1022-00004 · Northgate Telecommunications PLC · Principals Meeting

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PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT

MEMORANDUM

FROM: James Underwood, Associate, Calderwood & Harkness LLP

TO: Renata Vasquez, Partner, Calderwood & Harkness LLP

DATE: August 28, 2024

RE: Northgate Telecommunications PLC — CEO Employment Agreement Negotiation — Summary of Remaining Gaps Following August 26 Principals Meeting

MATTER NO.: 1022-00004

This memorandum constitutes privileged attorney work product prepared in anticipation of litigation and in connection with the provision of legal advice. It is protected by the attorney-client privilege and the work product doctrine. Do not forward, copy, or distribute without authorization from Renata Vasquez.

I. Purpose and Executive Summary

This memorandum summarizes the remaining unresolved negotiation gaps between Northgate Telecommunications PLC ("NTP" or "Northgate" or the "Company") and Marcus Elliot Harding ("Harding" or the "Executive") in connection with the negotiation of a CEO Employment Agreement (the "Agreement"). The analysis that follows is based on the in-person principals meeting held on Monday, August 26, 2024, at NTP's US Operations Headquarters, located at 600 Lexington Avenue, 38th Floor, New York, New York 10022, as well as the complete negotiation record assembled since June 2024.

The following individuals attended the August 26 principals meeting:

On behalf of Northgate Telecommunications PLC:

• Dame Philippa Thornton-Hale, Board Chair

• Geoffrey Stanton, Lead Independent Director and Chair of the Remuneration Committee

• Elaine Whitford, SVP & Group General Counsel

• Renata Vasquez, Partner, Calderwood & Harkness LLP

On behalf of Marcus Elliot Harding:

• Marcus Elliot Harding

• Victoria Hargrove, Partner, Hargrove & Liddell LLP ("H&L")

The meeting lasted approximately four and one-half hours, with a brief recess taken at approximately 2:15 p.m. Despite extensive and, at times, candid discussion, the meeting confirmed a meaningful impasse on two critical clusters of issues: (1) change in control severance terms (Section 7 of the draft Agreement), and (2) restrictive covenant terms (Section 9 of the draft Agreement). At the conclusion of the meeting, both sides acknowledged the impasse and agreed to allow Northgate to formulate one final compromise proposal, which both Harding and Hargrove indicated they would review "in good faith" but without any commitment or pre-agreement to its terms.

This memorandum catalogs each specific remaining gap within these two clusters, quantifies the financial delta where applicable, and identifies the nature of each disagreement — distinguishing between disputes over financial quantum and disputes over structural or definitional issues. The intent is to provide you and the broader deal team with a complete roadmap of the remaining negotiation terrain so that the Remuneration Committee can be properly advised in connection with formulating the final proposal.

For reference, the negotiation history to date is as follows:

• June 10, 2024: Initial term sheet circulated by Calderwood & Harkness on behalf of NTP.

• June 24 – July 19, 2024: Five rounds of term-sheet level negotiation, including calls on June 24, July 1, July 8, July 12, and July 19. The July 8 call resolved the majority of compensation-related terms.

• July 22, 2024: Draft 1 of the Employment Agreement circulated by Calderwood & Harkness.

• August 5, 2024: H&L returned a redline of Draft 1 containing eighty-eight (88) comments and proposed revisions.

• August 12, 2024: Draft 2 of the Employment Agreement circulated by Calderwood & Harkness, reflecting the Board's authorized concessions communicated on August 9.

• August 19, 2024: H&L returned a redline of Draft 2 containing forty-two (42) remaining comments and proposed revisions — a meaningful reduction from Draft 1 but with substantially all of the high-value open items preserved.

• August 26, 2024: In-person principals meeting (as summarized herein).

As detailed below, while the parties have reached agreement on a substantial portion of the Agreement — including base salary, annual incentive, long-term incentive targets, sign-on compensation, benefits, the dual employment structure, and numerous ancillary provisions — the unresolved issues are both financially significant and structurally complex, and their resolution will determine whether this engagement can be brought to a successful conclusion.

II. Status of Agreed Terms

Before turning to the unresolved gaps, it is useful to confirm the material terms that have been agreed and are no longer in dispute. These terms were largely settled during the July 8, 2024 negotiation call and refined through subsequent exchanges, with certain items confirmed in the term-sheet rounds and carried forward into the draft Agreement without objection. Unless otherwise noted, these terms are reflected in Draft 2 and were not the subject of any comment in H&L's August 19 redline.

A. Cash Compensation

Base Salary. $1,750,000 per annum, payable in accordance with NTP's standard US payroll practices (bi-weekly). Agreed.

Target Annual Incentive. 175% of base salary, yielding a target annual incentive opportunity of $3,062,500. The annual incentive will be payable based on achievement of performance goals established by the Remuneration Committee within the first ninety (90) days of each fiscal year, consistent with NTP's Senior Executive Incentive Plan. Agreed.

Maximum Annual Incentive. 300% of base salary, yielding a maximum annual incentive opportunity of $5,250,000. Agreed.

B. Long-Term Incentive Compensation

Annual Long-Term Incentive (LTI) Target. $9,000,000 per year, allocated 60% to performance share units ("PSUs") and 40% to restricted stock units ("RSUs"). PSUs will be subject to three-year cliff vesting based on relative total shareholder return ("TSR") and absolute revenue growth hurdles, consistent with the metrics applicable to other NTP senior executives. RSUs will vest ratably over three years (one-third per year). Agreed.

Total Target Annual Compensation. The sum of base salary ($1,750,000), target annual incentive ($3,062,500), and annual LTI target ($9,000,000) yields total target annual compensation of $13,812,500. This figure has been benchmarked by Veltrano Proxy Advisors, Inc. and confirmed as positioning Harding at approximately the 65th percentile of the Company's peer group for total target compensation. Agreed.

C. Sign-On Compensation (Make-Whole)

Sign-On Cash Bonus. $5,000,000, payable within thirty (30) days of the start date. This amount is subject to a twenty-four (24) month clawback in the event of voluntary resignation without Good Reason. The clawback is pro-rated on a monthly basis (i.e., the repayment obligation reduces by 1/24th for each full month of employment completed). Agreed.

Sign-On Equity Grant. Designed to make Harding whole for equity forfeited at his current employer, Marlowe Asset Management Digital Holdings, Inc. ("Marlowe Asset Management"), where he currently serves as President and Chief Operating Officer. Harding's forfeited Marlowe Asset Management equity has been valued by both sides at approximately $23,400,000 based on Marlowe Asset Management's closing price as of June 7, 2024 and the applicable vesting schedules. The sign-on equity consists of:

• RSU Grant: $12,000,000, vesting in equal annual installments of one-third per year over three years from the grant date. Agreed.

• PSU Grant: $6,400,000, cliff vesting at the end of three years, subject to the same TSR and revenue growth hurdles applicable to annual LTI PSU grants. Agreed.

• Total Sign-On Equity: $18,400,000. Agreed.

The equity make-whole shortfall of $5,000,000 (i.e., $23,400,000 in forfeited Marlowe Asset Management equity less $18,400,000 in sign-on equity) is offset by the $5,000,000 sign-on cash bonus. Both sides have accepted this structure. Agreed.

D. Retirement and Pension Benefits

401(k) Plan. Harding will participate in NTP's US 401(k) plan with a 6% employer match, subject to applicable IRS contribution limits (currently $23,000 employee elective deferral limit for 2024, with a $7,500 catch-up contribution for individuals age 50 and over, plus employer matching contributions). Agreed.

Supplemental Executive Retirement Plan (SERP). NTP will make annual contributions of $250,000 to a non-qualified SERP, with vesting to be coordinated with the employment term. Agreed.

E. Perquisites. The following perquisites have been agreed without material dispute:

• Automobile Allowance: $25,000 per year.

• Executive Health Program: Participation in NTP's comprehensive executive health assessment program, including annual physicals, preventive screenings, and concierge medical coordination.

• Supplemental Life Insurance: $2,000,000 in supplemental life insurance coverage, in addition to NTP's standard group life insurance benefits.

• Financial and Tax Planning Reimbursement: Up to $35,000 per year for personal financial planning, tax preparation, and estate planning services. This provision is particularly relevant given the cross-border tax complexities arising from the dual employment structure (discussed below).

F. Employment Term

Term. Five (5) years, with a proposed commencement date of October 1, 2024, and an expiration date of September 30, 2029. The Agreement will provide for automatic one-year renewals unless either party provides at least 180 days' advance written notice of non-renewal. Agreed in principle, subject to one caveat: the start date may shift to November 1, 2024, to accommodate Harding's transition out of Marlowe Asset Management Digital Holdings. H&L indicated at the August 26 meeting that Harding's Marlowe Asset Management employment agreement requires sixty (60) days' notice of resignation, and Harding wishes to provide a full transition period. Both sides agreed to accommodate a potential start date adjustment without reopening any other terms.

G. Governing Law and Dual Employment Structure

Governing Law. The primary employment agreement, between Harding and Northgate Telecommunications US, Inc. (NTP's wholly-owned US subsidiary), will be governed by the laws of the State of New York. A secondary UK service agreement, between Harding and Northgate Telecommunications PLC, will be governed by the laws of England and Wales. Agreed.

Dual Employment Structure. Harding will spend approximately 80% of his working time in the United States and 20% in the United Kingdom. The parties have agreed in principle on the following elements of the dual employment structure:

• Tax equalization for UK-source income, with NTP bearing the incremental cost of any additional UK tax liability arising from Harding's UK duties beyond what he would owe if all income were US-sourced.

• Coordination of social security obligations under the US-UK Totalization Agreement.

• Compliance with the Financial Conduct Authority's Senior Managers and Certification Regime ("SM&CR"), with Moorfield Bates LLP advising NTP on FCA regulatory requirements applicable to Harding's UK role.

The detailed mechanics of the UK service agreement remain subject to finalization by Moorfield Bates, but neither side has identified any substantive disputes in this area.

H. Additional Agreed Terms

Non-Disparagement. Mutual and perpetual, with carve-outs for truthful statements in legal proceedings, regulatory inquiries, and filings required by applicable law or regulation. Agreed.

Indemnification and D&O Coverage. Harding will receive NTP's standard form of director and officer indemnification, consistent with NTP's Articles of Association and applicable law. D&O insurance coverage will be provided under the Company's existing policy with Ashdown Surety & Insurance Co. (Policy No. ASI-D&O-NTP-2024-4471), which provides $50,000,000 per occurrence and $100,000,000 in the aggregate. Agreed in principle, subject to review of the specific indemnification agreement form.

