1022-00004 · Northgate Telecommunications PLC · Term Sheet Negotiation

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CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / WORK PRODUCT

Call Notes — Term Sheet Negotiation Call #4

This memorandum constitutes attorney work product and is protected by the attorney-client privilege. It has been prepared by counsel for Northgate Telecommunications PLC in connection with the negotiation of employment terms for a prospective Chief Executive Officer. This document is intended solely for internal distribution within Calderwood & Harkness LLP and must not be shared with the client, opposing counsel, or any third party without prior review and authorization by Renata Vasquez, Partner.

Matter: Northgate Telecommunications PLC — CEO Employment Negotiation

Matter Number: 1022-00004

Date of Call: Friday, July 12, 2024

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

Date of Preparation: July 12, 2024

Call Logistics

Date: Friday, July 12, 2024

Time: 2:00 p.m. – 3:45 p.m. (EDT) (approximately 1 hour 45 minutes)

Format: Video conference (Calderon Software; Calderwood & Harkness hosting link)

Reference Document: Revised Term Sheet (v4) — draft circulated by Calderwood & Harkness on July 10, 2024, incorporating agreements reached during the July 8, 2024 negotiation call (Call #3). The v4 term sheet contained bracketed alternatives on the remaining disputed provisions, as described further below.

Attendees

Calderwood & Harkness LLP (counsel to Northgate Telecommunications PLC)

• Renata Vasquez, Partner

• James Underwood, Associate

• Devon Archer, Associate (notetaker)

Hargrove & Liddell LLP (counsel to Marcus Elliot Harding)

• Victoria Hargrove, Partner

• Nathan Chu, Associate

Not Present on Call

No client principals participated in this call. This was a counsel-to-counsel negotiation session. Specifically, Elaine Whitford, General Counsel of Northgate Telecommunications PLC ("NTP" or "Northgate"), was not in attendance, nor was Marcus Elliot Harding ("Harding" or the "Executive"). Accordingly, all positions discussed were conveyed by respective counsel based on previously received client instructions.

I. Opening and Agenda

Vasquez opened the call at approximately 2:02 p.m. EDT by referencing the revised term sheet (v4) dated July 10, 2024, which had been circulated to Hargrove & Liddell by email on July 10 at 6:14 p.m. EDT. Vasquez noted that the v4 term sheet was intended to memorialize and incorporate the agreements reached during the July 8, 2024 negotiation call (Call #3) and to frame the remaining open issues for discussion on this call.

Vasquez provided a brief recap of the items resolved during the July 8 call, which are now reflected as agreed terms in the v4 term sheet:

• Base Salary: $1,750,000 per annum.

• Target Bonus: 175% of base salary = $3,062,500.

• Maximum Bonus: 300% of base salary = $5,250,000.

• Sign-On Cash Bonus: $5,000,000, subject to a 24-month clawback in the event of voluntary resignation without Good Reason or termination for Cause.

• Annual Long-Term Incentive (LTI): $9,000,000 in aggregate grant-date value, allocated 60% to performance stock units ("PSUs") and 40% to restricted stock units ("RSUs").

• Supplemental Executive Retirement Plan (SERP): $250,000 per year contribution by NTP.

• Perquisites: $25,000 annual automobile allowance; enrollment in Northgate's executive health program; $2,000,000 supplemental life insurance policy (premiums paid by NTP); and $35,000 per year for financial planning and tax preparation reimbursement.

Vasquez noted that, with these items resolved, the v4 term sheet contained bracketed alternatives reflecting each side's position on the two remaining categories of open issues: (1) change in control provisions and (2) restrictive covenant provisions. Vasquez proposed that the call proceed through these two categories sequentially, beginning with the change in control provisions.

Hargrove confirmed her agreement with Vasquez's characterization of the current state of negotiations and stated that the purpose of this call, from Harding's perspective, was to narrow the bracketed alternatives on the remaining open points to the extent possible, with the goal of enabling Calderwood & Harkness to prepare a first full draft of the employment agreement that reflected either agreed positions or clearly delineated disputes. Hargrove indicated she had received updated instructions from Harding prior to the call and was prepared to discuss certain modified positions.

With no further preliminary matters, the parties proceeded to the substance of the discussion.

II. Discussion of Change in Control Provisions

A. CIC Definition

The discussion of change in control ("CIC") provisions began with the definition of what constitutes a "change in control" under the prospective employment agreement.

Hargrove reiterated Harding's position that the definition of "change in control" should include four independent triggers, any one of which would constitute a CIC for purposes of the agreement:

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

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

(d) 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 12-month period (the "Board turnover trigger").

Hargrove stated that all four triggers are standard in CEO-level employment agreements at US-listed public companies and that Harding views each as representing a distinct governance scenario in which his continued employment may be at risk due to a fundamental change in the corporate authority structure from which his mandate derives.

Vasquez reiterated Northgate's position that triggers (a), (b), and (c) are acceptable and largely consistent with the definition of "change of control" used in NTP's existing equity incentive plan and the employment agreements of other senior executives. However, Vasquez stated that Northgate continues to reject the Board turnover trigger (d). Vasquez explained the basis for NTP's objection in the following terms:

First, Northgate's Board of Directors views the inclusion of a Board turnover trigger as inconsistent with UK corporate governance norms and the UK Corporate Governance Code 2024 (the "Code"). Under the Code, annual re-election of all directors at the annual general meeting is considered best practice, and the routine refreshment of board composition — including replacement of a majority of directors over time through normal governance processes — should not give rise to severance entitlements.

Second, the Remuneration Committee is concerned that a Board turnover trigger could create a perverse incentive structure in which the incoming CEO would be entitled to substantial severance payments as a result of ordinary-course board succession planning, activist shareholder campaigns resulting in board seats being contested, or other scenarios that do not involve a genuine change of corporate control.

Third, Vasquez noted that the Board turnover trigger is comparatively rare in the employment agreements of executives at UK-listed companies, even those with ADR listings in the United States, and that inclusion of such a trigger would be subject to scrutiny by institutional shareholders and proxy advisory firms in connection with NTP's annual say-on-pay vote.

Hargrove responded by arguing that the Board turnover trigger is a standard and well-recognized provision in US public company CEO employment agreements and is included in the vast majority of agreements at S&P 500 companies. Hargrove stated that the provision provides a meaningful and important protection for the CEO in circumstances where the board from which the executive received his appointment and mandate has been fundamentally reconstituted — a scenario that may result in a change in corporate strategy, management philosophy, or expectations for the CEO role that is functionally equivalent to a change of control even if no acquisition or merger has occurred. Hargrove noted that this is particularly relevant in the current environment, given the increasing frequency of activist campaigns and proxy contests in the telecommunications sector.

Vasquez acknowledged Hargrove's arguments but stated that this remains a Board-level decision for Northgate and that the Remuneration Committee, chaired by Geoffrey Stanton, had specifically considered and rejected this provision during its deliberations on the term sheet. Vasquez stated that she was not in a position to concede this point without further instruction from the Board and that she did not anticipate the Board would change its position absent a compelling reason to do so.

Status: No resolution reached on the Board turnover trigger. The provision remains bracketed in the v4 term sheet, with Northgate's position excluding trigger (d) and Harding's position including it.

