1022-00004 · Northgate Telecommunications PLC · Term Sheet Negotiation

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PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

Call Notes: Term Sheet Negotiation Call #1

Date of Call: June 24, 2024

Time: 2:00 PM – 3:45 PM EDT

Format: Videoconference (Northgate Data Systems)

Matter: Northgate Telecommunications PLC — CEO Employment Negotiation

Matter Number: 1022-00004

Prepared By: Devon Archer, Associate, Calderwood & Harkness LLP

Date Prepared: June 24, 2024

1. Attendees

Calderwood & Harkness LLP (Counsel to Northgate Telecommunications PLC)

• Renata Vasquez, Partner (lead negotiator)

• James Underwood, Associate

• Devon Archer, Associate (note-taker)

Hargrove & Liddell LLP (Personal Counsel to Marcus Elliot Harding)

• Victoria Hargrove, Partner (lead negotiator)

• Nathan Chu, Associate

Not Present (but Referenced During Call)

• Elaine Whitford, SVP & Group General Counsel, Northgate Telecommunications PLC — not on call; receiving a separate debrief from Vasquez following the call

• Marcus Elliot Harding — not on call; represented by Hargrove & Liddell LLP

• Geoffrey Stanton, Chair, Remuneration Committee, Northgate Telecommunications PLC — not on call; his guidance and instructions to the negotiating team were conveyed by Vasquez at various points during the discussion

• Dame Philippa Thornton-Hale, Non-Executive Director, Northgate Telecommunications PLC — referenced by Vasquez in connection with the Board's position on the CIC Board turnover trigger

• Sandra Kolb, Managing Director, Veltrano Proxy Advisors, Inc. — referenced by Vasquez in connection with proxy advisory analysis

• Dr. Rachel Whitmore, Whitmore Hobson LLP — referenced by Vasquez as the independent compensation consultant to the Remuneration Committee

2. Purpose of Call

This call constituted the first substantive negotiation session between Calderwood & Harkness LLP, on behalf of Northgate Telecommunications PLC ("NTP" or "Northgate" or the "Company"), and Hargrove & Liddell LLP, on behalf of Marcus Elliot Harding ("Harding" or the "Executive"), following the exchange of initial term sheet drafts.

By way of background, Calderwood & Harkness circulated the initial term sheet (v1) to Hargrove & Liddell on June 10, 2024. Hargrove & Liddell returned a significantly marked-up counterproposal (v2) on June 17, 2024, which included material revisions across multiple key economic and protective provisions.

The objective of this call was to discuss the key areas of divergence between Northgate's initial term sheet and Harding's counterproposal, with particular focus on the most material open issues. Vasquez opened the call by noting that this session was intended to be the first of what both parties anticipate will be a series of negotiation sessions designed to narrow the gaps between the parties' respective positions, with the ultimate goal of reaching agreement on a comprehensive term sheet that would serve as the basis for drafting a definitive employment agreement.

Vasquez expressed Northgate's strong interest in concluding these negotiations expeditiously given the Board's desire to announce Harding's appointment as CEO before the end of the third quarter, and Hargrove acknowledged that Harding shares the desire to move forward efficiently, while emphasizing that the substance of the protections must be right before speed of execution becomes the priority.

3. Agenda Overview

Vasquez proposed the following order of discussion for the call:

1. Change in control severance provisions, including the CIC multiplier, Section 280G tax treatment, CIC definition triggers, and the double-trigger mechanism;

2. Restrictive covenant terms, including non-compete duration, geographic scope, activity definition, and non-solicitation provisions;

3. Garden leave provisions; and

4. A brief status check on areas where the parties appear to be at or near agreement, including base salary, bonus targets, equity compensation, perquisites, and related terms.

Hargrove agreed to the proposed agenda order but stated that she would also briefly raise the make-whole equity quantum during the status check portion of the call, as Harding had additional views on the structure of that component that she wished to flag early in the process.

4. Discussion of Change in Control Provisions

4.1 CIC Severance Multiplier

The first substantive topic addressed was the CIC severance multiplier, which represents one of the most significant dollar-value gaps between the two term sheet drafts.

Northgate's position (v1 term sheet): A multiplier of 2.5x the sum of base salary plus target annual bonus, calculated as follows:

2.5 × ($1,750,000 base salary + $3,062,500 target annual bonus) = 2.5 × $4,812,500 = $12,031,250

Harding's position (v2 redline): A multiplier of 3x the sum of base salary plus target annual bonus, calculated as follows:

3 × ($1,750,000 base salary + $3,062,500 target annual bonus) = 3 × $4,812,500 = $14,437,500

Dollar gap between the two positions: $14,437,500 − $12,031,250 = $2,406,250.

Hargrove opened the discussion on this point by stating that Harding's current employment agreement with Marlowe Asset Management Digital Holdings, Inc. provides for 3x (base plus bonus) CIC severance with full vesting acceleration of all outstanding equity awards. Hargrove characterized the 3x multiplier as a baseline expectation for Harding — not an aspirational ask — and stated unequivocally that any offer below his current protection level would represent a step backward from Harding's existing arrangement and would be unacceptable to him.

Hargrove further emphasized the context of the recruitment. Harding is leaving a secure Chief Operating Officer position at a company with a market capitalization of approximately $34 billion, where he has been instrumental in growing Marlowe Asset Management's SaaS annual recurring revenue from $120 million to $1.8 billion over his tenure. The risk profile associated with accepting the NTP CEO role — which involves relocating to a new leadership position at a company undergoing strategic transformation and operating in a different competitive landscape — justifies, at minimum, equivalent economic protection to what Harding currently enjoys at Marlowe Asset Management. Hargrove stressed that Harding is not a candidate who needs this role; Northgate is pursuing him, and the compensation package must reflect that dynamic.

Vasquez responded with a detailed explanation of Northgate's rationale. She stated that the Remuneration Committee, chaired by Geoffrey Stanton, had carefully considered market data compiled by the independent compensation consultant, Whitmore Hobson LLP, as well as the applicable governance constraints, before arriving at the 2.5x multiplier. Vasquez emphasized that the 2.5x multiplier reflects the upper end of what the Committee considers defensible under the UK Corporate Governance Code 2024, specifically Provision 40, which sets expectations regarding notice periods and severance multiples for UK-listed companies and reflects the principle that severance payments should not reward failure or incentivize departure.

Vasquez further noted that NTP is dual-listed — on the London Stock Exchange (LON: NTP) and via American Depositary Receipts on the New York Stock Exchange (NYSE: NTPC) — and is therefore subject to scrutiny from both UK and US institutional shareholders and proxy advisory firms. She referenced the Company's most recent Annual General Meeting, held on April 18, 2024, at which NTP received 87.4% support on its advisory say-on-pay resolution. While this level of support is adequate, Vasquez explained that the Board is concerned that offering a 3x CIC package — particularly in combination with certain other elements of Harding's counterproposal — could jeopardize future say-on-pay votes, erode shareholder confidence in the Remuneration Committee's governance framework, and potentially trigger binding shareholder action under the UK remuneration policy regime.

Vasquez also referenced the analysis prepared by Veltrano Proxy Advisors, Inc. (Sandra Kolb, Managing Director), which Northgate had engaged to provide a preliminary assessment of how the proposed executive compensation package would likely be received by proxy advisory firms. According to Vasquez, the Veltrano analysis indicated that Thackeray Health IT (ISS) generally flags CIC severance exceeding 3x as a significant governance concern, and that a 3x multiplier combined with a full tax gross-up (discussed separately below in Section 4.2) would very likely trigger a negative say-on-pay recommendation from ISS. Vasquez noted that Tarrant Partners LLC applies a similar analytical framework and would likely reach the same conclusion.

Hargrove pushed back on the governance framing. She argued that Harding's compensation package should properly be benchmarked against US peer companies rather than UK norms, given several key facts: (a) Harding would be based in New York at NTP's US Operations Headquarters at 600 Lexington Avenue, 38th Floor; (b) the employment agreement itself would be governed by the laws of the State of New York; and (c) the role effectively requires Harding to compete for talent and operate in the US executive market. Hargrove stated that among S&P 500 and Russell 1000 CEO employment agreements in the technology and telecommunications sectors, a 3x CIC multiplier is within the mainstream range, and that the UK governance overlay should not be used to artificially depress what is fundamentally a US-market executive employment negotiation.

Vasquez acknowledged the cross-border tension inherent in the arrangement but reiterated that, regardless of the governing law of the employment agreement or Harding's physical location, NTP is a UK public limited company and its remuneration policy is subject to a binding shareholder vote at the 2025 Annual General Meeting. The Board cannot approve compensation terms that it reasonably believes will fail that binding vote, and Vasquez indicated that the Remuneration Committee views this as a genuine constraint rather than a negotiating tactic.

No resolution was reached on this issue during the call. Both sides restated their respective positions clearly, and it was agreed that the CIC multiplier would continue to be discussed at subsequent negotiation sessions. Vasquez indicated that she would report Hargrove's arguments to the Remuneration Committee and seek further guidance, but did not signal any specific movement from the 2.5x position at this time.