Section 409A Compliance. Both sides have agreed that all provisions of the Agreement will be drafted to comply with Section 409A of the Internal Revenue Code, including separation pay plan exemptions, short-term deferral rules, and specified employee delay provisions where applicable. Agreed.

Non-Solicitation of Employees. The concept of an employee non-solicitation covenant has been agreed; however, the duration remains open and is addressed in Section IV.E below as part of the restrictive covenant cluster.

III. Cluster One — Change in Control Provisions (Section 7 of Draft Agreement)

The change in control ("CIC") provisions represent the first of the two principal clusters of unresolved issues. The disagreements in this cluster span five distinct sub-issues, each of which is addressed below. Taken together, these sub-issues represent both the largest aggregate financial exposure and the most significant governance risk among all remaining open terms.

A. Change in Control Definition

Agreed Elements. Both sides have agreed that the definition of "Change in Control" in Section 7.1 of the draft Agreement will include the following triggering events:

(a) The acquisition by any person or group, directly or indirectly, of more than 50% of the combined voting power of the outstanding voting securities of NTP;

(b) The consummation of a merger, consolidation, or similar business combination transaction involving NTP, unless NTP's shareholders immediately prior to such transaction hold at least 50% of the combined voting power of the surviving or resulting entity; and

(c) The sale, lease, exchange, or other transfer of all or substantially all of the assets of NTP and its subsidiaries, taken as a whole, to any person or group not affiliated with NTP.

These three triggers are consistent with market-standard CIC definitions and were not the subject of material dispute during the negotiation.

Unresolved Element — Board Turnover Trigger. Harding demands the inclusion of a fourth trigger in the CIC definition: a change in the composition of the Board of Directors of NTP such that individuals who constituted the Board as of the effective date of the Agreement (or who were subsequently nominated or elected with the approval of a majority of the incumbent directors) cease to constitute a majority of the Board within any rolling twelve-month period (the "Board turnover trigger"). This formulation is drawn from Section 409A's definition of a change in control event and is common in US public company CEO agreements.

NTP's position is that this trigger must be categorically excluded. At the August 26 meeting, Geoffrey Stanton, speaking in his capacity as Chair of the Remuneration Committee, made the following principal arguments against inclusion:

(i) The Board turnover trigger is inconsistent with established UK corporate governance norms. As a UK-listed company, NTP is subject to the UK Corporate Governance Code, which contemplates regular board refreshment as a matter of good governance. The inclusion of a provision that could characterize ordinary board succession as a "change in control" is, in the Board's view, fundamentally incompatible with these principles.

(ii) No such trigger was included in the employment agreement of the outgoing CEO, Sir Alistair Kemble, who served as CEO for eleven years. The Remuneration Committee is reluctant to establish a precedent that would be viewed as an escalation of executive protections beyond what was afforded to Sir Alistair.

(iii) The Board is currently engaged in a planned refreshment process. Three directors' terms expire at the 2025 AGM, and the Nominations Committee (chaired by Lucinda Farrow) is actively evaluating candidates. Inclusion of the Board turnover trigger could inadvertently create a CIC event in connection with ordinary succession planning.

At the principals meeting, Harding personally characterized the Board turnover trigger as a "fundamental protection" and indicated that it was important to him on a personal and philosophical level. Harding stated that he was unwilling to relocate his family, resign a senior position at Marlowe Asset Management, and forfeit over $23 million in equity only to find himself reporting to a hostile board with no meaningful severance protection in the event of a de facto change in control achieved through board replacement rather than an outright acquisition. Victoria Hargrove supported this position by citing precedent in recent S&P 500 CEO appointments, noting that the Board turnover trigger appears in more than 60% of newly negotiated CEO agreements at large-cap US public companies.

Nature of Disagreement. This is a structural and definitional disagreement that is essentially binary. To date, no middle ground has been identified. The trigger is either included or excluded. One potential compromise that has not yet been explored — but which I flag for your consideration — would be to include the Board turnover trigger but with a higher threshold (e.g., two-thirds of directors replaced, rather than a simple majority) or a longer measurement period (e.g., twenty-four months rather than twelve). However, it is unclear whether either side would accept such a modification, and it was not discussed at the August 26 meeting.

B. CIC Severance Multiplier (Double-Trigger)

Both sides have agreed on a double-trigger CIC severance structure — that is, severance is payable only upon the occurrence of both (i) a Change in Control and (ii) a qualifying termination of employment (termination without Cause or resignation for Good Reason) within the applicable protection window following the CIC. The duration of the protection window (twenty-four months, per NTP's draft) is agreed. The disagreement is solely over the severance multiplier.

NTP Final Position (as of Draft 2). A multiplier of 2.5× the sum of base salary and target annual incentive bonus:

2.5 × ($1,750,000 + $3,062,500) = 2.5 × $4,812,500 = $12,031,250

Harding's Position (per H&L redline of Draft 2 and reiterated at the August 26 meeting). A multiplier of 3× the sum of base salary and target annual incentive bonus:

3 × ($1,750,000 + $3,062,500) = 3 × $4,812,500 = $14,437,500

Financial Gap. $14,437,500 − $12,031,250 = $2,406,250.

It should be noted that during the July 12 negotiation call, Victoria Hargrove floated a potential compromise at 2.75×, which would yield CIC cash severance of $13,234,375. At that time, Hargrove characterized this as a figure she "believed she could sell to her client." However, at the August 26 principals meeting, Harding personally retreated from this position and stated, in substance, that the 3× multiplier is "non-negotiable" and represents the minimum level of protection he is willing to accept. This represented a notable hardening of Harding's position and was, in my assessment, one of the most significant developments of the meeting.

Contextual Note — Governance and Proxy Advisory Considerations. In July 2024, Sandra Kolb of Veltrano Proxy Advisors, Inc. (NTP's retained proxy advisory consultant) provided informal guidance to the Remuneration Committee that Thackeray Health IT ("ISS") generally flags CIC severance packages exceeding 3× as a concern in its quantitative pay-for-performance analysis. Kolb further advised that a 3× CIC multiplier, combined with a full Section 280G gross-up (as Harding demands, discussed in Section III.C below), would almost certainly trigger a negative say-on-pay recommendation from ISS. Tarrant Partners LLC would likely follow suit.

Geoffrey Stanton emphasized at the August 26 meeting that NTP received 87.4% shareholder support on its advisory say-on-pay vote at the April 18, 2024 Annual General Meeting. While this represents a comfortable passing margin, Stanton noted that support had declined from 92.1% in 2023, and he is unwilling to approve terms that risk further erosion. This concern is amplified by the fact that NTP's 2025 AGM will require a binding vote on NTP's Directors' Remuneration Policy under UK law, creating an elevated level of shareholder sensitivity around executive pay decisions.

Additionally, Provision 40 of the UK Corporate Governance Code 2024 (applicable to NTP as a Premium Listed company on the London Stock Exchange) states that notice or contract periods for directors should be set at one year or less, and that any payments for loss of office should reflect the departing director's obligation to mitigate loss. While the provision is applied on a "comply or explain" basis and is not directly determinative of US-governed severance terms, the Remuneration Committee has expressed concern about reputational and governance perception issues associated with a 3× multiplier.

C. Section 280G Tax Treatment

This sub-issue concerns the treatment of potential excise taxes under Section 280G and Section 4999 of the Internal Revenue Code, which impose a 20% excise tax on "excess parachute payments" received by a "disqualified individual" in connection with a change in control.

NTP Final Position. NTP proposes a "best-net cutback" or "safe-harbor" approach: total parachute payments would be reduced to the safe-harbor limit (i.e., three times the executive's "base amount" minus one dollar) if, and only if, such a reduction would produce a better after-tax result for the Executive than receiving the full parachute payment amount and bearing the resulting excise tax. Under this approach, NTP would bear no obligation to provide a tax gross-up of any kind. The parachute payment calculations would be performed by a nationally recognized accounting firm selected by NTP (currently proposed as Alder & Hughes LLP).

The relevant safe-harbor limit, based on Harding's base amount, is calculated as follows:

• Base amount (average W-2 compensation from Marlowe Asset Management Digital Holdings, 2019–2023): $7,840,000

• Safe-harbor limit (3 × $7,840,000 − $1): $23,519,999

Harding's Position. Harding demands a full Section 280G excise tax gross-up on all excess parachute payments. Under this approach, NTP would be obligated to make an additional cash payment to Harding in an amount sufficient to place him in the same after-tax position he would have occupied had no excise tax been imposed — including a "gross-up on the gross-up" to account for the income tax and excise tax attributable to the gross-up payment itself.

Financial Exposure of Gross-Up. The potential financial exposure to NTP is substantial. Based on preliminary calculations:

• Estimated total parachute payments under Harding's proposed terms (3× CIC cash severance of $14,437,500 + full acceleration of all unvested equity at target performance levels + benefit continuation for 36 months): approximately $38,200,000.

• Excess parachute payment ($38,200,000 − $7,840,000): approximately $30,360,000.

• Estimated excise tax at 20% ($30,360,000 × 0.20): approximately $6,072,000.

• Estimated gross-up cost to NTP (including gross-up on the gross-up for federal and state income tax and excise tax): $4,200,000 – $6,800,000, depending on assumptions used in the parachute payment calculation, including the treatment of equity acceleration (which involves complex valuation issues under Treasury Regulation Section 1.280G-1).

These estimates are preliminary and would require a full parachute payment analysis by Alder & Hughes LLP once the final terms are established. The range reflects uncertainty regarding the valuation of accelerated equity awards and the interaction between Section 280G and Section 409A in the context of a double-trigger CIC provision.

Whitmore Hobson LLP Analysis. Dr. Rachel Whitmore of Whitmore Hobson LLP, engaged by NTP to provide independent tax advisory services to the Remuneration Committee, prepared a preliminary analysis of the best-net cutback versus gross-up comparison. Her analysis, presented to the Remuneration Committee on August 14, 2024, indicates that under a best-net cutback scenario, Harding's after-tax position is roughly equivalent to — or, in certain scenarios, slightly better than — the after-tax position he would achieve by receiving the full parachute payment plus excise tax (without any gross-up). This is because the safe-harbor cutback avoids not only the 20% excise tax but also the loss of the federal income tax deduction for excess parachute payments under Section 280G(a), which benefits NTP but indirectly affects the total economics of the arrangement.

Dr. Whitmore's analysis suggests that, from a purely economic standpoint, the gross-up demand is largely a matter of principle and optics rather than economic necessity for Harding. However, it is important to note that this analysis is sensitive to the ultimate composition and valuation of the parachute payments, and the conclusion could change if Harding's total parachute payment profile shifts materially.