B. CIC Severance Multiplier — Hargrove's Compromise Proposal

The discussion turned to the CIC severance cash payment, expressed as a multiple of the sum of base salary plus target annual bonus.

Hargrove introduced a new compromise position on behalf of Harding. Hargrove stated that, in the interest of narrowing the remaining gaps and demonstrating Harding's good faith, Harding would accept a 2.75x multiplier on the sum of base salary plus target bonus as the CIC severance cash amount, down from his initial demand of 3.0x. Hargrove characterized this as a meaningful concession and stated that Harding expected Northgate to reciprocate with movement on other outstanding items.

The parties discussed the resulting calculations:

The gap between Northgate's current position of 2.5x and Harding's revised compromise of 2.75x was noted to be $1,203,125 ($13,234,375 minus $12,031,250). The movement from Harding's original 3.0x demand to the proposed 2.75x represented a reduction of $1,203,125 on Harding's side.

Vasquez acknowledged the movement from 3.0x to 2.75x and stated that she appreciated Harding's willingness to narrow the gap. Vasquez stated that she would take the 2.75x proposal under advisement with the Remuneration Committee but was not in a position to accept or reject the proposal on this call. Vasquez noted that the Remuneration Committee would likely want to evaluate the 2.75x proposal in the context of the overall compensation package, including the interaction with the Section 280G analysis and the CIC tax treatment question discussed below.

Underwood asked whether the 2.75x multiplier would represent Harding's final position or whether there was further flexibility below that level. Hargrove responded that she was not authorized to go below 2.75x at this time and that Harding views 2.75x as a reasonable middle ground that reflects meaningful concession from his original position.

Vasquez offered several additional observations for the record:

First, Vasquez noted that Veltrano Proxy Advisors, Inc. ("Veltrano"), NTP's proxy solicitation firm, had informally indicated during a background call on July 3, 2024, that CIC multipliers at or above 3.0x are routinely flagged by both ISS and Tarrant Partners LLC as a potential governance concern. While 2.75x falls below the 3.0x threshold, Vasquez noted that even a 2.75x multiplier would be above the typical range observed at UK-listed companies, which generally cap CIC severance at 2.0x base salary (or, in some cases, 2.0x base salary plus bonus). Vasquez acknowledged, however, that the 2.75x multiplier falls within the range observed at comparably sized US-listed public companies, particularly in the technology and telecommunications sectors.

Second, Vasquez noted that Whitmore Hobson LLP's peer-group compensation benchmarking analysis (the "Whitmore Hobson Report"), which was commissioned by the Remuneration Committee and is expected to be finalized by approximately July 18, 2024, would be relevant to the Remuneration Committee's evaluation of the 2.75x proposal. Vasquez stated that the preliminary data from the Whitmore Hobson Report suggested a median CIC multiplier of 2.5x and a 75th percentile of approximately 2.9x among the selected peer group, though the final peer group composition had not yet been confirmed.

Status: The 2.75x CIC multiplier proposal is under advisement by the Northgate Remuneration Committee. Vasquez will revert to Hargrove following Committee deliberation. The issue remains unresolved as of the conclusion of this call.

C. CIC Tax Treatment — Gross-Up vs. Best-Net

The discussion moved to the treatment of excise taxes under Section 280G and Section 4999 of the Internal Revenue Code in connection with CIC-related payments.

Hargrove reiterated Harding's demand for a full Section 280G excise tax gross-up — i.e., in the event that any payments or benefits constitute "excess parachute payments" under Section 280G, NTP would make an additional payment to Harding sufficient to place him in the same after-tax position as if no excise tax had been imposed, taking into account the excise tax itself as well as any income tax and employment tax on the gross-up payment.

Hargrove noted that Harding's current employment arrangement at Marlowe Asset Management Digital Holdings, Inc. ("Marlowe Asset Management") includes a full excise tax gross-up and that this is a point of principle for Harding. Hargrove stated that Harding should not be placed in a worse position with respect to tax protection by accepting the Northgate role than he currently enjoys at Marlowe Asset Management. Hargrove characterized the gross-up as a standard element of CEO compensation at major US public companies, notwithstanding the trend among some companies to eliminate such provisions.

Vasquez reiterated Northgate's position, which is to include a best-net cutback provision rather than a gross-up. Under the best-net approach, if any payments or benefits to Harding would constitute excess parachute payments, the payments would be reduced to the Section 280G "safe harbor" amount (i.e., three times the base amount minus one dollar) only if the after-tax amount received by Harding under the cutback would be greater than or equal to the after-tax amount Harding would receive if the full payment were made and the excise tax were imposed without any gross-up. If the after-tax amount is greater without the cutback (i.e., Harding is better off paying the excise tax), no cutback would occur, but no gross-up would be provided.

Vasquez cited several grounds for Northgate's position:

First, Vasquez referenced the ISS proxy advisory policy, which treats Section 280G excise tax gross-ups as "problematic pay practices." Vasquez stated that inclusion of a full gross-up in the employment agreement would likely trigger a negative recommendation from ISS on NTP's annual say-on-pay resolution. Vasquez noted that NTP received 87.4% say-on-pay support at the April 18, 2024 Annual General Meeting — a level she characterized as providing "limited cushion" and one that could be at risk if ISS issues an adverse recommendation.

Second, Vasquez referenced Calderwood & Harkness's preliminary Section 280G analysis, which had been prepared based on publicly available information regarding Harding's compensation at Marlowe Asset Management and the proposed terms of the Northgate employment arrangement. The key parameters of the preliminary analysis were discussed as follows:

• Base amount: $7,840,000 (representing Harding's average annualized W-2 compensation at Marlowe Asset Management for the five taxable years 2019 through 2023).

• Safe harbor limit: $23,519,999 (calculated as three times the base amount minus one dollar: 3 × $7,840,000 – $1 = $23,519,999).

• Estimated total parachute payments under Harding's proposed terms: approximately $38,200,000 (including CIC cash severance, accelerated equity, benefit continuation, and other CIC-contingent payments).

• Estimated excess parachute payment: approximately $30,360,000 ($38,200,000 minus $7,840,000 base amount).

• Estimated excise tax (20% under Section 4999): approximately $6,072,000.

Third, Vasquez noted that the cost to NTP of a full gross-up — including the gross-up on the gross-up (i.e., the additional tax payments required to make Harding whole for the income tax on the gross-up payment itself) — would likely exceed $10,000,000 in the aggregate, depending on applicable state and local tax rates.

Hargrove questioned whether the best-net analysis would actually produce a result favorable to Harding and suggested that the numbers are close to the inflection point at which a cutback versus full payment analysis could go either way depending on the precise composition of parachute payments, applicable tax rates, and other variables. Hargrove argued that, in these circumstances, the gross-up serves as essential "insurance" against a scenario in which Harding is disadvantaged by the absence of either a full payment or a cutback.

