1022-00004 · Northgate Telecommunications PLC · Term Sheet Negotiation

call-notes-negotiation-3-july-8.docx DOCUMENT Labor & Employment

63 / 75 ← → ✕

PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT — ATTORNEY-CLIENT COMMUNICATION

Calderwood & Harkness LLP 299 Park Avenue, 42nd Floor New York, NY 10171

Call Notes: Term Sheet Negotiation Call #3

This document constitutes privileged and confidential attorney work product and attorney-client communication prepared in connection with the representation of Northgate Telecommunications PLC. This document is not to be disclosed, disseminated, or distributed to any person or entity outside of the attorney-client relationship without the prior written consent of Calderwood & Harkness LLP. Unauthorized disclosure may result in waiver of applicable privileges.

Date of Call: July 8, 2024

Time: 2:00 PM – 4:15 PM ET

Method: Video conference (Northgate Data Systems — Calderwood & Harkness secure instance)

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

Matter: Northgate Telecommunications PLC — CEO Employment Negotiation

Matter Number: 1022-00004

1. Attendees

For Northgate Telecommunications PLC (via Calderwood & Harkness LLP):

• Renata Vasquez, Partner, Calderwood & Harkness LLP — Lead negotiator

• James Underwood, Associate, Calderwood & Harkness LLP

• Devon Archer, Associate, Calderwood & Harkness LLP — Note-taker

For Marcus Elliot Harding (via Hargrove & Liddell LLP):

• Victoria Hargrove, Partner, Hargrove & Liddell LLP — Lead negotiator

• Nathan Chu, Associate, Hargrove & Liddell LLP

Note: No principals participated on this call. Neither client representatives of Northgate Telecommunications PLC (including members of the Remuneration Committee, the Board, or Northgate's in-house legal team) nor Marcus Elliot Harding himself were present. This was a counsel-to-counsel negotiation session conducted solely between outside legal advisors for the respective parties.

2. Purpose and Context

This call represented the third negotiation session in the term sheet phase for the proposed executive employment agreement between Northgate Telecommunications US, Inc. (as employer, a wholly-owned Delaware subsidiary of Northgate Telecommunications PLC) and Marcus Elliot Harding (as incoming Chief Executive Officer of the Northgate Telecommunications group). The parties have been engaged in active negotiations since early June 2024, following the announcement by the Northgate Board of Directors of Sir Alistair Kemble's planned retirement from the CEO role effective December 31, 2024, and the Board's identification of Mr. Harding as its preferred successor candidate.

This call followed the second negotiation call held on July 1, 2024, during which discussions centered primarily on the geographic scope and activity definitions for the proposed post-employment non-compete covenant, as well as the scope and duration of the customer non-solicitation provision. The July 1 call did not result in final resolution on either the change in control severance provisions or the restrictive covenant provisions, and those items were carried forward as outstanding disputed items for further negotiation.

The primary objective of the July 8 call was to seek agreement on outstanding compensation elements — specifically, base salary, annual incentive (bonus), sign-on compensation (both cash and equity), annual long-term incentive awards, retirement benefits, and perquisites — so that the parties could isolate and bracket the two remaining disputed areas (change in control severance and restrictive covenant provisions) and proceed to the preparation of a full draft executive employment agreement.

The reference document for this call was the Revised Term Sheet (v3), being the Northgate Telecommunications PLC counter-proposal dated June 24, 2024, as further discussed and informally annotated during the July 1 call. Both parties confirmed at the outset of the call that they were working from the same version of this document.

3. Summary of Agreed Terms

The following terms were discussed during the call and have been agreed upon by the parties on behalf of their respective clients, subject to incorporation into and execution of the definitive Executive Employment Agreement. Unless otherwise noted, all dollar figures are denominated in United States dollars.

3.1 Base Salary

Agreed: $1,750,000 per annum.

At the outset of the compensation discussion, Hargrove confirmed on behalf of Harding that the proposed annual base salary of $1,750,000 is accepted without further negotiation. This figure had been set forth in the Revised Term Sheet (v3) dated June 24, 2024, and Harding had previously indicated informally (through Hargrove on the June 24 call) that the base salary quantum was acceptable.

Vasquez confirmed that this figure has been approved by the Northgate Telecommunications PLC Remuneration Committee, with specific authorization from Geoffrey Stanton, who serves as Chair of the Remuneration Committee. Vasquez noted that the Remuneration Committee had reviewed peer-group benchmarking data prepared by Whitmore Hobson LLP, Northgate's independent compensation consultant, and determined that $1,750,000 falls within the 60th to 75th percentile range for base salary compensation for chief executive officers at comparable U.S.-listed and dual-listed telecommunications companies.

This figure represents an increase of $300,000 (approximately 20.7%) over Harding's current annual base salary at Marlowe Asset Management Digital Holdings, Inc. of $1,450,000 per year, which Hargrove confirmed during the discussion. Both parties acknowledged that the step-up in base salary is commensurate with the increased scope of the Group CEO role at Northgate, which encompasses oversight of global operations across the United States, the United Kingdom, Continental Europe, and select Asia-Pacific markets.

Base salary is to be paid in accordance with Northgate Telecommunications US, Inc.'s standard payroll practices and will be subject to annual review by the Remuneration Committee, with any increases at the sole discretion of the Committee. No provision for a guaranteed minimum increase or cost-of-living adjustment was requested by Hargrove or offered by Vasquez, and the parties agreed this is appropriate for a CEO-level position.

3.2 Annual Incentive (Bonus)

Target annual bonus agreed: 175% of base salary, equal to $3,062,500 per annum at target performance.

Maximum annual bonus agreed: 300% of base salary, equal to $5,250,000 per annum at maximum performance.

This item required somewhat more discussion than the base salary provision. Hargrove opened by reiterating Harding's prior request, first raised on the June 24 call, for a target annual bonus opportunity of 200% of base salary (which would have yielded a target bonus of $3,500,000). Hargrove argued that a 200% target is consistent with the bonus opportunity provided to certain other CEO-level executives in the U.S. telecommunications sector, citing publicly disclosed compensation packages at two unnamed comparator companies.

Vasquez responded by referring to peer-group benchmarking data provided by Whitmore Hobson LLP, which included an analysis of annual incentive opportunity levels across a peer group of 18 publicly traded telecommunications and technology companies with revenue profiles broadly comparable to Northgate's. According to the Whitmore Hobson analysis, which was previously shared with Hargrove & Liddell in connection with the June 24 counter-proposal, the median CEO target bonus in the peer group is 150% of base salary, and the 75th percentile target bonus is 175% of base salary. Vasquez noted that a 175% target places Harding at the top quartile of the peer group and represents a generous positioning that the Remuneration Committee believes is appropriate given the significance of the hire.

After further discussion, including consideration of the maximum bonus opportunity of 300% of base salary (which Hargrove acknowledged is above the 75th percentile of the peer group on a maximum basis), Hargrove accepted the 175% target / 300% maximum structure as within the competitive range and confirmed that Harding would not press further on this point.

The parties agreed that the annual bonus will be determined annually by the Board of Directors (or the Remuneration Committee, as delegated) based on performance metrics to be established at the beginning of each fiscal year. The specific performance metrics, weighting, threshold performance levels, and the formulaic versus discretionary components of the bonus determination are to be addressed in the definitive Executive Employment Agreement. Vasquez indicated that Northgate's customary practice is to use a combination of financial metrics (revenue growth, adjusted EBITDA, and free cash flow) and strategic or operational metrics (customer satisfaction, network investment milestones, and talent development), with weightings established by the Remuneration Committee.

The parties further agreed in principle that Harding will be entitled to a pro-rata bonus for any partial year of employment, calculated based on the number of days elapsed in the fiscal year through the date of termination (or, for the initial year of employment, from the start date through the end of the fiscal year), subject to achievement of applicable performance metrics. The mechanics of pro-ration — including whether the pro-rata bonus will be based on actual performance measured through the full fiscal year or through the date of termination — are to be addressed in the definitive agreement.

3.3 Sign-On Cash Bonus (Make-Whole Component)

Agreed: $5,000,000, payable within 30 calendar days of the start date.

The sign-on cash bonus is subject to a 24-month clawback provision under which Harding will be required to repay the full amount (or a pro-rated portion, as may be agreed in the definitive agreement) if he voluntarily resigns without Good Reason during the first 24 months of employment with Northgate.

Hargrove confirmed Harding's acceptance of the $5,000,000 sign-on cash bonus on the terms proposed. In doing so, Hargrove provided additional context regarding the purpose of the sign-on cash payment, noting that it is intended to serve as a partial make-whole for the estimated gap between Harding's forfeited unvested equity compensation at Marlowe Asset Management Digital Holdings and the proposed sign-on equity grant under the Northgate arrangement. Specifically, Hargrove stated that Harding's estimated forfeited unvested equity at Marlowe Asset Management Digital Holdings, Inc. is approximately $23,400,000 (based on Marlowe Asset Management's closing share price as of a recent date and comprising a combination of restricted stock units and performance stock units that would be forfeited upon Harding's resignation from Marlowe Asset Management). The proposed Northgate sign-on equity grant of $18,400,000 (discussed below in Section 3.4) leaves an approximate shortfall of $5,000,000, which the sign-on cash bonus is intended to address.

Hargrove noted, however, that the sign-on cash bonus does not fully replicate the economics of the forfeited Marlowe Asset Management equity, as the cash payment is subject to ordinary income taxation at Harding's effective marginal rate (estimated at approximately 50.3% on a combined federal, state, and city basis, given Harding's New York City residence), whereas the forfeited Marlowe Asset Management equity included both RSUs (taxed as ordinary income on vesting) and PSUs with potential long-term capital gains treatment on certain components. Hargrove did not, however, request a tax gross-up on the sign-on cash bonus, and the parties agreed to proceed without one.

The specific clawback mechanics — including whether repayment will be pro-rated on a monthly basis over the 24-month period (such that the repayment obligation decreases by 1/24th for each full month of employment completed), the definition of "Good Reason" for purposes of the clawback provision (which may or may not be identical to the definition of Good Reason used in the severance provisions), the timing and method of repayment, and whether the clawback will be secured by any form of promissory note or other instrument — are to be addressed in the definitive Executive Employment Agreement.

3.4 Sign-On Equity Grant (Make-Whole for Forfeited Marlowe Asset Management Equity)

Agreed total sign-on equity value: $18,400,000, to be delivered in the form of equity awards under the Northgate Telecommunications PLC 2022 Omnibus Incentive Plan, consisting of the following components:

Restricted Stock Unit (RSU) Grant: $12,000,000 in value, vesting ratably over three years from the start date (one-third of the total RSU grant vesting on each of the first, second, and third anniversaries of the start date), subject to continued employment through each applicable vesting date.

