Grantee shall be deemed to have granted its consent to the Change of Control."

This provision contains two features that significantly reduce the risk profile relative to the Pacific Ridge consent:

(a) Reasonableness Standard. The consent "shall not be unreasonably withheld, conditioned, or delayed." This standard places the burden on Clearpath to articulate commercially reasonable grounds for withholding consent. If Clearpath were to withhold consent on unreasonable grounds — for example, simply to extract commercial concessions not justified by the change in ownership — Cascadia could challenge the withholding as a breach of Clearpath's contractual obligation to act reasonably.

(b) Deemed Consent Mechanism. If Clearpath fails to respond within 30 calendar days of receiving written notice of the anticipated Change of Control, consent is deemed granted. This mechanism provides a backstop that protects Cascadia against delay or non-responsiveness by Clearpath.

If consent is neither obtained nor deemed granted (i.e., Clearpath affirmatively withholds consent within the 30-day period), Section 11.4 provides that the Grantee shall have the right to terminate the IRU Agreement and seek damages for the remaining term of the IRU, calculated based on the unamortized balance of the upfront capacity payment and the net present value of ongoing maintenance fees for the unexpired term.

4. Timing and Strategy. The favorable consent standard and deemed-consent mechanism substantially reduce the risk associated with this provision. Our recommended approach is as follows:

(a) Prompt Written Notice. We recommend delivering written notice to Clearpath promptly after signing of the merger agreement. The target is delivery within five business days of the April 7, 2025 signing date — i.e., by approximately April 14, 2025. The notice should include a description of the Transaction (in a form approved by Northgate), the identity of the acquirer (Northgate Telecommunications PLC), a summary of Northgate's qualifications and financial strength, and an express assurance of continued performance of all of Cascadia's obligations under the IRU Agreement following the Merger.

(b) 30-Day Response Period. If the notice is delivered by April 14, 2025, the 30-day response period would expire on or about May 14, 2025 — well in advance of the anticipated August 2025 closing date. This timeline provides ample cushion. If Clearpath grants affirmative consent (or fails to respond, resulting in deemed consent), the matter will be resolved months before closing.

(c) Contingency Planning. In the unlikely event that Clearpath affirmatively withholds consent within the 30-day period, we would evaluate whether Clearpath's grounds for withholding are "reasonable" under the applicable standard. Factors relevant to the reasonableness analysis would include: (i) the nature and specificity of Clearpath's stated objections; (ii) whether the Merger would materially impair Cascadia's ability to perform its obligations under the IRU Agreement; (iii) whether Northgate's financial condition and operational capabilities are comparable to or stronger than Cascadia's; and (iv) whether Clearpath's stated grounds are pretextual or motivated by considerations unrelated to the legitimate interests protected by the consent requirement. If Clearpath's withholding is deemed unreasonable, Cascadia could assert that Clearpath has breached its contractual obligation and that consent should be treated as constructively granted. However, this would require a legal determination and could introduce uncertainty and delay. Accordingly, our preferred strategy is to engage Clearpath proactively and obtain affirmative consent, rather than relying on the deemed-consent mechanism or a challenge to the reasonableness of any withholding.

(d) No Anticipated Objection. Based on our preliminary understanding of the relationship between Cascadia and Clearpath, we do not currently anticipate that Clearpath will object to the Merger. Clearpath is a sophisticated telecommunications company that is likely to understand that an acquisition by a well-capitalized international telecom operator is likely to enhance, rather than diminish, the quality and reliability of services under the IRU. However, we cannot rule out the possibility that Clearpath may use the consent process as an opportunity to raise commercial issues or seek improvements to the terms of the IRU.

Risk Assessment: Low-Medium. The reasonableness standard and deemed-consent mechanism provide significant contractual protections. The 30-day response period fits comfortably within the anticipated Transaction timeline. The primary risk is that Clearpath could attempt to use the consent process as leverage for commercial concessions, but the contractual framework limits Clearpath's ability to withhold consent on unreasonable grounds.

D. Oregon Municipal Broadband Cooperative Agreement

1. Agreement Identification. The agreement at issue is the Cooperative Agreement, dated as of August 22, 2020, by and between Cascadia Fiber Networks, Inc. and the Oregon Municipal Broadband Cooperative (the "Cooperative"), as amended by the First Addendum, dated as of October 1, 2021 (collectively, the "Cooperative Agreement"). The Cooperative is a governmental cooperative organized under Oregon Revised Statutes Chapter 190 (Intergovernmental Cooperation), comprising several Oregon municipalities including the cities of Bend, Redmond, Prineville, Madras, and La Pine, as well as Deschutes County. Under the Cooperative Agreement, Cascadia provides backbone fiber infrastructure, transport services, and operational support to the Cooperative's municipal broadband programs, which deliver broadband internet access to residential and commercial users in underserved communities across central Oregon.

The Cooperative Agreement has an initial term of 10 years (expiring August 22, 2030), with two successive five-year renewal options exercisable by the Cooperative. The agreement reflects a public-private partnership model in which Cascadia provides the core network infrastructure and the Cooperative's member municipalities provide last-mile distribution and subscriber management. The financial terms include annual infrastructure fees, recurring transport charges, and shared capital expenditure obligations for network expansion. The Cooperative Agreement is material to Cascadia's operations in the Oregon market and contributes to Cascadia's public-interest profile as a provider of broadband infrastructure to underserved communities.

2. Change of Control Definition. Section 9.1 of the Cooperative Agreement defines "Change of Control" as follows:

"Change of Control" means any merger, acquisition, consolidation, or other transaction resulting in a change of the controlling interest of the Service Provider, whether through a direct or indirect transfer of equity interests, a merger of the Service Provider with or into another entity, or otherwise.

This is a broadly worded definition that encompasses the proposed Merger. The Merger will result in Northgate acquiring 100% of the equity interests of Cascadia, constituting a change of the "controlling interest" of Cascadia. The forward merger structure, in which Merger Sub merges with and into Cascadia, falls within the express reference to "a merger of the Service Provider with or into another entity." Accordingly, the Merger triggers the Change of Control provision.

3. Consequences of Change of Control. Section 9.2 of the Cooperative Agreement provides as follows:

"The Service Provider may not undergo a Change of Control without the prior approval of the Board of Directors of the Cooperative (the 'Board'). The Service Provider shall provide written notice to the Cooperative of any anticipated Change of Control not less than sixty (60) days prior to the proposed effective date of such Change of Control. In the event that the Board does not approve the Change of Control, the Cooperative may terminate this Agreement upon sixty (60) days' prior written notice to the Service Provider."

The consent mechanism requires the affirmative approval of the Cooperative's board of directors. The Cooperative Agreement does not specify the standard by which the board is to evaluate a consent request — it does not include a "reasonableness" qualifier, nor does it provide for deemed consent upon the passage of time without a response. However, as a governmental cooperative, the Cooperative's board is composed of elected or appointed officials from the member municipalities, and its deliberations are likely subject to Oregon open meetings law (ORS Chapter 192). This means that the board's consideration of the consent request will be a matter of public record, and the board's decision-making process may be influenced by public-interest considerations, including the impact of the Change of Control on broadband service delivery to the Cooperative's member communities.

If the board does not approve the Change of Control, the Cooperative may terminate the Cooperative Agreement upon 60 days' prior written notice. Termination of the Cooperative Agreement would result in the loss of recurring revenue from the Cooperative relationship and could have reputational implications for Cascadia (and, post-closing, for Northgate) in the Oregon market, particularly given the public-interest nature of the Cooperative's broadband programs.

4. Timing and Strategy. The primary challenge with the Cooperative consent is timing. The Cooperative's board of directors meets on a periodic basis — likely quarterly, though the precise schedule must be confirmed with Cascadia management. If the board does not meet frequently, there may be limited opportunities to present the consent request within the Transaction timeline. Our recommended approach is as follows:

(a) Coordination with Cascadia Management. We recommend coordinating with Derek Holmgren (CEO of Cascadia) and Sandra Whitfield (General Counsel of Cascadia) to identify the schedule of upcoming Cooperative board meetings. If a meeting is scheduled to occur in May, June, or July 2025, the consent request should be placed on the agenda for that meeting. If no meeting is scheduled to occur before the anticipated closing date, we should explore the possibility of requesting that the Cooperative convene a special meeting to consider the consent request.

(b) 60-Day Notice Requirement. Section 9.2 requires Cascadia to provide written notice to the Cooperative not less than 60 days prior to the proposed effective date of the Change of Control. Assuming a target closing date in August 2025, notice should be delivered no later than early June 2025. However, we recommend delivering notice as early as practicable after signing — ideally in April 2025 — to provide maximum time for the board's consideration and to demonstrate good faith and respect for the Cooperative's governance process.