4.2 Section 280G Tax Treatment (Gross-Up vs. Best-Net Cutback)

The second CIC-related topic was the treatment of potential excise taxes under Section 280G of the Internal Revenue Code.

Northgate's position (v1 term sheet): A "best-net cutback" approach — that is, if any payments to Harding in connection with a change in control would constitute "parachute payments" within the meaning of Section 280G, the total payments would be reduced to the safe harbor limit (i.e., three times the "base amount" minus one dollar) if, and only if, such reduction would result in a better after-tax outcome for the Executive after taking into account the 20% excise tax imposed by Section 4999 of the Code. No excise tax gross-up would be provided under any circumstances.

Harding's position (v2 redline): A full Section 280G excise tax gross-up — that is, if any excise tax is imposed under Section 4999, NTP would make an additional payment to Harding sufficient to place him in the same after-tax position he would have been in had no excise tax been imposed.

Hargrove opened by stating that Harding's existing employment agreement with Marlowe Asset Management Digital Holdings includes a full 280G gross-up provision and that this feature is standard among executive agreements for individuals of Harding's caliber and seniority. She characterized the best-net cutback approach as effectively shifting the entire economic risk of a change in control to the Executive, penalizing him for a corporate transaction over which he may have limited control and from which shareholders will typically benefit significantly.

Vasquez responded by walking through the preliminary Section 280G analysis that Calderwood & Harkness had prepared in connection with structuring the initial term sheet. The key parameters of this analysis were as follows:

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

• Safe harbor limit under Section 280G: (3 × $7,840,000) − $1 = $23,519,999

• Estimated total parachute payments under Harding's demanded terms (3x CIC cash severance + full equity acceleration + benefits continuation): approximately $38,200,000

• Excess parachute payment: $38,200,000 − $7,840,000 = $30,360,000

• Estimated excise tax at 20% rate: approximately $6,072,000

Vasquez noted that the estimated potential gross-up cost to NTP, accounting for the excise tax on the gross-up payment itself and associated income tax "gross-up on the gross-up," could range from approximately $4,200,000 to $6,800,000 depending on the final composition of the parachute payments, the applicable marginal tax rates at the time of the CIC, and the allocation methodology used to determine the portion of payments attributable to the CIC.

Vasquez then referenced the analysis prepared by Dr. Rachel Whitmore of Whitmore Hobson LLP, the independent compensation consultant retained by the Remuneration Committee. According to Vasquez, Whitmore Hobson had modeled the after-tax outcomes under both the gross-up approach and the best-net cutback approach and had concluded that, under the best-net approach, a cutback of total parachute payments to the safe harbor limit of $23,519,999 would yield an after-tax position for Harding that is roughly equivalent to — and potentially slightly better than — receiving the full uncapped parachute payment and paying the 20% excise tax out of pocket. In other words, the Whitmore Hobson analysis suggests that the gross-up is largely a matter of principle and optics rather than one of genuine economic substance, because Harding would be approximately equally well off (or marginally better off) under the cutback.

Hargrove disputed this characterization vigorously. She argued that the Whitmore Hobson analysis necessarily depends on a set of assumptions about Harding's marginal federal and state income tax rates, the composition and timing of parachute payments, and the applicable Section 280G allocation methodology — and that her own firm's analysis, prepared with input from Harding's personal tax advisors, reaches a materially different conclusion under certain plausible scenarios. Hargrove stated that the gross-up provision protects Harding against downside scenarios in which the best-net cutback is not the optimal outcome — i.e., scenarios in which a cutback would leave him meaningfully worse off than receiving the full payment with a gross-up. She argued that the purpose of the gross-up is precisely to eliminate the uncertainty inherent in these calculations and to ensure that Harding is held harmless regardless of how the numbers ultimately fall.

Vasquez reiterated the proxy advisory dimension. She stated that ISS policy guidelines explicitly treat excise tax gross-ups as a "problematic pay practice" and that Veltrano Proxy Advisors had specifically identified the 280G gross-up as a risk factor that, in combination with a 3x CIC multiplier, would very likely trigger a negative say-on-pay recommendation. Vasquez noted that the trend among large-cap US public companies over the past decade has been decisively away from 280G gross-ups, with fewer than 10% of S&P 500 companies still maintaining such provisions, and that NTP's Board is unwilling to adopt a practice that is widely viewed as a governance outlier.

No resolution was reached on this issue. Hargrove stated clearly and on the record that the full 280G excise tax gross-up is one of Harding's "non-negotiable" requirements and that she did not have authority from her client to agree to a best-net cutback under any circumstances. Vasquez took note of this characterization but did not alter Northgate's position.

4.3 CIC Definition — Board Turnover Trigger

The third CIC-related topic was the definition of what constitutes a "change in control" for purposes of triggering the CIC severance protections.

Northgate's position (v1 term sheet): CIC is defined to include the following events:

(a) Acquisition by any person or group of more than 50% of the outstanding voting securities of NTP;

(b) Consummation of a merger, consolidation, or similar business combination transaction in which the shareholders of NTP immediately prior to such transaction hold less than 50% of the outstanding voting securities of the surviving or resulting entity immediately following such transaction; and

Notably, Northgate's proposed definition does not include a Board turnover trigger.

Harding's position (v2 redline): Add a fourth trigger:

(d) A change in the composition of the Board of Directors of NTP such that a majority of the directors serving on the Board are replaced within any 12-month period by directors whose appointment or election was not endorsed by a majority of the directors in office prior to such change (a "Board turnover trigger").

Hargrove argued that the Board turnover trigger is a standard protective provision that reflects the practical reality that an executive's employment environment can fundamentally and irrevocably change through a proxy contest, activist campaign, or similar shareholder action even in the absence of a traditional change of ownership or corporate transaction. She stated that the trigger is designed to protect Harding in scenarios where new directors — potentially installed by an activist investor — reconstitute the Board and fundamentally alter the company's strategic direction, management philosophy, or compensation practices in ways that are adverse to the CEO. Without this trigger, Harding could find himself working under a hostile Board that has every incentive to force him out on unfavorable terms, without any CIC protections applying.

Vasquez responded that the Board — and she referenced specifically the views of Dame Philippa Thornton-Hale (Senior Independent Director) and Geoffrey Stanton (Chair, Remuneration Committee) — views the Board turnover trigger as overreach and as inconsistent with fundamental principles of UK corporate governance. Vasquez stated that changes in Board composition through the ordinary shareholder nomination and election process represent the exercise of shareholders' legitimate governance rights and should not, in the Board's view, constitute a "change in control" that triggers substantial severance obligations. To treat ordinary director elections as potential CIC events would, in the Board's assessment, have an undesirable entrenchment effect and would undermine the accountability of the Board to shareholders — precisely the dynamic that the UK Corporate Governance Code is designed to prevent.

Hargrove countered that the Board turnover trigger is a well-established feature of US public company CEO employment agreements and that its inclusion is particularly relevant in NTP's case given the Company's significant and concentrated institutional shareholder base. She referenced the following major shareholders by name:

• Caledonian Asset Management: 8.3% of shares outstanding

• Pemberton Capital Group: 6.7% of shares outstanding

• Thornbury Investment Trust: 5.1% of shares outstanding

• Regis Global Equity Fund: 4.4% of shares outstanding

Hargrove noted that collectively these four shareholders hold approximately 24.5% of NTP's outstanding shares, and that any two of them acting in concert could exercise significant influence over Board composition. She stated that the risk of an activist campaign or contested election is not hypothetical but rather a realistic scenario that Harding must be protected against as a condition of accepting the role.

Vasquez stated that the Board's position on the Board turnover trigger is firm and not subject to compromise. She characterized this as a matter of governance principle on which the Board is unwilling to negotiate, regardless of the other terms of the package.

No resolution was reached. This remains a binary disagreement — the provision is either included or excluded — and there is no obvious middle ground. The note-taker records that the tone of the discussion on this point was cordial but notably more pointed than on other topics, reflecting the strength of conviction on both sides.

4.4 CIC Double-Trigger Mechanism

On a more constructive note, both sides confirmed agreement in principle on a double-trigger CIC severance mechanism. That is, severance benefits would be payable only upon the occurrence of both (i) a CIC event (as defined) and (ii) a qualifying termination of employment within a specified window following the CIC. A qualifying termination would include termination by the Company without "cause" or resignation by the Executive for "good reason," in each case as those terms would be defined in the employment agreement.

There was a brief discussion regarding the length of the post-CIC window during which a qualifying termination must occur in order to trigger severance:

• Northgate's position: 12 months following the CIC event

• Harding's position: 24 months following the CIC event

Both sides acknowledged that this is a secondary issue relative to the multiplier, tax treatment, and definitional questions discussed above, and agreed that the window period could be resolved in the context of the full draft employment agreement. The note-taker records that neither side appeared to view this as a particularly contentious point.

5. Discussion of Restrictive Covenant Provisions

5.1 Non-Compete Duration

Northgate's position (v1 term sheet): 24 months post-termination of employment.

Harding's position (v2 redline): 12 months post-termination of employment.

