CALDERWOOD & HARKNESS LLP Attorneys at Law
299 Park Avenue, 42nd Floor New York, NY 10171
Telephone: (212) 506-7000 Facsimile: (212) 506-7001 www.calderwoodharkness.com
June 4, 2024
Elaine Whitford Senior Vice President & Group General Counsel Northgate Telecommunications PLC 600 Lexington Avenue, 38th Floor New York, NY 10022
Re: Engagement of Calderwood & Harkness LLP by Northgate Telecommunications PLC — Negotiation and Drafting of Executive Employment Agreement Matter Number: 1022-00004
Dear Ms. Whitford:
We are pleased that Northgate Telecommunications PLC has selected Calderwood & Harkness LLP to serve as its outside counsel in connection with the matter described in this letter. This engagement letter sets forth the terms and conditions upon which the Firm will undertake this representation. We ask that you review this letter carefully, and, if the terms are acceptable, that you confirm Northgate's agreement by executing and returning the enclosed duplicate original at your earliest convenience.
1. Engagement and Scope of Representation
Calderwood & Harkness LLP ("C&H," the "Firm," "we," or "us") is pleased to confirm its engagement by Northgate Telecommunications PLC ("Northgate," "NTP," or the "Company"), a public limited company organized under the laws of England and Wales (registered number 07381264), with its principal United Kingdom offices located at 45 Canary Wharf Tower, One Canada Square, London E14 5AB, United Kingdom, and its United States operations headquarters located at 600 Lexington Avenue, 38th Floor, New York, NY 10022.
C&H is engaged to serve as outside counsel to Northgate in connection with the negotiation, structuring, drafting, and finalization of an executive employment agreement for the Company's incoming Chief Executive Officer, Marcus Elliot Harding ("Mr. Harding"). The engagement is expected to encompass a range of advisory, drafting, and negotiation activities as described more fully below.
The scope of this engagement includes the following:
(a) Preparation and Negotiation of Employment Agreement. The preparation and negotiation of a term sheet and definitive CEO employment agreement (the "Employment Agreement") between Northgate Telecommunications US, Inc. ("NTP US"), a wholly-owned Delaware subsidiary of Northgate Telecommunications PLC, and Mr. Harding. This includes the drafting of all ancillary exhibits, schedules, and attachments thereto as may be necessary or appropriate.
(b) Compensation Structure Advisory. Advising the Company on the design and structuring of Mr. Harding's compensation arrangements, including but not limited to: base salary, annual cash incentive opportunity (including performance metrics and payout curves), long-term equity incentive awards (including any stock options, restricted stock units, performance share units, or other equity-based awards to be granted under NTP's existing or proposed equity incentive plans), sign-on bonus or make-whole arrangements intended to compensate Mr. Harding for compensation forfeited upon departure from his current employer, and benefit and perquisite provisions (including retirement plan participation, supplemental executive retirement arrangements, relocation benefits, and similar matters).
(c) Termination and Severance Provisions. Advising on provisions governing termination of employment and related severance obligations, including provisions applicable to termination without cause, resignation for good reason, termination for cause, death and disability, and voluntary resignation. This includes the structuring of change in control protections, including double-trigger and modified single-trigger severance arrangements, and the drafting of release and cooperation requirements applicable upon any qualifying termination.
(d) Restrictive Covenant Provisions. Advising on the design, drafting, and enforceability of post-employment restrictive covenant provisions, including non-competition covenants, employee and customer non-solicitation covenants, non-disparagement obligations, and confidentiality and proprietary information provisions. This advisory work will take into account the evolving legal landscape regarding non-compete enforceability under federal and applicable state law, including any guidance issued by the Federal Trade Commission.
(e) Tax Analysis — Section 280G and Section 409A. Analysis of Section 280G "parachute payment" issues arising in connection with any change in control severance provisions, including the evaluation of potential excise taxes under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), and the structuring of any "best net" cutback or gross-up provisions, as applicable. The Firm will also advise on compliance with the requirements of Section 409A of the Code as they relate to the structure and timing of compensation payments and benefits under the Employment Agreement, including the application of the short-term deferral exception, the separation pay exception, and other applicable exemptions.
(f) Coordination with UK Employment Counsel. Coordination with Northgate's UK employment counsel, Moorfield Bates LLP (1 Moorgate, London EC2R 6AB, United Kingdom; lead partner: Simon Aldridge), regarding the proposed secondary UK service agreement between Northgate Telecommunications PLC and Mr. Harding and cross-border employment structuring matters, including the allocation of duties, compensation, and benefits between the US Employment Agreement and any UK service agreement, and related tax equalization or social security considerations.