(c) Public-Interest Messaging. The consent request to the Cooperative should emphasize the public-interest benefits of the Merger, including Northgate's commitment to continued and enhanced broadband service delivery, Northgate's financial resources and willingness to invest in network infrastructure expansion in underserved areas, and the continuity of Cascadia's operations and management under Northgate's ownership. Given the public-interest nature of the Cooperative's mission, these considerations are likely to be highly relevant to the board's deliberations. We recommend preparing a presentation for the board that addresses these points, potentially including a commitment letter or assurance from Northgate regarding continued investment in the Cooperative's broadband programs.

(d) Relationship Leverage. Cascadia has an established, multi-year working relationship with the Cooperative and its member municipalities. Mr. Holmgren, as CEO and co-founder of Cascadia, is personally known to and respected by the Cooperative's leadership. We recommend that Mr. Holmgren take a lead role in the consent engagement, supported by the deal team's preparation of the formal consent request and supporting materials.

(e) Contingency Planning. In the event that the Cooperative board declines to approve the Change of Control, the Cooperative Agreement provides for a 60-day termination period. This termination right is not automatic — it requires the Cooperative to affirmatively deliver a termination notice. In practice, the Cooperative may be reluctant to terminate the agreement if termination would disrupt broadband service delivery to its member communities, particularly if no alternative provider is readily available. This dynamic provides some practical protection, but it should not be relied upon as a substitute for obtaining affirmative board approval.

Risk Assessment: Low-Medium. The consent requirement is real and requires affirmative board action, but the established relationship between Cascadia and the Cooperative, the public-interest nature of continued service delivery, and the limited availability of alternative backbone fiber providers in central Oregon all support the view that consent is obtainable. The primary risk is one of timing — the board's meeting schedule may not align perfectly with the Transaction timeline, and accommodating the board's governance process may require proactive scheduling coordination.

E. Cascadia Fiber Networks, Inc. — 2016 Equity Incentive Plan

1. Agreement Identification. The agreement at issue is the Cascadia Fiber Networks, Inc. 2016 Equity Incentive Plan, as adopted by the board of directors on March 15, 2016, and as amended on July 20, 2018 and February 4, 2021 (the "Plan"). The Plan provides for the grant of stock options (both incentive stock options and non-qualified stock options), restricted stock units ("RSUs"), restricted stock awards, stock appreciation rights, and other equity-based awards to eligible participants, including employees, officers, directors, and consultants of Cascadia and its subsidiaries.

As of March 1, 2025, the Plan has the following outstanding awards:

Key participants include Derek Holmgren (CEO and Co-Founder), who holds 1,200,000 stock options and 600,000 RSUs; Priya Ramachandran (CTO and Co-Founder), who holds 900,000 stock options and 450,000 RSUs; Tobias Engel (CFO), who holds 400,000 stock options and 300,000 RSUs; and approximately 620 other employees, officers, and directors holding the balance of the outstanding awards. The Plan is administered by the Compensation Committee of Cascadia's board of directors.

2. Change of Control Definition. Section 2.7 of the Plan defines "Change of Control" as follows:

"Change of Control" means the occurrence of any one of the following events:

(a) any merger, consolidation, or similar transaction involving the Company in which the Company is not the surviving entity or in which the outstanding shares of the Company's common stock are converted into or exchanged for other securities or property;

(b) any transaction or series of related transactions in which a person or group (as defined in Section 13(d)(3) of the Exchange Act) acquires, directly or indirectly, beneficial ownership of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company's then-outstanding voting securities;

(d) the approval by the Company's stockholders of a plan or proposal for the dissolution or liquidation of the Company.

The proposed Merger triggers prong (b) of this definition. Upon consummation of the Merger, Northgate (through its ownership of 100% of the outstanding shares of the surviving corporation) will acquire beneficial ownership of securities representing more than 50% of the combined voting power of Cascadia's then-outstanding voting securities. We note that prong (a) does not apply because Cascadia is the surviving entity in the forward merger — it is Merger Sub, not Cascadia, that ceases to exist. However, prong (a) is also potentially triggered by the conversion of Cascadia common stock into the right to receive cash merger consideration, which could be characterized as a conversion of outstanding shares "into or exchanged for other securities or property." In either case, the result is the same — the Merger constitutes a Change of Control under the Plan.

3. Consequences of Change of Control. Section 12.1 of the Plan provides for single-trigger acceleration:

"Notwithstanding any provision of this Plan or any Award Agreement to the contrary, upon the occurrence of a Change of Control, all outstanding and unvested Awards shall immediately and automatically vest in full as of the date of the Change of Control (or, if the Change of Control is the result of a merger or similar transaction, as of the effective time of such transaction). Following such acceleration:

(a) All stock options that become vested pursuant to this Section 12.1 shall become immediately exercisable, and, if the Change of Control involves a merger in which the Company's common stock is converted into the right to receive cash consideration, each such option shall be cancelled and converted into the right to receive a cash payment equal to the excess, if any, of the per-share cash consideration over the per-share exercise price of such option, multiplied by the number of shares subject to such option.

(b) All restricted stock units that become vested pursuant to this Section 12.1 shall be settled in cash at the per-share cash consideration payable in the Change of Control transaction."

The practical effect of this provision is that at the effective time of the Merger, all 5,180,000 unvested equity awards (3,500,000 unvested stock options and 1,680,000 unvested RSUs) will immediately vest. Vested stock options will be cashed out at the per-share merger consideration of $15.79 (based on 47,500,000 fully diluted shares) less the applicable per-share exercise price. Vested RSUs will be converted into the right to receive $15.79 per share in cash. The aggregate cost of the acceleration is incorporated into the merger consideration payable to Cascadia's equityholders and is reflected in the fully diluted share count of 47,500,000 shares used to calculate the per-share merger consideration.

We note that certain stock options may have exercise prices that exceed $15.79 per share (i.e., they are "out of the money" or "underwater"). Such options, upon acceleration and cancellation, would yield no cash payment to the holder and would effectively be cancelled for no consideration. The precise number and exercise prices of underwater options should be confirmed with Cascadia's management and the Compensation Committee.

4. Timing and Strategy. The acceleration under the Plan is automatic and self-executing. It does not require any consent, approval, or affirmative action by the Plan administrator, the board of directors, or any individual participant. The acceleration occurs by operation of the Plan's terms at the effective time of the Merger. Accordingly, the primary workstreams related to this provision are confirmatory and tax-related:

(a) Tax Analysis. Hawthorne & Sable LLP (Douglas Kirwan and Elena Montague) is advising on the tax implications of the acceleration, with particular focus on the following issues:

(i) IRC § 280G — Golden Parachute Payments. The acceleration of equity awards in connection with a Change of Control may give rise to "excess parachute payments" under IRC § 280G for certain executive participants whose total change-of-control-related compensation (including acceleration of equity awards, severance payments, and other benefits) exceeds the applicable "base amount" threshold (generally, three times the executive's average annualized compensation over the five-year period preceding the Change of Control). If excess parachute payments arise, the company loses its tax deduction for the excess amount, and the recipient executive is subject to a 20% excise tax under IRC § 4999 in addition to regular income tax. Hawthorne & Sable is preparing a preliminary § 280G analysis for the key executive participants, including Messrs. Holmgren and Engel and Ms. Ramachandran.

(ii) IRC § 409A — Deferred Compensation. To the extent that any equity awards constitute "deferred compensation" for purposes of IRC § 409A, the settlement of such awards upon a Change of Control must comply with the specific Change of Control requirements of § 409A and the regulations thereunder. Hawthorne & Sable is reviewing the award agreements to confirm § 409A compliance.

(iii) Withholding Obligations. Cascadia (as the surviving corporation and employer) will be responsible for applicable income tax withholding and employment tax obligations in connection with the exercise and settlement of equity awards at closing. The withholding amounts should be calculated and integrated into the closing mechanics.

(b) Retention Planning. The single-trigger acceleration of all unvested equity awards at closing will eliminate the "golden handcuff" effect of unvested equity for Cascadia's employees post-closing. This raises employee retention concerns, particularly for key employees whose expertise and institutional knowledge are critical to the post-closing integration and ongoing operation of Cascadia's business. We recommend coordinating with the employment and benefits diligence workstream (and with Northgate's human resources team) to evaluate the need for post-closing retention arrangements, such as new equity grants under a Northgate equity plan, cash retention bonuses, or new employment agreements with key employees. This is a matter of particular importance with respect to Mr. Holmgren (CEO), Ms. Ramachandran (CTO), and Mr. Engel (CFO), each of whom is essential to the successful integration of Cascadia into Northgate's operations.