Hargrove stated that Harding's current non-compete covenant with Marlowe Asset Management Digital Holdings is 12 months in duration with a geographic scope limited to the United States. She stated unequivocally that Harding will not accept a more restrictive covenant than what he currently has. A 24-month non-compete, Hargrove argued, is excessive by any standard and would effectively render Harding unemployable for two full years in his core industry — telecommunications and enterprise technology — at a stage of his career where two years of forced inactivity would represent a significant and potentially irreversible setback to his professional trajectory. Hargrove noted that the telecommunications industry is evolving rapidly and that even 12 months away from active leadership is a meaningful professional sacrifice.

Vasquez acknowledged the gap between the parties' positions and noted that Calderwood & Harkness had internally assessed the enforceability question. Vasquez stated, in candid terms, that a 24-month worldwide non-compete under a New York-governed agreement may face enforceability challenges under New York law, given the reasonableness analysis that New York courts apply to post-employment restrictive covenants — considering factors such as the duration, geographic scope, and scope of restricted activities in relation to the employer's legitimate protectable interests. Vasquez indicated that Northgate was prepared to discuss a potential reduction in duration as part of a broader package deal across the interrelated issues of non-compete duration, geographic scope, activity definition, and garden leave.

Vasquez did not, at this stage, specify the Remuneration Committee's authorized fallback position. [Note: Per Elaine Whitford's email to Vasquez dated June 22, 2024, the Remuneration Committee has authorized movement to 18 months as a fallback position on non-compete duration if necessary to secure agreement on other material terms. This authorization was not disclosed to opposing counsel during this call.]

Hargrove stated that 12 months is Harding's firm position on non-compete duration and that any duration beyond 12 months would need to be offset by enhanced garden leave compensation — effectively providing Harding with full economic protection during the entire restricted period.

5.2 Non-Compete Geographic Scope

Northgate's position (v1 term sheet): Worldwide.

Harding's position (v2 redline): Limited to North America and Western Europe.

Hargrove argued that a worldwide geographic scope is overly broad and unnecessary to protect NTP's legitimate business interests. She stated that NTP's primary competitive markets are concentrated in North America and Western Europe, and that restrictions covering regions such as Asia-Pacific, Latin America, the Middle East, or Africa serve no genuine protective purpose and are punitive in character. Hargrove noted that it would be unreasonable and likely unenforceable to prevent Harding from, for example, accepting a role at a telecommunications company operating exclusively in Southeast Asia.

Vasquez noted that NTP has approximately 22,500 employees globally and maintains operations, partnerships, and customer relationships across multiple regions beyond North America and Western Europe. She argued that a departing CEO would possess knowledge of the Company's global strategy, competitive positioning, capital allocation priorities, M&A pipeline, and technology roadmap that extends well beyond any single geographic region, and that a worldwide scope is warranted to protect that body of confidential and strategically sensitive information.

However, Vasquez also acknowledged that geographic scope is a point on which the parties could seek compromise, and she signaled that Northgate would consider narrowing the scope as part of a broader resolution of the restrictive covenant package. She did not specify what narrowed scope might be acceptable.

No resolution was reached, and both sides agreed to continue the discussion in subsequent calls.

5.3 Non-Compete Activity Definition

Northgate's position (v1 term sheet): The non-compete would restrict Harding from employment by, or provision of services to, any company deriving more than 15% of its consolidated revenue from telecommunications services, telecommunications infrastructure, or enterprise SaaS platforms serving telecommunications operators.

Harding's position (v2 redline): The non-compete would be narrowed to restrict Harding only from employment by, or provision of services to, "direct competitors" listed on a schedule of eight specifically named companies to be attached to the employment agreement.

Hargrove argued that the revenue-percentage test proposed by Northgate is overbroad and could capture companies that are not genuine competitors of NTP. She offered the example of a diversified technology conglomerate with a relatively small telecommunications segment that happens to exceed 15% of consolidated revenue but that does not compete with NTP's core business in any meaningful way. Under Northgate's formulation, Harding would be prohibited from working for such a company even though there is no competitive overlap with NTP. Hargrove characterized this as an unreasonable restraint on Harding's future employment options.

Vasquez defended the revenue-percentage test as an objective, administrable, and well-established standard that avoids the arbitrariness and potential for manipulation inherent in a named-competitor schedule. She noted that a static list of eight companies could quickly become outdated as the industry evolves — through mergers, new market entrants, spin-offs, or business pivots — and that a company not on the original list could become NTP's most significant competitor within months of Harding's departure. The revenue test, by contrast, is self-adjusting and captures the competitive landscape as it exists at the relevant time.

Hargrove countered that a named-competitor schedule provides certainty and predictability to the Executive, who can know with confidence on the date of termination exactly which companies are off-limits, and avoids the potential for costly and protracted litigation over whether a particular company meets the 15% revenue threshold. She noted that revenue-test disputes are fact-intensive and may require access to a prospective employer's nonpublic financial data, creating practical difficulties for enforcement and compliance.

The discussion on this point was described by the note-taker as productive, with both sides engaging constructively on the relative merits of the two approaches. However, no agreement was reached, and both sides agreed to continue exploring possible formulations — including potential hybrid approaches — in subsequent calls.

5.4 Non-Solicitation. Northgate's position (v1 term sheet): 24 months post-termination; covering both employees and customers of NTP.

Harding's position (v2 redline): 18 months post-termination; covering employees only, with no customer non-solicitation restriction.

Hargrove stated that a customer non-solicitation covenant is unnecessary given the nature of NTP's business. NTP is an enterprise and consumer telecommunications company whose customer relationships are institutional in character — driven by long-term contracts, network infrastructure dependencies, and enterprise procurement processes — rather than personal to the CEO. A departing CEO's ability to "solicit" a major telecommunications customer is, in Hargrove's characterization, essentially nonexistent in any practical sense.

Vasquez argued that a departing CEO would possess unique insight into NTP's strategic customer relationships, pricing structures, contract renewal timelines, and competitive positioning vis-à-vis specific accounts, and that this knowledge warrants customer non-solicitation protection, particularly during the period immediately following the CEO's departure.

This topic was discussed only briefly and was not resolved. Both sides agreed it would be revisited in future sessions, likely in the context of a broader negotiation on the full restrictive covenant package.

6. Discussion of Garden Leave Provisions

Northgate's position (v1 term sheet): Six months of paid garden leave, during which Harding would continue to receive base salary only:

$1,750,000 ÷ 12 × 6 = $875,000 total garden leave compensation

Harding's position (v2 redline): Twelve months of garden leave at full compensation — including both base salary and a pro-rata portion of the target annual bonus — with the garden leave period running concurrently with the post-employment non-compete. Under Harding's formulation, if the non-compete is set at 12 months, the 12-month garden leave period would fully overlap, effectively reducing the post-employment non-compete restriction to zero additional months beyond the garden leave period. If the non-compete were set at 18 months (a hypothetical discussed during the call), the effective post-employment non-compete would be reduced to six months.

Hargrove argued that garden leave compensation should be at full pay — base salary plus pro-rata target bonus — because during the garden leave period the Executive remains technically employed by the Company, continues to owe duties of loyalty and confidentiality, and is available to provide transition assistance as requested. She stated that it would be inequitable and inconsistent with market practice to require an executive to remain employed but to reduce his compensation to base salary only. Hargrove also referenced UK market practice, where garden leave is typically provided at full pay, as a relevant benchmark given that NTP is a UK-domiciled company.

Vasquez acknowledged the UK market practice point but raised a more fundamental structural concern. She stated that if garden leave and the non-compete run concurrently under Harding's formulation, Northgate's effective non-compete protection period would be substantially reduced — to zero months in the case of a 12-month non-compete, or to as few as six months in the case of an 18-month non-compete. The Board's intent, Vasquez explained, is that garden leave serve as a paid transition period benefiting both parties, but not as a mechanism to effectively eliminate or undercut the non-compete protection that the Company requires.

Vasquez proposed an alternative framework under which the garden leave period and the non-compete period would run sequentially rather than concurrently — that is, the non-compete clock would begin only after the garden leave period has expired. Alternatively, Vasquez suggested that only a portion of the garden leave period (e.g., 50%) should count against the non-compete, preserving a meaningful post-employment restriction.

Hargrove rejected the sequential treatment proposal. She stated that sequential treatment would effectively extend Harding's total restricted period to 18 months (6-month garden leave + 12-month non-compete), 24 months (12-month garden leave + 12-month non-compete), or even longer — durations that Hargrove characterized as clearly unacceptable and inconsistent with the constraints she had already identified regarding non-compete duration.

No resolution was reached on this issue. Both sides recognized that the garden leave structure is inherently linked to the non-compete duration and compensation terms, and agreed that these issues must be resolved together as part of an integrated package. Vasquez stated that Northgate would consider creative approaches to the sequencing and overlap question, and Hargrove indicated that Harding would be willing to discuss alternatives but not to accept any framework that results in a total restricted period exceeding 12 months.

7. Brief Status Check on Areas of Potential Agreement

Vasquez and Hargrove conducted a brief review of those areas of the term sheet where the parties appear to be at or near agreement, subject to finalization in the drafting of the full employment agreement. The following items were discussed:

• Base salary: $1,750,000 per annum — tentatively agreed. Hargrove noted that Harding's current base salary at Marlowe Asset Management Digital Holdings is $1,450,000, and the proposed NTP base represents a $300,000 increase reflecting the greater scope and responsibility of the CEO role.