Vasquez responded that Whitmore Hobson LLP's preliminary analysis — which takes into account Harding's anticipated New York State and New York City tax rates in addition to federal rates — suggested that the cutback is slightly favorable to Harding on an after-tax basis under the currently modeled scenario. This means that Harding would receive a higher after-tax amount with the cutback (and no excise tax) than he would receive with the full payment subject to excise tax (and no gross-up). Vasquez argued that this result significantly diminishes the practical value of the gross-up, since under the best-net provision the cutback would apply and Harding would be made better off. The gross-up, Vasquez argued, would therefore have limited practical value to Harding but would carry significant optics and governance costs for Northgate, including potential adverse proxy advisory recommendations and shareholder dissatisfaction.

Status: No resolution reached on the gross-up vs. best-net issue. Hargrove stated that the full Section 280G excise tax gross-up is "non-negotiable" for Harding. Vasquez stated that Northgate's Board is equally firm in its opposition to a gross-up provision. This issue remains a significant point of disagreement.

D. CIC Equity Acceleration

The parties had a brief discussion regarding the treatment of unvested equity awards upon a qualifying termination of employment in connection with a change in control.

Both sides confirmed their agreement on the fundamental principle of full acceleration of all unvested equity awards (both RSUs and PSUs) upon a qualifying CIC termination — i.e., a termination without Cause or resignation for Good Reason within the 24-month period following a CIC (a "double trigger" structure). There was no dispute on this point.

The remaining open issue relates to the treatment of PSUs upon acceleration — specifically, the level of performance at which PSUs vest upon a CIC-related acceleration event:

Northgate's position: PSUs should accelerate and vest based on actual performance measured through the most recently completed performance measurement date, or, if less than one year of the performance period has elapsed at the time of the CIC, at target performance. This approach ensures that PSU payouts reflect actual company performance to the greatest extent practicable while providing a reasonable default for the early portion of the performance period.

Harding's position: PSUs should accelerate and vest at target performance regardless of actual performance at the time of the CIC. Harding's position applies this treatment uniformly, without regard to how far into the performance period the CIC occurs.

Hargrove argued that PSU acceleration at target is standard for incoming CEO sign-on equity grants, particularly where the executive has not yet had sufficient time to influence the performance metrics applicable to the PSUs. Hargrove noted that this is especially relevant for the initial sign-on PSU grant of $6,400,000, which would be the Executive's first equity award from NTP and would cover a period during which Harding is still transitioning into the CEO role.

Vasquez acknowledged the force of Hargrove's argument with respect to the initial sign-on grant but noted that the treatment of PSU acceleration directly affects the Section 280G parachute payment calculation — specifically, the higher the deemed value of accelerated PSUs, the larger the total parachute payment and the more likely that the excess parachute payment threshold is exceeded or that the best-net analysis produces a different result. Vasquez stated that this interaction needs to be modeled carefully before a final position can be taken.

Both sides agreed to defer this issue to the full draft employment agreement, where the PSU acceleration provision will be addressed in the context of the equity award agreements and the overall Section 280G analysis.

Status: Deferred to the full draft employment agreement. To be modeled in connection with the Section 280G analysis.

E. CIC Benefit Continuation

The parties briefly addressed the duration of post-termination benefit continuation following a qualifying CIC termination.

Hargrove reiterated Harding's position of 36 months of continued participation in NTP's group health, dental, vision, and other welfare benefit plans (or equivalent coverage) following a qualifying CIC termination, at NTP's expense.

Vasquez reiterated Northgate's position of 24 months of COBRA continuation coverage, with NTP paying the employer portion of the premium during the continuation period.

Neither side moved from its stated position during this call. Vasquez characterized the benefit continuation issue as a secondary matter relative to the CIC multiplier and tax gross-up questions, and both sides appeared to agree that this issue could be resolved in the context of the broader CIC package once the higher-priority items are addressed. No further substantive discussion occurred on this point.

Status: Unresolved. Noted as a secondary issue relative to the multiplier and gross-up.

III. Discussion of Restrictive Covenant Provisions

A. Non-Compete Duration

The discussion of restrictive covenant provisions opened with the duration of the post-termination non-competition restriction.

Hargrove reiterated Harding's position that the non-compete period should be 12 months following the termination of employment, regardless of the reason for termination. Hargrove noted that this is consistent with Harding's current non-compete obligation under his employment agreement at Marlowe Asset Management Digital Holdings, which imposes a 12-month post-termination non-competition restriction with a geographic scope limited to the United States.

Vasquez noted that Northgate had already demonstrated significant flexibility on this issue over the course of the negotiation. Northgate's original term sheet (v1) proposed a 24-month non-compete period. In the v3 counter-proposal circulated on June 25, 2024, Northgate reflected a willingness to discuss an 18-month non-compete period as a fallback position, based on guidance received from the Remuneration Committee on June 22, 2024. Vasquez characterized the 18-month duration as a meaningful concession from Northgate's original position and stated that the Remuneration Committee views 18 months as the minimum duration necessary to protect Northgate's legitimate business interests, given the sensitivity and strategic nature of the CEO role and the extent of confidential information to which Harding will have access.

Hargrove stated that 12 months is the maximum non-compete duration that Harding will accept. Hargrove offered several arguments in support of this position:

First, Hargrove cited Harding's existing Marlowe Asset Management non-compete (12 months, US geographic scope) as the appropriate benchmark, arguing that Harding should not be required to accept more restrictive post-employment obligations at Northgate than he currently has at Marlowe Asset Management.

Second, Hargrove argued that a non-compete period longer than 12 months would be unreasonable given the pace of technological change and competitive dynamics in the telecommunications and SaaS industries. Hargrove stated that the skills and market knowledge of a CEO in this sector have a relatively short shelf life, and that an 18-month or longer restriction would effectively exclude Harding from the industry for an excessive period.

Third, Hargrove noted that longer non-compete periods are increasingly disfavored by courts and legislatures, and that enforceability risk increases significantly with duration beyond 12 months.

Status: Unresolved. Northgate's position remains at 18 months; Harding's position remains at 12 months. A 15-month compromise was floated by Underwood (see Section III.B below) but not accepted by either side.

B. Non-Compete Geographic Scope — Hargrove's New Movement

Hargrove introduced a modified position on the geographic scope of the non-compete restriction. Hargrove stated that, if the non-compete duration remains at 12 months, Harding would accept a geographic scope encompassing North America and Western Europe — an expansion from Harding's original position of North America only, as stated in the v2 redline circulated on June 14, 2024.

This represented a meaningful concession from Harding's side, as Northgate's initial term sheet proposed a worldwide non-compete scope. The Remuneration Committee's fallback position, as communicated on June 22, 2024, was a geographic scope of North America and Western Europe combined with an 18-month duration. The current state of the geographic scope discussion was therefore as follows:

Vasquez noted the convergence on geographic scope — both sides are now at North America and Western Europe — but observed that a gap remains on duration (18 months vs. 12 months). Vasquez stated that the Remuneration Committee's fallback position contemplated the North America and Western Europe scope in conjunction with an 18-month duration, and that the two parameters were linked in the Committee's analysis. Vasquez did not indicate whether the Committee would accept the reduced scope at a different duration.

Underwood asked whether Harding would consider a compromise duration of 15 months, given the convergence on geographic scope. Hargrove responded that she did not have authority to agree to anything beyond 12 months on this call but stated that she would take the 15-month compromise back to Harding and revert. Hargrove noted that Harding's general position is that 12 months is the outer limit of what is reasonable, but she acknowledged the question and did not reject it outright.