(c) Confirmation of Fully Diluted Share Count. We should confirm with Cascadia's management and legal counsel (WKB) that the fully diluted share count of 47,500,000 shares used to calculate the per-share merger consideration of $15.79 accurately reflects all outstanding equity awards (including awards that will accelerate at closing) and all other potentially dilutive securities. Any discrepancy in the fully diluted share count would affect the per-share merger consideration and should be identified and resolved prior to signing.

Risk Assessment: Low. The equity plan acceleration is a known, quantifiable cost that has been incorporated into the deal economics from the outset. The acceleration is automatic and does not require any third-party consent or approval. The associated tax analysis is underway at Hawthorne & Sable. The primary ongoing workstream relates to retention planning, which is a post-closing integration matter rather than a closing condition.

IV. Summary Table of Change of Control Provisions

The following table summarizes the change of control provisions identified in our review:

V. Additional Considerations

A. Interaction with Merger Agreement Provisions

The merger agreement, which is in advanced drafting with a target signing date of April 7, 2025, should address the change of control provisions identified in this memorandum in the following respects:

(a) Representations and Warranties. The merger agreement should include representations by Cascadia regarding the completeness and accuracy of its disclosure of all contracts, agreements, and instruments containing change of control, consent-to-assignment, or similar provisions that are triggered by the Merger. These contracts should be listed on the applicable disclosure schedule (anticipated to be Schedule 3.5 — Required Consents, or Schedule 3.14 — Material Contracts, depending on the final organization of the disclosure schedules). Cascadia should represent that the disclosure schedules set forth a complete and accurate list of all such agreements and that Cascadia has provided copies of all such agreements (including all amendments) to Northgate in the Data Room.

(b) Pre-Closing Covenants. The merger agreement should include a covenant requiring Cascadia to use commercially reasonable efforts to obtain all third-party consents identified on the applicable disclosure schedule prior to closing. The scope and limitations of this covenant should be carefully negotiated, including:

(i) whether Cascadia is required to offer commercial concessions (e.g., price reductions, extended terms, enhanced SLAs) to obtain consents, and if so, the parameters of any concessions that Cascadia is authorized to offer without Northgate's prior written approval;

(ii) whether Cascadia is required to incur material costs or expenses in connection with obtaining consents (e.g., consent fees payable to counterparties);

(iii) whether Northgate has the right to participate in or direct the consent solicitation process; and

(iv) the information-sharing and coordination obligations between Cascadia and Northgate with respect to consent efforts.

(c) Closing Conditions. The merger agreement should specify which third-party consents, if any, are conditions to the obligation of each party to close the Merger. This is a significant negotiating point. From Northgate's perspective, it may be desirable to include the Pacific Ridge consent as a closing condition, given the magnitude of the revenue exposure. From Cascadia's perspective, making the Pacific Ridge consent a closing condition effectively gives Northgate an option to walk away from the Transaction if the consent is not obtained, which Cascadia may view as unacceptable deal risk. One potential compromise is to include the Pacific Ridge consent as a condition to Northgate's closing obligation but to provide that the condition may be waived by Northgate in its sole discretion, thereby giving Northgate the flexibility to close the Transaction without the Pacific Ridge consent if it determines that the risk is acceptable. We recommend discussing this issue with the full deal team and with WKB during the next round of merger agreement negotiations.

(d) Risk Allocation. To the extent that any identified consent is not obtained prior to cl