(g) Corporate Governance and Proxy Advisory Considerations. Advising on corporate governance and proxy advisory considerations relevant to the CEO compensation package, including compliance with the UK Corporate Governance Code (as published by the Financial Reporting Council), applicable Cobalt Ridge Solutions ("ISS") and Tarrant Partners LLC guidelines regarding executive pay, and institutional shareholder engagement considerations. This advisory work is intended to assist the Company in anticipating and addressing potential shareholder concerns regarding the size, structure, and disclosure of the CEO compensation package, though the Firm's role does not extend to the preparation of regulatory filings or proxy statement disclosures.
(h) Coordination with Company Advisors. Coordination as necessary with the Company's independent compensation consultant, Whitmore Hobson LLP, regarding market benchmarking data, pay-for-performance analyses, and the design of compensation program elements, and with the Company's auditors, Galloway & Partners, regarding equity compensation accounting matters, including the application of ASC 718 and related financial reporting considerations, in each case at the direction of and as authorized by the Company.
(i) Negotiation with Counterparty Counsel. Negotiation of the term sheet, Employment Agreement, and all related documents with counsel to Mr. Harding, Hargrove & Liddell LLP (51 Madison Avenue, 30th Floor, New York, NY 10010; lead partner: Victoria Hargrove), including the exchange of drafts, the negotiation of substantive terms, and the resolution of open issues through the execution of the definitive Employment Agreement.
(j) Related Matters. Such other tasks as may be reasonably related to the foregoing and as may be mutually agreed upon by the Firm and the Company from time to time.
Scope Exclusions. This engagement does not include, and the Firm is not being retained to provide, representation or advice in connection with: (i) any matters of United Kingdom employment law, which are being handled exclusively by Moorfield Bates LLP; (ii) the preparation or filing of any reports, registration statements, proxy statements, or other documents with the U.S. Securities and Exchange Commission ("SEC"), the UK Financial Conduct Authority ("FCA"), or any other regulatory body; (iii) the preparation of any tax returns, tax elections, or similar filings on behalf of the Company or Mr. Harding; or (iv) any litigation, arbitration, or dispute resolution proceeding, whether actual or threatened. Any expansion of the scope of this engagement beyond the matters described above will be confirmed in a separate writing executed by both parties.
2. Engagement Team
The following attorneys will be primarily responsible for the provision of legal services in connection with this engagement:
Ms. Vasquez, as Responsible Partner, will have overall supervisory responsibility for the engagement and will serve as the primary point of contact for all communications between the Firm and the Company. Mr. Crawford, as Billing Partner, will have administrative responsibility for billing and financial matters related to the engagement. Mr. Underwood, as Lead Associate, will have day-to-day responsibility for drafting, research, and coordination of work product, and Ms. Archer will assist with drafting, research, and related tasks as needed.
From time to time, other attorneys, paralegals, or professional staff of the Firm may assist with specific aspects of the engagement. The Company will be notified in advance of any material changes to the composition of the engagement team, including the addition of any new timekeeper whose anticipated involvement is expected to be substantial. In the event that a matter arises within the scope of this engagement that would benefit from consultation with attorneys in other practice areas of the Firm (for example, tax, ERISA, or corporate governance), we will advise the Company and obtain its authorization before engaging such additional resources on this matter.
3. Client Identification
It is important that the identity of our client in this engagement be clearly understood. The client in this engagement is Northgate Telecommunications PLC, together with its subsidiary Northgate Telecommunications US, Inc., to the extent that NTP US is a party to the Employment Agreement that is the subject of this engagement. References in this letter to "the Company" or "Northgate" shall be construed accordingly.
The Firm does not represent, and this engagement does not create an attorney-client relationship with, any individual director, officer, or employee of the Company in his or her personal capacity in connection with this matter. To the extent that the Firm communicates with directors, officers, or employees of the Company (including members of the Board of Directors, the Compensation Committee, or the Nominations Committee), such communications are made on behalf of the Company as an entity and are subject to the Company's attorney-client privilege.
The Firm does not represent Mr. Harding in connection with this engagement. Mr. Harding is represented by his own personal counsel, Hargrove & Liddell LLP. Communications between the Firm and Hargrove & Liddell LLP will be conducted on behalf of the Company in the ordinary course of negotiating the Employment Agreement, and such communications do not create or imply any attorney-client or fiduciary relationship between the Firm and Mr. Harding.