Status: Geographic scope has converged at North America and Western Europe. Duration remains unresolved (18 months vs. 12 months); a 15-month compromise has been proposed by Calderwood & Harkness and will be taken to Harding by Hargrove & Liddell.

C. Non-Compete Activity Definition

The parties continued the discussion from the July 1, 2024 negotiation call (Call #2) regarding the scope of activity that would be restricted under the non-compete provision — i.e., the definition of what constitutes competitive activity.

The two positions are as follows:

Northgate's position: The non-compete would restrict Harding from accepting employment with, or providing consulting or advisory services to, any company that derives more than 15% of its annual consolidated revenue from (i) telecommunications services, (ii) telecommunications infrastructure, or (iii) enterprise SaaS platforms serving telecommunications operators. This revenue-based test is designed to capture entities that are meaningful competitors to NTP, regardless of how they are organized or branded, without limiting the restriction to a static list of named companies.

Harding's position: The non-compete restriction should be limited to "direct competitors" of NTP, identified on a schedule to be attached to the employment agreement. Harding proposed a schedule listing eight named companies that he considers to be NTP's direct competitors. The identities of the eight companies were not discussed on this call, though they were identified in the v2 redline and are on file. Harding's position is that the revenue-based approach is overbroad and would capture a wide range of companies that are not genuine competitors.

Hargrove elaborated on Harding's objections to the revenue-based test, arguing that a 15% revenue threshold is too low and would capture diversified technology companies that have a small telecommunications division or product line but are not, in any meaningful sense, competitors to NTP. Hargrove offered the hypothetical example of a large cloud computing company that derives 16% of its revenue from infrastructure services sold to telecom operators — such a company would be captured by the 15% test, even though the vast majority of its business is unrelated to NTP's core market. Hargrove argued that this result would be unreasonable and would unduly restrict Harding's employment opportunities.

Vasquez acknowledged that the 15% revenue threshold could be discussed and that Northgate is open to considering a higher threshold. However, Vasquez argued that a scheduled-competitor approach (i.e., a fixed list of named companies) is too narrow and becomes quickly outdated as companies merge, are acquired, enter new markets, or spin off divisions. Vasquez noted that a static schedule drafted in 2024 may bear little resemblance to the competitive landscape in 2027 or 2028, when the non-compete might be triggered.

Vasquez proposed a possible middle ground in the form of a combination approach:

The non-compete would include (i) a scheduled list of primary competitors — to be agreed upon by the parties and attached to the employment agreement — and (ii) a revenue-based catch-all applying to any company not on the schedule that derives more than a specified percentage (Vasquez suggested 25% or 30%) of its annual consolidated revenue from telecommunications services, telecommunications infrastructure, or enterprise SaaS platforms serving telecommunications operators. This combination approach would provide certainty (through the schedule) while also capturing future competitors that may not exist or may not be identifiable at the time the agreement is executed.

Hargrove expressed interest in the combination approach and stated that it was a constructive proposal. However, Hargrove did not commit to the approach on this call and stated that she would need to discuss the concept — including the appropriate revenue threshold and the composition of the schedule — with Harding before responding. Hargrove also noted that the question of how the schedule would be updated over time (if at all) would need to be addressed.

Status: No resolution reached. The combination approach has been discussed and received a tentatively favorable response from Hargrove & Liddell. Further discussion deferred to the next call or to the redline of the full draft agreement.

D. Garden Leave

The parties discussed the proposed garden leave provision, which would require Harding to remain employed by NTP (but not actively working) for a specified period following notice of termination, during which the non-compete restrictions would begin to run.

Northgate's position: A 6-month paid garden leave period at base salary only ($1,750,000 annualized = approximately $875,000 for the 6-month garden leave period). The non-compete would begin to run at the commencement of the garden leave period, such that if the non-compete duration is 18 months, the effective post-garden-leave non-compete restriction would be 12 months (18 months total minus 6 months served during garden leave).

Harding's position: A 12-month garden leave period at full compensation (base salary plus pro-rata target bonus). Critically, Harding's position is that the garden leave period and the non-compete period should run concurrently in their entirety, so that the effective post-garden-leave non-compete restriction would be zero additional months — i.e., upon completion of the garden leave, Harding would have no further non-compete obligation.

Vasquez stated that the concept of concurrent running — i.e., allowing the non-compete clock to run during the garden leave period — is acceptable to Northgate in principle. However, Vasquez argued that the garden leave period and compensation level need to be aligned with the overall non-compete duration. Using Northgate's proposed framework as an example, Vasquez outlined the following structure:

If the non-compete is set at 18 months, and 6 months of paid garden leave run concurrently with the first 6 months of the non-compete, the effective post-employment restriction beyond the garden leave would be 12 months. Vasquez noted that this structure may, in practical terms, address some of Harding's concerns about the total duration of restriction, since Harding would be compensated during the first 6 months (the garden leave period) and would only be subject to an uncompensated restriction for the remaining 12 months.

Hargrove stated that she understood the logic of this structure but reiterated that Harding views the total period of restriction — garden leave plus any post-garden-leave non-compete — as the relevant measure of how long his employment opportunities are constrained. From Harding's perspective, whether the restriction takes the form of paid garden leave or an uncompensated non-compete, he is still unable to work for a competitor. Hargrove stated that Harding's position remains that the total period of restriction should not exceed 12 months, whether structured as 12 months of garden leave with no additional non-compete, 6 months of garden leave plus 6 months of non-compete, or any other combination.

Status: Unresolved. This issue is directly linked to the non-compete duration discussion and will likely need to be resolved in conjunction with the duration and scope questions.

E. Non-Solicitation. The parties briefly discussed the post-termination non-solicitation restrictions.

Northgate's position: A 24-month post-termination non-solicitation restriction covering both (i) employees of NTP and its affiliates and (ii) customers of NTP and its affiliates.

Harding's position: An 18-month post-termination non-solicitation restriction covering employees only. Harding does not accept a customer non-solicitation provision.

Hargrove argued that a customer non-solicitation provision is impractical for a CEO who, by the nature of the role, is expected to interact with virtually all of NTP's major customers, strategic partners, and key accounts. Hargrove stated that enforcement of a customer non-solicitation against a former CEO would be problematic, as it would be difficult to distinguish between the executive's personal relationships (which predate the employment) and customer relationships developed on behalf of NTP during the employment. Hargrove also argued that a broad customer non-solicitation would effectively function as an additional non-compete, since any role at a competitor would necessarily involve interaction with many of the same customers.

Vasquez stated that Northgate considers customer non-solicitation to be an important element of the restrictive covenant package, given the relationship-driven nature of Harding's expected role as CEO. Vasquez noted that NTP's largest enterprise and carrier customers — several of which represent nine-figure annual revenue relationships — would be directly managed by the CEO, and that Harding's personal relationships with these customers would be a significant asset that NTP has a legitimate interest in protecting.