MEMORANDUM
PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
TO: Oliver Mackenzie, Responsible Partner, Mergers & Acquisitions
FROM: Naomi Petersen, Working Associate, Mergers & Acquisitions
CC: Andrew Fitzpatrick, Lead Associate, Mergers & Acquisitions; Harrison Wexford, Billing Partner, Mergers & Acquisitions
DATE: March 17, 2025
RE: Change of Control Analysis — Cascadia Fiber Networks, Inc. Contracts and Instruments
MATTER NO.: 1022-00006
BILLING NO.: 78432.001
CLIENT: Northgate Telecommunications PLC
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I. Executive Summary
This memorandum identifies and analyzes all material contracts, agreements, and instruments of Cascadia Fiber Networks, Inc. ("Cascadia" or "CFN") that contain "change of control" provisions that would be triggered by the proposed forward merger of NTP Acquisition Sub, Inc. ("Merger Sub"), a newly formed, wholly owned subsidiary of Northgate Telecommunications PLC ("Northgate" or "NTP"), with and into Cascadia pursuant to Section 251 of the Delaware General Corporation Law (the "DGCL"), following which Cascadia will survive the merger as a wholly owned subsidiary of Northgate (the "Merger" or the "Transaction"). The aggregate merger consideration is $750,000,000, payable entirely in cash at closing.
The purpose of this memorandum is to provide the deal team with a comprehensive assessment of each identified change of control provision, including the specific definitional language triggering the provision, the consequences of a change of control under each agreement, the risk profile associated with each provision, and recommended strategies and timelines for addressing each provision in connection with the anticipated signing and closing of the Transaction. This analysis is intended to inform the drafting of the merger agreement, the preparation of the disclosure schedules, the coordination of the financing workstream, and the development of the third-party consent strategy.
Based on our review of the documents produced in the due diligence process by Cascadia and its counsel, Whitmore, Kessler & Braun LLP ("WKB"), we have identified five categories of agreements and instruments containing change of control provisions that are triggered by the Merger:
(1) Elkhorn Capital Markets, LLC — Term Loan Agreement. The existing term loan agreement requires mandatory prepayment of the outstanding principal balance of $82,600,000, plus a prepayment premium of 1.0% ($826,000), upon a change of control. This is a self-executing provision that does not require lender consent; rather, it requires payoff at closing.
(2) Master Services Agreement — Pacific Ridge Data Centers, LLC. The master services agreement between Cascadia and Pacific Ridge Data Centers, LLC ("Pacific Ridge") requires Cascadia to obtain Pacific Ridge's prior written consent before consummating any change of control transaction. Consent is at Pacific Ridge's sole discretion, without any reasonableness qualifier. Annual revenue attributable to this agreement is approximately $22,000,000, representing approximately 11.7% of Cascadia's fiscal year 2024 revenue.
(3) Wholesale Fiber IRU Agreement — Clearpath Internet Services, Inc. The wholesale fiber indefeasible right of use agreement requires the consent of Clearpath Internet Services, Inc. ("Clearpath") prior to a change of control; however, the agreement provides that consent shall not be unreasonably withheld, conditioned, or delayed, and further provides for a 30-day deemed-consent mechanism.
(4) Oregon Municipal Broadband Cooperative Agreement. The cooperative agreement between Cascadia and the Oregon Municipal Broadband Cooperative (the "Cooperative") requires the prior approval of the Cooperative's board of directors before Cascadia may undergo a change of control. Without board approval, the Cooperative may terminate the agreement upon 60 days' written notice.
(5) Cascadia Fiber Networks, Inc. 2016 Equity Incentive Plan. The equity incentive plan provides for single-trigger acceleration of all outstanding and unvested equity awards (stock options and restricted stock units) upon a change of control. This acceleration is automatic and is already factored into the fully diluted share count of 47,500,000 shares used to calculate the per-share merger consideration of $15.79.
Summary Risk Assessment. The Elkhorn mandatory prepayment is a known closing cost that has been factored into the closing mechanics and the funds flow memorandum. The equity plan acceleration is similarly a known, quantifiable cost already incorporated into the deal economics. The Pacific Ridge consent presents the highest commercial risk given the magnitude of the revenue exposure (approximately $22,000,000 annually) and the discretionary nature of the consent standard, and should be prioritized in the consent strategy. The Clearpath and Oregon Municipal Broadband Cooperative consents are assessed as obtainable with proactive engagement, though each requires timely attention to ensure alignment with the anticipated closing timeline. We note that none of the identified provisions present a legal impediment to the closing of the Transaction, but the Pacific Ridge consent in particular warrants careful consideration in the context of merger agreement negotiation and closing condition design.
Recommended Timeline. We recommend addressing each consent in parallel with the regulatory approval timeline. Based on current projections, the target signing date for the merger agreement is April 7, 2025. Regulatory filings (Hart-Scott-Rodino, Federal Communications Commission, state public utility commissions, and the Committee on Foreign Investment in the United States) are expected to require 90 to 150 days from signing for completion. Accordingly, the estimated closing date is in August 2025, with an outside date of September 30, 2025 (subject to a mutual 60-day extension to November 29, 2025 if regulatory approvals remain the sole outstanding condition). Third-party consent efforts should be initiated promptly after signing and managed on a timeline that ensures resolution well in advance of the expected closing date.
II. Scope and Methodology
A. Documents Reviewed
This analysis is based on our review of all material contracts, credit agreements, equity plans, and other instruments of Cascadia as produced to the Calderwood & Harkness LLP electronic data room (the "Data Room"), supplemented by Cascadia's written responses to the comprehensive due diligence request list dated February 12, 2025 (the "Request List"), as updated by supplemental responses received through March 14, 2025. The Data Room currently contains approximately 3,420 documents organized across 47 folders. Our review has focused on the following categories of documents, which represent the universe of agreements most likely to contain change of control provisions:
(a) credit agreements, loan agreements, notes, guarantees, and related financing documents;
(b) material commercial contracts with customers, vendors, and service providers, including master services agreements, indefeasible rights of use agreements, interconnection agreements, and wholesale agreements;
(c) joint venture agreements, partnership agreements, and cooperative agreements;
(d) equity incentive plans, stock option agreements, restricted stock unit agreements, and other compensatory equity arrangements;
(e) real property leases and subleases;
(f) intellectual property licenses and technology agreements;
(g) government contracts and municipal agreements; and
(h) any other agreements identified by Cascadia management or WKB as containing assignment restrictions, consent requirements, or change of control provisions.
B. Definitional Approach
For purposes of this analysis, we have construed the concept of "change of control" broadly to capture the full range of contractual formulations that may be triggered by the Merger. Across the universe of Cascadia's agreements, we have encountered and analyzed the following variant formulations: "change of control," "change in control," "change of ownership," "transfer of control," "assignment by operation of law," "assignment without consent," "merger, consolidation, or reorganization," "sale of all or substantially all assets," and similar triggers. Each identified provision has been evaluated against the specific structure of the proposed Transaction — a forward merger under DGCL § 251 in which Merger Sub merges with and into Cascadia, with Cascadia as the surviving corporation — to determine whether the provision is in fact triggered.
C. Transaction Structure Considerations
The proposed Transaction is structured as a forward merger under DGCL § 251. Under this structure, Merger Sub will merge with and into Cascadia, and Cascadia will survive the Merger as a wholly owned subsidiary of Northgate. This structure has important implications for the change of control analysis:
(a) Equity Transfer. The ultimate beneficial ownership of 100% of Cascadia's outstanding equity will transfer to Northgate at closing. All outstanding shares of Cascadia common stock (other than treasury shares and dissenting shares) will be converted into the right to receive the per-share merger consideration. This transfer of beneficial ownership triggers change of control provisions that reference the acquisition of a specified percentage of voting equity or ownership interests.
(b) Board Composition. Cascadia's board of directors will be reconstituted at the effective time of the Merger. The surviving corporation's directors will be designated by Northgate pursuant to the merger agreement. This change in board composition may independently trigger change of control provisions that reference changes in the composition or control of the board of directors, although none of the provisions identified herein rely solely on a board composition trigger.
(c) Survival of the Entity. Because Cascadia survives the Merger, the Transaction does not constitute a dissolution or liquidation of Cascadia, and Cascadia's legal existence continues uninterrupted. Contracts that restrict "assignment" of the agreement may or may not be triggered by a forward merger where the contracting party survives, depending on the specific language of the restriction and applicable governing law. Under Delaware law, a merger in which the contracting party survives does not constitute an "assignment by operation of law" absent specific contractual language to the contrary. We have analyzed each provision with this principle in mind.
(d) Not a Sale of Assets. The Transaction is structured as a merger, not as an asset purchase. Provisions that are triggered solely by a "sale of all or substantially all assets" of Cascadia are not triggered by the Merger. However, several provisions employ disjunctive formulations (e.g., "merger, consolidation, or sale of all or substantially all assets") that capture the Merger regardless.
D. Coordination with Cascadia's Counsel
We have coordinated with Jonathan Kessler and Megan Tsai of WKB in confirming the completeness of the document production. On March 3, 2025, we provided WKB with a supplemental request specifically identifying the categories of provisions at issue and requesting confirmation that all contracts containing such provisions had been produced to the Data Room. On March 10, 2025, Ms. Tsai confirmed in writing that, to WKB's knowledge, the Data Room production includes all material contracts of Cascadia that contain change of control, consent-to-assignment, or similar provisions. We have relied on this confirmation in preparing this memorandum, subject to the caveat that our analysis is necessarily limited to the documents produced and information provided to us. We recommend that the merger agreement include a representation by Cascadia regarding the completeness of the disclosure of all contracts containing change of control provisions, and that such contracts be listed on the applicable disclosure schedule.