Nature of Disagreement. This sub-issue involves both a financial component (the $4.2M – $6.8M gross-up exposure) and a principled component. Harding, through Hargrove, frames the gross-up as standard market protection for a candidate who is forfeiting significant equity at his current employer and assuming meaningful personal risk by transitioning to a new role. Hargrove has cited precedent at several large-cap US companies, though she acknowledged at the August 26 meeting that the trend in recent years has been away from gross-ups and toward best-net cutbacks.

NTP frames its refusal to provide a gross-up as governance-driven, citing ISS's publicly stated policy that treats excise tax gross-ups as "problematic" pay practices. The Board is particularly concerned about the interaction between a 3× CIC multiplier and a full gross-up, which together would almost certainly be viewed as excessive by proxy advisory firms and institutional shareholders.

D. CIC Equity Acceleration

Both sides agree that all unvested equity awards should fully accelerate upon a qualifying CIC termination. The disagreement is over the performance level at which PSUs vest upon such acceleration.

NTP Position. Full acceleration of all unvested equity upon a qualifying CIC termination. For PSUs, vesting would be determined as follows:

• If the applicable performance period is 50% or more complete at the time of the CIC, PSUs vest based on actual performance measured through the most recently completed fiscal quarter.

• If the applicable performance period is less than 50% complete at the time of the CIC, PSUs vest at the target performance level.

This approach is consistent with the treatment afforded to other NTP senior executives under the Company's Long-Term Incentive Plan and was adopted by the Remuneration Committee in 2022 as part of a governance-oriented redesign of the executive compensation program.

Harding's Position. Full acceleration of all unvested equity, with all PSUs vesting at the target performance level regardless of the elapsed performance period and regardless of actual performance at the time of the CIC.

Financial Gap. The delta depends entirely on the Company's actual performance metrics at the time of a hypothetical CIC event. If actual performance is tracking at or above target, the two approaches produce identical results. However, if actual performance is below target — particularly in the early years of a performance period when there is limited performance data — Harding's approach would result in a meaningfully higher payout.

The most significant application of this disagreement is to the sign-on PSU grant ($6,400,000 at target) and the first one or two annual LTI PSU tranches, which together could represent $15,000,000 or more in target value. If actual performance at the time of a CIC were tracking at, say, 60% of target, the difference between actual-performance vesting and target-level vesting could amount to several million dollars. Precise quantification is not possible at this stage, as it depends on future performance outcomes that are inherently uncertain.

E. CIC Benefit Continuation

NTP Position. Twenty-four (24) months of continued health insurance coverage through COBRA, with NTP subsidizing the premium at the same rate as active employees. Additionally, NTP would provide $50,000 in outplacement assistance through a nationally recognized executive outplacement firm.

Harding's Position. Thirty-six (36) months of continued participation in NTP's full executive benefits program — not limited to COBRA health insurance but including dental, vision, life insurance, disability insurance, and the executive health program. Harding has not identified a specific outplacement assistance amount, and this item is not considered material by either side.

Financial Gap. The gap is twelve (12) additional months of benefit continuation, and the scope of coverage is broader under Harding's proposal (full executive benefits versus COBRA-only). The estimated incremental cost is approximately $75,000 – $120,000, depending on benefit valuations and the applicable premium rates.

While this gap is relatively modest in dollar terms — particularly in the context of the other CIC issues — it is worth noting that the additional twelve months of benefit continuation would be included in the total parachute payment calculation under Section 280G, thereby increasing the excess parachute payment amount and, correspondingly, the excise tax exposure and potential gross-up cost.

IV. Cluster Two — Restrictive Covenant Provisions (Section 9 of Draft Agreement)

The restrictive covenant provisions represent the second principal cluster of unresolved issues. These provisions govern Harding's post-termination obligations regarding non-competition, garden leave, and non-solicitation. The disagreements in this cluster span four sub-issues (a fifth sub-issue — geographic scope — has been resolved). These issues are discussed below.

A. Non-Compete Duration

NTP Position (as of Draft 2). An eighteen (18) month post-termination non-competition period. This represents a significant concession from NTP's initial position of twenty-four (24) months in Draft 1. The concession was authorized by the Board on August 9, 2024, following a discussion between Dame Philippa Thornton-Hale and Geoffrey Stanton, and communicated to the deal team by Elaine Whitford.

Harding's Position. A twelve (12) month post-termination non-competition period, matching the non-compete duration in Harding's current employment agreement with Marlowe Asset Management Digital Holdings. Hargrove has argued that requiring Harding to accept a longer non-compete than his current arrangement is commercially unreasonable and would effectively punish Harding for accepting the NTP position.

Gap. Six (6) months.

Enforceability Note. Calderwood & Harkness's internal enforceability analysis, prepared by Devon Archer (Senior Associate) and circulated to the deal team on June 6, 2024, flagged that even an eighteen-month non-compete in a New York-governed agreement faces meaningful enforceability risk under the state's reasonableness analysis. New York courts apply a three-part test for restrictive covenants, requiring that the restriction be (i) no greater than necessary to protect a legitimate employer interest, (ii) not impose an undue hardship on the employee, and (iii) not be injurious to the public. While New York courts have upheld non-competes of up to twenty-four months in certain circumstances, the trend in recent judicial decisions has favored shorter durations, particularly for senior executives in rapidly evolving technology sectors.

Additionally, pending New York legislation — Assembly Bill A1278B and Senate Bill S3100A, which would impose a near-total ban on non-compete agreements — adds further uncertainty to the enforceability analysis. While the legislation has not yet been enacted and its prospects are uncertain, its pendency has created a chilling effect on aggressive non-compete enforcement in New York. If enacted, the legislation could render the non-compete provision entirely unenforceable, regardless of its duration.

Devon Archer's memo recommended a fallback approach: an eighteen-month non-compete period combined with a concurrent paid garden leave period, so as to reduce the effective post-employment restraint and thereby improve enforceability. This recommendation aligns with NTP's current negotiating posture (discussed in Section IV.D below), though the parties disagree on the terms of the garden leave provision.

B. Non-Compete Geographic Scope

NTP Position (as of Draft 2). North America and Western Europe.

Harding's Position. North America and Western Europe.

Status. This sub-issue is agreed. NTP moved from a worldwide geographic scope in Draft 1 to North America and Western Europe in Draft 2, and Harding accepted this scope in H&L's August 19 redline. No remaining gap exists on this point.

C. Non-Compete Activity Definition

NTP Position. The non-compete would prohibit Harding from accepting employment with, or providing services (whether as an employee, consultant, advisor, board member, or otherwise) to, any company that derives more than 15% of its consolidated annual revenue from telecommunications services, telecommunications infrastructure, or enterprise software-as-a-service ("SaaS") platforms serving telecommunications operators. This is an objective, revenue-based test designed to capture both direct competitors and companies with material telecommunications operations, while excluding diversified companies with only incidental telecom activities.

Harding's Position. The non-compete would be limited to "direct competitors" identified on a schedule of eight (8) named companies, to be mutually agreed by NTP and Harding at the time the Agreement is executed and refreshed annually by mutual agreement during the employment term. Harding has not yet proposed the specific companies for the schedule, but Hargrove indicated at the August 26 meeting that the list would likely include "the usual suspects" — i.e., the largest global telecom operators and infrastructure companies that NTP regularly identifies as competitors in its annual report and investor presentations.

Gap. This is a fundamental structural disagreement. NTP's revenue-based test is objective and broad, capturing any employer that meets the revenue threshold regardless of whether it appears on a predetermined list. Harding's scheduled-competitor approach is narrow and inherently subjective, requiring annual renegotiation and mutual agreement on the list of covered competitors.

NTP's principal objection to the scheduled-competitor approach is that it is easily circumvented. A competitor could restructure, rebrand, or merge with a non-listed entity and thereby fall outside the restriction. Additionally, new entrants to the telecommunications market — including technology companies that pivot into telecom infrastructure — would not be captured unless and until the list is refreshed by mutual agreement, which requires Harding's consent. NTP views this as providing Harding with an effective veto over the scope of his own non-compete.

Harding's principal objection to the revenue-based test is that it is overly broad. Harding has argued that a 15% revenue threshold could capture large, diversified technology companies (such as major cloud computing providers or enterprise software companies) that have telecom-related business lines but are not genuine competitors of NTP. Harding has characterized the revenue-based test as potentially precluding him from employment at a wide range of companies where NTP has no legitimate competitive concern.

Nature of Disagreement. Structural and definitional. The gap here is not about financial quantum but about the fundamental architecture of the non-compete restriction.

D. Garden Leave

The garden leave provision is closely interrelated with the non-compete duration issue discussed in Section IV.A above, as the parties' respective proposals contemplate different degrees of overlap between the garden leave period and the post-termination non-compete period.

NTP Position. Six (6) months of paid garden leave at base salary only:

$1,750,000 ÷ 12 × 6 = $875,000

The garden leave period would run concurrently with the first six months of the eighteen-month non-compete period. Under this structure, the effective post-departure restraint consists of six months of funded garden leave followed by twelve months of unfunded non-compete — yielding a total restraint period of eighteen months, of which only the first six are compensated.

Harding's Position. Twelve (12) months of paid garden leave at full compensation, including both base salary and a pro-rata target annual incentive bonus:

($1,750,000 + $3,062,500) ÷ 12 × 12 = $4,812,500

Under Harding's proposal, the garden leave period and the non-compete would run fully concurrently, so that the twelve-month non-compete would effectively expire at the end of the twelve-month garden leave period. This means there would be no unfunded post-employment non-compete period whatsoever.

Financial Gap. $4,812,500 − $875,000 = $3,937,500.

Structural Impact. Beyond the financial delta, the structural implications of Harding's proposal are significant. By requiring the garden leave and non-compete to run fully concurrently and to be of equal duration, Harding's proposal effectively eliminates any unfunded non-compete period. NTP views this as fundamentally undermining the purpose of the restrictive covenant, which is to ensure that Harding does not compete with NTP for a meaningful period following his departure. If Harding is fully compensated throughout the entire non-compete period, the covenant functions less as a genuine restraint and more as a paid sabbatical — a characterization that Geoffrey Stanton used during the August 26 meeting.

Conversely, Hargrove has argued that requiring Harding to serve a post-employment non-compete without compensation is inequitable and would be viewed unfavorably by courts assessing the reasonableness of the restriction. Hargrove cited the trend in UK law (where garden leave is the norm rather than the exception for senior executives) and argued that a funded non-compete period enhances enforceability, particularly in light of the pending New York legislation discussed in Section IV.A above.

E. Non-Solicitation. NTP Position. A twenty-four (24) month post-termination non-solicitation covenant, applying to both employees and customers of NTP and its subsidiaries.

Harding's Position. An eighteen (18) month post-termination non-solicitation covenant, applying to employees of NTP and its subsidiaries only. Harding categorically rejects any customer non-solicitation restriction.