• Target annual incentive: 175% of base salary = $3,062,500 — tentatively agreed.

• Maximum annual incentive: 300% of base salary = $5,250,000 — tentatively agreed.

• 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") — tentatively agreed.

• Sign-on cash bonus: $5,000,000, subject to a 24-month clawback obligation in the event of voluntary resignation without good reason — tentatively agreed.

• Supplemental Executive Retirement Plan ("SERP") contribution: $250,000 per year — tentatively agreed.

• Perquisites: Car allowance, executive health program, supplemental life insurance, and financial/tax planning reimbursement — largely agreed, with minor details regarding coverage levels and reimbursement caps to be confirmed during drafting of the full agreement.

• Initial term of employment: Five years, with automatic one-year renewals unless either party provides notice of non-renewal within a specified period prior to expiration — tentatively agreed.

• Proposed start date: October 1, 2024 — tentatively agreed, though Hargrove flagged that Harding may need additional time to manage his transition from Marlowe Asset Management, including notice obligations and the orderly handover of responsibilities. Hargrove indicated that a start date of November 1, 2024 may be necessary, depending on how the transition process unfolds. Vasquez noted that Northgate has a strong preference for the October 1 date but would accommodate a modest delay if required.

Make-Whole Equity Discussion

Hargrove raised the sign-on equity make-whole quantum, which she had flagged at the outset of the call as a topic she wished to address briefly.

Northgate's position (v1 term sheet): A total sign-on equity grant of $18,400,000, structured as follows:

• RSUs: $12,000,000, vesting ratably over three years (one-third per year)

• PSUs: $6,400,000, cliff-vesting at the end of a three-year performance period, subject to performance conditions to be determined

By way of context, Vasquez explained that the make-whole equity quantum was determined by reference to Harding's estimated forfeited equity at Marlowe Asset Management Digital Holdings, which both sides have estimated at approximately $23,400,000. The $5,000,000 gap between the forfeited equity value ($23,400,000) and the NTP sign-on equity grant ($18,400,000) was intended to be bridged by the $5,000,000 sign-on cash bonus, such that Harding's total sign-on package ($18,400,000 equity + $5,000,000 cash = $23,400,000) would be economically equivalent to his forfeited Marlowe Asset Management equity.

Hargrove stated that the $5,000,000 cash offset is not economically equivalent to the forfeited equity for two principal reasons: first, the tax-deferral advantages of equity compensation (which are lost when the make-whole is delivered in cash subject to immediate taxation), and second, the potential for equity appreciation over the vesting period, which further increases the economic value of equity relative to cash. Hargrove indicated that Harding would prefer a larger equity make-whole component — ideally closing the full $23,400,000 gap with equity rather than a cash/equity blend — but she acknowledged that this is not a deal-breaker if the more fundamental issues of CIC protections and restrictive covenants are resolved satisfactorily.

Vasquez provided additional context on the equity pool implications. She noted that Harding's proposed sign-on equity grant plus his first-year annual LTI award would total $18,400,000 + $9,000,000 = $27,400,000. Based on the June 4, 2024 ADR closing price of $15.87 per share, this would require the issuance of approximately 1,726,529 shares, representing approximately 0.25% of NTP's approximately 699 million shares outstanding on a fully diluted basis. Vasquez confirmed that this number of shares is within the remaining capacity of the Northgate Telecommunications PLC 2022 Omnibus Incentive Plan, which has approximately 14.2 million shares remaining in the available share pool.

Both sides agreed that the make-whole equity issue is secondary to the CIC and restrictive covenant disputes, and that it can likely be resolved once the principal areas of disagreement are addressed. Hargrove reserved the right to revisit the make-whole structure in detail at a future session.

8. Non-CIC Severance (Brief Discussion)

The parties briefly touched on the non-CIC severance package — i.e., the severance benefits payable upon a qualifying termination of employment outside of a change in control context.

Northgate's position (v1 term sheet):

• Cash severance: 2x (base salary + target annual bonus) = 2 × $4,812,500 = $9,625,000

• Pro-rata annual incentive bonus for the year of termination

• COBRA continuation coverage for 18 months

• Accelerated vesting of equity awards that would have vested within 12 months following the date of termination

Harding's position (v2 redline):

• Cash severance: 2.5x (base salary + target annual bonus) = 2.5 × $4,812,500 = $12,031,250

• Pro-rata annual incentive bonus for the year of termination

• Full acceleration of all unvested equity awards

• COBRA continuation coverage for 24 months

Hargrove acknowledged that this gap — $2,406,250 on the cash severance component alone, plus the meaningful difference between 12-month partial acceleration and full acceleration of unvested equity — is significant. However, she indicated that non-CIC severance is a negotiable issue for Harding and that the CIC provisions and restrictive covenants are his higher priorities for this stage of the negotiation.

By mutual agreement, the non-CIC severance discussion was deferred to a future negotiation session. Both sides acknowledged that it remains an open issue requiring resolution before the term sheet can be finalized.

9. Process and Next Steps

The parties discussed process and next steps as follows:

1. Second negotiation call: The parties agreed to schedule a second negotiation call for the week of July 1, 2024. [Note: This call was subsequently confirmed for July 1, 2024, at 2:00 PM EDT.]

2. Reporting to principals: Vasquez stated that she would report the substance of this call to Elaine Whitford (SVP & Group General Counsel, NTP) and, through Whitford, to the Remuneration Committee, and that she would obtain any further direction or updated authority from the Committee prior to the next call.

3. Client debrief: Hargrove stated that she would debrief Harding on the call and confirm whether there is any flexibility on any of his stated positions, including those characterized as "non-negotiable" during this session.

4. Revised term sheet: James Underwood (Calderwood & Harkness) is to circulate a revised term sheet (v3) reflecting Northgate's counter-proposals on the issues discussed during this call, incorporating any updated Remuneration Committee guidance, prior to the next negotiation call. The target for circulation of v3 is June 28, 2024.

5. Good faith commitment: Both sides affirmed their commitment to continuing to work in good faith toward a resolution of the outstanding issues.

6. Closing remarks: Vasquez reiterated Northgate's strong interest in securing Harding as CEO and expressed hope that creative solutions could be found to bridge the remaining gaps, while being transparent about the governance constraints under which the Board and Remuneration Committee are operating. Hargrove reciprocated, stating that Harding remains genuinely interested in the NTP opportunity and that he views it as a compelling professional challenge, but emphasized that the economic protections and restrictive covenant terms are fundamental to his willingness to leave a secure and highly compensated position at Marlowe Asset Management Digital Holdings. Both lead partners expressed optimism that an agreement could be reached through continued negotiation.

10. Summary of Open Issues (as of End of Call)

11. Call Duration and Distribution

Call Duration: Approximately 1 hour and 45 minutes (2:00 PM – 3:45 PM EDT).

Distribution of These Notes: Internal Calderwood & Harkness LLP distribution only, as follows:

• Renata Vasquez, Partner

• Bernard Crawford, Partner

• James Underwood, Associate

These notes have not been shared with opposing counsel and are not to be shared with any party outside Calderwood & Harkness LLP.

NOTICE: These notes are privileged and confidential attorney work product prepared in anticipation of continued negotiation and in connection with the provision of legal advice to Northgate Telecommunications PLC. They reflect the mental impressions, strategies, and legal analysis of counsel. Do not distribute outside Calderwood & Harkness LLP without the prior written approval of Renata Vasquez. Any inadvertent disclosure does not constitute a waiver of any applicable privilege or protection.

Prepared by:

Devon Archer Associate, Calderwood & Harkness LLP June 24, 2024

Issue	NTP Position	Harding Position	Status
CIC multiplier	2.5x ($12,031,250)	3x ($14,437,500)	Unresolved — $2,406,250 gap
CIC tax treatment	Best-net cutback	Full 280G gross-up	Unresolved — est. $4.2M–$6.8M exposure
CIC definition — Board turnover trigger	Excluded	Included	Unresolved — binary disagreement
CIC double-trigger window	12 months	24 months	Unresolved — secondary issue
Non-compete duration	24 months	12 months	Unresolved
Non-compete geographic scope	Worldwide	North America + Western Europe	Unresolved
Non-compete activity definition	Revenue-based test (>15%)	Scheduled competitors (8 companies)	Unresolved
Non-solicitation	24 months; employees + customers	18 months; employees only	Unresolved
Garden leave	6 months at base salary	12 months at full comp, concurrent with non-compete	Unresolved
Non-CIC severance multiplier	2x ($9,625,000)	2.5x ($12,031,250)	Unresolved — deferred
Make-whole equity quantum	$18.4M equity + $5M cash	Prefers higher equity component	Likely resolvable
Base salary, bonus, LTI, perquisites	As per v1 term sheet	Tentatively agreed	Near agreement
Start date	October 1, 2024	October 1 or November 1, 2024	Near agreement