III. Detailed Analysis of Change of Control Provisions
A. Elkhorn Capital Markets, LLC — Term Loan Agreement
1. Agreement Identification. The agreement at issue is the Term Loan Agreement, dated as of September 15, 2021, by and between Cascadia Fiber Networks, Inc., as Borrower, and Elkhorn Capital Markets, LLC, as Lender and Administrative Agent (as amended by the First Amendment to Term Loan Agreement, dated as of March 22, 2023, and the Second Amendment to Term Loan Agreement, dated as of November 8, 2024, collectively, the "Elkhorn Term Loan Agreement"). The Elkhorn Term Loan Agreement was entered into in connection with Cascadia's acquisition of certain fiber network assets in Idaho and Nevada and the expansion of Cascadia's backbone infrastructure in the Pacific Northwest.
As of March 1, 2025, the outstanding principal balance under the Elkhorn Term Loan Agreement is $82,600,000. The facility bears interest at Term SOFR plus 275 basis points, with a maturity date of September 15, 2028. The Elkhorn Term Loan Agreement is secured by a first-priority lien on substantially all of Cascadia's tangible and intangible assets, including fiber optic network infrastructure, equipment, real property interests, intellectual property, and accounts receivable, as documented in the Security Agreement and related collateral documents.
We note for the deal team's awareness that Elkhorn Capital Markets, LLC also participates as a syndicate member in the Pinnacle Atlantic Bank acquisition financing facility, with a $75,000,000 commitment in the $500,000,000 new senior secured credit facility. This dual role — as the existing lender being paid off at closing and as a participant in the new acquisition financing — gives rise to potential conflict-of-interest considerations that are addressed separately in the Conflict Check Memorandum dated March 12, 2025 (prepared by Andrew Fitzpatrick). The dual role does not affect the change of control analysis set forth herein, but it underscores the importance of coordinating the payoff and lien release mechanics with the financing closing mechanics.
2. Change of Control Definition. Section 7.01(e) of the Elkhorn Term Loan Agreement defines "Change of Control" as follows:
"Change of Control" means (i) any transaction or series of related transactions (including any merger, consolidation, recapitalization, or reorganization) the result of which is that any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) other than the Existing Equity Holders (as defined in Schedule 1.01 hereto) shall have acquired, directly or indirectly, beneficial ownership of more than 50% of the Voting Equity Interests of the Borrower; or (ii) the Borrower shall have sold, transferred, or otherwise disposed of all or substantially all of its assets (other than to a wholly owned Subsidiary of the Borrower).
The proposed Merger clearly triggers prong (i) of this definition. Upon consummation of the Merger, Northgate will acquire beneficial ownership of 100% of the Voting Equity Interests of Cascadia. Northgate is not an "Existing Equity Holder" as defined in Schedule 1.01 to the Elkhorn Term Loan Agreement (which lists the equity holders of Cascadia as of the closing date of the term loan, including the co-founders Derek Holmgren and Priya Ramachandran, certain venture capital investors, and employee option holders). Accordingly, the Merger constitutes a "Change of Control" under the Elkhorn Term Loan Agreement.
3. Consequences of Change of Control. Section 2.05(b) of the Elkhorn Term Loan Agreement provides that upon the occurrence of a Change of Control, the Borrower shall be required to prepay the entire outstanding principal amount of the Term Loans, together with all accrued and unpaid interest thereon and all applicable fees and premiums, on the date of such Change of Control (or, if the Change of Control is the result of a merger or similar transaction, on the closing date of such transaction). This is a mandatory prepayment obligation — it is self-executing and does not require any consent, waiver, or approval from Elkhorn.
Section 2.05(b)(ii) further provides for a prepayment premium in connection with any mandatory prepayment triggered by a Change of Control, calculated as follows:
"In connection with any mandatory prepayment of the Term Loans pursuant to this Section 2.05(b), the Borrower shall pay to the Lender a prepayment premium equal to 1.0% of the aggregate principal amount of Term Loans being prepaid."
Based on the current outstanding principal balance of $82,600,000, the prepayment premium is $826,000 (i.e., $82,600,000 × 1.0%).
Section 2.05(c) requires the Borrower to provide the Lender and Administrative Agent with not less than 10 business days' prior written notice of the anticipated Change of Control, specifying the nature of the transaction, the expected closing date, and the estimated prepayment amount. This notice requirement is a condition to the orderly administration of the prepayment but is not a consent mechanism — Elkhorn has no right to block the Change of Control or to refuse the prepayment.
4. Timing and Strategy. Because the Elkhorn Term Loan Agreement does not require consent or approval from Elkhorn, but rather mandates prepayment upon a Change of Control, the primary workstream for this provision is the preparation and execution of the payoff mechanics:
(a) Payoff Letter. We are currently preparing a draft payoff letter for delivery to Elkhorn. The payoff letter will request a statement of the total payoff amount as of an estimated closing date (currently projected for August 2025), including outstanding principal, accrued and unpaid interest through the anticipated payoff date, the prepayment premium, and any other fees or costs. The payoff amount will be confirmed two business days prior to closing, consistent with standard practice, to account for the per diem interest accrual.
(b) Estimated Payoff Amount. Based on current information, the estimated total payoff is as follows:
(c) Lien Releases. The release of Elkhorn's security interests in Cascadia's assets is a critical closing mechanic. Under the Pinnacle Atlantic Bank commitment letter for the new $500,000,000 senior secured credit facility, the grant of first-priority security interests in Cascadia's assets is a condition precedent to funding. Accordingly, Elkhorn must deliver UCC-3 termination statements, mortgage releases, intellectual property lien releases, and other applicable lien release documentation at closing, simultaneously with the payoff. We are coordinating with Elkhorn's counsel to prepare the requisite release documentation.
(d) Funds Flow Integration. The Elkhorn payoff must be incorporated into the funds flow memorandum for the Transaction. The funds flow will reflect the following sources and uses:
Note: The figures above are illustrative and will be refined as the funds flow memorandum is finalized. Andrew Fitzpatrick is leading the financing workstream and will coordinate the integration of the Elkhorn payoff into the final funds flow.
(e) Notice. Written notice of the anticipated Change of Control must be delivered to Elkhorn not less than 10 business days prior to closing. Assuming an August 2025 closing, this notice should be delivered no later than approximately mid-July 2025. However, given Elkhorn's dual role in the new facility, Elkhorn will have independent awareness of the Transaction timeline through its participation in the Pinnacle Atlantic Bank syndicate.
Risk Assessment: Low. The Elkhorn payoff is a mechanical closing condition. The amounts are known, quantifiable, and budgeted. There is no discretionary consent element. The primary execution risk relates to the timely delivery of lien release documentation, which is being proactively managed.
B. Master Services Agreement — Pacific Ridge Data Centers, LLC
1. Agreement Identification. The agreement at issue is the Master Services Agreement, dated as of January 12, 2019, by and between Cascadia Fiber Networks, Inc., as Service Provider, and Pacific Ridge Data Centers, LLC, as Customer (as amended by Amendment No. 1, dated as of June 30, 2020, and Amendment No. 2, dated as of February 15, 2022, collectively, the "Pacific Ridge MSA"). Under the Pacific Ridge MSA, Cascadia provides lit and dark fiber connectivity services, wavelength transport services, and related network services to Pacific Ridge's data center facilities located in Portland, Oregon; Hillsboro, Oregon; and Seattle, Washington. The Pacific Ridge MSA has an initial term expiring on January 12, 2029, with two successive automatic renewal periods of three years each, absent notice of non-renewal by either party not less than 12 months prior to the expiration of the then-current term.
Pacific Ridge is one of Cascadia's largest single customers. Annual revenue attributable to the Pacific Ridge MSA for fiscal year 2024 was approximately $22,000,000, representing approximately 11.7% of Cascadia's total fiscal year 2024 revenue of $187,400,000. The revenue is generated primarily through monthly recurring charges under multiple service orders governed by the MSA, with additional revenue from installation fees, excess usage charges, and professional services. The relationship is strategically significant for Cascadia, as Pacific Ridge operates high-density colocation and hyperscale data center campuses that serve major cloud service providers and enterprise customers, creating a stable, long-term demand profile for fiber connectivity.
2. Change of Control Definition. Section 14.3 of the Pacific Ridge MSA defines "Change of Control" as follows:
"Change of Control" means, with respect to either party, (a) any merger, consolidation, reorganization, or similar transaction involving such party, (b) the sale or transfer of all or substantially all of the assets of such party, or (c) any other transaction or series of related transactions that results in a change in the person or entity that, directly or indirectly, owns or controls more than fifty percent (50%) of the voting power or equity interests of such party.
The proposed Merger falls squarely within this definition on multiple grounds. First, the Merger is a "merger" involving Cascadia (prong (a)). Second, upon consummation of the Merger, Northgate will directly own 100% of the equity interests and voting power of Cascadia, representing a change in the person that controls more than 50% of the voting power and equity interests of Cascadia (prong (c)). Accordingly, there is no ambiguity — the Merger constitutes a "Change of Control" under the Pacific Ridge MSA.
3. Consequences of Change of Control. Section 14.4 of the Pacific Ridge MSA provides the following consequences upon a Change of Control:
"Neither party may undergo a Change of Control without the prior written consent of the other party. In the event that a party undergoes a Change of Control without obtaining such prior written consent, the other party shall have the right, exercisable in its sole discretion, to terminate this Agreement upon not less than thirty (30) days' prior written notice, such termination to be effective as of the date specified in the notice. Any termination pursuant to this Section 14.4 shall not relieve the terminating party of its obligation to pay all amounts due and owing under this Agreement through the effective date of termination, nor shall it relieve the breaching party of liability for damages arising from the breach."
Critically, the Pacific Ridge MSA does not qualify the consent requirement with a "reasonableness" standard. Section 14.4 requires "prior written consent" without any limitation on the grounds upon which consent may be withheld. This means that Pacific Ridge has the contractual right to withhold consent for any reason, or for no reason at all. The absence of a reasonableness qualifier materially increases the risk profile of this consent, as it provides Pacific Ridge with significant leverage in any consent negotiation.