4. Fees and Billing Arrangements
4.1 Hourly Rates
Professional fees for legal services rendered in connection with this engagement will be charged on an hourly basis at the following standard rates for the named timekeepers:
The rates set forth above are the Firm's current standard rates for the named timekeepers and reflect the rates in effect as of the date of this engagement letter. These rates are subject to adjustment on an annual basis, typically effective as of January 1 of each calendar year, in accordance with the Firm's standard rate-setting process. The Company will receive advance written notice of any rate adjustments at least thirty (30) days prior to the effective date of any such adjustment. Any rates applicable to additional timekeepers assigned to this engagement will be communicated to the Company at the time of their assignment.
All professional time is recorded in increments of one-tenth (1/10th) of an hour (i.e., six-minute increments). Each time entry will reflect the date on which the work was performed, the identity of the timekeeper, the amount of time spent, and a brief description of the activity performed.
4.2 Monthly Billing
The Firm will issue invoices to the Company on a monthly basis, generally within the first ten (10) business days following the close of each calendar month in which services are rendered or disbursements are incurred. Each invoice will reflect: (a) professional fees, itemized by timekeeper and including, for each entry, the date of the activity, the time expended, and a narrative description of the work performed; and (b) disbursements and out-of-pocket expenses incurred during the applicable billing period, itemized by category.
Payment of each invoice is due within thirty (30) days of the date of the invoice. Invoices should be remitted to Calderwood & Harkness LLP at the address set forth in the letterhead above, or by wire transfer to such account as the Firm may designate on its invoices. In the event that the Company has questions or concerns regarding any invoice, we encourage the Company to contact Mr. Crawford or Ms. Vasquez promptly so that any issues may be addressed in a timely manner.
The Firm reserves the right to charge interest on any amounts that remain unpaid more than sixty (60) days after the invoice date, at the lesser of one and one-half percent (1.5%) per month or the maximum rate permitted by applicable law. The Firm will provide written notice to the Company before any interest charges are assessed.
4.3 Disbursements. In addition to professional fees, the Company will be responsible for the reimbursement of reasonable out-of-pocket disbursements and expenses incurred by the Firm in connection with this engagement. Disbursements may include, but are not limited to, the following categories of expense:
(a) Travel expenses, including airfare, ground transportation, hotel accommodations, and meals incurred in connection with travel reasonably necessary for the engagement (e.g., meetings with Company representatives, negotiations with counterparty counsel, or attendance at Compensation Committee meetings);
(b) Overnight courier and delivery charges;
(c) Long-distance telephone and videoconference charges;
(d) Charges for electronic legal research services, including Westmark Data Systems, Sundial Solutions, and comparable databases;
(e) Photocopying and document reproduction charges;
(f) Meal expenses incurred in connection with working sessions or travel related to the engagement; and
(g) Filing fees, notarization fees, or similar charges, if applicable.
All disbursements will be itemized on each monthly invoice. The Firm will endeavor to keep disbursements reasonable and consistent with the nature and requirements of the engagement. For any single disbursement expected to exceed $2,500, the Firm will seek prior approval from the Company before incurring such expense, except in circumstances where delay would be prejudicial to the Company's interests.
5. Retainer
Upon execution of this engagement letter, the Company agrees to pay to the Firm a retainer in the amount of Seventy-Five Thousand Dollars ($75,000.00). The retainer shall be deposited into the Firm's client trust account (an Interest on Lawyers' Account, or "IOLTA" account, maintained in accordance with the requirements of the New York Rules of Professional Conduct) and held in trust for the benefit of the Company throughout the duration of the engagement.
The retainer will not be applied to or credited against any interim invoices issued during the course of the engagement. Instead, the retainer will be applied as a credit against the final invoice issued by the Firm upon the conclusion or termination of the engagement. In the event that the retainer exceeds the amount of the final invoice (after application of any credits or adjustments), the excess will be refunded to the Company promptly, and in any event within thirty (30) days of the conclusion or termination of the engagement.
In the event that fees and disbursements incurred during the engagement substantially exceed the retainer amount (which the parties anticipate may occur given the complexity and anticipated duration of the negotiation process), the retainer will be applied to the final invoice only, and any remaining balance will be due and payable in accordance with the terms set forth in Section 4.2 above.
6. Conflicts of Interest
Prior to undertaking this engagement, the Firm conducted a comprehensive conflicts of interest check in accordance with its standard conflicts clearance procedures and the applicable provisions of the New York Rules of Professional Conduct. The conflicts check encompassed the following parties and entities:
• Northgate Telecommunications PLC (and its subsidiaries, including Northgate Telecommunications US, Inc.)