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
Call Notes: Term Sheet Negotiation Call #1
Date of Call: June 24, 2024
Time: 2:00 PM – 3:45 PM EDT
Format: Videoconference (Northgate Data Systems)
Matter: Northgate Telecommunications PLC — CEO Employment Negotiation
Matter Number: 1022-00004
Prepared By: Devon Archer, Associate, Calderwood & Harkness LLP
Date Prepared: June 24, 2024
1. Attendees
Calderwood & Harkness LLP (Counsel to Northgate Telecommunications PLC)
•  Renata Vasquez, Partner (lead negotiator)
•  James Underwood, Associate
•  Devon Archer, Associate (note-taker)
Hargrove & Liddell LLP (Personal Counsel to Marcus Elliot Harding)
•  Victoria Hargrove, Partner (lead negotiator)
•  Nathan Chu, Associate
Not Present (but Referenced During Call)
•  Elaine Whitford, SVP & Group General Counsel, Northgate Telecommunications PLC — not on call; receiving a separate debrief from Vasquez following the call
•  Marcus Elliot Harding — not on call; represented by Hargrove & Liddell LLP
•  Geoffrey Stanton, Chair, Remuneration Committee, Northgate Telecommunications PLC — not on call; his guidance and instructions to the negotiating team were conveyed by Vasquez at various points during the discussion
•  Dame Philippa Thornton-Hale, Non-Executive Director, Northgate Telecommunications PLC — referenced by Vasquez in connection with the Board's position on the CIC Board turnover trigger
•  Sandra Kolb, Managing Director, Veltrano Proxy Advisors, Inc. — referenced by Vasquez in connection with proxy advisory analysis
•  Dr. Rachel Whitmore, Whitmore Hobson LLP — referenced by Vasquez as the independent compensation consultant to the Remuneration Committee
2. Purpose of Call
This call constituted the first substantive negotiation session between Calderwood & Harkness LLP, on behalf of Northgate Telecommunications PLC ("NTP" or "Northgate" or the "Company"), and Hargrove & Liddell LLP, on behalf of Marcus Elliot Harding ("Harding" or the "Executive"), following the exchange of initial term sheet drafts.
By way of background, Calderwood & Harkness circulated the initial term sheet (v1) to Hargrove & Liddell on June 10, 2024. Hargrove & Liddell returned a significantly marked-up counterproposal (v2) on June 17, 2024, which included material revisions across multiple key economic and protective provisions.
The objective of this call was to discuss the key areas of divergence between Northgate's initial term sheet and Harding's counterproposal, with particular focus on the most material open issues. Vasquez opened the call by noting that this session was intended to be the first of what both parties anticipate will be a series of negotiation sessions designed to narrow the gaps between the parties' respective positions, with the ultimate goal of reaching agreement on a comprehensive term sheet that would serve as the basis for drafting a definitive employment agreement.
Vasquez expressed Northgate's strong interest in concluding these negotiations expeditiously given the Board's desire to announce Harding's appointment as CEO before the end of the third quarter, and Hargrove acknowledged that Harding shares the desire to move forward efficiently, while emphasizing that the substance of the protections must be right before speed of execution becomes the priority.
3. Agenda Overview
Vasquez proposed the following order of discussion for the call:
1.  Change in control severance provisions, including the CIC multiplier, Section 280G tax treatment, CIC definition triggers, and the double-trigger mechanism;
2.  Restrictive covenant terms, including non-compete duration, geographic scope, activity definition, and non-solicitation provisions;
3.  Garden leave provisions; and
4.  A brief status check on areas where the parties appear to be at or near agreement, including base salary, bonus targets, equity compensation, perquisites, and related terms.
Hargrove agreed to the proposed agenda order but stated that she would also briefly raise the make-whole equity quantum during the status check portion of the call, as Harding had additional views on the structure of that component that she wished to flag early in the process.
4. Discussion of Change in Control Provisions
4.1 CIC Severance Multiplier
The first substantive topic addressed was the CIC severance multiplier, which represents one of the most significant dollar-value gaps between the two term sheet drafts.
Northgate's position (v1 term sheet): A multiplier of 2.5x the sum of base salary plus target annual bonus, calculated as follows:
2.5 × ($1,750,000 base salary + $3,062,500 target annual bonus) = 2.5 × $4,812,500 = $12,031,250
Harding's position (v2 redline): A multiplier of 3x the sum of base salary plus target annual bonus, calculated as follows:
3 × ($1,750,000 base salary + $3,062,500 target annual bonus) = 3 × $4,812,500 = $14,437,500
Dollar gap between the two positions: $14,437,500 − $12,031,250 = $2,406,250.
Hargrove opened the discussion on this point by stating that Harding's current employment agreement with Marlowe Asset Management Digital Holdings, Inc. provides for 3x (base plus bonus) CIC severance with full vesting acceleration of all outstanding equity awards. Hargrove characterized the 3x multiplier as a baseline expectation for Harding — not an aspirational ask — and stated unequivocally that any offer below his current protection level would represent a step backward from Harding's existing arrangement and would be unacceptable to him.
Hargrove further emphasized the context of the recruitment. Harding is leaving a secure Chief Operating Officer position at a company with a market capitalization of approximately $34 billion, where he has been instrumental in growing Marlowe Asset Management's SaaS annual recurring revenue from $120 million to $1.8 billion over his tenure. The risk profile associated with accepting the NTP CEO role — which involves relocating to a new leadership position at a company undergoing strategic transformation and operating in a different competitive landscape — justifies, at minimum, equivalent economic protection to what Harding currently enjoys at Marlowe Asset Management. Hargrove stressed that Harding is not a candidate who needs this role; Northgate is pursuing him, and the compensation package must reflect that dynamic.
Vasquez responded with a detailed explanation of Northgate's rationale. She stated that the Remuneration Committee, chaired by Geoffrey Stanton, had carefully considered market data compiled by the independent compensation consultant, Whitmore Hobson LLP, as well as the applicable governance constraints, before arriving at the 2.5x multiplier. Vasquez emphasized that the 2.5x multiplier reflects the upper end of what the Committee considers defensible under the UK Corporate Governance Code 2024, specifically Provision 40, which sets expectations regarding notice periods and severance multiples for UK-listed companies and reflects the principle that severance payments should not reward failure or incentivize departure.
Vasquez further noted that NTP is dual-listed — on the London Stock Exchange (LON: NTP) and via American Depositary Receipts on the New York Stock Exchange (NYSE: NTPC) — and is therefore subject to scrutiny from both UK and US institutional shareholders and proxy advisory firms. She referenced the Company's most recent Annual General Meeting, held on April 18, 2024, at which NTP received 87.4% support on its advisory say-on-pay resolution. While this level of support is adequate, Vasquez explained that the Board is concerned that offering a 3x CIC package — particularly in combination with certain other elements of Harding's counterproposal — could jeopardize future say-on-pay votes, erode shareholder confidence in the Remuneration Committee's governance framework, and potentially trigger binding shareholder action under the UK remuneration policy regime.
Vasquez also referenced the analysis prepared by Veltrano Proxy Advisors, Inc. (Sandra Kolb, Managing Director), which Northgate had engaged to provide a preliminary assessment of how the proposed executive compensation package would likely be received by proxy advisory firms. According to Vasquez, the Veltrano analysis indicated that Thackeray Health IT (ISS) generally flags CIC severance exceeding 3x as a significant governance concern, and that a 3x multiplier combined with a full tax gross-up (discussed separately below in Section 4.2) would very likely trigger a negative say-on-pay recommendation from ISS. Vasquez noted that Tarrant Partners LLC applies a similar analytical framework and would likely reach the same conclusion.
Hargrove pushed back on the governance framing. She argued that Harding's compensation package should properly be benchmarked against US peer companies rather than UK norms, given several key facts: (a) Harding would be based in New York at NTP's US Operations Headquarters at 600 Lexington Avenue, 38th Floor; (b) the employment agreement itself would be governed by the laws of the State of New York; and (c) the role effectively requires Harding to compete for talent and operate in the US executive market. Hargrove stated that among S&P 500 and Russell 1000 CEO employment agreements in the technology and telecommunications sectors, a 3x CIC multiplier is within the mainstream range, and that the UK governance overlay should not be used to artificially depress what is fundamentally a US-market executive employment negotiation.
Vasquez acknowledged the cross-border tension inherent in the arrangement but reiterated that, regardless of the governing law of the employment agreement or Harding's physical location, NTP is a UK public limited company and its remuneration policy is subject to a binding shareholder vote at the 2025 Annual General Meeting. The Board cannot approve compensation terms that it reasonably believes will fail that binding vote, and Vasquez indicated that the Remuneration Committee views this as a genuine constraint rather than a negotiating tactic.
No resolution was reached on this issue during the call. Both sides restated their respective positions clearly, and it was agreed that the CIC multiplier would continue to be discussed at subsequent negotiation sessions. Vasquez indicated that she would report Hargrove's arguments to the Remuneration Committee and seek further guidance, but did not signal any specific movement from the 2.5x position at this time.
4.2 Section 280G Tax Treatment (Gross-Up vs. Best-Net Cutback)
The second CIC-related topic was the treatment of potential excise taxes under Section 280G of the Internal Revenue Code.
Northgate's position (v1 term sheet): A "best-net cutback" approach — that is, if any payments to Harding in connection with a change in control would constitute "parachute payments" within the meaning of Section 280G, the total payments would be reduced to the safe harbor limit (i.e., three times the "base amount" minus one dollar) if, and only if, such reduction would result in a better after-tax outcome for the Executive after taking into account the 20% excise tax imposed by Section 4999 of the Code. No excise tax gross-up would be provided under any circumstances.