If Cascadia were to consummate the Merger without obtaining Pacific Ridge's prior written consent, the failure to obtain consent would constitute a material breach of the Pacific Ridge MSA. Pacific Ridge would then have the right to terminate the MSA upon 30 days' written notice. Termination of the MSA would result in the loss of approximately $22,000,000 in annual recurring revenue, with additional potential exposure for early termination damages under the individual service orders.
4. Timing and Strategy. This consent represents the highest-risk change of control provision identified in our review, and we recommend that it be treated as a priority item in the deal team's consent strategy. The following considerations inform our recommended approach:
(a) Early Engagement. We recommend engaging Pacific Ridge on the consent request promptly after the signing of the merger agreement (target signing date: April 7, 2025). Delay in initiating the consent discussion increases the risk that Pacific Ridge may perceive the request as an afterthought or may feel pressured, either of which could complicate negotiations. Early engagement also provides maximum time to negotiate and resolve any conditions that Pacific Ridge may attach to its consent.
(b) Business Case for Consent. Northgate's strategic rationale for the acquisition should be communicated to Pacific Ridge as part of the consent request. Key talking points should include: (i) Northgate's planned deployment of its proprietary NetOrchestra SaaS network management platform across Cascadia's infrastructure, which will enhance service quality, reliability, and operational transparency for Cascadia's customers, including Pacific Ridge; (ii) Northgate's commitment to continued and enhanced service delivery under the existing MSA, with no planned reduction in service levels, staffing, or network investment; (iii) Northgate's significant balance sheet and capital resources, which will enable accelerated network expansion and infrastructure investment to support Pacific Ridge's growing data center operations; and (iv) Northgate's track record of successful integration of acquired fiber network operators in other markets, with demonstrated continuity of service to existing customers. We recommend coordinating with Liam Sutherland (VP, Corporate Development, Northgate) to develop and refine the commercial talking points for the Pacific Ridge engagement.
(c) Potential for Commercial Concessions. Given Pacific Ridge's leverage under the consent provision, we should anticipate the possibility that Pacific Ridge may seek commercial concessions as a condition of granting consent. Such concessions could include pricing reductions or rate freezes, extended contract terms, enhanced service level agreements (SLAs) with increased credits for service failures, capacity guarantees, most-favored-customer provisions, or other favorable modifications to the MSA. The deal team should evaluate the acceptable parameters for such concessions in advance, in consultation with Northgate's commercial team, so that the consent negotiation can proceed efficiently.
(d) Merger Agreement Provisions. We recommend that the merger agreement include a specific covenant requiring Cascadia to use commercially reasonable efforts to obtain Pacific Ridge's written consent prior to closing. The scope of the "commercially reasonable efforts" obligation should be carefully defined to address, among other things, whether Cascadia is required to offer commercial concessions to obtain the consent, and if so, the parameters of any concessions that Cascadia is authorized to offer without Northgate's prior approval. Additionally, the merger agreement should address whether the failure to obtain Pacific Ridge's consent prior to closing constitutes a condition to Northgate's obligation to close. This is a significant negotiating point: Northgate may seek to include Pacific Ridge's consent as a closing condition, while Cascadia (through WKB) may resist such a condition on the ground that it gives Northgate an "out" if the consent is not obtained. We anticipate this issue will be the subject of focused negotiation between the parties and their respective counsel.
(e) Alternative Structures. In the event that Pacific Ridge withholds consent and it becomes apparent that consent will not be obtained prior to closing, the deal team should evaluate alternative structures to mitigate the risk, including the possibility of deferring the merger closing with respect to Pacific Ridge-related operations, or structuring the post-closing integration to minimize disruption to Pacific Ridge's services and thereby reduce the commercial incentive for Pacific Ridge to exercise its termination right.
(f) Confidentiality. Prior to signing, engagement with Pacific Ridge regarding the Transaction will be constrained by confidentiality considerations. The merger agreement will likely contain provisions governing the timing and manner of communications with customers, including Pacific Ridge. These provisions should be coordinated with the customer communication plan.
Risk Assessment: Medium-High. The discretionary nature of the consent standard, combined with the significant revenue exposure (~$22,000,000 annually, representing ~11.7% of Cascadia's FY2024 revenue), makes this the highest-risk commercial consent identified in our review. Loss of the Pacific Ridge relationship would represent a material adverse impact on Cascadia's revenue base and could have implications for Northgate's post-closing business plan and financial projections. However, we note that Pacific Ridge and Cascadia have a long-standing commercial relationship, that Pacific Ridge's data center operations depend on Cascadia's fiber infrastructure, and that Northgate's acquisition is likely to enhance rather than diminish service quality and reliability. These factors provide a reasonable basis for optimism that consent is obtainable, provided the engagement is handled skillfully and initiated promptly.
C. Wholesale Fiber IRU Agreement — Clearpath Internet Services, Inc.
1. Agreement Identification. The agreement at issue is the Wholesale Fiber Indefeasible Right of Use Agreement, dated as of April 8, 2017, by and between Cascadia Fiber Networks, Inc., as Grantor, and Clearpath Internet Services, Inc. ("Clearpath"), as Grantee (the "Clearpath IRU Agreement"). Under the Clearpath IRU Agreement, Cascadia granted Clearpath a 20-year indefeasible right of use in specified dark fiber strands on designated route segments within Cascadia's fiber optic network in Washington state, including routes between Seattle and Spokane, and between Seattle and Tacoma. The IRU term expires on April 8, 2037.
An indefeasible right of use, or "IRU," is a long-term contractual right to use a specified portion of a fiber optic network's capacity, typically for a fixed term. IRUs are a common commercial arrangement in the telecommunications infrastructure industry and are generally treated as a form of long-term lease or license for the applicable fiber capacity. The Clearpath IRU Agreement provides Clearpath with dedicated dark fiber capacity on the specified routes, which Clearpath uses to support its wholesale internet services business in the Pacific Northwest.
The financial terms of the Clearpath IRU Agreement include an upfront capacity payment made by Clearpath at the inception of the IRU, recognized by Cascadia as deferred revenue over the 20-year term, plus ongoing monthly maintenance and colocation fees. The IRU represents a significant long-term capacity commitment on Cascadia's network and is material to the ongoing utilization and revenue profile of the affected route segments.
2. Change of Control Definition. Section 11.2 of the Clearpath IRU Agreement defines "Change of Control" as follows:
"Change of Control" means any direct or indirect transfer, sale, merger, consolidation, or other transaction or series of related transactions that results in a change of more than fifty percent (50%) of the ownership or voting control of the Grantor from the ownership or voting control existing as of the date of this Agreement.
The proposed Merger triggers this definition. Upon consummation of the Merger, Northgate will acquire 100% of the ownership and voting control of Cascadia, representing a change of more than 50% of the ownership and voting control of the Grantor from the ownership and voting control existing as of April 8, 2017 (the date of the Clearpath IRU Agreement). The existing shareholders of Cascadia as of that date — including the co-founders, venture capital investors, and employee equity holders — will have no continuing ownership interest in Cascadia following the Merger.
3. Consequences of Change of Control. Section 11.3 of the Clearpath IRU Agreement provides as follows:
"The Grantor shall not undergo a Change of Control without the prior written consent of the Grantee; provided, however, that such consent shall not be unreasonably withheld, conditioned, or delayed. In the event that the Grantor provides written notice to the Grantee of an anticipated Change of Control, the Grantee shall have thirty (30) calendar days from the date of receipt of such notice to deliver a written response to the Grantor either granting or withholding consent (and, if withholding consent, specifying in reasonable detail the grounds for such withholding). If the Grantee fails to deliver a written response within such thirty (30) day period, the Grantee shall be deemed to have granted its consent to the Change of Control."
This provision contains two features that significantly reduce the risk profile relative to the Pacific Ridge consent:
(a) Reasonableness Standard. The consent "shall not be unreasonably withheld, conditioned, or delayed." This standard places the burden on Clearpath to articulate commercially reasonable grounds for withholding consent. If Clearpath were to withhold consent on unreasonable grounds — for example, simply to extract commercial concessions not justified by the change in ownership — Cascadia could challenge the withholding as a breach of Clearpath's contractual obligation to act reasonably.
(b) Deemed Consent Mechanism. If Clearpath fails to respond within 30 calendar days of receiving written notice of the anticipated Change of Control, consent is deemed granted. This mechanism provides a backstop that protects Cascadia against delay or non-responsiveness by Clearpath.
If consent is neither obtained nor deemed granted (i.e., Clearpath affirmatively withholds consent within the 30-day period), Section 11.4 provides that the Grantee shall have the right to terminate the IRU Agreement and seek damages for the remaining term of the IRU, calculated based on the unamortized balance of the upfront capacity payment and the net present value of ongoing maintenance fees for the unexpired term.
4. Timing and Strategy. The favorable consent standard and deemed-consent mechanism substantially reduce the risk associated with this provision. Our recommended approach is as follows:
(a) Prompt Written Notice. We recommend delivering written notice to Clearpath promptly after signing of the merger agreement. The target is delivery within five business days of the April 7, 2025 signing date — i.e., by approximately April 14, 2025. The notice should include a description of the Transaction (in a form approved by Northgate), the identity of the acquirer (Northgate Telecommunications PLC), a summary of Northgate's qualifications and financial strength, and an express assurance of continued performance of all of Cascadia's obligations under the IRU Agreement following the Merger.