However, Vasquez indicated that Northgate is willing to discuss narrowing the customer non-solicitation to cover only "active customers" with whom Harding had material personal involvement during the 12-month period immediately preceding his termination of employment. This limitation would exclude customers with whom Harding had no direct personal interaction or only de minimis contact.

Hargrove did not accept or reject this proposal on the call.

Status: Unresolved. To be addressed in the full draft employment agreement.

F. Enforceability Considerations

Vasquez briefly flagged a practical consideration relating to the enforceability of the proposed non-compete restrictions. Vasquez noted that Calderwood & Harkness's internal analysis has identified enforceability risks under New York law for a non-compete of 24 months duration, even with the worldwide scope reduced to North America and Western Europe. Vasquez referenced the multi-factor reasonableness analysis applicable under current New York common law, which considers the duration, geographic scope, and scope of restricted activity in light of the employer's legitimate protectable interests and the burden on the employee.

Vasquez also noted the pending New York state legislation (referenced as the proposed New York Non-Compete Ban, which has been under consideration in multiple legislative sessions) that would, if enacted, prohibit non-compete agreements entirely for most employees in New York. While the legislation has not yet been signed into law as of the date of this call, Vasquez stated that its pendency adds uncertainty to the enforceability landscape.

Vasquez emphasized that these observations were offered as a practical observation bearing on the reasonableness of the parties' respective positions, not as a concession by Northgate on the appropriate duration or scope. Vasquez stated that Northgate's position remains to seek the broadest enforceable restrictions and that the employment agreement will include standard provisions for judicial modification (i.e., "blue pencil" or reformation clauses) in the event a court determines that the restrictions as drafted are overbroad.

Hargrove noted the enforceability point and stated that it supports Harding's position that 12 months is the commercially reasonable and legally defensible duration for a post-termination non-compete. Hargrove stated that Harding does not wish to sign an agreement containing provisions that may be unenforceable, as litigation over enforceability would be disruptive and damaging to both parties.

Status: No resolution required; informational discussion. The enforceability analysis will inform both parties' positions going forward.

IV. Discussion of Transition Timeline

The parties briefly discussed the proposed start date for Harding's employment with NTP.

The original proposed start date as set forth in the v1 term sheet was October 1, 2024. Hargrove raised the possibility that this timeline may be too aggressive, noting several considerations:

First, Harding's departure from Marlowe Asset Management Digital Holdings will require a transition period. Harding currently serves as Chief Operating Officer of Marlowe Asset Management, and an orderly handover of his COO responsibilities is important to preserve professional relationships and his reputation in the industry. Hargrove noted that Harding's existing Marlowe Asset Management employment agreement likely requires a notice period (the specific length of which was not discussed on this call), and that Harding wishes to honor that obligation in full.

Second, Hargrove noted that Harding has not yet given notice to Marlowe Asset Management and will not do so until the material terms of the NTP employment arrangement are finalized and a binding agreement is in near-final form. Depending on the pace of negotiations, the notice period may not begin until late July or early August, which could push the earliest available start date to late October or early November.

Hargrove proposed that the parties discuss a revised start date of November 1, 2024.

Vasquez noted that Sir Alistair Kemble's retirement as CEO of NTP is effective December 31, 2024, and that a November 1 start date would allow for a two-month overlap and transition period between the outgoing and incoming CEO. Vasquez stated that this overlap period could be beneficial for NTP and for Harding, as it would provide an opportunity for Harding to familiarize himself with NTP's operations, Board dynamics, and key stakeholder relationships while Sir Alistair remains in an active role.

Both sides agreed that the start date question is secondary to the resolution of the substantive deal terms discussed above and that the start date would be finalized once (and if) the core terms of the employment arrangement are agreed. No further discussion of the start date occurred.

Status: Deferred. November 1, 2024 is under discussion as a revised start date, subject to resolution of the substantive terms.

V. Sign-On Equity — Brief Confirmation

Hargrove confirmed that the sign-on equity terms as agreed during the July 8 call (Call #3) remain acceptable to Harding, subject to one outstanding item regarding PSU performance hurdles. The agreed sign-on equity package consists of:

• Sign-on RSUs: $12,000,000 in grant-date value, vesting ratably over three years (one-third per year on each anniversary of the grant date).

• Sign-on PSUs: $6,400,000 in grant-date value, cliff vesting at the end of the three-year performance period, subject to achievement of specified performance conditions.

• Total Sign-On Equity: $18,400,000.

Hargrove noted that the sign-on PSU grant remains subject to final agreement on the applicable performance hurdles, which are expected to include relative total shareholder return ("TSR") and revenue growth metrics. The specific performance targets, threshold/target/maximum payout levels, and peer group composition for the TSR metric are to be specified in the equity award agreement and have not yet been negotiated. Hargrove stated that Harding expects to engage on these terms once the full draft employment agreement and related equity award agreements are circulated.

Hargrove reiterated that the total sign-on equity of $18,400,000 represents a $5,000,000 shortfall relative to Harding's estimated forfeited Marlowe Asset Management equity of $23,400,000 (consisting of unvested RSUs and PSUs at Marlowe Asset Management that would be forfeited upon Harding's departure). The $5,000,000 sign-on cash bonus (agreed on July 8) is intended to bridge this gap. Hargrove confirmed that Harding views the overall make-whole package — $18,400,000 in sign-on equity plus $5,000,000 in sign-on cash — as acceptable in the aggregate and considers the make-whole issue to be resolved.

Vasquez confirmed NTP's understanding of the make-whole structure and its economic rationale. Vasquez offered the following additional observations regarding share utilization:

The sign-on RSU and PSU grants would be issued under the Northgate Telecommunications PLC 2022 Omnibus Incentive Plan (the "Plan"), which currently has 14,200,000 shares remaining in its authorized share reserve. At the current NTP ADR price of $15.87 (as of the close of trading on July 11, 2024), the combined sign-on equity ($18,400,000) plus first-year annual LTI ($9,000,000), totaling $27,400,000, would require the issuance of approximately 1,726,529 shares (calculated as $27,400,000 ÷ $15.87). This represents approximately 0.25% of NTP's approximately 699 million shares outstanding. Vasquez noted that this level of dilution is well within the Plan's remaining capacity and should not require shareholder approval for an increase to the share reserve.

Status: Sign-on equity terms confirmed as agreed. PSU performance hurdles to be negotiated in connection with the equity award agreements.

VI. Procedural Next Steps

The parties discussed the procedural path forward. The following next steps were identified and agreed upon:

1. Draft 1 of Employment Agreement: Vasquez stated that Calderwood & Harkness intends to circulate the first full draft employment agreement ("Draft 1") by approximately July 22, 2024. Draft 1 will incorporate all agreed terms from the v4 term sheet and will reflect Northgate's positions on the remaining open items. Specifically, the CIC and restrictive covenant provisions in Draft 1 will be drafted as follows:

• CIC multiplier: 2.5x (Northgate's position).

• CIC tax treatment: best-net cutback (no gross-up).

• CIC definition: three triggers only (no Board turnover trigger).

• Non-compete duration: 18 months.

• Non-compete geographic scope: North America and Western Europe.

• Non-compete activity definition: revenue-based test (specific threshold to be determined, potentially reflecting the combination approach discussed on this call).

• Garden leave: 6 months at base salary only.