• Marcus Elliot Harding (individually)
• Marlowe Asset Management Digital Holdings, Inc. (Mr. Harding's current employer; NYSE: VDHI; 200 Technology Way, Suite 4000, San Jose, CA 95110)
• Hargrove & Liddell LLP (counsel to Mr. Harding)
The conflicts check was completed on June 3, 2024. Based on the information available to the Firm as of that date, no conflicts of interest or potential conflicts of interest were identified that would preclude the Firm from undertaking this engagement or that would require disclosure to, or consent from, the Company.
The Firm maintains an ongoing obligation to monitor for conflicts throughout the duration of this engagement. Should any conflict of interest or potential conflict of interest arise during the course of the engagement — whether as a result of the Firm's acceptance of a new client or matter, changes in the circumstances of this engagement, or otherwise — the Firm will promptly notify the Company and take appropriate steps in accordance with the applicable provisions of the New York Rules of Professional Conduct, including, where appropriate, seeking informed written consent from the Company or withdrawing from the representation.
7. Confidentiality
All information, documents, and communications provided by the Company to the Firm in connection with this engagement, including but not limited to information regarding the Company's business, financial condition, strategic plans, compensation practices, and the terms under negotiation for the Employment Agreement, will be treated by the Firm as strictly confidential. Such information is and shall remain subject to the protections of the attorney-client privilege and/or the work-product doctrine, to the fullest extent applicable under law.
The Firm will not disclose any confidential information received from the Company to any third party without the Company's prior written consent, except: (a) as required by applicable law, court order, or regulatory requirement; (b) as necessary to perform the services contemplated by this engagement, including but not limited to communications with counterparty counsel, Hargrove & Liddell LLP, in connection with the negotiation of the Employment Agreement; or (c) as directed by the Company, including communications and coordination with Moorfield Bates LLP (the Company's UK employment counsel), Whitmore Hobson LLP (the Company's independent compensation consultant), and Galloway & Partners (the Company's auditors), in each case to the extent reasonably necessary in furtherance of the objectives of this engagement and at the Company's express direction.
The Company acknowledges and understands that the negotiation process inherently involves the disclosure of certain information to counterparty counsel, including proposed terms, compensation data, and related materials, as part of normal and customary negotiation activities. The Firm will exercise professional judgment in determining the scope and nature of disclosures made to counterparty counsel during the negotiation process, and will consult with the Company regarding any disclosures that, in the Firm's judgment, involve particularly sensitive or material information.
The obligations of confidentiality set forth in this Section 7 shall survive the conclusion or termination of this engagement.
8. Termination of Engagement
Either party may terminate this engagement at any time, with or without cause, by providing written notice to the other party. In the case of termination by the Firm, such termination shall be subject to the Firm's obligations under the applicable Rules of Professional Conduct, including the obligation to take reasonable steps to avoid prejudice to the Company's interests.
Upon termination of the engagement for any reason:
(a) The Company will be responsible for the payment of all professional fees and disbursements incurred through the effective date of termination, subject to the application of the retainer as described in Section 5 above.
(b) The Firm will take reasonable steps to protect the Company's interests during the transition period following termination, including but not limited to the timely return or transfer of all client files, documents, and work product to the Company or to successor counsel designated by the Company.
(c) The Firm will cooperate reasonably with successor counsel to facilitate an orderly transition of the engagement.
The termination of this engagement shall not affect the Firm's obligations of confidentiality under Section 7, which shall survive such termination.
9. Document Retention
Upon the conclusion of this engagement, the Firm will retain copies of the engagement file, including correspondence, memoranda, drafts, research materials, and other documents generated in connection with the representation, in accordance with the Firm's standard document retention policy. The Firm's current retention period for closed matter files is ten (10) years from the date of the final invoice, unless a shorter or longer period is required by applicable law or regulation.
Any original documents provided by the Company to the Firm during the course of this engagement will be returned to the Company upon written request. The Company is encouraged to request the return of any such original documents promptly upon the conclusion of the engagement.
Prior to the destruction of any files relating to this engagement in accordance with the Firm's retention schedule, the Firm will provide written notice to the Company at the last known address in the Firm's records, affording the Company a reasonable opportunity (not less than sixty (60) days) to request delivery of the files prior to their destruction.
10. Limitation of Engagement
This engagement is limited in scope to the matters described in Section 1 of this letter. The Firm has not been retained to provide, and does not undertake to provide, legal advice or representation to the Company in connection with any matter that falls outside the scope of this engagement, unless and until the parties agree in writing to expand the scope of the engagement or enter into a separate engagement for such purpose.