Gap — Duration. Six (6) months (24 months versus 18 months). This gap is relatively modest and, based on the tone of the August 26 discussion, appears amenable to compromise.

Gap — Scope. The more significant disagreement is over the scope of the non-solicitation covenant. NTP seeks to prohibit Harding from soliciting both employees and customers; Harding refuses the customer component entirely. Hargrove's argument is that customer non-solicitation covenants are difficult to enforce, practically unworkable for a CEO-level executive (who interacts with hundreds of customers and business relationships in the ordinary course), and impose an unreasonable burden on Harding's future employment prospects. NTP's argument is that the CEO's customer relationships represent the Company's most valuable competitive asset and that exclusion of customer non-solicitation would leave a significant gap in NTP's post-employment protections.

Nature of Disagreement. The duration gap is quantitative and likely negotiable. The customer non-solicitation scope is a structural disagreement that has been firmly resisted by Harding and his counsel.

V. Summary Table of Remaining Gaps

The following table presents a consolidated summary of all unresolved negotiation issues as of August 28, 2024:

Aggregate Quantifiable Financial Gap (CIC cluster only, excluding PSU acceleration variable): Approximately $6.6M – $9.2M, consisting of the CIC multiplier delta ($2.4M), gross-up exposure ($4.2M – $6.8M), and benefit continuation ($75K – $120K).

Aggregate Quantifiable Financial Gap (Restrictive covenant cluster): $3,937,500 (garden leave), plus the non-quantifiable structural disagreements on activity definition and customer non-solicitation scope.

VI. Assessment and Observations

Based on the August 26 principals meeting and the full course of negotiations to date, I offer the following assessment and observations for your consideration:

Interrelation of the Two Clusters. The CIC and restrictive covenant clusters are not independent of one another. Victoria Hargrove has indicated informally — in sidebar conversations following the July 12 and July 19 negotiation calls — that flexibility on the restrictive covenant terms could create room for movement on CIC terms, and vice versa. This suggests that a package deal, rather than issue-by-issue negotiation, may be the most productive approach for the final proposal. However, at the August 26 meeting, Harding personally described the 3× CIC multiplier, the full Section 280G gross-up, and the Board turnover trigger as "non-negotiable," which significantly constrains the universe of available trade-offs.

Governance and Shareholder Risk. The CIC issues present both a financial gap and a governance and shareholder risk that the Remuneration Committee must weigh carefully. The Remuneration Committee — consisting of Geoffrey Stanton (Chair), Dame Philippa Thornton-Hale, Lucinda Farrow, and Dr. Tomás Herrera — has been clear in its instruction to the deal team that the guidance of ISS and Veltrano Proxy Advisors, particularly regarding the combined effect of a 3× CIC multiplier and a full Section 280G gross-up, cannot be disregarded. Sandra Kolb of Veltrano has indicated that this combination would likely trigger a negative say-on-pay recommendation from ISS, and the Remuneration Committee views such an outcome as unacceptable. NTP's 2025 AGM will require a binding vote on the Directors' Remuneration Policy — not merely an advisory say-on-pay vote — making the stakes considerably higher. A negative ISS recommendation on the eve of a binding policy vote could have far-reaching consequences for the Board's credibility and the Company's investor relations.

Enforceability of Restrictive Covenants. The restrictive covenant issues are compounded by the enforceability concerns described in Section IV.A above. NTP's concession from a twenty-four-month non-compete to eighteen months was significant and represented the outer boundary of what the Board was willing to offer. Harding's insistence on a twelve-month non-compete coupled with twelve months of fully compensated garden leave, running entirely concurrently, would effectively neutralize the non-compete as a meaningful restraint. Under Harding's proposal, the non-compete period is fully funded, eliminating the financial deterrent effect, and expires simultaneously with the garden leave period, leaving no post-garden-leave restriction whatsoever. Geoffrey Stanton characterized this structure at the August 26 meeting as "a paid holiday with a restrictive covenant label," and the Board's frustration on this point was evident.

Non-CIC Severance — Additional Open Item. Although it was not a principal focus of the August 26 meeting, it should be noted that the non-CIC severance terms also remain unresolved. NTP proposes a 2× multiplier on base salary and target annual incentive ($9,625,000); Harding demands a 2.5× multiplier ($12,031,250). This gap of $2,406,250 mirrors the CIC multiplier gap and may be addressable as part of a broader package compromise. The parties did not devote significant discussion time to this issue at the principals meeting, as the CIC provisions were the primary focus, but it remains an open term that will need to be resolved.

Overall Likelihood of Agreement. From the August 26 meeting, the likelihood of reaching full agreement on all open terms appears low. Both sides expressed genuine regret but acknowledged what Dame Philippa Thornton-Hale described as "fundamental philosophical differences" regarding the appropriate balance between executive protection and corporate governance constraints. Harding views himself as a candidate who is making significant personal and financial sacrifices to join NTP and who is entitled to best-in-class protections commensurate with those sacrifices. The Board views itself as constrained by UK governance norms, shareholder expectations, and proxy advisory guidance, and as unwilling to establish precedents that could be viewed as excessive by investors and regulators.

That said, neither side has formally terminated negotiations. The agreement to allow NTP to formulate one final compromise proposal, and Harding's commitment to review it "in good faith," preserves a window — albeit a narrow one — for resolution.

VII. Recommended Next Steps

Based on the foregoing analysis, I recommend the following next steps:

1. Seek Board Authorization for a Final Compromise Proposal. The Remuneration Committee should be convened to authorize a "best and final" offer. The proposal should be developed with a clear understanding of the Board's absolute limits on each issue, so that it can be presented to Harding as a comprehensive package rather than an invitation for further point-by-point negotiation. I would recommend that the proposal be framed as a take-it-or-leave-it offer, with a defined response deadline (e.g., ten business days), to preserve the Board's credibility and prevent further protracted negotiation. It should be recognized that the Board has already made material concessions, including the reduction of the non-compete scope from worldwide to North America and Western Europe and the reduction of the non-compete duration from twenty-four to eighteen months.

2. Identify Areas of Greatest Flexibility. In formulating the final proposal, the deal team should determine whether any further movement is possible on the garden leave terms or the non-compete activity definition, as these may be the areas of greatest potential flexibility on the Northgate side without triggering governance concerns. Specifically:

(a) Garden leave: A compromise at nine (9) months of garden leave at base salary plus a pro-rated portion of the target bonus — running concurrently with the non-compete — might bridge the gap between the parties without fully neutralizing the unfunded non-compete period.

(b) Activity definition: A hybrid approach combining a scheduled-competitor list with a revenue-based backstop (e.g., the schedule of named competitors plus any additional company that derives more than 25% of revenue from telecom services) could address both sides' concerns. This approach would give Harding the certainty of a defined list while preserving NTP's ability to capture new or restructured competitors that meet an objective revenue threshold.

3. Prepare the Remuneration Committee for a Possible Termination of Negotiations. If Harding does not accept the final proposal, the Board must be prepared to terminate negotiations and move to an alternative candidate. The Remuneration Committee should receive a clear-eyed assessment of the costs and risks of a failed negotiation — including the impact on NTP's CEO search timeline, market perception, and the Company's operations during an extended vacancy — so that this decision, if it becomes necessary, can be made on a fully informed basis.

4. Coordinate on Contingency Planning. In parallel with the final proposal, the deal team should coordinate with Elaine Whitford and Priya Narayanan (SVP, Human Resources) on contingency planning. This should include re-engagement with Kensington Partners, the executive search firm retained by NTP, and specifically with Antonia Blythe (Managing Director), to evaluate alternative CEO candidates and interim CEO arrangements. It would also be prudent to assess whether Sir Alistair Kemble would be willing to extend his service on a transitional basis if the Harding negotiation fails.

5. Drafting of Final Proposal. I remain available to prepare drafting of the final compromise proposal, including a revised term sheet and corresponding redline of the draft Agreement, upon receipt of Board direction. Given the narrow window of opportunity, I would recommend targeting circulation of the final proposal no later than September 6, 2024, to allow adequate time for Harding's review before the anticipated October 1 (or November 1) start date becomes unachievable.

VIII. Distribution and Privilege

This memorandum is privileged attorney work product prepared in connection with the legal representation of Northgate Telecommunications PLC and its affiliates under Calderwood & Harkness LLP engagement 1022-00004. It reflects the mental impressions, conclusions, opinions, and legal theories of counsel and is protected by the attorney-client privilege, the work product doctrine, and all other applicable privileges and protections.

Distribution of this memorandum is limited to the following individuals unless otherwise directed by Renata Vasquez:

• Renata Vasquez, Partner, Calderwood & Harkness LLP

• Bernard Crawford, Billing Partner, Calderwood & Harkness LLP

• Client contacts as authorized and directed by Vasquez

This memorandum should not be forwarded, copied, distributed, or disclosed to any third party without the prior written authorization of Renata Vasquez. Inadvertent disclosure does not constitute a waiver of any applicable privilege or protection.

Copy to file.

Respectfully submitted,

James Underwood Associate Calderwood & Harkness LLP One Manhattan West, 55th Floor New York, New York 10001 Direct: (212) 555-0147 junderwood@calderwoodharkness.com

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT

Issue	NTP Position	Harding Position	Gap / Delta
CIC Definition — Board Turnover Trigger	Excluded	Included (majority of directors replaced in 12-month period)	Binary disagreement — no middle ground identified
CIC Severance Multiplier	2.5× ($12,031,250)	3× ($14,437,500)	$2,406,250
Section 280G Tax Treatment	Best-net cutback (no gross-up)	Full excise tax gross-up	$4.2M – $6.8M potential exposure to NTP
CIC PSU Acceleration	Pro-rata based on actual performance (or target if <50% of period elapsed)	At target regardless of elapsed period or actual performance	Variable — potentially several million dollars depending on performance at time of CIC
CIC Benefit Continuation	24 months COBRA; $50K outplacement	36 months full executive benefits	12 additional months; ~$75K – $120K incremental cost
Non-Compete Duration	18 months	12 months	6 months
Non-Compete Activity Scope	Revenue-based test (>15% from telecom/enterprise SaaS)	Scheduled competitor list (8 named companies, refreshed annually)	Structural — objective test vs. enumerated list
Garden Leave Duration & Compensation	6 months at base salary only ($875,000); concurrent with first 6 months of non-compete	12 months at full compensation ($4,812,500); fully concurrent with 12-month non-compete	$3,937,500; structural impact of eliminating unfunded non-compete period
Non-Solicitation Duration	24 months	18 months	6 months
Non-Solicitation Scope	Employees and customers	Employees only	Customer non-solicitation categorically rejected by Harding