• Non-solicitation: 24 months, covering both employees and customers.

It is expected that Hargrove & Liddell will redline the CIC and restrictive covenant sections of Draft 1 to reflect Harding's positions on the disputed items. This approach is intended to produce a clean redline that identifies the remaining points of disagreement in the full agreement context.

2. CIC Multiplier — Remuneration Committee Review: Vasquez will take the 2.75x CIC multiplier compromise proposal to the Remuneration Committee for deliberation and will revert to Hargrove with the Committee's response.

3. Non-Compete Duration — Client Instruction: Hargrove will take the 15-month non-compete compromise (proposed by Underwood on this call) and the combination activity-definition approach (proposed by Vasquez) to Harding for his consideration and will revert to Vasquez with Harding's response.

4. Negotiation Call #5: The parties agreed to schedule a fifth negotiation call for July 19, 2024, to address any remaining term-sheet-level issues before the full draft is circulated. The July 19 call is intended to narrow the open items further so that Draft 1 can be prepared with the greatest possible clarity regarding which provisions are agreed and which remain in dispute.

5. Hargrove & Liddell Review Timeline: Hargrove noted that she expects Hargrove & Liddell will need approximately two weeks to review and redline the full draft employment agreement once received. Assuming Draft 1 is circulated on or about July 22, this would place the anticipated return of the Hargrove & Liddell redline at approximately August 5, 2024.

VII. Summary of Status — Open Items

The following table summarizes the status of all remaining open items as of the conclusion of Negotiation Call #4:

VIII. Administrative Information

Next Scheduled Call: July 19, 2024 — Negotiation Call #5

Draft 1 of Employment Agreement: Target circulation date of July 22, 2024

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

Notes Reviewed by: James Underwood, Associate, Calderwood & Harkness LLP

Distribution (Calderwood & Harkness Internal Only):

• Renata Vasquez, Partner

• Bernard Crawford, Partner

• James Underwood, Associate

• Devon Archer, Associate

These call notes are for internal Calderwood & Harkness use only. They have not been shared with the client (Northgate Telecommunications PLC or its representatives) or with opposing counsel (Hargrove & Liddell LLP) and must not be distributed outside of the Calderwood & Harkness deal team without the prior review and approval of Renata Vasquez.

ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT CONFIDENTIAL TREATMENT REQUESTED

Multiplier	Calculation	CIC Cash Severance
2.5x (NTP position)	2.5 × ($1,750,000 + $3,062,500) = 2.5 × $4,812,500	$12,031,250
2.75x (Harding compromise)	2.75 × ($1,750,000 + $3,062,500) = 2.75 × $4,812,500	$13,234,375
3.0x (Harding original)	3.0 × ($1,750,000 + $3,062,500) = 3.0 × $4,812,500	$14,437,500
Party	Geographic Scope	Duration
NTP (initial)	Worldwide	24 months
NTP (current fallback)	North America + Western Europe	18 months
Harding (initial)	North America only	12 months
Harding (current)	North America + Western Europe	12 months
Issue	NTP Position	Harding Position	Status
CIC Definition — Board turnover trigger	Excluded	Included	Unresolved; NTP firm
CIC Multiplier	2.5x ($12,031,250)	2.75x ($13,234,375) — moved from 3x ($14,437,500)	Under advisement by NTP Remuneration Committee
CIC Tax Treatment	Best-net cutback	Full 280G gross-up (~$6,072,000 estimated excise tax)	Unresolved; both sides firm
CIC Benefit Continuation	24 months COBRA	36 months	Unresolved
CIC PSU Acceleration	At actual performance or target if <1 year	At target regardless	Deferred to full draft
Non-Compete Duration	18 months (fallback from 24)	12 months	Unresolved; 15-month compromise floated
Non-Compete Geographic Scope	North America + Western Europe	North America + Western Europe (moved from N. America only)	Converged
Non-Compete Activity Definition	>15% revenue from telecom/SaaS	Scheduled 8 competitors	Combination approach discussed; not resolved
Garden Leave	6 months at base salary	12 months at full comp, concurrent with non-compete	Unresolved; linked to non-compete duration
Non-Solicitation Duration	24 months (employees + customers)	18 months (employees only)	Unresolved
Start Date	October 1, 2024	Possibly November 1, 2024	Secondary; deferred

CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / WORK PRODUCT
Call Notes — Term Sheet Negotiation Call #4
This memorandum constitutes attorney work product and is protected by the attorney-client privilege. It has been prepared by counsel for Northgate Telecommunications PLC in connection with the negotiation of employment terms for a prospective Chief Executive Officer. This document is intended solely for internal distribution within Calderwood & Harkness LLP and must not be shared with the client, opposing counsel, or any third party without prior review and authorization by Renata Vasquez, Partner.
Matter: Northgate Telecommunications PLC — CEO Employment Negotiation
Matter Number: 1022-00004
Date of Call: Friday, July 12, 2024
Prepared by: Devon Archer, Associate, Calderwood & Harkness LLP
Date of Preparation: July 12, 2024
Call Logistics
Date: Friday, July 12, 2024
Time: 2:00 p.m. – 3:45 p.m. (EDT) (approximately 1 hour 45 minutes)
Format: Video conference (Calderon Software; Calderwood & Harkness hosting link)
Reference Document: Revised Term Sheet (v4) — draft circulated by Calderwood & Harkness on July 10, 2024, incorporating agreements reached during the July 8, 2024 negotiation call (Call #3). The v4 term sheet contained bracketed alternatives on the remaining disputed provisions, as described further below.
Attendees
Calderwood & Harkness LLP (counsel to Northgate Telecommunications PLC)
•  Renata Vasquez, Partner
•  James Underwood, Associate
•  Devon Archer, Associate (notetaker)
Hargrove & Liddell LLP (counsel to Marcus Elliot Harding)
•  Victoria Hargrove, Partner
•  Nathan Chu, Associate
Not Present on Call
No client principals participated in this call. This was a counsel-to-counsel negotiation session. Specifically, Elaine Whitford, General Counsel of Northgate Telecommunications PLC ("NTP" or "Northgate"), was not in attendance, nor was Marcus Elliot Harding ("Harding" or the "Executive"). Accordingly, all positions discussed were conveyed by respective counsel based on previously received client instructions.
I. Opening and Agenda
Vasquez opened the call at approximately 2:02 p.m. EDT by referencing the revised term sheet (v4) dated July 10, 2024, which had been circulated to Hargrove & Liddell by email on July 10 at 6:14 p.m. EDT. Vasquez noted that the v4 term sheet was intended to memorialize and incorporate the agreements reached during the July 8, 2024 negotiation call (Call #3) and to frame the remaining open issues for discussion on this call.
Vasquez provided a brief recap of the items resolved during the July 8 call, which are now reflected as agreed terms in the v4 term sheet:
•  Base Salary: $1,750,000 per annum.
•  Target Bonus: 175% of base salary = $3,062,500.
•  Maximum Bonus: 300% of base salary = $5,250,000.
•  Sign-On Cash Bonus: $5,000,000, subject to a 24-month clawback in the event of voluntary resignation without Good Reason or termination for Cause.
•  Annual Long-Term Incentive (LTI): $9,000,000 in aggregate grant-date value, allocated 60% to performance stock units ("PSUs") and 40% to restricted stock units ("RSUs").
•  Supplemental Executive Retirement Plan (SERP): $250,000 per year contribution by NTP.
•  Perquisites: $25,000 annual automobile allowance; enrollment in Northgate's executive health program; $2,000,000 supplemental life insurance policy (premiums paid by NTP); and $35,000 per year for financial planning and tax preparation reimbursement.
Vasquez noted that, with these items resolved, the v4 term sheet contained bracketed alternatives reflecting each side's position on the two remaining categories of open issues: (1) change in control provisions and (2) restrictive covenant provisions. Vasquez proposed that the call proceed through these two categories sequentially, beginning with the change in control provisions.
Hargrove confirmed her agreement with Vasquez's characterization of the current state of negotiations and stated that the purpose of this call, from Harding's perspective, was to narrow the bracketed alternatives on the remaining open points to the extent possible, with the goal of enabling Calderwood & Harkness to prepare a first full draft of the employment agreement that reflected either agreed positions or clearly delineated disputes. Hargrove indicated she had received updated instructions from Harding prior to the call and was prepared to discuss certain modified positions.
With no further preliminary matters, the parties proceeded to the substance of the discussion.
II. Discussion of Change in Control Provisions
A. CIC Definition
The discussion of change in control ("CIC") provisions began with the definition of what constitutes a "change in control" under the prospective employment agreement.
Hargrove reiterated Harding's position that the definition of "change in control" should include four independent triggers, any one of which would constitute a CIC for purposes of the agreement:
(a) the acquisition by any person or group of more than 50% of the outstanding voting securities of NTP;
(b) a merger, consolidation, or similar business combination transaction in which NTP's shareholders immediately prior to the transaction hold less than 50% of the voting power of the surviving or resulting entity immediately following the transaction;
(c) the sale, lease, exchange, or other transfer of all or substantially all of NTP's assets; and
(d) 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 12-month period (the "Board turnover trigger").
Hargrove stated that all four triggers are standard in CEO-level employment agreements at US-listed public companies and that Harding views each as representing a distinct governance scenario in which his continued employment may be at risk due to a fundamental change in the corporate authority structure from which his mandate derives.
Vasquez reiterated Northgate's position that triggers (a), (b), and (c) are acceptable and largely consistent with the definition of "change of control" used in NTP's existing equity incentive plan and the employment agreements of other senior executives. However, Vasquez stated that Northgate continues to reject the Board turnover trigger (d). Vasquez explained the basis for NTP's objection in the following terms:
First, Northgate's Board of Directors views the inclusion of a Board turnover trigger as inconsistent with UK corporate governance norms and the UK Corporate Governance Code 2024 (the "Code"). Under the Code, annual re-election of all directors at the annual general meeting is considered best practice, and the routine refreshment of board composition — including replacement of a majority of directors over time through normal governance processes — should not give rise to severance entitlements.
Second, the Remuneration Committee is concerned that a Board turnover trigger could create a perverse incentive structure in which the incoming CEO would be entitled to substantial severance payments as a result of ordinary-course board succession planning, activist shareholder campaigns resulting in board seats being contested, or other scenarios that do not involve a genuine change of corporate control.
Third, Vasquez noted that the Board turnover trigger is comparatively rare in the employment agreements of executives at UK-listed companies, even those with ADR listings in the United States, and that inclusion of such a trigger would be subject to scrutiny by institutional shareholders and proxy advisory firms in connection with NTP's annual say-on-pay vote.
Hargrove responded by arguing that the Board turnover trigger is a standard and well-recognized provision in US public company CEO employment agreements and is included in the vast majority of agreements at S&P 500 companies. Hargrove stated that the provision provides a meaningful and important protection for the CEO in circumstances where the board from which the executive received his appointment and mandate has been fundamentally reconstituted — a scenario that may result in a change in corporate strategy, management philosophy, or expectations for the CEO role that is functionally equivalent to a change of control even if no acquisition or merger has occurred. Hargrove noted that this is particularly relevant in the current environment, given the increasing frequency of activist campaigns and proxy contests in the telecommunications sector.
Vasquez acknowledged Hargrove's arguments but stated that this remains a Board-level decision for Northgate and that the Remuneration Committee, chaired by Geoffrey Stanton, had specifically considered and rejected this provision during its deliberations on the term sheet. Vasquez stated that she was not in a position to concede this point without further instruction from the Board and that she did not anticipate the Board would change its position absent a compelling reason to do so.
Status: No resolution reached on the Board turnover trigger. The provision remains bracketed in the v4 term sheet, with Northgate's position excluding trigger (d) and Harding's position including it.
B. CIC Severance Multiplier — Hargrove's Compromise Proposal
The discussion turned to the CIC severance cash payment, expressed as a multiple of the sum of base salary plus target annual bonus.
Hargrove introduced a new compromise position on behalf of Harding. Hargrove stated that, in the interest of narrowing the remaining gaps and demonstrating Harding's good faith, Harding would accept a 2.75x multiplier on the sum of base salary plus target bonus as the CIC severance cash amount, down from his initial demand of 3.0x. Hargrove characterized this as a meaningful concession and stated that Harding expected Northgate to reciprocate with movement on other outstanding items.
The parties discussed the resulting calculations:
The gap between Northgate's current position of 2.5x and Harding's revised compromise of 2.75x was noted to be $1,203,125 ($13,234,375 minus $12,031,250). The movement from Harding's original 3.0x demand to the proposed 2.75x represented a reduction of $1,203,125 on Harding's side.
