**ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL**
Dear Elaine,
I wanted to get you my assessment of yesterday's meeting as quickly as possible so that you and Geoffrey have the benefit of it before any further discussions with the Board. This communication is protected by attorney-client privilege and should not be forwarded or shared beyond the Remuneration Committee and those directors with a need to know. James Underwood is preparing detailed meeting notes that will be circulated separately.
**I. Meeting Overview**
As you know, the principals meeting took place yesterday, August 26, at 600 Lexington Avenue, 38th Floor (NTP US Operations HQ), and ran approximately two and a half hours. In attendance for Northgate were Dame Philippa Thornton-Hale, Geoffrey Stanton, you, and me. Marcus Elliot Harding attended personally, accompanied by Victoria Hargrove of Hargrove & Liddell LLP.
**II. Meeting Dynamics**
The tone at the outset was respectful, constructive, and at times genuinely encouraging. Both sides acknowledged the mutual interest in finding a path to a definitive agreement. Dame Philippa and Harding had a notably productive exchange about Northgate's strategic vision — the convergence strategy, the enterprise SaaS buildout, and the transatlantic operating model. The cultural and strategic alignment between Harding and Northgate was, frankly, as strong as I have seen in any CEO recruitment process. Harding clearly wants this role, and the Board clearly wants him in it.
However, when the conversation turned to the two remaining open issues — change in control severance and the restrictive covenant provisions — the dynamic shifted markedly. Both sides became more positional, and the collaborative tone gave way to what I can only describe as carefully polite entrenchment.
**III. Assessment of Impasse #1: Change in Control Provisions**
Three sub-issues remain unresolved within the CIC package. I will address each in turn.
*CIC Multiplier.* Harding stated personally, explicitly, and without equivocation that a 3x multiplier on base salary plus target bonus ($14,437,500) is "non-negotiable." He cited his existing arrangement at Marlowe Asset Management Digital Holdings — which provides 3x base plus bonus with full vesting acceleration — as the relevant benchmark and made clear he will not accept a step-down. Northgate's position remains at 2.5x ($12,031,250). The gap is $2,406,250. I do not believe Harding is posturing on this point; his body language and the specificity of his statements suggest this is a genuine line in the sand.
*Tax Gross-Up vs. Best-Net Cutback.* Harding demanded a full Section 280G excise tax gross-up. This is a significant economic exposure. Based on the preliminary 280G analysis we commissioned through Whitmore Hobson, the numbers are as follows:
- Base amount: $7,840,000 - Safe harbor limit (3x base amount minus $1): $23,519,999 - Estimated total parachute payments under Harding's proposal: approximately $38.2 million - Excess parachute payment: approximately $30.36 million - Estimated excise tax (20%): approximately $6,072,000 - Estimated gross-up exposure to Northgate (including income tax gross-up on the gross-up): $4.2 million to $6.8 million, depending on final parachute payment calculations and applicable state tax rates
Here is the critical point, however: Whitmore Hobson's analysis also indicated that Harding's after-tax position under a best-net cutback versus full payment plus excise tax is roughly equivalent, with the cutback actually slightly favored in most modeled scenarios. In other words, a best-net cutback would not meaningfully reduce what Harding takes home — the gross-up demand is largely a matter of principle, perceived status, and optics rather than real economics. Victoria Hargrove acknowledged this during the meeting when I walked through the analysis, but she indicated that Harding views the gross-up as a standard protection at his level and is unwilling to be the executive who "accepted less."
*Board Turnover Trigger.* Harding continues to insist on inclusion of a change in Board composition trigger — specifically, that a majority of directors being replaced within any 12-month period would constitute a change in control for purposes of the agreement. Geoffrey was direct and unequivocal in rejecting this. He explained, correctly, that this trigger is inconsistent with UK corporate governance norms and the UK Corporate Governance Code, which contemplates annual re-election of all directors and regular Board refreshment. Including such a trigger would effectively give Harding a veto over Board succession planning and could create perverse incentives. Both sides agreed on the other three CIC triggers (acquisition of >50% voting securities; merger or consolidation resulting in less than 50% post-transaction shareholder retention; sale of substantially all assets). The Board turnover trigger remains a binary disagreement with no obvious middle ground.
*Double Trigger.* For completeness, both sides continue to agree on double-trigger CIC severance — i.e., a qualifying termination (without cause or for good reason) must follow within 24 months of the change in control event. This is not in dispute.
**IV. Assessment of Impasse #2: Restrictive Covenant Provisions**
The restrictive covenant discussion was more nuanced but equally unresolved.
*Non-Compete Duration.* Northgate's current position (as reflected in Draft 2 of the employment agreement) is 18 months post-termination, reduced from the initial 24-month proposal. Harding insists on 12 months, matching his existing Marlowe Asset Management non-compete. The gap is six months.
*Non-Compete Geographic Scope.* Northgate moved to North America and Western Europe in Draft 2, down from worldwide. Harding accepted this scope — but only if paired with the 12-month duration. He will not accept the narrower geography combined with the longer period.