Performance Stock Unit (PSU) Grant: $6,400,000 in value, cliff vesting at the end of a three-year performance period commencing on the start date, subject to the achievement of performance hurdles based on total shareholder return (TSR) measured against a designated peer group and revenue growth targets. Specific performance metrics, the composition of the TSR peer group, the measurement period, and the threshold, target, and maximum payout levels (expressed as a percentage of the target number of PSUs) are to be addressed in the definitive Executive Employment Agreement and the applicable award agreements under the 2022 Omnibus Incentive Plan.

During the discussion of the sign-on equity grant, Hargrove reiterated that Harding's forfeited unvested equity at Marlowe Asset Management Digital Holdings, Inc. is estimated at approximately $23,400,000, and that the combined sign-on package (the $5,000,000 sign-on cash bonus plus the $18,400,000 sign-on equity grant) totals $23,400,000 — matching the estimated forfeiture amount on a gross (pre-tax) basis but falling short on an after-tax basis given the differing tax treatment of cash and equity compensation. Hargrove expressly reserved Harding's right to revisit the sign-on equity quantum, particularly if updated valuations of Harding's forfeited Marlowe Asset Management equity (based on Marlowe Asset Management's share price closer to the start date) indicate a larger forfeiture amount. Notwithstanding this reservation, Hargrove agreed to proceed on the basis of the $18,400,000 sign-on equity grant for purposes of advancing the term sheet and preparing the first draft of the definitive agreement.

Vasquez confirmed that the sign-on equity grants will be made under the Northgate Telecommunications PLC 2022 Omnibus Incentive Plan, which was approved by Northgate shareholders at the 2022 Annual General Meeting. The share price to be used for purposes of converting the dollar-denominated grant values into a number of shares (or ADRs) will be determined as of the date of grant, using the closing price of Northgate ADRs on the New York Stock Exchange (NYSE: NTPC) on the trading day immediately preceding the grant date. For reference purposes, Vasquez noted that the closing price of Northgate ADRs on June 4, 2024 was $15.87 per ADR.

Vasquez further noted that the combined sign-on equity grant and the first-year annual LTI grant (discussed below in Section 3.5) would represent, on a pro forma basis, approximately 1,726,529 shares (based on the $15.87 reference price), which is approximately 0.25% of Northgate's approximately 699 million total shares outstanding. This quantum is well within the 14,200,000 shares remaining in the equity reserve pool under the 2022 Omnibus Incentive Plan and does not raise concerns regarding shareholder dilution or the need to seek additional equity plan authorization at the next Annual General Meeting.

3.5 Annual Long-Term Incentive (LTI) Grant

Agreed annual LTI target value: $9,000,000 per year.

Agreed mix: 60% Performance Stock Units (PSUs) / 40% Restricted Stock Units (RSUs).

• PSU component: $5,400,000 per year in target value.

• RSU component: $3,600,000 per year in target value.

Vesting schedule: RSUs will vest ratably over three years (one-third per year from the date of grant). PSUs will cliff vest at the end of a three-year performance period, subject to the achievement of performance metrics to be established by the Remuneration Committee at the time of each annual grant. Annual LTI grants are expected to be made at the same time as grants to other senior executives, typically within 30 days following the end of each fiscal year.

Hargrove confirmed that Harding's current annual long-term incentive target at Marlowe Asset Management Digital Holdings, Inc. is $7,500,000. The proposed $9,000,000 annual LTI target at Northgate represents an increase of $1,500,000 (20.0%), which Hargrove acknowledged is appropriate and commensurate with the step-up from Harding's current role as President and Chief Operating Officer at Marlowe Asset Management to the Group Chief Executive Officer role at Northgate Telecommunications. Hargrove did not seek further negotiation on the annual LTI target value.

Vasquez noted that the 60/40 PSU/RSU mix is consistent with the mix used for annual LTI grants to other members of the Northgate senior executive leadership team and reflects the Remuneration Committee's emphasis on performance-based compensation. The specific performance metrics for PSU awards will be established annually by the Remuneration Committee and are expected to include a combination of relative total shareholder return, revenue growth, and adjusted EBITDA metrics, consistent with Northgate's historical practice.

Both parties acknowledged that the treatment of unvested annual LTI awards upon termination of employment — including the extent of acceleration (if any) upon termination without Cause or for Good Reason, both in and outside of a change in control context — is directly linked to the change in control and severance provisions that remain in dispute. Accordingly, the treatment of unvested LTI on termination was not resolved on this call and remains subject to the resolution of the CIC and non-CIC severance terms discussed in Section 4 below.

3.6 Total Target Annual Compensation

Both parties confirmed during the call that the total target annual compensation under the agreed terms is as follows:

This represents a total target annual compensation package that is approximately $2,687,500 (24.2%) above Harding's current total target annual compensation at Marlowe Asset Management Digital Holdings, Inc., which Hargrove confirmed to be $11,125,000 (comprising $1,450,000 base salary, $2,175,000 target bonus at 150% of base, and $7,500,000 annual LTI target). The step-up is consistent with the Remuneration Committee's objective of providing a compensation package that is competitive and commensurate with the Group CEO role, and Hargrove acknowledged that the overall annual compensation level is satisfactory from Harding's perspective.

The total target annual compensation figure does not include the sign-on cash bonus, the sign-on equity grant, retirement benefits, or perquisites, which are addressed separately in the sections above and below.

3.7 Retirement Benefits

401(k) Plan Participation:

Harding will be eligible to participate in the Northgate Telecommunications US, Inc. 401(k) retirement savings plan on the same terms as other similarly situated employees. The plan provides for an employer matching contribution of 6% of eligible compensation. Based on a base salary of $1,750,000, the employer matching contribution would be $105,000 per year, subject to applicable Internal Revenue Service contribution limits under Sections 401(a)(17), 402(g), and 415 of the Internal Revenue Code, as amended. Vasquez noted that current IRS limits may cap the actual tax-qualified matching contribution at a lower level, with any excess to be provided through the SERP or a non-qualified deferred compensation arrangement, the specifics of which will be addressed in the definitive agreement.

Supplemental Executive Retirement Plan (SERP):

Northgate will provide an annual supplemental executive retirement contribution of $250,000 per year. This contribution will be credited to a non-qualified deferred compensation account maintained on behalf of Harding, subject to the requirements of Section 409A of the Internal Revenue Code. The terms of the SERP — including vesting schedule, distribution timing and form, and investment options — will be addressed in the definitive agreement and the applicable SERP plan documents.

Hargrove confirmed agreement on both the 401(k) plan participation terms and the SERP contribution level. Hargrove stated that no further negotiation is anticipated on retirement benefits.

3.8 Perquisites and Benefits

The parties discussed and agreed upon the following perquisites and benefits:

Car Allowance: $25,000 per year. This amount was agreed at the increased level, reflecting an adjustment from the initial Northgate proposal of $20,000 per year. The increase was requested by Hargrove on the June 24 call and was accepted by Vasquez on behalf of Northgate at that time, with confirmation reiterated on this call.

Executive Health Program: Harding will be entitled to full participation in the Northgate Telecommunications US, Inc. executive health program, which provides comprehensive annual physical examinations, executive wellness services, and related benefits through NTP's designated provider. No further negotiation was required on this item.

Supplemental Life Insurance: $2,000,000 in supplemental life insurance coverage, in addition to any group life insurance coverage provided under NTP's standard employee benefits program. The cost of the supplemental life insurance policy will be borne by Northgate. The parties agreed on this provision without further discussion.

Financial and Tax Planning Reimbursement: Up to $35,000 per year for the cost of personal financial planning, tax preparation, and tax advisory services. This amount was agreed at the increased level, reflecting an adjustment from the initial Northgate proposal of $25,000 per year. The increase was requested by Hargrove on the June 24 call and was accepted by Vasquez on behalf of Northgate at that time, with confirmation reiterated on this call. The increase reflects the expected complexity of Harding's personal tax situation given his anticipated cross-border duties and UK-source income.

Relocation: Not applicable. Harding currently resides at 14 Gramercy Park South, New York, New York, and Northgate Telecommunications US, Inc.'s U.S. operations headquarters is located at 600 Lexington Avenue, New York, New York. No relocation will be necessary in connection with Harding's commencement of employment.

Directors' and Officers' Insurance and Indemnification: Harding will be covered under Northgate Telecommunications PLC's existing Directors' and Officers' liability insurance policy maintained with Ashdown Surety & Insurance Co. (Policy Number ASI-D&O-NTP-2024-4471), which provides coverage of $50,000,000 per occurrence and $100,000,000 in the aggregate. The terms of Harding's indemnification and D&O tail coverage following any termination of employment or cessation of Board service will be addressed in the definitive Executive Employment Agreement.

Hargrove flagged during the discussion that Harding will expect the indemnification provisions in the definitive agreement to be at least as favorable as those currently provided to other directors and officers of Northgate Telecommunications PLC and its subsidiaries, including advancement of legal fees and expenses, and that the indemnification obligations should survive the termination of the employment agreement. Vasquez confirmed that this is the standard approach for Northgate's senior executives and directors and that the definitive agreement will include customary indemnification provisions consistent with Northgate's existing indemnification agreements and Delaware law.

3.9 Employment Term and Start Date

Initial Term: Five (5) years, commencing on the start date and running through the fifth anniversary thereof.

Renewal: The employment term will automatically renew for successive one-year periods following the expiration of the initial five-year term, unless either party provides at least 180 calendar days' advance written notice of non-renewal prior to the expiration of the then-current term. The parties agreed on this structure without substantive discussion, as it is consistent with the Revised Term Sheet (v3).

Start Date: The proposed start date is October 1, 2024. However, Hargrove noted that a start date of November 1, 2024 may be necessary to accommodate Harding's transition from Marlowe Asset Management Digital Holdings, Inc., including compliance with any required notice period under Harding's existing employment arrangement with Marlowe Asset Management (believed to be 90 days), the completion of an orderly handoff of Harding's responsibilities as President and Chief Operating Officer of Marlowe Asset Management, and any administrative requirements related to the separation from Marlowe Asset Management's equity and benefit plans.

Vasquez acknowledged Hargrove's note but stated that Northgate has a strong preference for an October 1, 2024 start date, given the Board's desire to provide a meaningful overlap period between Harding's commencement and the effective date of Sir Alistair Kemble's planned retirement on December 31, 2024. An October 1 start date would provide a three-month transition period during which Harding and Sir Alistair could work together to ensure continuity of leadership, whereas a November 1 start date would compress this overlap to only two months. Vasquez acknowledged, however, that the start date may need to be adjusted based on practical considerations and expressed flexibility on behalf of Northgate. The final start date is to be confirmed and reflected in the definitive Executive Employment Agreement.

