Contract analysis

From: Renata Vasquez <rvasquez@calderwoodharkness.com> To: Victoria Hargrove <vhargrove@hargroveliddell.com> Cc: James Underwood <junderwood@calderwoodharkness.com> Date: Mon, 22 Jul 2024 04:17:00 -0000 Subject: Northgate Telecommunications PLC — Draft Executive Employment Agreement for Marcus Elliot Harding

I hope this message finds you well. I am writing in connection with the proposed Executive Employment Agreement between Northgate Telecommunications US, Inc. (as employer) and Marcus Elliot Harding (the "Agreement").

On behalf of Northgate, I want to thank you and your team for the productive term-sheet discussions over the past several weeks. The five negotiation calls from June 24 through July 19 were substantive and constructive, and we believe they have laid a solid foundation for the definitive agreement. With that groundwork in place, Calderwood & Harkness is pleased to transmit, on behalf of Northgate, the first full draft

Please find attached the Executive Employment Agreement — Draft 1 (employment-agreement-draft-1.docx), dated July 22, 2024. As discussed, the Agreement is between Northgate Telecommunications US, Inc., the wholly-owned US subsidiary of Northgate Telecommunications PLC, and Mr. Harding, and is governed by New York law. This is consistent with the dual-contract structure we have discussed throughout the term-sheet proc

Draft 1 is a comprehensive employment agreement containing all substantive provisions. For ease of reference, I have summarized the principal terms below:

- **Term (Section 2):** Five-year initial term commencing October 1, 2024 and expiring September 30, 2029, with automatic one-year renewals unless either party provides 180 days' prior written notice of non-renewal.

- **Position and Duties (Section 3):** Group Chief Executive Officer of Northgate Telecommunications PLC and its subsidiaries, reporting to the Board of Directors.

- **Compensation (Section 4):** - Base salary: $1,750,000 per annum. - Target annual incentive: 175% of base salary ($3,062,500), with a maximum payout of 300% of base salary ($5,250,000). - Annual long-term incentive award: $9,000,000 in grant-date value (60% performance share units / 40% restricted stock units).

- **Sign-On Arrangements (Section 5):** Designed to make Mr. Harding whole for forfeited equity at Marlowe Asset Management: - Cash sign-on bonus of $5,000,000, subject to a 24-month repayment clawback. - Sign-on equity grant of $18,400,000 in aggregate grant-date value, consisting of $12,000,000 in RSUs vesting ratably over three years and $6,400,000 in PSUs cliff-vesting at the end of year three.

- **Benefits (Section 6):** 401(k) plan with 6% employer matching contribution; supplemental executive retirement plan contribution of $250,000 per year; and executive perquisites as detailed in the draft.

- **Termination Without Cause / Resignation for Good Reason (Non-CIC) (Section 8):** Severance equal to 2x the sum of base salary and target annual bonus ($9,625,000); pro-rata annual bonus for the year of termination; 18 months of employer-paid COBRA continuation coverage; and 12 months of accelerated vesting of outstanding equity awards.

- **Change in Control (Section 7):** Double-trigger provisions. CIC severance equal to 2.5x the sum of base salary and target annual bonus ($12,031,250); full acceleration of all unvested equity awards; 24 months of employer-paid COBRA continuation coverage; and a best-net cutback under Section 280G of the Internal Revenue Code (no tax gross-up).

- **Restrictive Covenants (Section 9):** 24-month post-termination non-competition covenant (worldwide; activity-based, covering companies deriving more than 15% of revenue from telecommunications services, telecommunications infrastructure, or enterprise SaaS platforms serving telecommunications operators); 24-month non-solicitation of employees and customers; 6-month garden leave period at base salary; and mutual n

- **Additional Provisions:** Indemnification and D&O insurance coverage; Section 409A compliance provisions; and customary general provisions.

I want to be transparent that certain provisions in the draft reflect Northgate's positions on items that remain open from our term-sheet discussions. I would like to flag two in particular:

*Change in Control (Section 7).* The draft incorporates the CIC definition that we reached agreement on during our July 8 call—namely, acquisition of more than 50% of outstanding voting securities, a merger or consolidation in which NTP shareholders retain less than 50% of the surviving entity, or a sale of substantially all assets. However, the draft does not include the Board turnover trigger (i.e., a change in a m

*Restrictive Covenants (Section 9).* The draft maintains a 24-month worldwide non-compete with the activity-based restriction described above, together with the 6-month garden leave at base salary, consistent with Northgate's opening position. We are aware that Hargrove & Liddell has advocated for a shorter non-compete duration of 12 months and a narrower geographic scope, and we understand these remain items for dis

I want to emphasize that Draft 1 incorporates all points of agreement reached during our five term-sheet calls, including the agreed compensation elements—base salary, bonus targets and structure, annual LTI, sign-on arrangements, SERP, and perquisites—faithfully and in full.

We invite you and your team to review the draft and provide a redline with comments at your convenience. Once Hargrove & Liddell has had an opportunity to complete its review, we would be happy to schedule a call to discuss the draft and work through any open items. Given the proposed October 1, 2024 start date—and the possible adjustment to November 1 that was discussed during our July 19 call—I would suggest that t

Northgate remains genuinely enthusiastic about the prospect of Mr. Harding joining as Group CEO and is committed to working constructively toward a definitive agreement that works for all parties. Please do not hesitate to reach out if you or Nathan have any questions in the meantime. I am available by phone or email at any time.

**Renata Vasquez** Partner, Labor & Employment Calderwood & Harkness LLP 299 Park Avenue, 42nd Floor New York, NY 10171 T: (212) 558-4000 | D: (212) 558-4173 E: rvasquez@calderwoodharkness.com

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