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
MEMORANDUM
FROM: James Underwood, Associate, Calderwood & Harkness LLP
TO: Renata Vasquez, Partner, Calderwood & Harkness LLP
DATE: August 28, 2024
RE: Northgate Telecommunications PLC — CEO Employment Agreement Negotiation — Summary of Remaining Gaps Following August 26 Principals Meeting
MATTER NO.: 1022-00004
This memorandum constitutes privileged attorney work product prepared in anticipation of litigation and in connection with the provision of legal advice. It is protected by the attorney-client privilege and the work product doctrine. Do not forward, copy, or distribute without authorization from Renata Vasquez.
I. Purpose and Executive Summary
This memorandum summarizes the remaining unresolved negotiation gaps between Northgate Telecommunications PLC ("NTP" or "Northgate" or the "Company") and Marcus Elliot Harding ("Harding" or the "Executive") in connection with the negotiation of a CEO Employment Agreement (the "Agreement"). The analysis that follows is based on the in-person principals meeting held on Monday, August 26, 2024, at NTP's US Operations Headquarters, located at 600 Lexington Avenue, 38th Floor, New York, New York 10022, as well as the complete negotiation record assembled since June 2024.
The following individuals attended the August 26 principals meeting:
On behalf of Northgate Telecommunications PLC:
• Dame Philippa Thornton-Hale, Board Chair
• Geoffrey Stanton, Lead Independent Director and Chair of the Remuneration Committee
• Elaine Whitford, SVP & Group General Counsel
• Renata Vasquez, Partner, Calderwood & Harkness LLP
On behalf of Marcus Elliot Harding:
• Marcus Elliot Harding
• Victoria Hargrove, Partner, Hargrove & Liddell LLP ("H&L")
The meeting lasted approximately four and one-half hours, with a brief recess taken at approximately 2:15 p.m. Despite extensive and, at times, candid discussion, the meeting confirmed a meaningful impasse on two critical clusters of issues: (1) change in control severance terms (Section 7 of the draft Agreement), and (2) restrictive covenant terms (Section 9 of the draft Agreement). At the conclusion of the meeting, both sides acknowledged the impasse and agreed to allow Northgate to formulate one final compromise proposal, which both Harding and Hargrove indicated they would review "in good faith" but without any commitment or pre-agreement to its terms.
This memorandum catalogs each specific remaining gap within these two clusters, quantifies the financial delta where applicable, and identifies the nature of each disagreement — distinguishing between disputes over financial quantum and disputes over structural or definitional issues. The intent is to provide you and the broader deal team with a complete roadmap of the remaining negotiation terrain so that the Remuneration Committee can be properly advised in connection with formulating the final proposal.
For reference, the negotiation history to date is as follows:
• June 10, 2024: Initial term sheet circulated by Calderwood & Harkness on behalf of NTP.
• June 24 – July 19, 2024: Five rounds of term-sheet level negotiation, including calls on June 24, July 1, July 8, July 12, and July 19. The July 8 call resolved the majority of compensation-related terms.
• July 22, 2024: Draft 1 of the Employment Agreement circulated by Calderwood & Harkness.
• August 5, 2024: H&L returned a redline of Draft 1 containing eighty-eight (88) comments and proposed revisions.
• August 12, 2024: Draft 2 of the Employment Agreement circulated by Calderwood & Harkness, reflecting the Board's authorized concessions communicated on August 9.
• August 19, 2024: H&L returned a redline of Draft 2 containing forty-two (42) remaining comments and proposed revisions — a meaningful reduction from Draft 1 but with substantially all of the high-value open items preserved.
• August 26, 2024: In-person principals meeting (as summarized herein).
As detailed below, while the parties have reached agreement on a substantial portion of the Agreement — including base salary, annual incentive, long-term incentive targets, sign-on compensation, benefits, the dual employment structure, and numerous ancillary provisions — the unresolved issues are both financially significant and structurally complex, and their resolution will determine whether this engagement can be brought to a successful conclusion.
II. Status of Agreed Terms
Before turning to the unresolved gaps, it is useful to confirm the material terms that have been agreed and are no longer in dispute. These terms were largely settled during the July 8, 2024 negotiation call and refined through subsequent exchanges, with certain items confirmed in the term-sheet rounds and carried forward into the draft Agreement without objection. Unless otherwise noted, these terms are reflected in Draft 2 and were not the subject of any comment in H&L's August 19 redline.
A. Cash Compensation
Base Salary. $1,750,000 per annum, payable in accordance with NTP's standard US payroll practices (bi-weekly). Agreed.
Target Annual Incentive. 175% of base salary, yielding a target annual incentive opportunity of $3,062,500. The annual incentive will be payable based on achievement of performance goals established by the Remuneration Committee within the first ninety (90) days of each fiscal year, consistent with NTP's Senior Executive Incentive Plan. Agreed.
Maximum Annual Incentive. 300% of base salary, yielding a maximum annual incentive opportunity of $5,250,000. Agreed.
B. Long-Term Incentive Compensation
Annual Long-Term Incentive (LTI) Target. $9,000,000 per year, allocated 60% to performance share units ("PSUs") and 40% to restricted stock units ("RSUs"). PSUs will be subject to three-year cliff vesting based on relative total shareholder return ("TSR") and absolute revenue growth hurdles, consistent with the metrics applicable to other NTP senior executives. RSUs will vest ratably over three years (one-third per year). Agreed.
Total Target Annual Compensation. The sum of base salary ($1,750,000), target annual incentive ($3,062,500), and annual LTI target ($9,000,000) yields total target annual compensation of $13,812,500. This figure has been benchmarked by Veltrano Proxy Advisors, Inc. and confirmed as positioning Harding at approximately the 65th percentile of the Company's peer group for total target compensation. Agreed.
C. Sign-On Compensation (Make-Whole)
Sign-On Cash Bonus. $5,000,000, payable within thirty (30) days of the start date. This amount is subject to a twenty-four (24) month clawback in the event of voluntary resignation without Good Reason. The clawback is pro-rated on a monthly basis (i.e., the repayment obligation reduces by 1/24th for each full month of employment completed). Agreed.
Sign-On Equity Grant. Designed to make Harding whole for equity forfeited at his current employer, Marlowe Asset Management Digital Holdings, Inc. ("Marlowe Asset Management"), where he currently serves as President and Chief Operating Officer. Harding's forfeited Marlowe Asset Management equity has been valued by both sides at approximately $23,400,000 based on Marlowe Asset Management's closing price as of June 7, 2024 and the applicable vesting schedules. The sign-on equity consists of:
• RSU Grant: $12,000,000, vesting in equal annual installments of one-third per year over three years from the grant date. Agreed.
• PSU Grant: $6,400,000, cliff vesting at the end of three years, subject to the same TSR and revenue growth hurdles applicable to annual LTI PSU grants. Agreed.
• Total Sign-On Equity: $18,400,000. Agreed.
The equity make-whole shortfall of $5,000,000 (i.e., $23,400,000 in forfeited Marlowe Asset Management equity less $18,400,000 in sign-on equity) is offset by the $5,000,000 sign-on cash bonus. Both sides have accepted this structure. Agreed.
D. Retirement and Pension Benefits
401(k) Plan. Harding will participate in NTP's US 401(k) plan with a 6% employer match, subject to applicable IRS contribution limits (currently $23,000 employee elective deferral limit for 2024, with a $7,500 catch-up contribution for individuals age 50 and over, plus employer matching contributions). Agreed.
Supplemental Executive Retirement Plan (SERP). NTP will make annual contributions of $250,000 to a non-qualified SERP, with vesting to be coordinated with the employment term. Agreed.
E. Perquisites. The following perquisites have been agreed without material dispute:
• Automobile Allowance: $25,000 per year.
• Executive Health Program: Participation in NTP's comprehensive executive health assessment program, including annual physicals, preventive screenings, and concierge medical coordination.
• Supplemental Life Insurance: $2,000,000 in supplemental life insurance coverage, in addition to NTP's standard group life insurance benefits.
• Financial and Tax Planning Reimbursement: Up to $35,000 per year for personal financial planning, tax preparation, and estate planning services. This provision is particularly relevant given the cross-border tax complexities arising from the dual employment structure (discussed below).
F. Employment Term
Term. Five (5) years, with a proposed commencement date of October 1, 2024, and an expiration date of September 30, 2029. The Agreement will provide for automatic one-year renewals unless either party provides at least 180 days' advance written notice of non-renewal. Agreed in principle, subject to one caveat: the start date may shift to November 1, 2024, to accommodate Harding's transition out of Marlowe Asset Management Digital Holdings. H&L indicated at the August 26 meeting that Harding's Marlowe Asset Management employment agreement requires sixty (60) days' notice of resignation, and Harding wishes to provide a full transition period. Both sides agreed to accommodate a potential start date adjustment without reopening any other terms.
G. Governing Law and Dual Employment Structure
Governing Law. The primary employment agreement, between Harding and Northgate Telecommunications US, Inc. (NTP's wholly-owned US subsidiary), will be governed by the laws of the State of New York. A secondary UK service agreement, between Harding and Northgate Telecommunications PLC, will be governed by the laws of England and Wales. Agreed.
Dual Employment Structure. Harding will spend approximately 80% of his working time in the United States and 20% in the United Kingdom. The parties have agreed in principle on the following elements of the dual employment structure:
• Tax equalization for UK-source income, with NTP bearing the incremental cost of any additional UK tax liability arising from Harding's UK duties beyond what he would owe if all income were US-sourced.
• Coordination of social security obligations under the US-UK Totalization Agreement.
• Compliance with the Financial Conduct Authority's Senior Managers and Certification Regime ("SM&CR"), with Moorfield Bates LLP advising NTP on FCA regulatory requirements applicable to Harding's UK role.
The detailed mechanics of the UK service agreement remain subject to finalization by Moorfield Bates, but neither side has identified any substantive disputes in this area.
H. Additional Agreed Terms
Non-Disparagement. Mutual and perpetual, with carve-outs for truthful statements in legal proceedings, regulatory inquiries, and filings required by applicable law or regulation. Agreed.
Indemnification and D&O Coverage. Harding will receive NTP's standard form of director and officer indemnification, consistent with NTP's Articles of Association and applicable law. D&O insurance coverage will be provided under the Company's existing policy with Ashdown Surety & Insurance Co. (Policy No. ASI-D&O-NTP-2024-4471), which provides $50,000,000 per occurrence and $100,000,000 in the aggregate. Agreed in principle, subject to review of the specific indemnification agreement form.
Section 409A Compliance. Both sides have agreed that all provisions of the Agreement will be drafted to comply with Section 409A of the Internal Revenue Code, including separation pay plan exemptions, short-term deferral rules, and specified employee delay provisions where applicable. Agreed.
Non-Solicitation of Employees. The concept of an employee non-solicitation covenant has been agreed; however, the duration remains open and is addressed in Section IV.E below as part of the restrictive covenant cluster.
III. Cluster One — Change in Control Provisions (Section 7 of Draft Agreement)
The change in control ("CIC") provisions represent the first of the two principal clusters of unresolved issues. The disagreements in this cluster span five distinct sub-issues, each of which is addressed below. Taken together, these sub-issues represent both the largest aggregate financial exposure and the most significant governance risk among all remaining open terms.