The Firm's legal advice and work product are based upon the laws, regulations, and judicial and administrative authorities in effect at the time such advice is rendered, and are prepared with reference to the specific facts and circumstances of the Company's situation as known to the Firm at the time. The Firm assumes no obligation to update or supplement its advice to reflect subsequent changes in law or fact, except to the extent that such changes come to the Firm's attention during the active course of this engagement and are material to the matters within the scope of the engagement.
The Firm makes no guarantee, warranty, or prediction regarding the outcome of any negotiation, the ultimate execution of the Employment Agreement, or the enforceability of any particular term or provision thereof. While the Firm will exercise its best professional judgment in advising the Company and advocating for the Company's interests in negotiations with counterparty counsel, the final terms of any Employment Agreement will necessarily reflect the outcome of a negotiation process involving multiple parties with differing interests and objectives.
11. Governing Law
This engagement letter and the relationship between the Firm and the Company arising out of or in connection with this engagement shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to its conflict of laws principles. Any dispute arising out of or relating to this engagement letter or the services provided hereunder shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the County of New York, or the United States District Court for the Southern District of New York, and each party hereby consents to the personal jurisdiction of such courts.
12. Communication
Unless otherwise agreed, communications regarding this engagement should be directed to the following individuals:
For the Firm:
Renata Vasquez, Partner Calderwood & Harkness LLP 299 Park Avenue, 42nd Floor New York, NY 10171 Telephone: (212) 506-7124
Email: rvasquez@calderwoodharkness.com
For the Company:
Elaine Whitford Senior Vice President & Group General Counsel Northgate Telecommunications PLC 600 Lexington Avenue, 38th Floor New York, NY 10022 Telephone: (212) 871-4500
Email: e.whitford@northgatetelecom.com
The Company and the Firm each agree to respond to communications from the other in a timely manner. The Firm will provide the Company with regular status updates on the progress of the engagement at such intervals as the Company may reasonably request. The Company agrees to provide the Firm with prompt access to documents, information, and personnel as may be reasonably necessary for the Firm to perform the services contemplated by this engagement.
13. Acceptance and Execution
We are grateful for the opportunity to represent Northgate Telecommunications PLC in connection with this matter. If the terms and conditions set forth in this engagement letter are acceptable to the Company, we respectfully request that you confirm the Company's agreement by signing and dating this letter in the space provided below and returning the executed original to the undersigned at your earliest convenience. A duplicate original of this engagement letter is enclosed for the Company's records.
This engagement letter, together with any written amendments or supplements agreed to by the parties, constitutes the entire agreement between the Firm and the Company with respect to the subject matter hereof and supersedes all prior or contemporaneous oral or written communications, proposals, or agreements relating to the engagement described herein.
We look forward to working with you and the Northgate team on this important matter. Please do not hesitate to contact me if you have any questions regarding the terms of this engagement or if you would like to discuss any aspect of the representation.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Name: Renata Vasquez
Title: Partner
Date: ________
ACCEPTANCE AND ACKNOWLEDGMENT
The undersigned, on behalf of Northgate Telecommunications PLC, hereby confirms that she has read and understood the terms and conditions set forth in this engagement letter, and that Northgate Telecommunications PLC agrees to be bound by such terms and conditions. The undersigned represents and warrants that she has the authority to execute this engagement letter on behalf of the Company.
AGREED AND ACCEPTED:
NORTHGATE TELECOMMUNICATIONS PLC
By: ________
Name: Elaine Whitford
Title: Senior Vice President & Group General Counsel
Date: June 4, 2024
Enclosure: Duplicate original of this engagement letter
cc: Bernard Crawford, Partner, Calderwood & Harkness LLP Priya Narayanan, Chief People Officer, Northgate Telecommunications PLC (if authorized by Ms. Whitford)
| Attorney | Role | Practice Group / Office |
| Renata Vasquez | Responsible Partner | Labor & Employment, New York |
| Bernard Crawford | Billing Partner | Labor & Employment, New York |
| James Underwood | Lead Associate | Labor & Employment, New York |
| Devon Archer | Working Associate | Labor & Employment, New York |
| Timekeeper | Position | Hourly Rate |
| Renata Vasquez | Partner | $1,650.00 |
| Bernard Crawford | Partner | $1,575.00 |
| James Underwood | Associate | $895.00 |
| Devon Archer | Associate | $725.00 |