*Non-Compete Activity Definition.* This is a meaningful structural disagreement. Harding's team insists on a scheduled-competitor approach — a fixed list of eight named companies (which Hargrove indicated she would provide in writing). Northgate's current draft uses a revenue-based test: any company deriving more than 15% of its revenue from telecom services, telecom infrastructure, or enterprise SaaS platforms serving telecom operators. Hargrove argued, not unreasonably, that the revenue-based test is overbroad and could sweep in companies that are not genuine competitive threats — particularly large diversified technology companies with telecom divisions that represent a small fraction of their overall operations. There is some validity to this concern, and it is also a point that a court reviewing enforceability would likely scrutinize.
*Garden Leave.* Northgate proposed six months of garden leave at base salary only ($1,750,000 annualized / $875,000 for the six-month period). Harding demands 12 months at full compensation (base plus pro-rata target bonus), and — critically — insists that the garden leave and non-compete run concurrently. Under his proposed structure, a 12-month non-compete period that runs concurrently with 12 months of garden leave would result in zero post-garden-leave restrictive period. This would effectively give Northgate no meaningful non-compete protection at all, since Harding would be compensated for the entire restricted period and could begin competing the day garden leave ends.
*Non-Solicitation.* Northgate proposed 24 months covering both employees and customers/clients. Harding countered with 18 months, employees only — no customer non-solicitation. This gap is meaningful but I view it as bridgeable if the primary non-compete issues are resolved. It is not the issue that will make or break this deal.
*A Note on Enforceability.* I want to remind you of the internal analysis we prepared in June regarding New York law enforceability concerns. Longer and broader non-competes face increasing judicial skepticism in New York, and there is pending legislation that, if enacted, could significantly restrict or ban post-employment non-competes in the state. Our previously recommended fallback position — 18-month non-compete, North America and Western Europe, a narrower activity definition, and 6-month garden leave running concurrently with the first six months of the non-compete period — remains C&H's view of the most defensible and enforceable structure. I want to be transparent, however, that even this recommended structure is still wider than what Harding is willing to accept.
**V. Items Not in Dispute / Already Resolved**
For context, I want to note that all other material economic terms were agreed during the July 8 negotiation call and remain settled:
- Base salary: $1,750,000 - Target annual bonus: 175% of base ($3,062,500); maximum bonus: 300% of base ($5,250,000) - Sign-on cash: $5,000,000 with 24-month repayment clawback - Sign-on equity: $18,400,000 ($12 million in RSUs vesting ratably over three years; $6.4 million in PSUs cliff vesting at three years) - Annual long-term incentive: $9,000,000 (60% PSUs / 40% RSUs) - SERP contribution: $250,000 per year - Perquisites package: agreed - Non-CIC severance structure: 2x base plus bonus (though Harding's position remains at 2.5x — this was not the focus of yesterday's discussion and I do not treat it as a primary impasse at this time) - Mutual non-disparagement: agreed in principle - Dual-contract structure: primary New York-governed agreement with NTP US, secondary UK service agreement with NTP PLC — agreed in concept, with Moorfield Bates coordinating on the UK side
These are significant and favorable terms. The package as a whole is among the most competitive CEO compensation arrangements I have worked on. That makes the impasse on these remaining points all the more frustrating.
**VI. Overall Likelihood Assessment**
Elaine, I owe you a candid assessment, and here it is: I believe the likelihood of reaching a definitive agreement with Marcus Harding is **low**.
I do not say this lightly. I have been negotiating executive employment agreements for twenty-two years, and I am generally skeptical when counterparties use the word "non-negotiable" — in my experience, it is often a negotiating tactic. But Harding used that word with respect to the 3x CIC multiplier, the full gross-up, and the Board turnover trigger, and he did so with a calm certainty that I found credible. Victoria Hargrove reinforced this assessment after the meeting. She pulled me aside briefly and told me, privately, that Harding would walk away from the opportunity rather than accept less on these points. She said this without drama or bluster, which made it more convincing, not less.
On the restrictive covenant front, the gap is meaningful but could theoretically be bridged with creative structuring — concurrent garden leave, a hybrid activity definition, some compromise on duration. However, Hargrove made clear that her client has linked concessions on restrictive covenants to corresponding movement on the CIC terms. Harding's team views this as a package negotiation, and they will not give ground on the covenants unless Northgate moves on CIC.
On Northgate's side, Geoffrey was clear during the meeting — and reiterated to me afterward — that the Board cannot accept terms that would likely trigger a negative say-on-pay recommendation from ISS or draw opposition from major institutional shareholders. As you know, Veltrano Proxy Advisors' analysis from July indicated that a 3x CIC multiplier combined with a full tax gross-up would very likely result in a negative ISS recommendation. Northgate received 87.4% say-on-pay support at the April 18, 2024 AGM. The Board views preserving that level of support as essential heading into the 2025 AGM, where the new CEO's compensation package will be subject to a binding remuneration policy vote under the UK framework.