Hargrove also raised the issue of Harding's existing 12-month post-termination non-compete agreement with Marlowe Asset Management Digital Holdings, Inc. Hargrove noted that the Marlowe Asset Management non-compete would be triggered upon Harding's resignation from Marlowe Asset Management and that, depending on the scope of the restriction and its enforceability, it could potentially restrict Harding from commencing employment with Northgate in a competing capacity. Hargrove indicated that Harding's preliminary view, based on advice from his personal counsel, is that the NTP Group CEO role may not fall within the scope of the Marlowe Asset Management non-compete, given that Marlowe Asset Management is primarily a digital media and content platform company rather than a telecommunications infrastructure and services provider. However, Hargrove acknowledged that this issue requires careful analysis and may need to be addressed either through a waiver or consent from Marlowe Asset Management or through a legal determination that the NTP role does not violate the scope of the Marlowe Asset Management restriction.

Vasquez agreed that the Marlowe Asset Management non-compete issue is an important consideration and suggested that it be addressed as a separate workstream running in parallel with the drafting of the definitive Executive Employment Agreement. Vasquez assigned James Underwood to prepare a detailed analysis of Harding's existing non-compete with Marlowe Asset Management and its implications for the proposed NTP role (see Action Items in Section 6 below).

4. Deferred / Unresolved Terms

The following terms were discussed on the call but were not resolved. Both parties agreed to defer these items and to address them in bracketed or alternative-text format in the first full draft of the Executive Employment Agreement.

4.1 Change in Control Provisions

The change in control severance provisions remain the most significant area of disagreement between the parties. The positions of each side are summarized below.

Northgate Position (as set forth in Revised Term Sheet v3):

• CIC Cash Severance Multiplier: 2.5x the sum of base salary plus target annual bonus. Based on the agreed compensation terms, this yields a CIC cash severance payment of $4,812,500 × 2.5 = $12,031,250.

• CIC Trigger: Double trigger (i.e., severance is payable only upon a qualifying termination of employment — termination without Cause or resignation for Good Reason — within a specified period following a change in control event, not upon the occurrence of a change in control alone).

• Section 280G Treatment: Best-net cutback. Parachute payments would be reduced to the safe harbor limit under Section 280G of the Internal Revenue Code to the extent such reduction would result in a greater after-tax benefit to Harding than the full payment subject to the 20% excise tax under Section 4999. No excise tax gross-up.

• CIC Equity Acceleration: Pro-rata acceleration of unvested equity based on service elapsed during the applicable vesting period; PSUs to vest at actual performance (if determinable) or target (if actual performance is not determinable at the time of the CIC).

• CIC Definition: Limited to (a) the acquisition by any person or group of more than 50% of the combined voting power of Northgate's outstanding voting securities; (b) a merger, consolidation, or similar business combination in which Northgate's pre-transaction shareholders hold less than 50% of the combined voting power of the surviving entity immediately following the transaction; and (c) a sale or disposition of all or substantially all of Northgate's assets. The CIC definition does not include a Board turnover trigger.

• Benefit Continuation: 24 months of COBRA continuation coverage at company expense following a qualifying CIC termination.

Harding Position (as communicated by Hargrove & Liddell):

• CIC Cash Severance Multiplier: 3x the sum of base salary plus target annual bonus. This yields a CIC cash severance payment of $4,812,500 × 3 = $14,437,500.

• CIC Trigger: Double trigger (consistent with Northgate's position on this point; no disagreement on the trigger mechanism).

• Section 280G Treatment: Full excise tax gross-up under Section 280G/4999. Northgate would be obligated to pay an additional amount sufficient to hold Harding harmless from any excise tax imposed under Section 4999, including any excise tax on the gross-up payment itself (a "full gross-up").

• CIC Equity Acceleration: Full acceleration of all unvested equity awards, including all RSUs and all PSUs at target performance level (not pro-rata or based on actual performance).

• CIC Definition: Includes, in addition to the three triggers in Northgate's proposed definition, a Board turnover trigger defined as a change in the composition of the Board of Directors such that a majority of the directors serving on the Board are replaced within any rolling 12-month period by directors who were not nominated or endorsed by the incumbent Board.

• Benefit Continuation: 36 months of COBRA continuation coverage (or equivalent) at company expense following a qualifying CIC termination.

Key Gaps:

The gap on CIC cash severance between the parties' positions is $2,406,250 ($14,437,500 under Harding's proposed 3x multiplier versus $12,031,250 under Northgate's proposed 2.5x multiplier).

The gap on Section 280G tax treatment — full excise tax gross-up (Harding's position) versus best-net cutback (Northgate's position) — represents an estimated differential of approximately $4,200,000 to $6,800,000, depending on the precise calculation of parachute payments under Section 280G. This estimate was provided by Vasquez based on a preliminary analysis by Calderwood & Harkness and is subject to refinement in the detailed Section 280G analysis to be prepared in connection with Draft 1 (see Section 5 below).

Hargrove described the change in control severance provisions — including the multiplier, the gross-up, the equity acceleration treatment, and the Board turnover trigger — as "core protection" terms from Harding's perspective. Hargrove noted that these provisions are particularly important given that Harding would be leaving a senior leadership position at a large, well-established company (Marlowe Asset Management Digital Holdings) to assume the Group CEO role at Northgate, a company that Harding perceives as potentially vulnerable to acquisition activity given its current valuation, market capitalization, and recent share price performance.

Vasquez acknowledged the importance of the issue to Harding but noted that Northgate's flexibility on CIC terms is significantly constrained by several factors. First, Vasquez cited ISS (Thackeray Health IT) proxy advisory guidelines, which generally view 280G excise tax gross-ups as a negative governance feature and recommend that shareholders vote against say-on-pay proposals that include such provisions. Second, Vasquez referenced guidance received from Veltrano Proxy Advisors, Inc. (Northgate's proxy advisory consultant), which has advised that inclusion of a full 280G gross-up would likely trigger a negative ISS recommendation on Northgate's say-on-pay proposal at the next Annual General Meeting. Third, Vasquez stated that the Board of Directors, acting through Geoffrey Stanton as Chair of the Remuneration Committee, has established firm parameters on the CIC provisions and that the 2.5x multiplier with best-net cutback represents the upper limit of the Board's authorized range.

After extended discussion, both parties agreed that the CIC provisions cannot be resolved at this stage and should be deferred to the next phase of negotiations. Both parties agreed that the first full draft of the Executive Employment Agreement (Draft 1) will reflect both positions: Northgate's position will be set forth in the body text of the relevant provisions, and Harding's position will be shown in footnotes or alternative bracketed text, so that the areas of disagreement are clearly delineated for further negotiation.

4.2 Restrictive Covenant Provisions

The post-employment restrictive covenant provisions remain disputed. The positions of each side are summarized below.

Non-Compete:

• Northgate position: 24-month post-termination non-compete period. Vasquez noted, however, that on prior calls Northgate has signaled a potential willingness to fall back to an 18-month non-compete period, and this fallback remains on the table. The geographic scope of the non-compete would be worldwide. The activity restriction would be defined using a revenue-based test, prohibiting Harding from providing services to, or being employed by, any company that derives more than 15% of its consolidated annual revenue from telecom services, telecom infrastructure, or enterprise SaaS platforms serving telecommunications operators.

• Harding position: 12-month post-termination non-compete period, matching the duration of Harding's current non-compete with Marlowe Asset Management Digital Holdings, Inc. The geographic scope would be limited to North America and Western Europe. The activity restriction would be narrowed to a schedule of eight specifically named direct competitors (the "Named Competitor" approach), rather than a broadly defined revenue-based test.

Garden Leave:

• Northgate position: 6-month paid garden leave period at base salary only. Garden leave would not run concurrently with the non-compete period (i.e., the total period of post-separation restriction could be up to 30 months: 6 months garden leave plus 24 months non-compete).

• Harding position: 12-month paid garden leave period at full compensation, defined to include base salary plus a pro-rata annual bonus based on target performance. Garden leave would run concurrently with the non-compete period, such that the total effective period of post-separation restriction would be limited to 12 months.

Non-Solicitation:

• Northgate position: 24-month post-termination non-solicitation of both employees and customers/clients of Northgate and its affiliates.

• Harding position: 18-month post-termination non-solicitation of employees only. No customer or client non-solicitation provision.

During the discussion, Vasquez proactively raised enforceability concerns under New York law relating to the proposed 24-month worldwide non-compete. Vasquez noted that New York courts apply a reasonableness analysis when evaluating the enforceability of post-employment non-compete agreements, considering factors including the duration of the restriction, the geographic scope, the breadth of the activity restriction, the employee's role and access to confidential information, and the hardship imposed on the employee. Vasquez observed that a 24-month worldwide non-compete based on a broad revenue-based activity test may be vulnerable to challenge as overbroad, particularly in light of pending New York State legislation (Senate Bill S3100, introduced in January 2024) that, if enacted, would impose significant new restrictions on post-employment non-compete agreements, potentially including outright prohibition for certain classes of employees or imposition of mandatory durational limits.

Both parties agreed that the restrictive covenant provisions cannot be resolved at this stage and should be deferred to the next phase of negotiations. As with the CIC provisions, both parties agreed that Draft 1 of the Executive Employment Agreement will present both positions in bracketed or alternative-text format to facilitate further discussion.

4.3 Non-CIC Severance Provisions

The non-CIC severance provisions — that is, the severance benefits payable upon a qualifying termination of employment (termination without Cause or resignation for Good Reason) outside the context of a change in control — were briefly discussed but not resolved.

Northgate position: 2x the sum of base salary plus target annual bonus, yielding a non-CIC severance payment of $4,812,500 × 2 = $9,625,000. Pro-rata annual bonus for the fiscal year in which termination occurs, based on actual performance. 18 months of COBRA continuation coverage at company expense. 12 months of accelerated vesting of unvested equity awards (with PSUs vesting at the lesser of target and actual performance, if determinable).

Harding position: 2.5x the sum of base salary plus target annual bonus, yielding a non-CIC severance payment of $4,812,500 × 2.5 = $12,031,250. Full acceleration of all unvested equity awards (including PSUs at target). 24 months of COBRA continuation coverage at company expense.

Hargrove stated that resolution of the non-CIC severance terms is directly linked to the resolution of the CIC severance terms, as the non-CIC severance provisions are typically set at a level that is proportionate to (and lower than) the CIC severance provisions. Hargrove argued that the non-CIC and CIC severance provisions should be addressed together as a unified package rather than in isolation.

Vasquez did not disagree with this general approach and indicated that Northgate views the non-CIC severance terms as part of the same overall severance framework.

Decision: The non-CIC severance provisions are deferred to the definitive agreement drafting process and will be presented in bracketed format in Draft 1, consistent with the treatment of the CIC provisions and restrictive covenant provisions.