(b) 30-Day Response Period. If the notice is delivered by April 14, 2025, the 30-day response period would expire on or about May 14, 2025 — well in advance of the anticipated August 2025 closing date. This timeline provides ample cushion. If Clearpath grants affirmative consent (or fails to respond, resulting in deemed consent), the matter will be resolved months before closing.
(c) Contingency Planning. In the unlikely event that Clearpath affirmatively withholds consent within the 30-day period, we would evaluate whether Clearpath's grounds for withholding are "reasonable" under the applicable standard. Factors relevant to the reasonableness analysis would include: (i) the nature and specificity of Clearpath's stated objections; (ii) whether the Merger would materially impair Cascadia's ability to perform its obligations under the IRU Agreement; (iii) whether Northgate's financial condition and operational capabilities are comparable to or stronger than Cascadia's; and (iv) whether Clearpath's stated grounds are pretextual or motivated by considerations unrelated to the legitimate interests protected by the consent requirement. If Clearpath's withholding is deemed unreasonable, Cascadia could assert that Clearpath has breached its contractual obligation and that consent should be treated as constructively granted. However, this would require a legal determination and could introduce uncertainty and delay. Accordingly, our preferred strategy is to engage Clearpath proactively and obtain affirmative consent, rather than relying on the deemed-consent mechanism or a challenge to the reasonableness of any withholding.
(d) No Anticipated Objection. Based on our preliminary understanding of the relationship between Cascadia and Clearpath, we do not currently anticipate that Clearpath will object to the Merger. Clearpath is a sophisticated telecommunications company that is likely to understand that an acquisition by a well-capitalized international telecom operator is likely to enhance, rather than diminish, the quality and reliability of services under the IRU. However, we cannot rule out the possibility that Clearpath may use the consent process as an opportunity to raise commercial issues or seek improvements to the terms of the IRU.
Risk Assessment: Low-Medium. The reasonableness standard and deemed-consent mechanism provide significant contractual protections. The 30-day response period fits comfortably within the anticipated Transaction timeline. The primary risk is that Clearpath could attempt to use the consent process as leverage for commercial concessions, but the contractual framework limits Clearpath's ability to withhold consent on unreasonable grounds.
D. Oregon Municipal Broadband Cooperative Agreement
1. Agreement Identification. The agreement at issue is the Cooperative Agreement, dated as of August 22, 2020, by and between Cascadia Fiber Networks, Inc. and the Oregon Municipal Broadband Cooperative (the "Cooperative"), as amended by the First Addendum, dated as of October 1, 2021 (collectively, the "Cooperative Agreement"). The Cooperative is a governmental cooperative organized under Oregon Revised Statutes Chapter 190 (Intergovernmental Cooperation), comprising several Oregon municipalities including the cities of Bend, Redmond, Prineville, Madras, and La Pine, as well as Deschutes County. Under the Cooperative Agreement, Cascadia provides backbone fiber infrastructure, transport services, and operational support to the Cooperative's municipal broadband programs, which deliver broadband internet access to residential and commercial users in underserved communities across central Oregon.
The Cooperative Agreement has an initial term of 10 years (expiring August 22, 2030), with two successive five-year renewal options exercisable by the Cooperative. The agreement reflects a public-private partnership model in which Cascadia provides the core network infrastructure and the Cooperative's member municipalities provide last-mile distribution and subscriber management. The financial terms include annual infrastructure fees, recurring transport charges, and shared capital expenditure obligations for network expansion. The Cooperative Agreement is material to Cascadia's operations in the Oregon market and contributes to Cascadia's public-interest profile as a provider of broadband infrastructure to underserved communities.
2. Change of Control Definition. Section 9.1 of the Cooperative Agreement defines "Change of Control" as follows:
"Change of Control" means any merger, acquisition, consolidation, or other transaction resulting in a change of the controlling interest of the Service Provider, whether through a direct or indirect transfer of equity interests, a merger of the Service Provider with or into another entity, or otherwise.
This is a broadly worded definition that encompasses the proposed Merger. The Merger will result in Northgate acquiring 100% of the equity interests of Cascadia, constituting a change of the "controlling interest" of Cascadia. The forward merger structure, in which Merger Sub merges with and into Cascadia, falls within the express reference to "a merger of the Service Provider with or into another entity." Accordingly, the Merger triggers the Change of Control provision.
3. Consequences of Change of Control. Section 9.2 of the Cooperative Agreement provides as follows:
"The Service Provider may not undergo a Change of Control without the prior approval of the Board of Directors of the Cooperative (the 'Board'). The Service Provider shall provide written notice to the Cooperative of any anticipated Change of Control not less than sixty (60) days prior to the proposed effective date of such Change of Control. In the event that the Board does not approve the Change of Control, the Cooperative may terminate this Agreement upon sixty (60) days' prior written notice to the Service Provider."
The consent mechanism requires the affirmative approval of the Cooperative's board of directors. The Cooperative Agreement does not specify the standard by which the board is to evaluate a consent request — it does not include a "reasonableness" qualifier, nor does it provide for deemed consent upon the passage of time without a response. However, as a governmental cooperative, the Cooperative's board is composed of elected or appointed officials from the member municipalities, and its deliberations are likely subject to Oregon open meetings law (ORS Chapter 192). This means that the board's consideration of the consent request will be a matter of public record, and the board's decision-making process may be influenced by public-interest considerations, including the impact of the Change of Control on broadband service delivery to the Cooperative's member communities.
If the board does not approve the Change of Control, the Cooperative may terminate the Cooperative Agreement upon 60 days' prior written notice. Termination of the Cooperative Agreement would result in the loss of recurring revenue from the Cooperative relationship and could have reputational implications for Cascadia (and, post-closing, for Northgate) in the Oregon market, particularly given the public-interest nature of the Cooperative's broadband programs.
4. Timing and Strategy. The primary challenge with the Cooperative consent is timing. The Cooperative's board of directors meets on a periodic basis — likely quarterly, though the precise schedule must be confirmed with Cascadia management. If the board does not meet frequently, there may be limited opportunities to present the consent request within the Transaction timeline. Our recommended approach is as follows:
(a) Coordination with Cascadia Management. We recommend coordinating with Derek Holmgren (CEO of Cascadia) and Sandra Whitfield (General Counsel of Cascadia) to identify the schedule of upcoming Cooperative board meetings. If a meeting is scheduled to occur in May, June, or July 2025, the consent request should be placed on the agenda for that meeting. If no meeting is scheduled to occur before the anticipated closing date, we should explore the possibility of requesting that the Cooperative convene a special meeting to consider the consent request.
(b) 60-Day Notice Requirement. Section 9.2 requires Cascadia to provide written notice to the Cooperative not less than 60 days prior to the proposed effective date of the Change of Control. Assuming a target closing date in August 2025, notice should be delivered no later than early June 2025. However, we recommend delivering notice as early as practicable after signing — ideally in April 2025 — to provide maximum time for the board's consideration and to demonstrate good faith and respect for the Cooperative's governance process.
(c) Public-Interest Messaging. The consent request to the Cooperative should emphasize the public-interest benefits of the Merger, including Northgate's commitment to continued and enhanced broadband service delivery, Northgate's financial resources and willingness to invest in network infrastructure expansion in underserved areas, and the continuity of Cascadia's operations and management under Northgate's ownership. Given the public-interest nature of the Cooperative's mission, these considerations are likely to be highly relevant to the board's deliberations. We recommend preparing a presentation for the board that addresses these points, potentially including a commitment letter or assurance from Northgate regarding continued investment in the Cooperative's broadband programs.
(d) Relationship Leverage. Cascadia has an established, multi-year working relationship with the Cooperative and its member municipalities. Mr. Holmgren, as CEO and co-founder of Cascadia, is personally known to and respected by the Cooperative's leadership. We recommend that Mr. Holmgren take a lead role in the consent engagement, supported by the deal team's preparation of the formal consent request and supporting materials.
(e) Contingency Planning. In the event that the Cooperative board declines to approve the Change of Control, the Cooperative Agreement provides for a 60-day termination period. This termination right is not automatic — it requires the Cooperative to affirmatively deliver a termination notice. In practice, the Cooperative may be reluctant to terminate the agreement if termination would disrupt broadband service delivery to its member communities, particularly if no alternative provider is readily available. This dynamic provides some practical protection, but it should not be relied upon as a substitute for obtaining affirmative board approval.
Risk Assessment: Low-Medium. The consent requirement is real and requires affirmative board action, but the established relationship between Cascadia and the Cooperative, the public-interest nature of continued service delivery, and the limited availability of alternative backbone fiber providers in central Oregon all support the view that consent is obtainable. The primary risk is one of timing — the board's meeting schedule may not align perfectly with the Transaction timeline, and accommodating the board's governance process may require proactive scheduling coordination.
E. Cascadia Fiber Networks, Inc. — 2016 Equity Incentive Plan
1. Agreement Identification. The agreement at issue is the Cascadia Fiber Networks, Inc. 2016 Equity Incentive Plan, as adopted by the board of directors on March 15, 2016, and as amended on July 20, 2018 and February 4, 2021 (the "Plan"). The Plan provides for the grant of stock options (both incentive stock options and non-qualified stock options), restricted stock units ("RSUs"), restricted stock awards, stock appreciation rights, and other equity-based awards to eligible participants, including employees, officers, directors, and consultants of Cascadia and its subsidiaries.
As of March 1, 2025, the Plan has the following outstanding awards:
Key participants include Derek Holmgren (CEO and Co-Founder), who holds 1,200,000 stock options and 600,000 RSUs; Priya Ramachandran (CTO and Co-Founder), who holds 900,000 stock options and 450,000 RSUs; Tobias Engel (CFO), who holds 400,000 stock options and 300,000 RSUs; and approximately 620 other employees, officers, and directors holding the balance of the outstanding awards. The Plan is administered by the Compensation Committee of Cascadia's board of directors.
2. Change of Control Definition. Section 2.7 of the Plan defines "Change of Control" as follows:
"Change of Control" means the occurrence of any one of the following events:
(a) any merger, consolidation, or similar transaction involving the Company in which the Company is not the surviving entity or in which the outstanding shares of the Company's common stock are converted into or exchanged for other securities or property;
(b) any transaction or series of related transactions in which a person or group (as defined in Section 13(d)(3) of the Exchange Act) acquires, directly or indirectly, beneficial ownership of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company's then-outstanding voting securities;
(c) the sale, transfer, or other disposition of all or substantially all of the Company's assets; or
(d) the approval by the Company's stockholders of a plan or proposal for the dissolution or liquidation of the Company.
The proposed Merger triggers prong (b) of this definition. Upon consummation of the Merger, Northgate (through its ownership of 100% of the outstanding shares of the surviving corporation) will acquire beneficial ownership of securities representing more than 50% of the combined voting power of Cascadia's then-outstanding voting securities. We note that prong (a) does not apply because Cascadia is the surviving entity in the forward merger — it is Merger Sub, not Cascadia, that ceases to exist. However, prong (a) is also potentially triggered by the conversion of Cascadia common stock into the right to receive cash merger consideration, which could be characterized as a conversion of outstanding shares "into or exchanged for other securities or property." In either case, the result is the same — the Merger constitutes a Change of Control under the Plan.
3. Consequences of Change of Control. Section 12.1 of the Plan provides for single-trigger acceleration:
"Notwithstanding any provision of this Plan or any Award Agreement to the contrary, upon the occurrence of a Change of Control, all outstanding and unvested Awards shall immediately and automatically vest in full as of the date of the Change of Control (or, if the Change of Control is the result of a merger or similar transaction, as of the effective time of such transaction). Following such acceleration:
(a) All stock options that become vested pursuant to this Section 12.1 shall become immediately exercisable, and, if the Change of Control involves a merger in which the Company's common stock is converted into the right to receive cash consideration, each such option shall be cancelled and converted into the right to receive a cash payment equal to the excess, if any, of the per-share cash consideration over the per-share exercise price of such option, multiplied by the number of shares subject to such option.
(b) All restricted stock units that become vested pursuant to this Section 12.1 shall be settled in cash at the per-share cash consideration payable in the Change of Control transaction."
The practical effect of this provision is that at the effective time of the Merger, all 5,180,000 unvested equity awards (3,500,000 unvested stock options and 1,680,000 unvested RSUs) will immediately vest. Vested stock options will be cashed out at the per-share merger consideration of $15.79 (based on 47,500,000 fully diluted shares) less the applicable per-share exercise price. Vested RSUs will be converted into the right to receive $15.79 per share in cash. The aggregate cost of the acceleration is incorporated into the merger consideration payable to Cascadia's equityholders and is reflected in the fully diluted share count of 47,500,000 shares used to calculate the per-share merger consideration.
We note that certain stock options may have exercise prices that exceed $15.79 per share (i.e., they are "out of the money" or "underwater"). Such options, upon acceleration and cancellation, would yield no cash payment to the holder and would effectively be cancelled for no consideration. The precise number and exercise prices of underwater options should be confirmed with Cascadia's management and the Compensation Committee.
4. Timing and Strategy. The acceleration under the Plan is automatic and self-executing. It does not require any consent, approval, or affirmative action by the Plan administrator, the board of directors, or any individual participant. The acceleration occurs by operation of the Plan's terms at the effective time of the Merger. Accordingly, the primary workstreams related to this provision are confirmatory and tax-related:
(a) Tax Analysis. Hawthorne & Sable LLP (Douglas Kirwan and Elena Montague) is advising on the tax implications of the acceleration, with particular focus on the following issues:
(i) IRC § 280G — Golden Parachute Payments. The acceleration of equity awards in connection with a Change of Control may give rise to "excess parachute payments" under IRC § 280G for certain executive participants whose total change-of-control-related compensation (including acceleration of equity awards, severance payments, and other benefits) exceeds the applicable "base amount" threshold (generally, three times the executive's average annualized compensation over the five-year period preceding the Change of Control). If excess parachute payments arise, the company loses its tax deduction for the excess amount, and the recipient executive is subject to a 20% excise tax under IRC § 4999 in addition to regular income tax. Hawthorne & Sable is preparing a preliminary § 280G analysis for the key executive participants, including Messrs. Holmgren and Engel and Ms. Ramachandran.
(ii) IRC § 409A — Deferred Compensation. To the extent that any equity awards constitute "deferred compensation" for purposes of IRC § 409A, the settlement of such awards upon a Change of Control must comply with the specific Change of Control requirements of § 409A and the regulations thereunder. Hawthorne & Sable is reviewing the award agreements to confirm § 409A compliance.
(iii) Withholding Obligations. Cascadia (as the surviving corporation and employer) will be responsible for applicable income tax withholding and employment tax obligations in connection with the exercise and settlement of equity awards at closing. The withholding amounts should be calculated and integrated into the closing mechanics.
(b) Retention Planning. The single-trigger acceleration of all unvested equity awards at closing will eliminate the "golden handcuff" effect of unvested equity for Cascadia's employees post-closing. This raises employee retention concerns, particularly for key employees whose expertise and institutional knowledge are critical to the post-closing integration and ongoing operation of Cascadia's business. We recommend coordinating with the employment and benefits diligence workstream (and with Northgate's human resources team) to evaluate the need for post-closing retention arrangements, such as new equity grants under a Northgate equity plan, cash retention bonuses, or new employment agreements with key employees. This is a matter of particular importance with respect to Mr. Holmgren (CEO), Ms. Ramachandran (CTO), and Mr. Engel (CFO), each of whom is essential to the successful integration of Cascadia into Northgate's operations.
(c) Confirmation of Fully Diluted Share Count. We should confirm with Cascadia's management and legal counsel (WKB) that the fully diluted share count of 47,500,000 shares used to calculate the per-share merger consideration of $15.79 accurately reflects all outstanding equity awards (including awards that will accelerate at closing) and all other potentially dilutive securities. Any discrepancy in the fully diluted share count would affect the per-share merger consideration and should be identified and resolved prior to signing.
Risk Assessment: Low. The equity plan acceleration is a known, quantifiable cost that has been incorporated into the deal economics from the outset. The acceleration is automatic and does not require any third-party consent or approval. The associated tax analysis is underway at Hawthorne & Sable. The primary ongoing workstream relates to retention planning, which is a post-closing integration matter rather than a closing condition.
IV. Summary Table of Change of Control Provisions
The following table summarizes the change of control provisions identified in our review:
V. Additional Considerations
A. Interaction with Merger Agreement Provisions
The merger agreement, which is in advanced drafting with a target signing date of April 7, 2025, should address the change of control provisions identified in this memorandum in the following respects:
(a) Representations and Warranties. The merger agreement should include representations by Cascadia regarding the completeness and accuracy of its disclosure of all contracts, agreements, and instruments containing change of control, consent-to-assignment, or similar provisions that are triggered by the Merger. These contracts should be listed on the applicable disclosure schedule (anticipated to be Schedule 3.5 — Required Consents, or Schedule 3.14 — Material Contracts, depending on the final organization of the disclosure schedules). Cascadia should represent that the disclosure schedules set forth a complete and accurate list of all such agreements and that Cascadia has provided copies of all such agreements (including all amendments) to Northgate in the Data Room.
(b) Pre-Closing Covenants. The merger agreement should include a covenant requiring Cascadia to use commercially reasonable efforts to obtain all third-party consents identified on the applicable disclosure schedule prior to closing. The scope and limitations of this covenant should be carefully negotiated, including:
(i) whether Cascadia is required to offer commercial concessions (e.g., price reductions, extended terms, enhanced SLAs) to obtain consents, and if so, the parameters of any concessions that Cascadia is authorized to offer without Northgate's prior written approval;
(ii) whether Cascadia is required to incur material costs or expenses in connection with obtaining consents (e.g., consent fees payable to counterparties);
(iii) whether Northgate has the right to participate in or direct the consent solicitation process; and
(iv) the information-sharing and coordination obligations between Cascadia and Northgate with respect to consent efforts.
(c) Closing Conditions. The merger agreement should specify which third-party consents, if any, are conditions to the obligation of each party to close the Merger. This is a significant negotiating point. From Northgate's perspective, it may be desirable to include the Pacific Ridge consent as a closing condition, given the magnitude of the revenue exposure. From Cascadia's perspective, making the Pacific Ridge consent a closing condition effectively gives Northgate an option to walk away from the Transaction if the consent is not obtained, which Cascadia may view as unacceptable deal risk. One potential compromise is to include the Pacific Ridge consent as a condition to Northgate's closing obligation but to provide that the condition may be waived by Northgate in its sole discretion, thereby giving Northgate the flexibility to close the Transaction without the Pacific Ridge consent if it determines that the risk is acceptable. We recommend discussing this issue with the full deal team and with WKB during the next round of merger agreement negotiations.
(d) Risk Allocation. To the extent that any identified consent is not obtained prior to cl

MEMORANDUM

MATTER NO.: 1022-00006

BILLING NO.: 78432.001

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