I see no path to bridging the CIC gap without one side fundamentally changing its position. The parties are not close; they are separated by governance principles on one side and personal benchmarking expectations on the other. Those are not the kinds of gaps that typically close with creative drafting.
**VII. Recommendations**
I recommend a two-track approach.
*Track 1 — Final Best-and-Final Proposal.* I recommend that the Board authorize a single, final compromise proposal to be transmitted to Hargrove & Liddell with a clear response deadline (I would suggest 10 business days). This proposal should:
- **Hold firm** at a 2.5x CIC multiplier with a best-net cutback (no gross-up). - **Reject** the Board turnover trigger. This is a governance matter on which I do not believe the Board can or should compromise. - **Offer meaningful movement** on the restrictive covenant front: accept an 18-month non-compete (North America and Western Europe) with a narrowed activity definition (I would recommend a hybrid approach — a named-competitor list supplemented by a more tightly defined revenue-based test, perhaps with a higher threshold such as 25%) and 6-month garden leave at base salary, with the garden leave running concurrently with the first six months of the non-compete period, resulting in a 12-month effective post-employment restricted period. - Leave the non-solicitation at 24 months for employees and 18 months for customers as a concession point if needed.
This gives Harding real movement on the issues where we have room and where the Board's governance and shareholder concerns are less acute, while holding the line on CIC and governance-sensitive items. It is a credible final offer that demonstrates good faith.
*Track 2 — Contingency Planning.* Simultaneously, and without waiting for Harding's response, I recommend that Northgate begin contingency planning for the probability that Harding declines the final proposal. Specifically:
- **Re-engage Kensington Partners.** Antonia Blythe should be contacted to discuss revisiting alternative candidates from the original shortlist or expanding the search. The sooner this conversation happens, the better — executive search timelines are long, and the December 31 transition date is approaching. - **Consider interim CEO arrangements.** The Board should evaluate whether Sir Alistair Kemble would be willing to extend his tenure beyond December 31, 2024, on a defined interim basis, or whether an internal interim appointment — such as Jonathan Briggs, the CFO — would be appropriate to bridge any gap. - **Confirm no disclosure obligations.** I have reviewed the situation and am satisfied that no public disclosure obligation is triggered by a failed negotiation, given that no definitive agreement was reached and no material commitment was made. However, I would recommend that we coordinate with your investor relations team to ensure appropriate messaging is prepared in the event that Harding's candidacy becomes public through other channels.
**VIII. Next Steps / Request for Direction**
I need direction from the Board to proceed with the final proposal. Specifically:
1. Please discuss with Geoffrey and the Remuneration Committee — and ideally with the full Board — to obtain authorization for the final proposal and its specific parameters. If the Board wishes to deviate from the approach I have outlined above, I am happy to discuss alternatives.
2. I need to know whether the Board is prepared to accept the termination of negotiations if Harding rejects the final offer. This is a critical question. If the answer is yes, the final proposal will carry real credibility. If the answer is "let's see what happens," Hargrove will sense it, and we will lose whatever leverage remains.
3. Upon receiving Board authorization, I can prepare the final compromise term sheet and cover letter and have it ready for transmission within 24 hours.
4. Bernard Crawford and our London office can coordinate with Simon Aldridge at Moorfield Bates on any UK-side implications of either outcome — whether that is finalizing the dual-contract structure with Harding or managing the transition to an alternative candidate or interim arrangement.
5. I am available for a call with you and Geoffrey at your earliest convenience — any time this week works on my end. Please let me know what works for your schedules.
**IX. Closing Thoughts**
I want to close on a personal note. Yesterday's meeting confirmed what we already knew: Marcus Harding and Northgate are strongly aligned on vision, strategy, and culture. Dame Philippa's conversation with him about the company's future was one of the most substantive and intellectually engaged exchanges I have witnessed between a board chair and a prospective CEO. That makes the impasse on these two specific deal terms — which are, in the scheme of things, structurally narrow even if economically and governancely significant — particularly unfortunate.
But alignment on vision does not override fiduciary responsibility, governance standards, or shareholder accountability. The Board is right to hold firm where it needs to hold firm. And if this ultimately does not come together, it will not be because Northgate failed to put forward a compelling and competitive offer.
Calderwood & Harkness is ready to support whatever path the Board chooses. Please do not hesitate to call me directly.
Best regards,
**Renata Vasquez** Partner Calderwood & Harkness LLP 299 Park Avenue, 42nd Floor New York, NY 10171 Tel: (212) 558-4000
---
*CONFIDENTIALITY NOTICE — ATTORNEY-CLIENT PRIVILEGED COMMUNICATION*
*This email and any attachments are a confidential attorney-client communication and may also be protected by the work product doctrine. This communication is intended solely for the use of the individual(s) to whom it is addressed. If you are not an intended recipient, you are hereby notified that any review, disclosure, copying, distribution, or use of this communication or any of its contents is strictly prohibited. If you have received this communication in error, please notify the sender immediately by reply email and permanently delete all copies of this communication and any attachments.*
*Matter No. 1022-00004*