A. Change in Control Definition
Agreed Elements. Both sides have agreed that the definition of "Change in Control" in Section 7.1 of the draft Agreement will include the following triggering events:
(a) The acquisition by any person or group, directly or indirectly, of more than 50% of the combined voting power of the outstanding voting securities of NTP;
(b) The consummation of a merger, consolidation, or similar business combination transaction involving NTP, unless NTP's shareholders immediately prior to such transaction hold at least 50% of the combined voting power of the surviving or resulting entity; and
(c) The sale, lease, exchange, or other transfer of all or substantially all of the assets of NTP and its subsidiaries, taken as a whole, to any person or group not affiliated with NTP.
These three triggers are consistent with market-standard CIC definitions and were not the subject of material dispute during the negotiation.
Unresolved Element — Board Turnover Trigger. Harding demands the inclusion of a fourth trigger in the CIC definition: a change in the composition of the Board of Directors of NTP such that individuals who constituted the Board as of the effective date of the Agreement (or who were subsequently nominated or elected with the approval of a majority of the incumbent directors) cease to constitute a majority of the Board within any rolling twelve-month period (the "Board turnover trigger"). This formulation is drawn from Section 409A's definition of a change in control event and is common in US public company CEO agreements.
NTP's position is that this trigger must be categorically excluded. At the August 26 meeting, Geoffrey Stanton, speaking in his capacity as Chair of the Remuneration Committee, made the following principal arguments against inclusion:
(i) The Board turnover trigger is inconsistent with established UK corporate governance norms. As a UK-listed company, NTP is subject to the UK Corporate Governance Code, which contemplates regular board refreshment as a matter of good governance. The inclusion of a provision that could characterize ordinary board succession as a "change in control" is, in the Board's view, fundamentally incompatible with these principles.
(ii) No such trigger was included in the employment agreement of the outgoing CEO, Sir Alistair Kemble, who served as CEO for eleven years. The Remuneration Committee is reluctant to establish a precedent that would be viewed as an escalation of executive protections beyond what was afforded to Sir Alistair.
(iii) The Board is currently engaged in a planned refreshment process. Three directors' terms expire at the 2025 AGM, and the Nominations Committee (chaired by Lucinda Farrow) is actively evaluating candidates. Inclusion of the Board turnover trigger could inadvertently create a CIC event in connection with ordinary succession planning.
At the principals meeting, Harding personally characterized the Board turnover trigger as a "fundamental protection" and indicated that it was important to him on a personal and philosophical level. Harding stated that he was unwilling to relocate his family, resign a senior position at Marlowe Asset Management, and forfeit over $23 million in equity only to find himself reporting to a hostile board with no meaningful severance protection in the event of a de facto change in control achieved through board replacement rather than an outright acquisition. Victoria Hargrove supported this position by citing precedent in recent S&P 500 CEO appointments, noting that the Board turnover trigger appears in more than 60% of newly negotiated CEO agreements at large-cap US public companies.
Nature of Disagreement. This is a structural and definitional disagreement that is essentially binary. To date, no middle ground has been identified. The trigger is either included or excluded. One potential compromise that has not yet been explored — but which I flag for your consideration — would be to include the Board turnover trigger but with a higher threshold (e.g., two-thirds of directors replaced, rather than a simple majority) or a longer measurement period (e.g., twenty-four months rather than twelve). However, it is unclear whether either side would accept such a modification, and it was not discussed at the August 26 meeting.
B. CIC Severance Multiplier (Double-Trigger)
Both sides have agreed on a double-trigger CIC severance structure — that is, severance is payable only upon the occurrence of both (i) a Change in Control and (ii) a qualifying termination of employment (termination without Cause or resignation for Good Reason) within the applicable protection window following the CIC. The duration of the protection window (twenty-four months, per NTP's draft) is agreed. The disagreement is solely over the severance multiplier.
NTP Final Position (as of Draft 2). A multiplier of 2.5× the sum of base salary and target annual incentive bonus:
2.5 × ($1,750,000 + $3,062,500) = 2.5 × $4,812,500 = $12,031,250
Harding's Position (per H&L redline of Draft 2 and reiterated at the August 26 meeting). A multiplier of 3× the sum of base salary and target annual incentive bonus:
3 × ($1,750,000 + $3,062,500) = 3 × $4,812,500 = $14,437,500
Financial Gap. $14,437,500 − $12,031,250 = $2,406,250.
It should be noted that during the July 12 negotiation call, Victoria Hargrove floated a potential compromise at 2.75×, which would yield CIC cash severance of $13,234,375. At that time, Hargrove characterized this as a figure she "believed she could sell to her client." However, at the August 26 principals meeting, Harding personally retreated from this position and stated, in substance, that the 3× multiplier is "non-negotiable" and represents the minimum level of protection he is willing to accept. This represented a notable hardening of Harding's position and was, in my assessment, one of the most significant developments of the meeting.
Contextual Note — Governance and Proxy Advisory Considerations. In July 2024, Sandra Kolb of Veltrano Proxy Advisors, Inc. (NTP's retained proxy advisory consultant) provided informal guidance to the Remuneration Committee that Thackeray Health IT ("ISS") generally flags CIC severance packages exceeding 3× as a concern in its quantitative pay-for-performance analysis. Kolb further advised that a 3× CIC multiplier, combined with a full Section 280G gross-up (as Harding demands, discussed in Section III.C below), would almost certainly trigger a negative say-on-pay recommendation from ISS. Tarrant Partners LLC would likely follow suit.
Geoffrey Stanton emphasized at the August 26 meeting that NTP received 87.4% shareholder support on its advisory say-on-pay vote at the April 18, 2024 Annual General Meeting. While this represents a comfortable passing margin, Stanton noted that support had declined from 92.1% in 2023, and he is unwilling to approve terms that risk further erosion. This concern is amplified by the fact that NTP's 2025 AGM will require a binding vote on NTP's Directors' Remuneration Policy under UK law, creating an elevated level of shareholder sensitivity around executive pay decisions.
Additionally, Provision 40 of the UK Corporate Governance Code 2024 (applicable to NTP as a Premium Listed company on the London Stock Exchange) states that notice or contract periods for directors should be set at one year or less, and that any payments for loss of office should reflect the departing director's obligation to mitigate loss. While the provision is applied on a "comply or explain" basis and is not directly determinative of US-governed severance terms, the Remuneration Committee has expressed concern about reputational and governance perception issues associated with a 3× multiplier.
C. Section 280G Tax Treatment
This sub-issue concerns the treatment of potential excise taxes under Section 280G and Section 4999 of the Internal Revenue Code, which impose a 20% excise tax on "excess parachute payments" received by a "disqualified individual" in connection with a change in control.
NTP Final Position. NTP proposes a "best-net cutback" or "safe-harbor" approach: total parachute payments would be reduced to the safe-harbor limit (i.e., three times the executive's "base amount" minus one dollar) if, and only if, such a reduction would produce a better after-tax result for the Executive than receiving the full parachute payment amount and bearing the resulting excise tax. Under this approach, NTP would bear no obligation to provide a tax gross-up of any kind. The parachute payment calculations would be performed by a nationally recognized accounting firm selected by NTP (currently proposed as Alder & Hughes LLP).
The relevant safe-harbor limit, based on Harding's base amount, is calculated as follows:
• Base amount (average W-2 compensation from Marlowe Asset Management Digital Holdings, 2019–2023): $7,840,000
• Safe-harbor limit (3 × $7,840,000 − $1): $23,519,999
Harding's Position. Harding demands a full Section 280G excise tax gross-up on all excess parachute payments. Under this approach, NTP would be obligated to make an additional cash payment to Harding in an amount sufficient to place him in the same after-tax position he would have occupied had no excise tax been imposed — including a "gross-up on the gross-up" to account for the income tax and excise tax attributable to the gross-up payment itself.
Financial Exposure of Gross-Up. The potential financial exposure to NTP is substantial. Based on preliminary calculations:
• Estimated total parachute payments under Harding's proposed terms (3× CIC cash severance of $14,437,500 + full acceleration of all unvested equity at target performance levels + benefit continuation for 36 months): approximately $38,200,000.
• Excess parachute payment ($38,200,000 − $7,840,000): approximately $30,360,000.
• Estimated excise tax at 20% ($30,360,000 × 0.20): approximately $6,072,000.
• Estimated gross-up cost to NTP (including gross-up on the gross-up for federal and state income tax and excise tax): $4,200,000 – $6,800,000, depending on assumptions used in the parachute payment calculation, including the treatment of equity acceleration (which involves complex valuation issues under Treasury Regulation Section 1.280G-1).
These estimates are preliminary and would require a full parachute payment analysis by Alder & Hughes LLP once the final terms are established. The range reflects uncertainty regarding the valuation of accelerated equity awards and the interaction between Section 280G and Section 409A in the context of a double-trigger CIC provision.
Whitmore Hobson LLP Analysis. Dr. Rachel Whitmore of Whitmore Hobson LLP, engaged by NTP to provide independent tax advisory services to the Remuneration Committee, prepared a preliminary analysis of the best-net cutback versus gross-up comparison. Her analysis, presented to the Remuneration Committee on August 14, 2024, indicates that under a best-net cutback scenario, Harding's after-tax position is roughly equivalent to — or, in certain scenarios, slightly better than — the after-tax position he would achieve by receiving the full parachute payment plus excise tax (without any gross-up). This is because the safe-harbor cutback avoids not only the 20% excise tax but also the loss of the federal income tax deduction for excess parachute payments under Section 280G(a), which benefits NTP but indirectly affects the total economics of the arrangement.
Dr. Whitmore's analysis suggests that, from a purely economic standpoint, the gross-up demand is largely a matter of principle and optics rather than economic necessity for Harding. However, it is important to note that this analysis is sensitive to the ultimate composition and valuation of the parachute payments, and the conclusion could change if Harding's total parachute payment profile shifts materially.
Nature of Disagreement. This sub-issue involves both a financial component (the $4.2M – $6.8M gross-up exposure) and a principled component. Harding, through Hargrove, frames the gross-up as standard market protection for a candidate who is forfeiting significant equity at his current employer and assuming meaningful personal risk by transitioning to a new role. Hargrove has cited precedent at several large-cap US companies, though she acknowledged at the August 26 meeting that the trend in recent years has been away from gross-ups and toward best-net cutbacks.
NTP frames its refusal to provide a gross-up as governance-driven, citing ISS's publicly stated policy that treats excise tax gross-ups as "problematic" pay practices. The Board is particularly concerned about the interaction between a 3× CIC multiplier and a full gross-up, which together would almost certainly be viewed as excessive by proxy advisory firms and institutional shareholders.
D. CIC Equity Acceleration