Harding's position (v2 redline): A full Section 280G excise tax gross-up — that is, if any excise tax is imposed under Section 4999, NTP would make an additional payment to Harding sufficient to place him in the same after-tax position he would have been in had no excise tax been imposed.
Hargrove opened by stating that Harding's existing employment agreement with Marlowe Asset Management Digital Holdings includes a full 280G gross-up provision and that this feature is standard among executive agreements for individuals of Harding's caliber and seniority. She characterized the best-net cutback approach as effectively shifting the entire economic risk of a change in control to the Executive, penalizing him for a corporate transaction over which he may have limited control and from which shareholders will typically benefit significantly.
Vasquez responded by walking through the preliminary Section 280G analysis that Calderwood & Harkness had prepared in connection with structuring the initial term sheet. The key parameters of this analysis were as follows:
•  Base amount (average W-2 compensation from Marlowe Asset Management Digital Holdings, tax years 2019–2023): $7,840,000
•  Safe harbor limit under Section 280G: (3 × $7,840,000) − $1 = $23,519,999
•  Estimated total parachute payments under Harding's demanded terms (3x CIC cash severance + full equity acceleration + benefits continuation): approximately $38,200,000
•  Excess parachute payment: $38,200,000 − $7,840,000 = $30,360,000
•  Estimated excise tax at 20% rate: approximately $6,072,000
Vasquez noted that the estimated potential gross-up cost to NTP, accounting for the excise tax on the gross-up payment itself and associated income tax "gross-up on the gross-up," could range from approximately $4,200,000 to $6,800,000 depending on the final composition of the parachute payments, the applicable marginal tax rates at the time of the CIC, and the allocation methodology used to determine the portion of payments attributable to the CIC.
Vasquez then referenced the analysis prepared by Dr. Rachel Whitmore of Whitmore Hobson LLP, the independent compensation consultant retained by the Remuneration Committee. According to Vasquez, Whitmore Hobson had modeled the after-tax outcomes under both the gross-up approach and the best-net cutback approach and had concluded that, under the best-net approach, a cutback of total parachute payments to the safe harbor limit of $23,519,999 would yield an after-tax position for Harding that is roughly equivalent to — and potentially slightly better than — receiving the full uncapped parachute payment and paying the 20% excise tax out of pocket. In other words, the Whitmore Hobson analysis suggests that the gross-up is largely a matter of principle and optics rather than one of genuine economic substance, because Harding would be approximately equally well off (or marginally better off) under the cutback.
Hargrove disputed this characterization vigorously. She argued that the Whitmore Hobson analysis necessarily depends on a set of assumptions about Harding's marginal federal and state income tax rates, the composition and timing of parachute payments, and the applicable Section 280G allocation methodology — and that her own firm's analysis, prepared with input from Harding's personal tax advisors, reaches a materially different conclusion under certain plausible scenarios. Hargrove stated that the gross-up provision protects Harding against downside scenarios in which the best-net cutback is not the optimal outcome — i.e., scenarios in which a cutback would leave him meaningfully worse off than receiving the full payment with a gross-up. She argued that the purpose of the gross-up is precisely to eliminate the uncertainty inherent in these calculations and to ensure that Harding is held harmless regardless of how the numbers ultimately fall.
Vasquez reiterated the proxy advisory dimension. She stated that ISS policy guidelines explicitly treat excise tax gross-ups as a "problematic pay practice" and that Veltrano Proxy Advisors had specifically identified the 280G gross-up as a risk factor that, in combination with a 3x CIC multiplier, would very likely trigger a negative say-on-pay recommendation. Vasquez noted that the trend among large-cap US public companies over the past decade has been decisively away from 280G gross-ups, with fewer than 10% of S&P 500 companies still maintaining such provisions, and that NTP's Board is unwilling to adopt a practice that is widely viewed as a governance outlier.
No resolution was reached on this issue. Hargrove stated clearly and on the record that the full 280G excise tax gross-up is one of Harding's "non-negotiable" requirements and that she did not have authority from her client to agree to a best-net cutback under any circumstances. Vasquez took note of this characterization but did not alter Northgate's position.
4.3 CIC Definition — Board Turnover Trigger
The third CIC-related topic was the definition of what constitutes a "change in control" for purposes of triggering the CIC severance protections.
Northgate's position (v1 term sheet): CIC is defined to include the following events:
(a) Acquisition by any person or group of more than 50% of the outstanding voting securities of NTP;
(b) Consummation of a merger, consolidation, or similar business combination transaction in which the shareholders of NTP immediately prior to such transaction hold less than 50% of the outstanding voting securities of the surviving or resulting entity immediately following such transaction; and
(c) Sale, transfer, or other disposition of all or substantially all of NTP's assets.
Notably, Northgate's proposed definition does not include a Board turnover trigger.
Harding's position (v2 redline): Add a fourth trigger:
(d) A change in the composition of the Board of Directors of NTP such that a majority of the directors serving on the Board are replaced within any 12-month period by directors whose appointment or election was not endorsed by a majority of the directors in office prior to such change (a "Board turnover trigger").
Hargrove argued that the Board turnover trigger is a standard protective provision that reflects the practical reality that an executive's employment environment can fundamentally and irrevocably change through a proxy contest, activist campaign, or similar shareholder action even in the absence of a traditional change of ownership or corporate transaction. She stated that the trigger is designed to protect Harding in scenarios where new directors — potentially installed by an activist investor — reconstitute the Board and fundamentally alter the company's strategic direction, management philosophy, or compensation practices in ways that are adverse to the CEO. Without this trigger, Harding could find himself working under a hostile Board that has every incentive to force him out on unfavorable terms, without any CIC protections applying.
Vasquez responded that the Board — and she referenced specifically the views of Dame Philippa Thornton-Hale (Senior Independent Director) and Geoffrey Stanton (Chair, Remuneration Committee) — views the Board turnover trigger as overreach and as inconsistent with fundamental principles of UK corporate governance. Vasquez stated that changes in Board composition through the ordinary shareholder nomination and election process represent the exercise of shareholders' legitimate governance rights and should not, in the Board's view, constitute a "change in control" that triggers substantial severance obligations. To treat ordinary director elections as potential CIC events would, in the Board's assessment, have an undesirable entrenchment effect and would undermine the accountability of the Board to shareholders — precisely the dynamic that the UK Corporate Governance Code is designed to prevent.
Hargrove countered that the Board turnover trigger is a well-established feature of US public company CEO employment agreements and that its inclusion is particularly relevant in NTP's case given the Company's significant and concentrated institutional shareholder base. She referenced the following major shareholders by name:
•  Caledonian Asset Management: 8.3% of shares outstanding
•  Pemberton Capital Group: 6.7% of shares outstanding
•  Thornbury Investment Trust: 5.1% of shares outstanding
•  Regis Global Equity Fund: 4.4% of shares outstanding
Hargrove noted that collectively these four shareholders hold approximately 24.5% of NTP's outstanding shares, and that any two of them acting in concert could exercise significant influence over Board composition. She stated that the risk of an activist campaign or contested election is not hypothetical but rather a realistic scenario that Harding must be protected against as a condition of accepting the role.
Vasquez stated that the Board's position on the Board turnover trigger is firm and not subject to compromise. She characterized this as a matter of governance principle on which the Board is unwilling to negotiate, regardless of the other terms of the package.
No resolution was reached. This remains a binary disagreement — the provision is either included or excluded — and there is no obvious middle ground. The note-taker records that the tone of the discussion on this point was cordial but notably more pointed than on other topics, reflecting the strength of conviction on both sides.
4.4 CIC Double-Trigger Mechanism
On a more constructive note, both sides confirmed agreement in principle on a double-trigger CIC severance mechanism. That is, severance benefits would be payable only upon the occurrence of both (i) a CIC event (as defined) and (ii) a qualifying termination of employment within a specified window following the CIC. A qualifying termination would include termination by the Company without "cause" or resignation by the Executive for "good reason," in each case as those terms would be defined in the employment agreement.
There was a brief discussion regarding the length of the post-CIC window during which a qualifying termination must occur in order to trigger severance:
•  Northgate's position: 12 months following the CIC event
•  Harding's position: 24 months following the CIC event
Both sides acknowledged that this is a secondary issue relative to the multiplier, tax treatment, and definitional questions discussed above, and agreed that the window period could be resolved in the context of the full draft employment agreement. The note-taker records that neither side appeared to view this as a particularly contentious point.
5. Discussion of Restrictive Covenant Provisions
5.1 Non-Compete Duration
Northgate's position (v1 term sheet): 24 months post-termination of employment.
Harding's position (v2 redline): 12 months post-termination of employment.