5. Path Forward and Next Steps

Both parties agreed on the following path forward at the conclusion of the call:

Preparation of Draft 1 of the Executive Employment Agreement: Both sides agreed that Calderwood & Harkness LLP will prepare the first full draft of the Executive Employment Agreement ("Draft 1"), incorporating all terms agreed during the term sheet negotiations (as described in Section 3 above) in clean, finalized text, and presenting all disputed terms (CIC severance provisions, restrictive covenant provisions, and non-CIC severance provisions, as described in Section 4 above) in bracketed or alternative-text format that clearly reflects both parties' positions. Vasquez stated that Draft 1 will be a comprehensive, execution-ready document (subject to resolution of the bracketed items) and will include all customary provisions expected in a CEO-level employment agreement, including definitions, representations and warranties, cooperation obligations, confidentiality and intellectual property provisions, dispute resolution mechanisms, and choice of law provisions.

Target Date for Draft 1 Circulation: Vasquez stated that Calderwood & Harkness aims to circulate Draft 1 to Hargrove & Liddell by July 22, 2024. Vasquez noted that this target date is contingent on timely receipt of the equity accounting analysis from Galloway & Partners and the completion of the Section 280G preliminary analysis.

Hargrove & Liddell's Review Period: Hargrove indicated that Hargrove & Liddell will require approximately two weeks from receipt of Draft 1 to conduct a thorough review and prepare a comprehensive redline markup reflecting Harding's comments, counterproposals on bracketed items, and any additional issues identified during the review process.

Dual-Contract Structure — UK Service Agreement: Vasquez noted that the full draft employment agreement prepared by Calderwood & Harkness will address the primary U.S. employment agreement, which will be governed by the laws of the State of New York. In addition, a secondary UK service agreement between Harding and Northgate Telecommunications PLC (the UK-incorporated parent entity) is being separately drafted by Moorfield Bates LLP (Simon Aldridge, lead partner) to govern Harding's UK board duties, regulatory compliance obligations (including obligations arising under UK corporate governance codes and Financial Conduct Authority requirements applicable to Northgate as a company with a premium listing on the London Stock Exchange), and any other duties performed in the United Kingdom, which are expected to represent approximately 20% of Harding's total working time. The UK service agreement is expected to be circulated in parallel with Draft 1 of the U.S. employment agreement. Hargrove acknowledged the dual-contract structure and noted that Harding's counsel may have comments on the UK service agreement as well, and that Hargrove & Liddell may retain UK counsel for this purpose.

Cross-Border Tax Matters: Vasquez confirmed that the definitive Executive Employment Agreement will include tax equalization provisions designed to address Harding's UK-source income arising from his duties performed in the United Kingdom. Given Harding's U.S. tax residency (as a U.S. citizen domiciled in New York), the tax equalization provisions will be structured so that Harding bears no more than the U.S. federal, state, and local income tax that he would have owed had all of his compensation been U.S.-source income, with Northgate bearing the cost of any additional UK income tax, National Insurance contributions, or other UK tax liabilities arising from his UK-source income. The provisions will also address the application of the U.S.-UK Tax Treaty (Convention Between the Government of the United States of America and the Government of the United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation) and the U.S.-UK Totalization Agreement for social security purposes (including the allocation of U.S. FICA and UK National Insurance contribution obligations).

Section 280G Analysis: Vasquez noted that Calderwood & Harkness will prepare a detailed Section 280G parachute payment analysis based on the terms reflected in Draft 1, using Harding's average annualized compensation (the "base amount" under Section 280G) calculated from his W-2 compensation from Marlowe Asset Management Digital Holdings, Inc. over the five calendar years 2019 through 2023, which yields an estimated base amount of $7,840,000. Based on this base amount, the safe harbor limit (three times the base amount, less one dollar) is estimated to be $23,519,999. The Section 280G analysis will quantify the estimated excise tax exposure under various scenarios, including under both the Northgate-proposed CIC terms (best-net cutback) and the Harding-proposed CIC terms (full gross-up), and will model the impact of different levels of parachute payments on Harding's after-tax compensation. This analysis will be completed before Draft 1 is finalized and will inform the bracketed provisions relating to Section 280G treatment.

Equity Accounting Consultation: Vasquez mentioned that Galloway & Partners (Clive Warburton, audit partner) is being consulted on the accounting treatment of the proposed sign-on equity grants and annual LTI grants under ASC 718 (Compensation — Stock Compensation) for U.S. GAAP reporting purposes and under IFRS 2 (Share-based Payment) for Northgate's UK statutory reporting purposes. This analysis will address the grant-date fair value measurement, expense recognition timing, and any classification issues (equity-classified versus liability-classified) arising from the proposed award structures, particularly the PSU awards with market-based (TSR) and non-market-based (revenue growth) performance conditions. The accounting analysis is expected to be available before Draft 1 finalization.

Next Negotiation Call: The next substantive negotiation call between Calderwood & Harkness and Hargrove & Liddell is to be scheduled after Hargrove & Liddell returns its redline of Draft 1. Based on the current timeline — Draft 1 circulation by July 22, 2024, plus approximately two weeks for Hargrove & Liddell's review — the next negotiation call is anticipated for the first or second week of August 2024. In the interim, the parties may schedule a brief procedural or scheduling call on or about July 12, 2024, to address any open procedural issues, confirm the Draft 1 timeline, and coordinate on the parallel workstreams (UK service agreement, Marlowe Asset Management non-compete analysis, and equity accounting consultation).

Marlowe Asset Management Non-Compete Analysis: James Underwood (Calderwood & Harkness) will prepare a separate memorandum analyzing Harding's existing 12-month post-termination non-compete agreement with Marlowe Asset Management Digital Holdings, Inc. and its implications for the proposed NTP role. This analysis will examine the scope of the Marlowe Asset Management non-compete (including the defined activity restriction, geographic scope, and duration), the enforceability of the Marlowe Asset Management non-compete under applicable law (expected to be Delaware or New York law, depending on the governing law provision of Harding's Marlowe Asset Management employment agreement), and the factual question of whether Harding's proposed role as Group CEO of Northgate Telecommunications would fall within the scope of the restricted activities under the Marlowe Asset Management non-compete. The analysis will also consider potential strategies for addressing the Marlowe Asset Management non-compete, including seeking a waiver or consent from Marlowe Asset Management, negotiating a narrowing amendment, or proceeding based on a determination that the NTP role is outside the scope of the restriction.

6. Open Action Items

7. Concluding Notes

The call concluded at approximately 4:15 PM ET.

At the close of the call, both Vasquez and Hargrove expressed satisfaction with the progress achieved on the compensation terms during this session and acknowledged the constructive and professional tone of the discussion. Vasquez noted that the agreement on all principal compensation elements (base salary, bonus, sign-on cash and equity, annual LTI, retirement benefits, and perquisites) represents a significant milestone in the negotiation process and positions the parties well to move to the definitive agreement phase.

Hargrove concurred but noted that while significant progress has been made, the change in control and restrictive covenant provisions remain the "most important issues" from Harding's perspective and will require resolution before any agreement can be finalized. Hargrove emphasized that these provisions represent non-negotiable protections from Harding's standpoint and that Harding's willingness to accept the NTP role will depend in substantial part on the outcome of the negotiations on these items. Hargrove stated that Harding views the CIC protections as essential given the risks associated with leaving a secure senior position at Marlowe Asset Management to join a new organization, and that the restrictive covenant terms must be reasonable and proportionate to Harding's legitimate interests.

Vasquez reiterated that the Remuneration Committee's approved framework is well-defined and that the Board's positions on the CIC and restrictive covenant provisions are firm, reflecting significant deliberation by the Remuneration Committee, input from the independent compensation consultant (Whitmore Hobson LLP), and guidance from Veltrano Proxy Advisors, Inc. on shareholder and proxy advisory sensitivities. However, Vasquez expressed willingness to explore creative structures within the approved parameters — for example, potential adjustments to the CIC equity acceleration provisions or modifications to the non-compete activity definition — that might narrow the gap between the parties without exceeding the Board's authorized range.

These notes were prepared by Devon Archer, Associate, Calderwood & Harkness LLP, based on contemporaneous handwritten notes taken during the call and a review of the video conference chat log. Devon Archer will circulate these call notes in draft form to Renata Vasquez and James Underwood for review and comment. The final version of these notes will be filed in the Calderwood & Harkness matter file under Matter Number 1022-00004. These notes are not to be shared with counterparty counsel (Hargrove & Liddell LLP), with Mr. Harding, or with any third party without the prior approval of Renata Vasquez.

Prepared by: Devon Archer, Associate, Calderwood & Harkness LLP, 299 Park Avenue, 42nd Floor, New York, NY 10171

Date of Preparation: July 8, 2024

Distribution: Internal Only — Renata Vasquez (Partner), Bernard Crawford (Partner), James Underwood (Associate), Calderwood & Harkness LLP

Matter: 1022-00004 — Northgate Telecommunications PLC — CEO Employment Negotiation

Status: PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT — ATTORNEY-CLIENT COMMUNICATION

Component	Annual Value
Base Salary	$1,750,000
Target Annual Bonus (175% of base)	$3,062,500
Annual LTI (target)	$9,000,000
Total Target Annual Compensation	$13,812,500
#	Action Item	Responsible Party	Target Date
1	Prepare and circulate Draft 1 of Executive Employment Agreement, incorporating all agreed terms in clean text and all disputed terms (CIC severance, restrictive covenants, non-CIC severance) in bracketed/alternative-text format reflecting both parties' positions	Calderwood & Harkness LLP (Underwood, Archer)	July 22, 2024
2	Prepare detailed Section 280G parachute payment analysis under Draft 1 terms, modeling safe harbor limit, excise tax exposure, and after-tax impact under best-net cutback and full gross-up scenarios	Calderwood & Harkness LLP (Archer)	Before Draft 1 circulation
3	Coordinate with Moorfield Bates LLP (Simon Aldridge) on the parallel drafting and circulation of the UK service agreement between Harding and Northgate Telecommunications PLC	Calderwood & Harkness LLP (Underwood)	Ongoing; target parallel circulation with Draft 1
4	Consult with Galloway & Partners (Clive Warburton) on equity accounting treatment of proposed sign-on and annual equity grants under ASC 718 and IFRS 2	Calderwood & Harkness LLP (Archer)	Before Draft 1 circulation
5	Prepare memorandum analyzing Harding's existing Marlowe Asset Management Digital Holdings 12-month non-compete and implications for the proposed NTP Group CEO role	Calderwood & Harkness LLP (Underwood)	Before Draft 1 circulation
6	Review Draft 1 of Executive Employment Agreement and prepare comprehensive redline markup	Hargrove & Liddell LLP (Hargrove, Chu)	Approximately 2 weeks after receipt of Draft 1
7	Confirm Harding's preferred start date (October 1 vs. November 1, 2024) and advise Calderwood & Harkness	Hargrove & Liddell LLP	Before Draft 1 circulation
8	Report agreed compensation terms and remaining open items to Remuneration Committee Chair (Geoffrey Stanton) and Board Chair (Dame Philippa Thornton-Hale) via Elaine Whitford (NTP General Counsel)	Calderwood & Harkness LLP (Vasquez)	Following this call

PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT — ATTORNEY-CLIENT COMMUNICATION
Calderwood & Harkness LLP 299 Park Avenue, 42nd Floor New York, NY 10171
Call Notes: Term Sheet Negotiation Call #3
This document constitutes privileged and confidential attorney work product and attorney-client communication prepared in connection with the representation of Northgate Telecommunications PLC. This document is not to be disclosed, disseminated, or distributed to any person or entity outside of the attorney-client relationship without the prior written consent of Calderwood & Harkness LLP. Unauthorized disclosure may result in waiver of applicable privileges.
Date of Call: July 8, 2024
Time: 2:00 PM – 4:15 PM ET
Method: Video conference (Northgate Data Systems — Calderwood & Harkness secure instance)
Prepared by: Devon Archer, Associate, Calderwood & Harkness LLP
Matter: Northgate Telecommunications PLC — CEO Employment Negotiation
Matter Number: 1022-00004
1. Attendees
For Northgate Telecommunications PLC (via Calderwood & Harkness LLP):
•  Renata Vasquez, Partner, Calderwood & Harkness LLP — Lead negotiator
•  James Underwood, Associate, Calderwood & Harkness LLP
•  Devon Archer, Associate, Calderwood & Harkness LLP — Note-taker
For Marcus Elliot Harding (via Hargrove & Liddell LLP):
•  Victoria Hargrove, Partner, Hargrove & Liddell LLP — Lead negotiator
•  Nathan Chu, Associate, Hargrove & Liddell LLP
Note: No principals participated on this call. Neither client representatives of Northgate Telecommunications PLC (including members of the Remuneration Committee, the Board, or Northgate's in-house legal team) nor Marcus Elliot Harding himself were present. This was a counsel-to-counsel negotiation session conducted solely between outside legal advisors for the respective parties.
2. Purpose and Context
This call represented the third negotiation session in the term sheet phase for the proposed executive employment agreement between Northgate Telecommunications US, Inc. (as employer, a wholly-owned Delaware subsidiary of Northgate Telecommunications PLC) and Marcus Elliot Harding (as incoming Chief Executive Officer of the Northgate Telecommunications group). The parties have been engaged in active negotiations since early June 2024, following the announcement by the Northgate Board of Directors of Sir Alistair Kemble's planned retirement from the CEO role effective December 31, 2024, and the Board's identification of Mr. Harding as its preferred successor candidate.
This call followed the second negotiation call held on July 1, 2024, during which discussions centered primarily on the geographic scope and activity definitions for the proposed post-employment non-compete covenant, as well as the scope and duration of the customer non-solicitation provision. The July 1 call did not result in final resolution on either the change in control severance provisions or the restrictive covenant provisions, and those items were carried forward as outstanding disputed items for further negotiation.
The primary objective of the July 8 call was to seek agreement on outstanding compensation elements — specifically, base salary, annual incentive (bonus), sign-on compensation (both cash and equity), annual long-term incentive awards, retirement benefits, and perquisites — so that the parties could isolate and bracket the two remaining disputed areas (change in control severance and restrictive covenant provisions) and proceed to the preparation of a full draft executive employment agreement.
The reference document for this call was the Revised Term Sheet (v3), being the Northgate Telecommunications PLC counter-proposal dated June 24, 2024, as further discussed and informally annotated during the July 1 call. Both parties confirmed at the outset of the call that they were working from the same version of this document.
3. Summary of Agreed Terms
The following terms were discussed during the call and have been agreed upon by the parties on behalf of their respective clients, subject to incorporation into and execution of the definitive Executive Employment Agreement. Unless otherwise noted, all dollar figures are denominated in United States dollars.
3.1 Base Salary
Agreed: $1,750,000 per annum.
At the outset of the compensation discussion, Hargrove confirmed on behalf of Harding that the proposed annual base salary of $1,750,000 is accepted without further negotiation. This figure had been set forth in the Revised Term Sheet (v3) dated June 24, 2024, and Harding had previously indicated informally (through Hargrove on the June 24 call) that the base salary quantum was acceptable.
Vasquez confirmed that this figure has been approved by the Northgate Telecommunications PLC Remuneration Committee, with specific authorization from Geoffrey Stanton, who serves as Chair of the Remuneration Committee. Vasquez noted that the Remuneration Committee had reviewed peer-group benchmarking data prepared by Whitmore Hobson LLP, Northgate's independent compensation consultant, and determined that $1,750,000 falls within the 60th to 75th percentile range for base salary compensation for chief executive officers at comparable U.S.-listed and dual-listed telecommunications companies.
This figure represents an increase of $300,000 (approximately 20.7%) over Harding's current annual base salary at Marlowe Asset Management Digital Holdings, Inc. of $1,450,000 per year, which Hargrove confirmed during the discussion. Both parties acknowledged that the step-up in base salary is commensurate with the increased scope of the Group CEO role at Northgate, which encompasses oversight of global operations across the United States, the United Kingdom, Continental Europe, and select Asia-Pacific markets.
Base salary is to be paid in accordance with Northgate Telecommunications US, Inc.'s standard payroll practices and will be subject to annual review by the Remuneration Committee, with any increases at the sole discretion of the Committee. No provision for a guaranteed minimum increase or cost-of-living adjustment was requested by Hargrove or offered by Vasquez, and the parties agreed this is appropriate for a CEO-level position.
3.2 Annual Incentive (Bonus)
Target annual bonus agreed: 175% of base salary, equal to $3,062,500 per annum at target performance.
Maximum annual bonus agreed: 300% of base salary, equal to $5,250,000 per annum at maximum performance.
This item required somewhat more discussion than the base salary provision. Hargrove opened by reiterating Harding's prior request, first raised on the June 24 call, for a target annual bonus opportunity of 200% of base salary (which would have yielded a target bonus of $3,500,000). Hargrove argued that a 200% target is consistent with the bonus opportunity provided to certain other CEO-level executives in the U.S. telecommunications sector, citing publicly disclosed compensation packages at two unnamed comparator companies.
Vasquez responded by referring to peer-group benchmarking data provided by Whitmore Hobson LLP, which included an analysis of annual incentive opportunity levels across a peer group of 18 publicly traded telecommunications and technology companies with revenue profiles broadly comparable to Northgate's. According to the Whitmore Hobson analysis, which was previously shared with Hargrove & Liddell in connection with the June 24 counter-proposal, the median CEO target bonus in the peer group is 150% of base salary, and the 75th percentile target bonus is 175% of base salary. Vasquez noted that a 175% target places Harding at the top quartile of the peer group and represents a generous positioning that the Remuneration Committee believes is appropriate given the significance of the hire.
After further discussion, including consideration of the maximum bonus opportunity of 300% of base salary (which Hargrove acknowledged is above the 75th percentile of the peer group on a maximum basis), Hargrove accepted the 175% target / 300% maximum structure as within the competitive range and confirmed that Harding would not press further on this point.
The parties agreed that the annual bonus will be determined annually by the Board of Directors (or the Remuneration Committee, as delegated) based on performance metrics to be established at the beginning of each fiscal year. The specific performance metrics, weighting, threshold performance levels, and the formulaic versus discretionary components of the bonus determination are to be addressed in the definitive Executive Employment Agreement. Vasquez indicated that Northgate's customary practice is to use a combination of financial metrics (revenue growth, adjusted EBITDA, and free cash flow) and strategic or operational metrics (customer satisfaction, network investment milestones, and talent development), with weightings established by the Remuneration Committee.
The parties further agreed in principle that Harding will be entitled to a pro-rata bonus for any partial year of employment, calculated based on the number of days elapsed in the fiscal year through the date of termination (or, for the initial year of employment, from the start date through the end of the fiscal year), subject to achievement of applicable performance metrics. The mechanics of pro-ration — including whether the pro-rata bonus will be based on actual performance measured through the full fiscal year or through the date of termination — are to be addressed in the definitive agreement.
3.3 Sign-On Cash Bonus (Make-Whole Component)
Agreed: $5,000,000, payable within 30 calendar days of the start date.
The sign-on cash bonus is subject to a 24-month clawback provision under which Harding will be required to repay the full amount (or a pro-rated portion, as may be agreed in the definitive agreement) if he voluntarily resigns without Good Reason during the first 24 months of employment with Northgate.
Hargrove confirmed Harding's acceptance of the $5,000,000 sign-on cash bonus on the terms proposed. In doing so, Hargrove provided additional context regarding the purpose of the sign-on cash payment, noting that it is intended to serve as a partial make-whole for the estimated gap between Harding's forfeited unvested equity compensation at Marlowe Asset Management Digital Holdings and the proposed sign-on equity grant under the Northgate arrangement. Specifically, Hargrove stated that Harding's estimated forfeited unvested equity at Marlowe Asset Management Digital Holdings, Inc. is approximately $23,400,000 (based on Marlowe Asset Management's closing share price as of a recent date and comprising a combination of restricted stock units and performance stock units that would be forfeited upon Harding's resignation from Marlowe Asset Management). The proposed Northgate sign-on equity grant of $18,400,000 (discussed below in Section 3.4) leaves an approximate shortfall of $5,000,000, which the sign-on cash bonus is intended to address.
Hargrove noted, however, that the sign-on cash bonus does not fully replicate the economics of the forfeited Marlowe Asset Management equity, as the cash payment is subject to ordinary income taxation at Harding's effective marginal rate (estimated at approximately 50.3% on a combined federal, state, and city basis, given Harding's New York City residence), whereas the forfeited Marlowe Asset Management equity included both RSUs (taxed as ordinary income on vesting) and PSUs with potential long-term capital gains treatment on certain components. Hargrove did not, however, request a tax gross-up on the sign-on cash bonus, and the parties agreed to proceed without one.
The specific clawback mechanics — including whether repayment will be pro-rated on a monthly basis over the 24-month period (such that the repayment obligation decreases by 1/24th for each full month of employment completed), the definition of "Good Reason" for purposes of the clawback provision (which may or may not be identical to the definition of Good Reason used in the severance provisions), the timing and method of repayment, and whether the clawback will be secured by any form of promissory note or other instrument — are to be addressed in the definitive Executive Employment Agreement.
3.4 Sign-On Equity Grant (Make-Whole for Forfeited Marlowe Asset Management Equity)
Agreed total sign-on equity value: $18,400,000, to be delivered in the form of equity awards under the Northgate Telecommunications PLC 2022 Omnibus Incentive Plan, consisting of the following components:
Restricted Stock Unit (RSU) Grant: $12,000,000 in value, vesting ratably over three years from the start date (one-third of the total RSU grant vesting on each of the first, second, and third anniversaries of the start date), subject to continued employment through each applicable vesting date.
Performance Stock Unit (PSU) Grant: $6,400,000 in value, cliff vesting at the end of a three-year performance period commencing on the start date, subject to the achievement of performance hurdles based on total shareholder return (TSR) measured against a designated peer group and revenue growth targets. Specific performance metrics, the composition of the TSR peer group, the measurement period, and the threshold, target, and maximum payout levels (expressed as a percentage of the target number of PSUs) are to be addressed in the definitive Executive Employment Agreement and the applicable award agreements under the 2022 Omnibus Incentive Plan.