Both sides agree that all unvested equity awards should fully accelerate upon a qualifying CIC termination. The disagreement is over the performance level at which PSUs vest upon such acceleration.
NTP Position. Full acceleration of all unvested equity upon a qualifying CIC termination. For PSUs, vesting would be determined as follows:
• If the applicable performance period is 50% or more complete at the time of the CIC, PSUs vest based on actual performance measured through the most recently completed fiscal quarter.
• If the applicable performance period is less than 50% complete at the time of the CIC, PSUs vest at the target performance level.
This approach is consistent with the treatment afforded to other NTP senior executives under the Company's Long-Term Incentive Plan and was adopted by the Remuneration Committee in 2022 as part of a governance-oriented redesign of the executive compensation program.
Harding's Position. Full acceleration of all unvested equity, with all PSUs vesting at the target performance level regardless of the elapsed performance period and regardless of actual performance at the time of the CIC.
Financial Gap. The delta depends entirely on the Company's actual performance metrics at the time of a hypothetical CIC event. If actual performance is tracking at or above target, the two approaches produce identical results. However, if actual performance is below target — particularly in the early years of a performance period when there is limited performance data — Harding's approach would result in a meaningfully higher payout.
The most significant application of this disagreement is to the sign-on PSU grant ($6,400,000 at target) and the first one or two annual LTI PSU tranches, which together could represent $15,000,000 or more in target value. If actual performance at the time of a CIC were tracking at, say, 60% of target, the difference between actual-performance vesting and target-level vesting could amount to several million dollars. Precise quantification is not possible at this stage, as it depends on future performance outcomes that are inherently uncertain.
E. CIC Benefit Continuation
NTP Position. Twenty-four (24) months of continued health insurance coverage through COBRA, with NTP subsidizing the premium at the same rate as active employees. Additionally, NTP would provide $50,000 in outplacement assistance through a nationally recognized executive outplacement firm.
Harding's Position. Thirty-six (36) months of continued participation in NTP's full executive benefits program — not limited to COBRA health insurance but including dental, vision, life insurance, disability insurance, and the executive health program. Harding has not identified a specific outplacement assistance amount, and this item is not considered material by either side.
Financial Gap. The gap is twelve (12) additional months of benefit continuation, and the scope of coverage is broader under Harding's proposal (full executive benefits versus COBRA-only). The estimated incremental cost is approximately $75,000 – $120,000, depending on benefit valuations and the applicable premium rates.
While this gap is relatively modest in dollar terms — particularly in the context of the other CIC issues — it is worth noting that the additional twelve months of benefit continuation would be included in the total parachute payment calculation under Section 280G, thereby increasing the excess parachute payment amount and, correspondingly, the excise tax exposure and potential gross-up cost.
IV. Cluster Two — Restrictive Covenant Provisions (Section 9 of Draft Agreement)
The restrictive covenant provisions represent the second principal cluster of unresolved issues. These provisions govern Harding's post-termination obligations regarding non-competition, garden leave, and non-solicitation. The disagreements in this cluster span four sub-issues (a fifth sub-issue — geographic scope — has been resolved). These issues are discussed below.
A. Non-Compete Duration
NTP Position (as of Draft 2). An eighteen (18) month post-termination non-competition period. This represents a significant concession from NTP's initial position of twenty-four (24) months in Draft 1. The concession was authorized by the Board on August 9, 2024, following a discussion between Dame Philippa Thornton-Hale and Geoffrey Stanton, and communicated to the deal team by Elaine Whitford.
Harding's Position. A twelve (12) month post-termination non-competition period, matching the non-compete duration in Harding's current employment agreement with Marlowe Asset Management Digital Holdings. Hargrove has argued that requiring Harding to accept a longer non-compete than his current arrangement is commercially unreasonable and would effectively punish Harding for accepting the NTP position.
Gap. Six (6) months.
Enforceability Note. Calderwood & Harkness's internal enforceability analysis, prepared by Devon Archer (Senior Associate) and circulated to the deal team on June 6, 2024, flagged that even an eighteen-month non-compete in a New York-governed agreement faces meaningful enforceability risk under the state's reasonableness analysis. New York courts apply a three-part test for restrictive covenants, requiring that the restriction be (i) no greater than necessary to protect a legitimate employer interest, (ii) not impose an undue hardship on the employee, and (iii) not be injurious to the public. While New York courts have upheld non-competes of up to twenty-four months in certain circumstances, the trend in recent judicial decisions has favored shorter durations, particularly for senior executives in rapidly evolving technology sectors.
Additionally, pending New York legislation — Assembly Bill A1278B and Senate Bill S3100A, which would impose a near-total ban on non-compete agreements — adds further uncertainty to the enforceability analysis. While the legislation has not yet been enacted and its prospects are uncertain, its pendency has created a chilling effect on aggressive non-compete enforcement in New York. If enacted, the legislation could render the non-compete provision entirely unenforceable, regardless of its duration.
Devon Archer's memo recommended a fallback approach: an eighteen-month non-compete period combined with a concurrent paid garden leave period, so as to reduce the effective post-employment restraint and thereby improve enforceability. This recommendation aligns with NTP's current negotiating posture (discussed in Section IV.D below), though the parties disagree on the terms of the garden leave provision.
B. Non-Compete Geographic Scope
NTP Position (as of Draft 2). North America and Western Europe.
Harding's Position. North America and Western Europe.
Status. This sub-issue is agreed. NTP moved from a worldwide geographic scope in Draft 1 to North America and Western Europe in Draft 2, and Harding accepted this scope in H&L's August 19 redline. No remaining gap exists on this point.
C. Non-Compete Activity Definition
NTP Position. The non-compete would prohibit Harding from accepting employment with, or providing services (whether as an employee, consultant, advisor, board member, or otherwise) to, any company that derives more than 15% of its consolidated annual revenue from telecommunications services, telecommunications infrastructure, or enterprise software-as-a-service ("SaaS") platforms serving telecommunications operators. This is an objective, revenue-based test designed to capture both direct competitors and companies with material telecommunications operations, while excluding diversified companies with only incidental telecom activities.
Harding's Position. The non-compete would be limited to "direct competitors" identified on a schedule of eight (8) named companies, to be mutually agreed by NTP and Harding at the time the Agreement is executed and refreshed annually by mutual agreement during the employment term. Harding has not yet proposed the specific companies for the schedule, but Hargrove indicated at the August 26 meeting that the list would likely include "the usual suspects" — i.e., the largest global telecom operators and infrastructure companies that NTP regularly identifies as competitors in its annual report and investor presentations.
Gap. This is a fundamental structural disagreement. NTP's revenue-based test is objective and broad, capturing any employer that meets the revenue threshold regardless of whether it appears on a predetermined list. Harding's scheduled-competitor approach is narrow and inherently subjective, requiring annual renegotiation and mutual agreement on the list of covered competitors.
NTP's principal objection to the scheduled-competitor approach is that it is easily circumvented. A competitor could restructure, rebrand, or merge with a non-listed entity and thereby fall outside the restriction. Additionally, new entrants to the telecommunications market — including technology companies that pivot into telecom infrastructure — would not be captured unless and until the list is refreshed by mutual agreement, which requires Harding's consent. NTP views this as providing Harding with an effective veto over the scope of his own non-compete.
Harding's principal objection to the revenue-based test is that it is overly broad. Harding has argued that a 15% revenue threshold could capture large, diversified technology companies (such as major cloud computing providers or enterprise software companies) that have telecom-related business lines but are not genuine competitors of NTP. Harding has characterized the revenue-based test as potentially precluding him from employment at a wide range of companies where NTP has no legitimate competitive concern.
Nature of Disagreement. Structural and definitional. The gap here is not about financial quantum but about the fundamental architecture of the non-compete restriction.
D. Garden Leave
The garden leave provision is closely interrelated with the non-compete duration issue discussed in Section IV.A above, as the parties' respective proposals contemplate different degrees of overlap between the garden leave period and the post-termination non-compete period.
NTP Position. Six (6) months of paid garden leave at base salary only:
$1,750,000 ÷ 12 × 6 = $875,000
The garden leave period would run concurrently with the first six months of the eighteen-month non-compete period. Under this structure, the effective post-departure restraint consists of six months of funded garden leave followed by twelve months of unfunded non-compete — yielding a total restraint period of eighteen months, of which only the first six are compensated.
Harding's Position. Twelve (12) months of paid garden leave at full compensation, including both base salary and a pro-rata target annual incentive bonus:
($1,750,000 + $3,062,500) ÷ 12 × 12 = $4,812,500
Under Harding's proposal, the garden leave period and the non-compete would run fully concurrently, so that the twelve-month non-compete would effectively expire at the end of the twelve-month garden leave period. This means there would be no unfunded post-employment non-compete period whatsoever.
Financial Gap. $4,812,500 − $875,000 = $3,937,500.
Structural Impact. Beyond the financial delta, the structural implications of Harding's proposal are significant. By requiring the garden leave and non-compete to run fully concurrently and to be of equal duration, Harding's proposal effectively eliminates any unfunded non-compete period. NTP views this as fundamentally undermining the purpose of the restrictive covenant, which is to ensure that Harding does not compete with NTP for a meaningful period following his departure. If Harding is fully compensated throughout the entire non-compete period, the covenant functions less as a genuine restraint and more as a paid sabbatical — a characterization that Geoffrey Stanton used during the August 26 meeting.
Conversely, Hargrove has argued that requiring Harding to serve a post-employment non-compete without compensation is inequitable and would be viewed unfavorably by courts assessing the reasonableness of the restriction. Hargrove cited the trend in UK law (where garden leave is the norm rather than the exception for senior executives) and argued that a funded non-compete period enhances enforceability, particularly in light of the pending New York legislation discussed in Section IV.A above.
E. Non-Solicitation. NTP Position. A twenty-four (24) month post-termination non-solicitation covenant, applying to both employees and customers of NTP and its subsidiaries.
Harding's Position. An eighteen (18) month post-termination non-solicitation covenant, applying to employees of NTP and its subsidiaries only. Harding categorically rejects any customer non-solicitation restriction.