Hargrove stated that Harding's current non-compete covenant with Marlowe Asset Management Digital Holdings is 12 months in duration with a geographic scope limited to the United States. She stated unequivocally that Harding will not accept a more restrictive covenant than what he currently has. A 24-month non-compete, Hargrove argued, is excessive by any standard and would effectively render Harding unemployable for two full years in his core industry — telecommunications and enterprise technology — at a stage of his career where two years of forced inactivity would represent a significant and potentially irreversible setback to his professional trajectory. Hargrove noted that the telecommunications industry is evolving rapidly and that even 12 months away from active leadership is a meaningful professional sacrifice.
Vasquez acknowledged the gap between the parties' positions and noted that Calderwood & Harkness had internally assessed the enforceability question. Vasquez stated, in candid terms, that a 24-month worldwide non-compete under a New York-governed agreement may face enforceability challenges under New York law, given the reasonableness analysis that New York courts apply to post-employment restrictive covenants — considering factors such as the duration, geographic scope, and scope of restricted activities in relation to the employer's legitimate protectable interests. Vasquez indicated that Northgate was prepared to discuss a potential reduction in duration as part of a broader package deal across the interrelated issues of non-compete duration, geographic scope, activity definition, and garden leave.
Vasquez did not, at this stage, specify the Remuneration Committee's authorized fallback position. [Note: Per Elaine Whitford's email to Vasquez dated June 22, 2024, the Remuneration Committee has authorized movement to 18 months as a fallback position on non-compete duration if necessary to secure agreement on other material terms. This authorization was not disclosed to opposing counsel during this call.]
Hargrove stated that 12 months is Harding's firm position on non-compete duration and that any duration beyond 12 months would need to be offset by enhanced garden leave compensation — effectively providing Harding with full economic protection during the entire restricted period.
5.2 Non-Compete Geographic Scope
Northgate's position (v1 term sheet): Worldwide.
Harding's position (v2 redline): Limited to North America and Western Europe.
Hargrove argued that a worldwide geographic scope is overly broad and unnecessary to protect NTP's legitimate business interests. She stated that NTP's primary competitive markets are concentrated in North America and Western Europe, and that restrictions covering regions such as Asia-Pacific, Latin America, the Middle East, or Africa serve no genuine protective purpose and are punitive in character. Hargrove noted that it would be unreasonable and likely unenforceable to prevent Harding from, for example, accepting a role at a telecommunications company operating exclusively in Southeast Asia.
Vasquez noted that NTP has approximately 22,500 employees globally and maintains operations, partnerships, and customer relationships across multiple regions beyond North America and Western Europe. She argued that a departing CEO would possess knowledge of the Company's global strategy, competitive positioning, capital allocation priorities, M&A pipeline, and technology roadmap that extends well beyond any single geographic region, and that a worldwide scope is warranted to protect that body of confidential and strategically sensitive information.
However, Vasquez also acknowledged that geographic scope is a point on which the parties could seek compromise, and she signaled that Northgate would consider narrowing the scope as part of a broader resolution of the restrictive covenant package. She did not specify what narrowed scope might be acceptable.
No resolution was reached, and both sides agreed to continue the discussion in subsequent calls.
5.3 Non-Compete Activity Definition
Northgate's position (v1 term sheet): The non-compete would restrict Harding from employment by, or provision of services to, any company deriving more than 15% of its consolidated revenue from telecommunications services, telecommunications infrastructure, or enterprise SaaS platforms serving telecommunications operators.
Harding's position (v2 redline): The non-compete would be narrowed to restrict Harding only from employment by, or provision of services to, "direct competitors" listed on a schedule of eight specifically named companies to be attached to the employment agreement.
Hargrove argued that the revenue-percentage test proposed by Northgate is overbroad and could capture companies that are not genuine competitors of NTP. She offered the example of a diversified technology conglomerate with a relatively small telecommunications segment that happens to exceed 15% of consolidated revenue but that does not compete with NTP's core business in any meaningful way. Under Northgate's formulation, Harding would be prohibited from working for such a company even though there is no competitive overlap with NTP. Hargrove characterized this as an unreasonable restraint on Harding's future employment options.
Vasquez defended the revenue-percentage test as an objective, administrable, and well-established standard that avoids the arbitrariness and potential for manipulation inherent in a named-competitor schedule. She noted that a static list of eight companies could quickly become outdated as the industry evolves — through mergers, new market entrants, spin-offs, or business pivots — and that a company not on the original list could become NTP's most significant competitor within months of Harding's departure. The revenue test, by contrast, is self-adjusting and captures the competitive landscape as it exists at the relevant time.
Hargrove countered that a named-competitor schedule provides certainty and predictability to the Executive, who can know with confidence on the date of termination exactly which companies are off-limits, and avoids the potential for costly and protracted litigation over whether a particular company meets the 15% revenue threshold. She noted that revenue-test disputes are fact-intensive and may require access to a prospective employer's nonpublic financial data, creating practical difficulties for enforcement and compliance.
The discussion on this point was described by the note-taker as productive, with both sides engaging constructively on the relative merits of the two approaches. However, no agreement was reached, and both sides agreed to continue exploring possible formulations — including potential hybrid approaches — in subsequent calls.
5.4 Non-Solicitation.  Northgate's position (v1 term sheet): 24 months post-termination; covering both employees and customers of NTP.
Harding's position (v2 redline): 18 months post-termination; covering employees only, with no customer non-solicitation restriction.
Hargrove stated that a customer non-solicitation covenant is unnecessary given the nature of NTP's business. NTP is an enterprise and consumer telecommunications company whose customer relationships are institutional in character — driven by long-term contracts, network infrastructure dependencies, and enterprise procurement processes — rather than personal to the CEO. A departing CEO's ability to "solicit" a major telecommunications customer is, in Hargrove's characterization, essentially nonexistent in any practical sense.
Vasquez argued that a departing CEO would possess unique insight into NTP's strategic customer relationships, pricing structures, contract renewal timelines, and competitive positioning vis-à-vis specific accounts, and that this knowledge warrants customer non-solicitation protection, particularly during the period immediately following the CEO's departure.
This topic was discussed only briefly and was not resolved. Both sides agreed it would be revisited in future sessions, likely in the context of a broader negotiation on the full restrictive covenant package.
6. Discussion of Garden Leave Provisions
Northgate's position (v1 term sheet): Six months of paid garden leave, during which Harding would continue to receive base salary only:
$1,750,000 ÷ 12 × 6 = $875,000 total garden leave compensation
Harding's position (v2 redline): Twelve months of garden leave at full compensation — including both base salary and a pro-rata portion of the target annual bonus — with the garden leave period running concurrently with the post-employment non-compete. Under Harding's formulation, if the non-compete is set at 12 months, the 12-month garden leave period would fully overlap, effectively reducing the post-employment non-compete restriction to zero additional months beyond the garden leave period. If the non-compete were set at 18 months (a hypothetical discussed during the call), the effective post-employment non-compete would be reduced to six months.
Hargrove argued that garden leave compensation should be at full pay — base salary plus pro-rata target bonus — because during the garden leave period the Executive remains technically employed by the Company, continues to owe duties of loyalty and confidentiality, and is available to provide transition assistance as requested. She stated that it would be inequitable and inconsistent with market practice to require an executive to remain employed but to reduce his compensation to base salary only. Hargrove also referenced UK market practice, where garden leave is typically provided at full pay, as a relevant benchmark given that NTP is a UK-domiciled company.
Vasquez acknowledged the UK market practice point but raised a more fundamental structural concern. She stated that if garden leave and the non-compete run concurrently under Harding's formulation, Northgate's effective non-compete protection period would be substantially reduced — to zero months in the case of a 12-month non-compete, or to as few as six months in the case of an 18-month non-compete. The Board's intent, Vasquez explained, is that garden leave serve as a paid transition period benefiting both parties, but not as a mechanism to effectively eliminate or undercut the non-compete protection that the Company requires.
Vasquez proposed an alternative framework under which the garden leave period and the non-compete period would run sequentially rather than concurrently — that is, the non-compete clock would begin only after the garden leave period has expired. Alternatively, Vasquez suggested that only a portion of the garden leave period (e.g., 50%) should count against the non-compete, preserving a meaningful post-employment restriction.
Hargrove rejected the sequential treatment proposal. She stated that sequential treatment would effectively extend Harding's total restricted period to 18 months (6-month garden leave + 12-month non-compete), 24 months (12-month garden leave + 12-month non-compete), or even longer — durations that Hargrove characterized as clearly unacceptable and inconsistent with the constraints she had already identified regarding non-compete duration.