During the discussion of the sign-on equity grant, Hargrove reiterated that Harding's forfeited unvested equity at Marlowe Asset Management Digital Holdings, Inc. is estimated at approximately $23,400,000, and that the combined sign-on package (the $5,000,000 sign-on cash bonus plus the $18,400,000 sign-on equity grant) totals $23,400,000 — matching the estimated forfeiture amount on a gross (pre-tax) basis but falling short on an after-tax basis given the differing tax treatment of cash and equity compensation. Hargrove expressly reserved Harding's right to revisit the sign-on equity quantum, particularly if updated valuations of Harding's forfeited Marlowe Asset Management equity (based on Marlowe Asset Management's share price closer to the start date) indicate a larger forfeiture amount. Notwithstanding this reservation, Hargrove agreed to proceed on the basis of the $18,400,000 sign-on equity grant for purposes of advancing the term sheet and preparing the first draft of the definitive agreement.
Vasquez confirmed that the sign-on equity grants will be made under the Northgate Telecommunications PLC 2022 Omnibus Incentive Plan, which was approved by Northgate shareholders at the 2022 Annual General Meeting. The share price to be used for purposes of converting the dollar-denominated grant values into a number of shares (or ADRs) will be determined as of the date of grant, using the closing price of Northgate ADRs on the New York Stock Exchange (NYSE: NTPC) on the trading day immediately preceding the grant date. For reference purposes, Vasquez noted that the closing price of Northgate ADRs on June 4, 2024 was $15.87 per ADR.
Vasquez further noted that the combined sign-on equity grant and the first-year annual LTI grant (discussed below in Section 3.5) would represent, on a pro forma basis, approximately 1,726,529 shares (based on the $15.87 reference price), which is approximately 0.25% of Northgate's approximately 699 million total shares outstanding. This quantum is well within the 14,200,000 shares remaining in the equity reserve pool under the 2022 Omnibus Incentive Plan and does not raise concerns regarding shareholder dilution or the need to seek additional equity plan authorization at the next Annual General Meeting.
3.5 Annual Long-Term Incentive (LTI) Grant
Agreed annual LTI target value: $9,000,000 per year.
Agreed mix: 60% Performance Stock Units (PSUs) / 40% Restricted Stock Units (RSUs).
•  PSU component: $5,400,000 per year in target value.
•  RSU component: $3,600,000 per year in target value.
Vesting schedule: RSUs will vest ratably over three years (one-third per year from the date of grant). PSUs will cliff vest at the end of a three-year performance period, subject to the achievement of performance metrics to be established by the Remuneration Committee at the time of each annual grant. Annual LTI grants are expected to be made at the same time as grants to other senior executives, typically within 30 days following the end of each fiscal year.
Hargrove confirmed that Harding's current annual long-term incentive target at Marlowe Asset Management Digital Holdings, Inc. is $7,500,000. The proposed $9,000,000 annual LTI target at Northgate represents an increase of $1,500,000 (20.0%), which Hargrove acknowledged is appropriate and commensurate with the step-up from Harding's current role as President and Chief Operating Officer at Marlowe Asset Management to the Group Chief Executive Officer role at Northgate Telecommunications. Hargrove did not seek further negotiation on the annual LTI target value.
Vasquez noted that the 60/40 PSU/RSU mix is consistent with the mix used for annual LTI grants to other members of the Northgate senior executive leadership team and reflects the Remuneration Committee's emphasis on performance-based compensation. The specific performance metrics for PSU awards will be established annually by the Remuneration Committee and are expected to include a combination of relative total shareholder return, revenue growth, and adjusted EBITDA metrics, consistent with Northgate's historical practice.
Both parties acknowledged that the treatment of unvested annual LTI awards upon termination of employment — including the extent of acceleration (if any) upon termination without Cause or for Good Reason, both in and outside of a change in control context — is directly linked to the change in control and severance provisions that remain in dispute. Accordingly, the treatment of unvested LTI on termination was not resolved on this call and remains subject to the resolution of the CIC and non-CIC severance terms discussed in Section 4 below.
3.6 Total Target Annual Compensation
Both parties confirmed during the call that the total target annual compensation under the agreed terms is as follows:
This represents a total target annual compensation package that is approximately $2,687,500 (24.2%) above Harding's current total target annual compensation at Marlowe Asset Management Digital Holdings, Inc., which Hargrove confirmed to be $11,125,000 (comprising $1,450,000 base salary, $2,175,000 target bonus at 150% of base, and $7,500,000 annual LTI target). The step-up is consistent with the Remuneration Committee's objective of providing a compensation package that is competitive and commensurate with the Group CEO role, and Hargrove acknowledged that the overall annual compensation level is satisfactory from Harding's perspective.
The total target annual compensation figure does not include the sign-on cash bonus, the sign-on equity grant, retirement benefits, or perquisites, which are addressed separately in the sections above and below.
3.7 Retirement Benefits
401(k) Plan Participation:
Harding will be eligible to participate in the Northgate Telecommunications US, Inc. 401(k) retirement savings plan on the same terms as other similarly situated employees. The plan provides for an employer matching contribution of 6% of eligible compensation. Based on a base salary of $1,750,000, the employer matching contribution would be $105,000 per year, subject to applicable Internal Revenue Service contribution limits under Sections 401(a)(17), 402(g), and 415 of the Internal Revenue Code, as amended. Vasquez noted that current IRS limits may cap the actual tax-qualified matching contribution at a lower level, with any excess to be provided through the SERP or a non-qualified deferred compensation arrangement, the specifics of which will be addressed in the definitive agreement.
Supplemental Executive Retirement Plan (SERP):
Northgate will provide an annual supplemental executive retirement contribution of $250,000 per year. This contribution will be credited to a non-qualified deferred compensation account maintained on behalf of Harding, subject to the requirements of Section 409A of the Internal Revenue Code. The terms of the SERP — including vesting schedule, distribution timing and form, and investment options — will be addressed in the definitive agreement and the applicable SERP plan documents.
Hargrove confirmed agreement on both the 401(k) plan participation terms and the SERP contribution level. Hargrove stated that no further negotiation is anticipated on retirement benefits.
3.8 Perquisites and Benefits
The parties discussed and agreed upon the following perquisites and benefits:
Car Allowance: $25,000 per year. This amount was agreed at the increased level, reflecting an adjustment from the initial Northgate proposal of $20,000 per year. The increase was requested by Hargrove on the June 24 call and was accepted by Vasquez on behalf of Northgate at that time, with confirmation reiterated on this call.
Executive Health Program: Harding will be entitled to full participation in the Northgate Telecommunications US, Inc. executive health program, which provides comprehensive annual physical examinations, executive wellness services, and related benefits through NTP's designated provider. No further negotiation was required on this item.
Supplemental Life Insurance: $2,000,000 in supplemental life insurance coverage, in addition to any group life insurance coverage provided under NTP's standard employee benefits program. The cost of the supplemental life insurance policy will be borne by Northgate. The parties agreed on this provision without further discussion.
Financial and Tax Planning Reimbursement: Up to $35,000 per year for the cost of personal financial planning, tax preparation, and tax advisory services. This amount was agreed at the increased level, reflecting an adjustment from the initial Northgate proposal of $25,000 per year. The increase was requested by Hargrove on the June 24 call and was accepted by Vasquez on behalf of Northgate at that time, with confirmation reiterated on this call. The increase reflects the expected complexity of Harding's personal tax situation given his anticipated cross-border duties and UK-source income.
Relocation: Not applicable. Harding currently resides at 14 Gramercy Park South, New York, New York, and Northgate Telecommunications US, Inc.'s U.S. operations headquarters is located at 600 Lexington Avenue, New York, New York. No relocation will be necessary in connection with Harding's commencement of employment.
Directors' and Officers' Insurance and Indemnification: Harding will be covered under Northgate Telecommunications PLC's existing Directors' and Officers' liability insurance policy maintained with Ashdown Surety & Insurance Co. (Policy Number ASI-D&O-NTP-2024-4471), which provides coverage of $50,000,000 per occurrence and $100,000,000 in the aggregate. The terms of Harding's indemnification and D&O tail coverage following any termination of employment or cessation of Board service will be addressed in the definitive Executive Employment Agreement.
Hargrove flagged during the discussion that Harding will expect the indemnification provisions in the definitive agreement to be at least as favorable as those currently provided to other directors and officers of Northgate Telecommunications PLC and its subsidiaries, including advancement of legal fees and expenses, and that the indemnification obligations should survive the termination of the employment agreement. Vasquez confirmed that this is the standard approach for Northgate's senior executives and directors and that the definitive agreement will include customary indemnification provisions consistent with Northgate's existing indemnification agreements and Delaware law.
3.9 Employment Term and Start Date
Initial Term: Five (5) years, commencing on the start date and running through the fifth anniversary thereof.
Renewal: The employment term will automatically renew for successive one-year periods following the expiration of the initial five-year term, unless either party provides at least 180 calendar days' advance written notice of non-renewal prior to the expiration of the then-current term. The parties agreed on this structure without substantive discussion, as it is consistent with the Revised Term Sheet (v3).
Start Date: The proposed start date is October 1, 2024. However, Hargrove noted that a start date of November 1, 2024 may be necessary to accommodate Harding's transition from Marlowe Asset Management Digital Holdings, Inc., including compliance with any required notice period under Harding's existing employment arrangement with Marlowe Asset Management (believed to be 90 days), the completion of an orderly handoff of Harding's responsibilities as President and Chief Operating Officer of Marlowe Asset Management, and any administrative requirements related to the separation from Marlowe Asset Management's equity and benefit plans.
Vasquez acknowledged Hargrove's note but stated that Northgate has a strong preference for an October 1, 2024 start date, given the Board's desire to provide a meaningful overlap period between Harding's commencement and the effective date of Sir Alistair Kemble's planned retirement on December 31, 2024. An October 1 start date would provide a three-month transition period during which Harding and Sir Alistair could work together to ensure continuity of leadership, whereas a November 1 start date would compress this overlap to only two months. Vasquez acknowledged, however, that the start date may need to be adjusted based on practical considerations and expressed flexibility on behalf of Northgate. The final start date is to be confirmed and reflected in the definitive Executive Employment Agreement.