Gap — Duration. Six (6) months (24 months versus 18 months). This gap is relatively modest and, based on the tone of the August 26 discussion, appears amenable to compromise.
Gap — Scope. The more significant disagreement is over the scope of the non-solicitation covenant. NTP seeks to prohibit Harding from soliciting both employees and customers; Harding refuses the customer component entirely. Hargrove's argument is that customer non-solicitation covenants are difficult to enforce, practically unworkable for a CEO-level executive (who interacts with hundreds of customers and business relationships in the ordinary course), and impose an unreasonable burden on Harding's future employment prospects. NTP's argument is that the CEO's customer relationships represent the Company's most valuable competitive asset and that exclusion of customer non-solicitation would leave a significant gap in NTP's post-employment protections.
Nature of Disagreement. The duration gap is quantitative and likely negotiable. The customer non-solicitation scope is a structural disagreement that has been firmly resisted by Harding and his counsel.
V. Summary Table of Remaining Gaps
The following table presents a consolidated summary of all unresolved negotiation issues as of August 28, 2024:
Aggregate Quantifiable Financial Gap (CIC cluster only, excluding PSU acceleration variable): Approximately $6.6M – $9.2M, consisting of the CIC multiplier delta ($2.4M), gross-up exposure ($4.2M – $6.8M), and benefit continuation ($75K – $120K).
Aggregate Quantifiable Financial Gap (Restrictive covenant cluster): $3,937,500 (garden leave), plus the non-quantifiable structural disagreements on activity definition and customer non-solicitation scope.
VI. Assessment and Observations
Based on the August 26 principals meeting and the full course of negotiations to date, I offer the following assessment and observations for your consideration:
Interrelation of the Two Clusters. The CIC and restrictive covenant clusters are not independent of one another. Victoria Hargrove has indicated informally — in sidebar conversations following the July 12 and July 19 negotiation calls — that flexibility on the restrictive covenant terms could create room for movement on CIC terms, and vice versa. This suggests that a package deal, rather than issue-by-issue negotiation, may be the most productive approach for the final proposal. However, at the August 26 meeting, Harding personally described the 3× CIC multiplier, the full Section 280G gross-up, and the Board turnover trigger as "non-negotiable," which significantly constrains the universe of available trade-offs.
Governance and Shareholder Risk. The CIC issues present both a financial gap and a governance and shareholder risk that the Remuneration Committee must weigh carefully. The Remuneration Committee — consisting of Geoffrey Stanton (Chair), Dame Philippa Thornton-Hale, Lucinda Farrow, and Dr. Tomás Herrera — has been clear in its instruction to the deal team that the guidance of ISS and Veltrano Proxy Advisors, particularly regarding the combined effect of a 3× CIC multiplier and a full Section 280G gross-up, cannot be disregarded. Sandra Kolb of Veltrano has indicated that this combination would likely trigger a negative say-on-pay recommendation from ISS, and the Remuneration Committee views such an outcome as unacceptable. NTP's 2025 AGM will require a binding vote on the Directors' Remuneration Policy — not merely an advisory say-on-pay vote — making the stakes considerably higher. A negative ISS recommendation on the eve of a binding policy vote could have far-reaching consequences for the Board's credibility and the Company's investor relations.
Enforceability of Restrictive Covenants. The restrictive covenant issues are compounded by the enforceability concerns described in Section IV.A above. NTP's concession from a twenty-four-month non-compete to eighteen months was significant and represented the outer boundary of what the Board was willing to offer. Harding's insistence on a twelve-month non-compete coupled with twelve months of fully compensated garden leave, running entirely concurrently, would effectively neutralize the non-compete as a meaningful restraint. Under Harding's proposal, the non-compete period is fully funded, eliminating the financial deterrent effect, and expires simultaneously with the garden leave period, leaving no post-garden-leave restriction whatsoever. Geoffrey Stanton characterized this structure at the August 26 meeting as "a paid holiday with a restrictive covenant label," and the Board's frustration on this point was evident.
Non-CIC Severance — Additional Open Item. Although it was not a principal focus of the August 26 meeting, it should be noted that the non-CIC severance terms also remain unresolved. NTP proposes a 2× multiplier on base salary and target annual incentive ($9,625,000); Harding demands a 2.5× multiplier ($12,031,250). This gap of $2,406,250 mirrors the CIC multiplier gap and may be addressable as part of a broader package compromise. The parties did not devote significant discussion time to this issue at the principals meeting, as the CIC provisions were the primary focus, but it remains an open term that will need to be resolved.
Overall Likelihood of Agreement. From the August 26 meeting, the likelihood of reaching full agreement on all open terms appears low. Both sides expressed genuine regret but acknowledged what Dame Philippa Thornton-Hale described as "fundamental philosophical differences" regarding the appropriate balance between executive protection and corporate governance constraints. Harding views himself as a candidate who is making significant personal and financial sacrifices to join NTP and who is entitled to best-in-class protections commensurate with those sacrifices. The Board views itself as constrained by UK governance norms, shareholder expectations, and proxy advisory guidance, and as unwilling to establish precedents that could be viewed as excessive by investors and regulators.
That said, neither side has formally terminated negotiations. The agreement to allow NTP to formulate one final compromise proposal, and Harding's commitment to review it "in good faith," preserves a window — albeit a narrow one — for resolution.
VII. Recommended Next Steps
Based on the foregoing analysis, I recommend the following next steps:
1. Seek Board Authorization for a Final Compromise Proposal. The Remuneration Committee should be convened to authorize a "best and final" offer. The proposal should be developed with a clear understanding of the Board's absolute limits on each issue, so that it can be presented to Harding as a comprehensive package rather than an invitation for further point-by-point negotiation. I would recommend that the proposal be framed as a take-it-or-leave-it offer, with a defined response deadline (e.g., ten business days), to preserve the Board's credibility and prevent further protracted negotiation. It should be recognized that the Board has already made material concessions, including the reduction of the non-compete scope from worldwide to North America and Western Europe and the reduction of the non-compete duration from twenty-four to eighteen months.
2. Identify Areas of Greatest Flexibility. In formulating the final proposal, the deal team should determine whether any further movement is possible on the garden leave terms or the non-compete activity definition, as these may be the areas of greatest potential flexibility on the Northgate side without triggering governance concerns. Specifically:
(a) Garden leave: A compromise at nine (9) months of garden leave at base salary plus a pro-rated portion of the target bonus — running concurrently with the non-compete — might bridge the gap between the parties without fully neutralizing the unfunded non-compete period.
(b) Activity definition: A hybrid approach combining a scheduled-competitor list with a revenue-based backstop (e.g., the schedule of named competitors plus any additional company that derives more than 25% of revenue from telecom services) could address both sides' concerns. This approach would give Harding the certainty of a defined list while preserving NTP's ability to capture new or restructured competitors that meet an objective revenue threshold.
3. Prepare the Remuneration Committee for a Possible Termination of Negotiations. If Harding does not accept the final proposal, the Board must be prepared to terminate negotiations and move to an alternative candidate. The Remuneration Committee should receive a clear-eyed assessment of the costs and risks of a failed negotiation — including the impact on NTP's CEO search timeline, market perception, and the Company's operations during an extended vacancy — so that this decision, if it becomes necessary, can be made on a fully informed basis.
4. Coordinate on Contingency Planning. In parallel with the final proposal, the deal team should coordinate with Elaine Whitford and Priya Narayanan (SVP, Human Resources) on contingency planning. This should include re-engagement with Kensington Partners, the executive search firm retained by NTP, and specifically with Antonia Blythe (Managing Director), to evaluate alternative CEO candidates and interim CEO arrangements. It would also be prudent to assess whether Sir Alistair Kemble would be willing to extend his service on a transitional basis if the Harding negotiation fails.
5. Drafting of Final Proposal. I remain available to prepare drafting of the final compromise proposal, including a revised term sheet and corresponding redline of the draft Agreement, upon receipt of Board direction. Given the narrow window of opportunity, I would recommend targeting circulation of the final proposal no later than September 6, 2024, to allow adequate time for Harding's review before the anticipated October 1 (or November 1) start date becomes unachievable.
VIII. Distribution and Privilege
This memorandum is privileged attorney work product prepared in connection with the legal representation of Northgate Telecommunications PLC and its affiliates under Calderwood & Harkness LLP engagement 1022-00004. It reflects the mental impressions, conclusions, opinions, and legal theories of counsel and is protected by the attorney-client privilege, the work product doctrine, and all other applicable privileges and protections.
Distribution of this memorandum is limited to the following individuals unless otherwise directed by Renata Vasquez:
• Renata Vasquez, Partner, Calderwood & Harkness LLP
• Bernard Crawford, Billing Partner, Calderwood & Harkness LLP
• Client contacts as authorized and directed by Vasquez
This memorandum should not be forwarded, copied, distributed, or disclosed to any third party without the prior written authorization of Renata Vasquez. Inadvertent disclosure does not constitute a waiver of any applicable privilege or protection.
Copy to file.
Respectfully submitted,
James Underwood Associate Calderwood & Harkness LLP One Manhattan West, 55th Floor New York, New York 10001 Direct: (212) 555-0147 junderwood@calderwoodharkness.com
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
Issue | NTP Position | Harding Position | Gap / Delta
CIC Definition — Board Turnover Trigger | Excluded | Included (majority of directors replaced in 12-month period) | Binary disagreement — no middle ground identified
CIC Severance Multiplier | 2.5× ($12,031,250) | 3× ($14,437,500) | $2,406,250
Section 280G Tax Treatment | Best-net cutback (no gross-up) | Full excise tax gross-up | $4.2M – $6.8M potential exposure to NTP
CIC PSU Acceleration | Pro-rata based on actual performance (or target if <50% of period elapsed) | At target regardless of elapsed period or actual performance | Variable — potentially several million dollars depending on performance at time of CIC
CIC Benefit Continuation | 24 months COBRA; $50K outplacement | 36 months full executive benefits | 12 additional months; ~$75K – $120K incremental cost
Non-Compete Duration | 18 months | 12 months | 6 months
Non-Compete Activity Scope | Revenue-based test (>15% from telecom/enterprise SaaS) | Scheduled competitor list (8 named companies, refreshed annually) | Structural — objective test vs. enumerated list
Garden Leave Duration & Compensation | 6 months at base salary only ($875,000); concurrent with first 6 months of non-compete | 12 months at full compensation ($4,812,500); fully concurrent with 12-month non-compete | $3,937,500; structural impact of eliminating unfunded non-compete period
Non-Solicitation Duration | 24 months | 18 months | 6 months
Non-Solicitation Scope | Employees and customers | Employees only | Customer non-solicitation categorically rejected by Harding

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT

MEMORANDUM

MATTER NO.: 1022-00004

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