No resolution was reached on this issue. Both sides recognized that the garden leave structure is inherently linked to the non-compete duration and compensation terms, and agreed that these issues must be resolved together as part of an integrated package. Vasquez stated that Northgate would consider creative approaches to the sequencing and overlap question, and Hargrove indicated that Harding would be willing to discuss alternatives but not to accept any framework that results in a total restricted period exceeding 12 months.
7. Brief Status Check on Areas of Potential Agreement
Vasquez and Hargrove conducted a brief review of those areas of the term sheet where the parties appear to be at or near agreement, subject to finalization in the drafting of the full employment agreement. The following items were discussed:
•  Base salary: $1,750,000 per annum — tentatively agreed. Hargrove noted that Harding's current base salary at Marlowe Asset Management Digital Holdings is $1,450,000, and the proposed NTP base represents a $300,000 increase reflecting the greater scope and responsibility of the CEO role.
•  Target annual incentive: 175% of base salary = $3,062,500 — tentatively agreed.
•  Maximum annual incentive: 300% of base salary = $5,250,000 — tentatively agreed.
•  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") — tentatively agreed.
•  Sign-on cash bonus: $5,000,000, subject to a 24-month clawback obligation in the event of voluntary resignation without good reason — tentatively agreed.
•  Supplemental Executive Retirement Plan ("SERP") contribution: $250,000 per year — tentatively agreed.
•  Perquisites: Car allowance, executive health program, supplemental life insurance, and financial/tax planning reimbursement — largely agreed, with minor details regarding coverage levels and reimbursement caps to be confirmed during drafting of the full agreement.
•  Initial term of employment: Five years, with automatic one-year renewals unless either party provides notice of non-renewal within a specified period prior to expiration — tentatively agreed.
•  Proposed start date: October 1, 2024 — tentatively agreed, though Hargrove flagged that Harding may need additional time to manage his transition from Marlowe Asset Management, including notice obligations and the orderly handover of responsibilities. Hargrove indicated that a start date of November 1, 2024 may be necessary, depending on how the transition process unfolds. Vasquez noted that Northgate has a strong preference for the October 1 date but would accommodate a modest delay if required.
Make-Whole Equity Discussion
Hargrove raised the sign-on equity make-whole quantum, which she had flagged at the outset of the call as a topic she wished to address briefly.
Northgate's position (v1 term sheet): A total sign-on equity grant of $18,400,000, structured as follows:
•  RSUs: $12,000,000, vesting ratably over three years (one-third per year)
•  PSUs: $6,400,000, cliff-vesting at the end of a three-year performance period, subject to performance conditions to be determined
By way of context, Vasquez explained that the make-whole equity quantum was determined by reference to Harding's estimated forfeited equity at Marlowe Asset Management Digital Holdings, which both sides have estimated at approximately $23,400,000. The $5,000,000 gap between the forfeited equity value ($23,400,000) and the NTP sign-on equity grant ($18,400,000) was intended to be bridged by the $5,000,000 sign-on cash bonus, such that Harding's total sign-on package ($18,400,000 equity + $5,000,000 cash = $23,400,000) would be economically equivalent to his forfeited Marlowe Asset Management equity.
Hargrove stated that the $5,000,000 cash offset is not economically equivalent to the forfeited equity for two principal reasons: first, the tax-deferral advantages of equity compensation (which are lost when the make-whole is delivered in cash subject to immediate taxation), and second, the potential for equity appreciation over the vesting period, which further increases the economic value of equity relative to cash. Hargrove indicated that Harding would prefer a larger equity make-whole component — ideally closing the full $23,400,000 gap with equity rather than a cash/equity blend — but she acknowledged that this is not a deal-breaker if the more fundamental issues of CIC protections and restrictive covenants are resolved satisfactorily.
Vasquez provided additional context on the equity pool implications. She noted that Harding's proposed sign-on equity grant plus his first-year annual LTI award would total $18,400,000 + $9,000,000 = $27,400,000. Based on the June 4, 2024 ADR closing price of $15.87 per share, this would require the issuance of approximately 1,726,529 shares, representing approximately 0.25% of NTP's approximately 699 million shares outstanding on a fully diluted basis. Vasquez confirmed that this number of shares is within the remaining capacity of the Northgate Telecommunications PLC 2022 Omnibus Incentive Plan, which has approximately 14.2 million shares remaining in the available share pool.
Both sides agreed that the make-whole equity issue is secondary to the CIC and restrictive covenant disputes, and that it can likely be resolved once the principal areas of disagreement are addressed. Hargrove reserved the right to revisit the make-whole structure in detail at a future session.
8. Non-CIC Severance (Brief Discussion)
The parties briefly touched on the non-CIC severance package — i.e., the severance benefits payable upon a qualifying termination of employment outside of a change in control context.
Northgate's position (v1 term sheet):
•  Cash severance: 2x (base salary + target annual bonus) = 2 × $4,812,500 = $9,625,000
•  Pro-rata annual incentive bonus for the year of termination
•  COBRA continuation coverage for 18 months
•  Accelerated vesting of equity awards that would have vested within 12 months following the date of termination
Harding's position (v2 redline):
•  Cash severance: 2.5x (base salary + target annual bonus) = 2.5 × $4,812,500 = $12,031,250
•  Pro-rata annual incentive bonus for the year of termination
•  Full acceleration of all unvested equity awards
•  COBRA continuation coverage for 24 months
Hargrove acknowledged that this gap — $2,406,250 on the cash severance component alone, plus the meaningful difference between 12-month partial acceleration and full acceleration of unvested equity — is significant. However, she indicated that non-CIC severance is a negotiable issue for Harding and that the CIC provisions and restrictive covenants are his higher priorities for this stage of the negotiation.
By mutual agreement, the non-CIC severance discussion was deferred to a future negotiation session. Both sides acknowledged that it remains an open issue requiring resolution before the term sheet can be finalized.
9. Process and Next Steps
The parties discussed process and next steps as follows:
1.  Second negotiation call: The parties agreed to schedule a second negotiation call for the week of July 1, 2024. [Note: This call was subsequently confirmed for July 1, 2024, at 2:00 PM EDT.]
2.  Reporting to principals: Vasquez stated that she would report the substance of this call to Elaine Whitford (SVP & Group General Counsel, NTP) and, through Whitford, to the Remuneration Committee, and that she would obtain any further direction or updated authority from the Committee prior to the next call.
3.  Client debrief: Hargrove stated that she would debrief Harding on the call and confirm whether there is any flexibility on any of his stated positions, including those characterized as "non-negotiable" during this session.
4.  Revised term sheet: James Underwood (Calderwood & Harkness) is to circulate a revised term sheet (v3) reflecting Northgate's counter-proposals on the issues discussed during this call, incorporating any updated Remuneration Committee guidance, prior to the next negotiation call. The target for circulation of v3 is June 28, 2024.
5.  Good faith commitment: Both sides affirmed their commitment to continuing to work in good faith toward a resolution of the outstanding issues.
6.  Closing remarks: Vasquez reiterated Northgate's strong interest in securing Harding as CEO and expressed hope that creative solutions could be found to bridge the remaining gaps, while being transparent about the governance constraints under which the Board and Remuneration Committee are operating. Hargrove reciprocated, stating that Harding remains genuinely interested in the NTP opportunity and that he views it as a compelling professional challenge, but emphasized that the economic protections and restrictive covenant terms are fundamental to his willingness to leave a secure and highly compensated position at Marlowe Asset Management Digital Holdings. Both lead partners expressed optimism that an agreement could be reached through continued negotiation.
10. Summary of Open Issues (as of End of Call)
11. Call Duration and Distribution
Call Duration: Approximately 1 hour and 45 minutes (2:00 PM – 3:45 PM EDT).
Distribution of These Notes: Internal Calderwood & Harkness LLP distribution only, as follows:
•  Renata Vasquez, Partner
•  Bernard Crawford, Partner
•  James Underwood, Associate
These notes have not been shared with opposing counsel and are not to be shared with any party outside Calderwood & Harkness LLP.
NOTICE: These notes are privileged and confidential attorney work product prepared in anticipation of continued negotiation and in connection with the provision of legal advice to Northgate Telecommunications PLC. They reflect the mental impressions, strategies, and legal analysis of counsel. Do not distribute outside Calderwood & Harkness LLP without the prior written approval of Renata Vasquez. Any inadvertent disclosure does not constitute a waiver of any applicable privilege or protection.
Prepared by:
Devon Archer Associate, Calderwood & Harkness LLP June 24, 2024
Issue | NTP Position | Harding Position | Status
CIC multiplier | 2.5x ($12,031,250) | 3x ($14,437,500) | Unresolved — $2,406,250 gap
CIC tax treatment | Best-net cutback | Full 280G gross-up | Unresolved — est. $4.2M–$6.8M exposure
CIC definition — Board turnover trigger | Excluded | Included | Unresolved — binary disagreement
CIC double-trigger window | 12 months | 24 months | Unresolved — secondary issue
Non-compete duration | 24 months | 12 months | Unresolved
Non-compete geographic scope | Worldwide | North America + Western Europe | Unresolved
Non-compete activity definition | Revenue-based test (>15%) | Scheduled competitors (8 companies) | Unresolved
Non-solicitation | 24 months; employees + customers | 18 months; employees only | Unresolved
Garden leave | 6 months at base salary | 12 months at full comp, concurrent with non-compete | Unresolved
Non-CIC severance multiplier | 2x ($9,625,000) | 2.5x ($12,031,250) | Unresolved — deferred
Make-whole equity quantum | $18.4M equity + $5M cash | Prefers higher equity component | Likely resolvable
Base salary, bonus, LTI, perquisites | As per v1 term sheet | Tentatively agreed | Near agreement
Start date | October 1, 2024 | October 1 or November 1, 2024 | Near agreement

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

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