Hargrove also raised the issue of Harding's existing 12-month post-termination non-compete agreement with Marlowe Asset Management Digital Holdings, Inc. Hargrove noted that the Marlowe Asset Management non-compete would be triggered upon Harding's resignation from Marlowe Asset Management and that, depending on the scope of the restriction and its enforceability, it could potentially restrict Harding from commencing employment with Northgate in a competing capacity. Hargrove indicated that Harding's preliminary view, based on advice from his personal counsel, is that the NTP Group CEO role may not fall within the scope of the Marlowe Asset Management non-compete, given that Marlowe Asset Management is primarily a digital media and content platform company rather than a telecommunications infrastructure and services provider. However, Hargrove acknowledged that this issue requires careful analysis and may need to be addressed either through a waiver or consent from Marlowe Asset Management or through a legal determination that the NTP role does not violate the scope of the Marlowe Asset Management restriction.
Vasquez agreed that the Marlowe Asset Management non-compete issue is an important consideration and suggested that it be addressed as a separate workstream running in parallel with the drafting of the definitive Executive Employment Agreement. Vasquez assigned James Underwood to prepare a detailed analysis of Harding's existing non-compete with Marlowe Asset Management and its implications for the proposed NTP role (see Action Items in Section 6 below).
4. Deferred / Unresolved Terms
The following terms were discussed on the call but were not resolved. Both parties agreed to defer these items and to address them in bracketed or alternative-text format in the first full draft of the Executive Employment Agreement.
4.1 Change in Control Provisions
The change in control severance provisions remain the most significant area of disagreement between the parties. The positions of each side are summarized below.
Northgate Position (as set forth in Revised Term Sheet v3):
•  CIC Cash Severance Multiplier: 2.5x the sum of base salary plus target annual bonus. Based on the agreed compensation terms, this yields a CIC cash severance payment of $4,812,500 × 2.5 = $12,031,250.
•  CIC Trigger: Double trigger (i.e., severance is payable only upon a qualifying termination of employment — termination without Cause or resignation for Good Reason — within a specified period following a change in control event, not upon the occurrence of a change in control alone).
•  Section 280G Treatment: Best-net cutback. Parachute payments would be reduced to the safe harbor limit under Section 280G of the Internal Revenue Code to the extent such reduction would result in a greater after-tax benefit to Harding than the full payment subject to the 20% excise tax under Section 4999. No excise tax gross-up.
•  CIC Equity Acceleration: Pro-rata acceleration of unvested equity based on service elapsed during the applicable vesting period; PSUs to vest at actual performance (if determinable) or target (if actual performance is not determinable at the time of the CIC).
•  CIC Definition: Limited to (a) the acquisition by any person or group of more than 50% of the combined voting power of Northgate's outstanding voting securities; (b) a merger, consolidation, or similar business combination in which Northgate's pre-transaction shareholders hold less than 50% of the combined voting power of the surviving entity immediately following the transaction; and (c) a sale or disposition of all or substantially all of Northgate's assets. The CIC definition does not include a Board turnover trigger.
•  Benefit Continuation: 24 months of COBRA continuation coverage at company expense following a qualifying CIC termination.
Harding Position (as communicated by Hargrove & Liddell):
•  CIC Cash Severance Multiplier: 3x the sum of base salary plus target annual bonus. This yields a CIC cash severance payment of $4,812,500 × 3 = $14,437,500.
•  CIC Trigger: Double trigger (consistent with Northgate's position on this point; no disagreement on the trigger mechanism).
•  Section 280G Treatment: Full excise tax gross-up under Section 280G/4999. Northgate would be obligated to pay an additional amount sufficient to hold Harding harmless from any excise tax imposed under Section 4999, including any excise tax on the gross-up payment itself (a "full gross-up").
•  CIC Equity Acceleration: Full acceleration of all unvested equity awards, including all RSUs and all PSUs at target performance level (not pro-rata or based on actual performance).
•  CIC Definition: Includes, in addition to the three triggers in Northgate's proposed definition, a Board turnover trigger defined as a change in the composition of the Board of Directors such that a majority of the directors serving on the Board are replaced within any rolling 12-month period by directors who were not nominated or endorsed by the incumbent Board.
•  Benefit Continuation: 36 months of COBRA continuation coverage (or equivalent) at company expense following a qualifying CIC termination.
Key Gaps:
The gap on CIC cash severance between the parties' positions is $2,406,250 ($14,437,500 under Harding's proposed 3x multiplier versus $12,031,250 under Northgate's proposed 2.5x multiplier).
The gap on Section 280G tax treatment — full excise tax gross-up (Harding's position) versus best-net cutback (Northgate's position) — represents an estimated differential of approximately $4,200,000 to $6,800,000, depending on the precise calculation of parachute payments under Section 280G. This estimate was provided by Vasquez based on a preliminary analysis by Calderwood & Harkness and is subject to refinement in the detailed Section 280G analysis to be prepared in connection with Draft 1 (see Section 5 below).
Hargrove described the change in control severance provisions — including the multiplier, the gross-up, the equity acceleration treatment, and the Board turnover trigger — as "core protection" terms from Harding's perspective. Hargrove noted that these provisions are particularly important given that Harding would be leaving a senior leadership position at a large, well-established company (Marlowe Asset Management Digital Holdings) to assume the Group CEO role at Northgate, a company that Harding perceives as potentially vulnerable to acquisition activity given its current valuation, market capitalization, and recent share price performance.
Vasquez acknowledged the importance of the issue to Harding but noted that Northgate's flexibility on CIC terms is significantly constrained by several factors. First, Vasquez cited ISS (Thackeray Health IT) proxy advisory guidelines, which generally view 280G excise tax gross-ups as a negative governance feature and recommend that shareholders vote against say-on-pay proposals that include such provisions. Second, Vasquez referenced guidance received from Veltrano Proxy Advisors, Inc. (Northgate's proxy advisory consultant), which has advised that inclusion of a full 280G gross-up would likely trigger a negative ISS recommendation on Northgate's say-on-pay proposal at the next Annual General Meeting. Third, Vasquez stated that the Board of Directors, acting through Geoffrey Stanton as Chair of the Remuneration Committee, has established firm parameters on the CIC provisions and that the 2.5x multiplier with best-net cutback represents the upper limit of the Board's authorized range.
After extended discussion, both parties agreed that the CIC provisions cannot be resolved at this stage and should be deferred to the next phase of negotiations. Both parties agreed that the first full draft of the Executive Employment Agreement (Draft 1) will reflect both positions: Northgate's position will be set forth in the body text of the relevant provisions, and Harding's position will be shown in footnotes or alternative bracketed text, so that the areas of disagreement are clearly delineated for further negotiation.
4.2 Restrictive Covenant Provisions
The post-employment restrictive covenant provisions remain disputed. The positions of each side are summarized below.
Non-Compete:
•  Northgate position: 24-month post-termination non-compete period. Vasquez noted, however, that on prior calls Northgate has signaled a potential willingness to fall back to an 18-month non-compete period, and this fallback remains on the table. The geographic scope of the non-compete would be worldwide. The activity restriction would be defined using a revenue-based test, prohibiting Harding from providing services to, or being employed by, any company that derives more than 15% of its consolidated annual revenue from telecom services, telecom infrastructure, or enterprise SaaS platforms serving telecommunications operators.
•  Harding position: 12-month post-termination non-compete period, matching the duration of Harding's current non-compete with Marlowe Asset Management Digital Holdings, Inc. The geographic scope would be limited to North America and Western Europe. The activity restriction would be narrowed to a schedule of eight specifically named direct competitors (the "Named Competitor" approach), rather than a broadly defined revenue-based test.
Garden Leave:
•  Northgate position: 6-month paid garden leave period at base salary only. Garden leave would not run concurrently with the non-compete period (i.e., the total period of post-separation restriction could be up to 30 months: 6 months garden leave plus 24 months non-compete).
•  Harding position: 12-month paid garden leave period at full compensation, defined to include base salary plus a pro-rata annual bonus based on target performance. Garden leave would run concurrently with the non-compete period, such that the total effective period of post-separation restriction would be limited to 12 months.
Non-Solicitation:
•  Northgate position: 24-month post-termination non-solicitation of both employees and customers/clients of Northgate and its affiliates.
•  Harding position: 18-month post-termination non-solicitation of employees only. No customer or client non-solicitation provision.
During the discussion, Vasquez proactively raised enforceability concerns under New York law relating to the proposed 24-month worldwide non-compete. Vasquez noted that New York courts apply a reasonableness analysis when evaluating the enforceability of post-employment non-compete agreements, considering factors including the duration of the restriction, the geographic scope, the breadth of the activity restriction, the employee's role and access to confidential information, and the hardship imposed on the employee. Vasquez observed that a 24-month worldwide non-compete based on a broad revenue-based activity test may be vulnerable to challenge as overbroad, particularly in light of pending New York State legislation (Senate Bill S3100, introduced in January 2024) that, if enacted, would impose significant new restrictions on post-employment non-compete agreements, potentially including outright prohibition for certain classes of employees or imposition of mandatory durational limits.
Both parties agreed that the restrictive covenant provisions cannot be resolved at this stage and should be deferred to the next phase of negotiations. As with the CIC provisions, both parties agreed that Draft 1 of the Executive Employment Agreement will present both positions in bracketed or alternative-text format to facilitate further discussion.
4.3 Non-CIC Severance Provisions
The non-CIC severance provisions — that is, the severance benefits payable upon a qualifying termination of employment (termination without Cause or resignation for Good Reason) outside the context of a change in control — were briefly discussed but not resolved.
Northgate position: 2x the sum of base salary plus target annual bonus, yielding a non-CIC severance payment of $4,812,500 × 2 = $9,625,000. Pro-rata annual bonus for the fiscal year in which termination occurs, based on actual performance. 18 months of COBRA continuation coverage at company expense. 12 months of accelerated vesting of unvested equity awards (with PSUs vesting at the lesser of target and actual performance, if determinable).
Harding position: 2.5x the sum of base salary plus target annual bonus, yielding a non-CIC severance payment of $4,812,500 × 2.5 = $12,031,250. Full acceleration of all unvested equity awards (including PSUs at target). 24 months of COBRA continuation coverage at company expense.
Hargrove stated that resolution of the non-CIC severance terms is directly linked to the resolution of the CIC severance terms, as the non-CIC severance provisions are typically set at a level that is proportionate to (and lower than) the CIC severance provisions. Hargrove argued that the non-CIC and CIC severance provisions should be addressed together as a unified package rather than in isolation.
Vasquez did not disagree with this general approach and indicated that Northgate views the non-CIC severance terms as part of the same overall severance framework.
Decision: The non-CIC severance provisions are deferred to the definitive agreement drafting process and will be presented in bracketed format in Draft 1, consistent with the treatment of the CIC provisions and restrictive covenant provisions.
5. Path Forward and Next Steps
Both parties agreed on the following path forward at the conclusion of the call:
Preparation of Draft 1 of the Executive Employment Agreement: Both sides agreed that Calderwood & Harkness LLP will prepare the first full draft of the Executive Employment Agreement ("Draft 1"), incorporating all terms agreed during the term sheet negotiations (as described in Section 3 above) in clean, finalized text, and presenting all disputed terms (CIC severance provisions, restrictive covenant provisions, and non-CIC severance provisions, as described in Section 4 above) in bracketed or alternative-text format that clearly reflects both parties' positions. Vasquez stated that Draft 1 will be a comprehensive, execution-ready document (subject to resolution of the bracketed items) and will include all customary provisions expected in a CEO-level employment agreement, including definitions, representations and warranties, cooperation obligations, confidentiality and intellectual property provisions, dispute resolution mechanisms, and choice of law provisions.
Target Date for Draft 1 Circulation: Vasquez stated that Calderwood & Harkness aims to circulate Draft 1 to Hargrove & Liddell by July 22, 2024. Vasquez noted that this target date is contingent on timely receipt of the equity accounting analysis from Galloway & Partners and the completion of the Section 280G preliminary analysis.
Hargrove & Liddell's Review Period: Hargrove indicated that Hargrove & Liddell will require approximately two weeks from receipt of Draft 1 to conduct a thorough review and prepare a comprehensive redline markup reflecting Harding's comments, counterproposals on bracketed items, and any additional issues identified during the review process.
Dual-Contract Structure — UK Service Agreement: Vasquez noted that the full draft employment agreement prepared by Calderwood & Harkness will address the primary U.S. employment agreement, which will be governed by the laws of the State of New York. In addition, a secondary UK service agreement between Harding and Northgate Telecommunications PLC (the UK-incorporated parent entity) is being separately drafted by Moorfield Bates LLP (Simon Aldridge, lead partner) to govern Harding's UK board duties, regulatory compliance obligations (including obligations arising under UK corporate governance codes and Financial Conduct Authority requirements applicable to Northgate as a company with a premium listing on the London Stock Exchange), and any other duties performed in the United Kingdom, which are expected to represent approximately 20% of Harding's total working time. The UK service agreement is expected to be circulated in parallel with Draft 1 of the U.S. employment agreement. Hargrove acknowledged the dual-contract structure and noted that Harding's counsel may have comments on the UK service agreement as well, and that Hargrove & Liddell may retain UK counsel for this purpose.
Cross-Border Tax Matters: Vasquez confirmed that the definitive Executive Employment Agreement will include tax equalization provisions designed to address Harding's UK-source income arising from his duties performed in the United Kingdom. Given Harding's U.S. tax residency (as a U.S. citizen domiciled in New York), the tax equalization provisions will be structured so that Harding bears no more than the U.S. federal, state, and local income tax that he would have owed had all of his compensation been U.S.-source income, with Northgate bearing the cost of any additional UK income tax, National Insurance contributions, or other UK tax liabilities arising from his UK-source income. The provisions will also address the application of the U.S.-UK Tax Treaty (Convention Between the Government of the United States of America and the Government of the United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation) and the U.S.-UK Totalization Agreement for social security purposes (including the allocation of U.S. FICA and UK National Insurance contribution obligations).
Section 280G Analysis: Vasquez noted that Calderwood & Harkness will prepare a detailed Section 280G parachute payment analysis based on the terms reflected in Draft 1, using Harding's average annualized compensation (the "base amount" under Section 280G) calculated from his W-2 compensation from Marlowe Asset Management Digital Holdings, Inc. over the five calendar years 2019 through 2023, which yields an estimated base amount of $7,840,000. Based on this base amount, the safe harbor limit (three times the base amount, less one dollar) is estimated to be $23,519,999. The Section 280G analysis will quantify the estimated excise tax exposure under various scenarios, including under both the Northgate-proposed CIC terms (best-net cutback) and the Harding-proposed CIC terms (full gross-up), and will model the impact of different levels of parachute payments on Harding's after-tax compensation. This analysis will be completed before Draft 1 is finalized and will inform the bracketed provisions relating to Section 280G treatment.
Equity Accounting Consultation: Vasquez mentioned that Galloway & Partners (Clive Warburton, audit partner) is being consulted on the accounting treatment of the proposed sign-on equity grants and annual LTI grants under ASC 718 (Compensation — Stock Compensation) for U.S. GAAP reporting purposes and under IFRS 2 (Share-based Payment) for Northgate's UK statutory reporting purposes. This analysis will address the grant-date fair value measurement, expense recognition timing, and any classification issues (equity-classified versus liability-classified) arising from the proposed award structures, particularly the PSU awards with market-based (TSR) and non-market-based (revenue growth) performance conditions. The accounting analysis is expected to be available before Draft 1 finalization.
Next Negotiation Call: The next substantive negotiation call between Calderwood & Harkness and Hargrove & Liddell is to be scheduled after Hargrove & Liddell returns its redline of Draft 1. Based on the current timeline — Draft 1 circulation by July 22, 2024, plus approximately two weeks for Hargrove & Liddell's review — the next negotiation call is anticipated for the first or second week of August 2024. In the interim, the parties may schedule a brief procedural or scheduling call on or about July 12, 2024, to address any open procedural issues, confirm the Draft 1 timeline, and coordinate on the parallel workstreams (UK service agreement, Marlowe Asset Management non-compete analysis, and equity accounting consultation).
Marlowe Asset Management Non-Compete Analysis: James Underwood (Calderwood & Harkness) will prepare a separate memorandum analyzing Harding's existing 12-month post-termination non-compete agreement with Marlowe Asset Management Digital Holdings, Inc. and its implications for the proposed NTP role. This analysis will examine the scope of the Marlowe Asset Management non-compete (including the defined activity restriction, geographic scope, and duration), the enforceability of the Marlowe Asset Management non-compete under applicable law (expected to be Delaware or New York law, depending on the governing law provision of Harding's Marlowe Asset Management employment agreement), and the factual question of whether Harding's proposed role as Group CEO of Northgate Telecommunications would fall within the scope of the restricted activities under the Marlowe Asset Management non-compete. The analysis will also consider potential strategies for addressing the Marlowe Asset Management non-compete, including seeking a waiver or consent from Marlowe Asset Management, negotiating a narrowing amendment, or proceeding based on a determination that the NTP role is outside the scope of the restriction.
6. Open Action Items
7. Concluding Notes
The call concluded at approximately 4:15 PM ET.
At the close of the call, both Vasquez and Hargrove expressed satisfaction with the progress achieved on the compensation terms during this session and acknowledged the constructive and professional tone of the discussion. Vasquez noted that the agreement on all principal compensation elements (base salary, bonus, sign-on cash and equity, annual LTI, retirement benefits, and perquisites) represents a significant milestone in the negotiation process and positions the parties well to move to the definitive agreement phase.
Hargrove concurred but noted that while significant progress has been made, the change in control and restrictive covenant provisions remain the "most important issues" from Harding's perspective and will require resolution before any agreement can be finalized. Hargrove emphasized that these provisions represent non-negotiable protections from Harding's standpoint and that Harding's willingness to accept the NTP role will depend in substantial part on the outcome of the negotiations on these items. Hargrove stated that Harding views the CIC protections as essential given the risks associated with leaving a secure senior position at Marlowe Asset Management to join a new organization, and that the restrictive covenant terms must be reasonable and proportionate to Harding's legitimate interests.
Vasquez reiterated that the Remuneration Committee's approved framework is well-defined and that the Board's positions on the CIC and restrictive covenant provisions are firm, reflecting significant deliberation by the Remuneration Committee, input from the independent compensation consultant (Whitmore Hobson LLP), and guidance from Veltrano Proxy Advisors, Inc. on shareholder and proxy advisory sensitivities. However, Vasquez expressed willingness to explore creative structures within the approved parameters — for example, potential adjustments to the CIC equity acceleration provisions or modifications to the non-compete activity definition — that might narrow the gap between the parties without exceeding the Board's authorized range.
These notes were prepared by Devon Archer, Associate, Calderwood & Harkness LLP, based on contemporaneous handwritten notes taken during the call and a review of the video conference chat log. Devon Archer will circulate these call notes in draft form to Renata Vasquez and James Underwood for review and comment. The final version of these notes will be filed in the Calderwood & Harkness matter file under Matter Number 1022-00004. These notes are not to be shared with counterparty counsel (Hargrove & Liddell LLP), with Mr. Harding, or with any third party without the prior approval of Renata Vasquez.
Prepared by: Devon Archer, Associate, Calderwood & Harkness LLP, 299 Park Avenue, 42nd Floor, New York, NY 10171
Date of Preparation: July 8, 2024
Distribution: Internal Only — Renata Vasquez (Partner), Bernard Crawford (Partner), James Underwood (Associate), Calderwood & Harkness LLP
Matter: 1022-00004 — Northgate Telecommunications PLC — CEO Employment Negotiation
Status: PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT — ATTORNEY-CLIENT COMMUNICATION
Component | Annual Value
Base Salary | $1,750,000
Target Annual Bonus (175% of base) | $3,062,500
Annual LTI (target) | $9,000,000
Total Target Annual Compensation | $13,812,500
# | Action Item | Responsible Party | Target Date
1 | Prepare and circulate Draft 1 of Executive Employment Agreement, incorporating all agreed terms in clean text and all disputed terms (CIC severance, restrictive covenants, non-CIC severance) in bracketed/alternative-text format reflecting both parties' positions | Calderwood & Harkness LLP (Underwood, Archer) | July 22, 2024
2 | Prepare detailed Section 280G parachute payment analysis under Draft 1 terms, modeling safe harbor limit, excise tax exposure, and after-tax impact under best-net cutback and full gross-up scenarios | Calderwood & Harkness LLP (Archer) | Before Draft 1 circulation
3 | Coordinate with Moorfield Bates LLP (Simon Aldridge) on the parallel drafting and circulation of the UK service agreement between Harding and Northgate Telecommunications PLC | Calderwood & Harkness LLP (Underwood) | Ongoing; target parallel circulation with Draft 1
4 | Consult with Galloway & Partners (Clive Warburton) on equity accounting treatment of proposed sign-on and annual equity grants under ASC 718 and IFRS 2 | Calderwood & Harkness LLP (Archer) | Before Draft 1 circulation
5 | Prepare memorandum analyzing Harding's existing Marlowe Asset Management Digital Holdings 12-month non-compete and implications for the proposed NTP Group CEO role | Calderwood & Harkness LLP (Underwood) | Before Draft 1 circulation
6 | Review Draft 1 of Executive Employment Agreement and prepare comprehensive redline markup | Hargrove & Liddell LLP (Hargrove, Chu) | Approximately 2 weeks after receipt of Draft 1
7 | Confirm Harding's preferred start date (October 1 vs. November 1, 2024) and advise Calderwood & Harkness | Hargrove & Liddell LLP | Before Draft 1 circulation
8 | Report agreed compensation terms and remaining open items to Remuneration Committee Chair (Geoffrey Stanton) and Board Chair (Dame Philippa Thornton-Hale) via Elaine Whitford (NTP General Counsel) | Calderwood & Harkness LLP (Vasquez) | Following this call

PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT — ATTORNEY-CLIENT COMMUNICATION

Record

Parties

Dates

Amounts