Vasquez acknowledged the movement from 3.0x to 2.75x and stated that she appreciated Harding's willingness to narrow the gap. Vasquez stated that she would take the 2.75x proposal under advisement with the Remuneration Committee but was not in a position to accept or reject the proposal on this call. Vasquez noted that the Remuneration Committee would likely want to evaluate the 2.75x proposal in the context of the overall compensation package, including the interaction with the Section 280G analysis and the CIC tax treatment question discussed below.
Underwood asked whether the 2.75x multiplier would represent Harding's final position or whether there was further flexibility below that level. Hargrove responded that she was not authorized to go below 2.75x at this time and that Harding views 2.75x as a reasonable middle ground that reflects meaningful concession from his original position.
Vasquez offered several additional observations for the record:
First, Vasquez noted that Veltrano Proxy Advisors, Inc. ("Veltrano"), NTP's proxy solicitation firm, had informally indicated during a background call on July 3, 2024, that CIC multipliers at or above 3.0x are routinely flagged by both ISS and Tarrant Partners LLC as a potential governance concern. While 2.75x falls below the 3.0x threshold, Vasquez noted that even a 2.75x multiplier would be above the typical range observed at UK-listed companies, which generally cap CIC severance at 2.0x base salary (or, in some cases, 2.0x base salary plus bonus). Vasquez acknowledged, however, that the 2.75x multiplier falls within the range observed at comparably sized US-listed public companies, particularly in the technology and telecommunications sectors.
Second, Vasquez noted that Whitmore Hobson LLP's peer-group compensation benchmarking analysis (the "Whitmore Hobson Report"), which was commissioned by the Remuneration Committee and is expected to be finalized by approximately July 18, 2024, would be relevant to the Remuneration Committee's evaluation of the 2.75x proposal. Vasquez stated that the preliminary data from the Whitmore Hobson Report suggested a median CIC multiplier of 2.5x and a 75th percentile of approximately 2.9x among the selected peer group, though the final peer group composition had not yet been confirmed.
Status: The 2.75x CIC multiplier proposal is under advisement by the Northgate Remuneration Committee. Vasquez will revert to Hargrove following Committee deliberation. The issue remains unresolved as of the conclusion of this call.
C. CIC Tax Treatment — Gross-Up vs. Best-Net
The discussion moved to the treatment of excise taxes under Section 280G and Section 4999 of the Internal Revenue Code in connection with CIC-related payments.
Hargrove reiterated Harding's demand for a full Section 280G excise tax gross-up — i.e., in the event that any payments or benefits constitute "excess parachute payments" under Section 280G, NTP would make an additional payment to Harding sufficient to place him in the same after-tax position as if no excise tax had been imposed, taking into account the excise tax itself as well as any income tax and employment tax on the gross-up payment.
Hargrove noted that Harding's current employment arrangement at Marlowe Asset Management Digital Holdings, Inc. ("Marlowe Asset Management") includes a full excise tax gross-up and that this is a point of principle for Harding. Hargrove stated that Harding should not be placed in a worse position with respect to tax protection by accepting the Northgate role than he currently enjoys at Marlowe Asset Management. Hargrove characterized the gross-up as a standard element of CEO compensation at major US public companies, notwithstanding the trend among some companies to eliminate such provisions.
Vasquez reiterated Northgate's position, which is to include a best-net cutback provision rather than a gross-up. Under the best-net approach, if any payments or benefits to Harding would constitute excess parachute payments, the payments would be reduced to the Section 280G "safe harbor" amount (i.e., three times the base amount minus one dollar) only if the after-tax amount received by Harding under the cutback would be greater than or equal to the after-tax amount Harding would receive if the full payment were made and the excise tax were imposed without any gross-up. If the after-tax amount is greater without the cutback (i.e., Harding is better off paying the excise tax), no cutback would occur, but no gross-up would be provided.
Vasquez cited several grounds for Northgate's position:
First, Vasquez referenced the ISS proxy advisory policy, which treats Section 280G excise tax gross-ups as "problematic pay practices." Vasquez stated that inclusion of a full gross-up in the employment agreement would likely trigger a negative recommendation from ISS on NTP's annual say-on-pay resolution. Vasquez noted that NTP received 87.4% say-on-pay support at the April 18, 2024 Annual General Meeting — a level she characterized as providing "limited cushion" and one that could be at risk if ISS issues an adverse recommendation.
Second, Vasquez referenced Calderwood & Harkness's preliminary Section 280G analysis, which had been prepared based on publicly available information regarding Harding's compensation at Marlowe Asset Management and the proposed terms of the Northgate employment arrangement. The key parameters of the preliminary analysis were discussed as follows:
•  Base amount: $7,840,000 (representing Harding's average annualized W-2 compensation at Marlowe Asset Management for the five taxable years 2019 through 2023).
•  Safe harbor limit: $23,519,999 (calculated as three times the base amount minus one dollar: 3 × $7,840,000 – $1 = $23,519,999).
•  Estimated total parachute payments under Harding's proposed terms: approximately $38,200,000 (including CIC cash severance, accelerated equity, benefit continuation, and other CIC-contingent payments).
•  Estimated excess parachute payment: approximately $30,360,000 ($38,200,000 minus $7,840,000 base amount).
•  Estimated excise tax (20% under Section 4999): approximately $6,072,000.
Third, Vasquez noted that the cost to NTP of a full gross-up — including the gross-up on the gross-up (i.e., the additional tax payments required to make Harding whole for the income tax on the gross-up payment itself) — would likely exceed $10,000,000 in the aggregate, depending on applicable state and local tax rates.
Hargrove questioned whether the best-net analysis would actually produce a result favorable to Harding and suggested that the numbers are close to the inflection point at which a cutback versus full payment analysis could go either way depending on the precise composition of parachute payments, applicable tax rates, and other variables. Hargrove argued that, in these circumstances, the gross-up serves as essential "insurance" against a scenario in which Harding is disadvantaged by the absence of either a full payment or a cutback.
Vasquez responded that Whitmore Hobson LLP's preliminary analysis — which takes into account Harding's anticipated New York State and New York City tax rates in addition to federal rates — suggested that the cutback is slightly favorable to Harding on an after-tax basis under the currently modeled scenario. This means that Harding would receive a higher after-tax amount with the cutback (and no excise tax) than he would receive with the full payment subject to excise tax (and no gross-up). Vasquez argued that this result significantly diminishes the practical value of the gross-up, since under the best-net provision the cutback would apply and Harding would be made better off. The gross-up, Vasquez argued, would therefore have limited practical value to Harding but would carry significant optics and governance costs for Northgate, including potential adverse proxy advisory recommendations and shareholder dissatisfaction.
Status: No resolution reached on the gross-up vs. best-net issue. Hargrove stated that the full Section 280G excise tax gross-up is "non-negotiable" for Harding. Vasquez stated that Northgate's Board is equally firm in its opposition to a gross-up provision. This issue remains a significant point of disagreement.
D. CIC Equity Acceleration
The parties had a brief discussion regarding the treatment of unvested equity awards upon a qualifying termination of employment in connection with a change in control.
Both sides confirmed their agreement on the fundamental principle of full acceleration of all unvested equity awards (both RSUs and PSUs) upon a qualifying CIC termination — i.e., a termination without Cause or resignation for Good Reason within the 24-month period following a CIC (a "double trigger" structure). There was no dispute on this point.
The remaining open issue relates to the treatment of PSUs upon acceleration — specifically, the level of performance at which PSUs vest upon a CIC-related acceleration event:
Northgate's position: PSUs should accelerate and vest based on actual performance measured through the most recently completed performance measurement date, or, if less than one year of the performance period has elapsed at the time of the CIC, at target performance. This approach ensures that PSU payouts reflect actual company performance to the greatest extent practicable while providing a reasonable default for the early portion of the performance period.
Harding's position: PSUs should accelerate and vest at target performance regardless of actual performance at the time of the CIC. Harding's position applies this treatment uniformly, without regard to how far into the performance period the CIC occurs.
Hargrove argued that PSU acceleration at target is standard for incoming CEO sign-on equity grants, particularly where the executive has not yet had sufficient time to influence the performance metrics applicable to the PSUs. Hargrove noted that this is especially relevant for the initial sign-on PSU grant of $6,400,000, which would be the Executive's first equity award from NTP and would cover a period during which Harding is still transitioning into the CEO role.
Vasquez acknowledged the force of Hargrove's argument with respect to the initial sign-on grant but noted that the treatment of PSU acceleration directly affects the Section 280G parachute payment calculation — specifically, the higher the deemed value of accelerated PSUs, the larger the total parachute payment and the more likely that the excess parachute payment threshold is exceeded or that the best-net analysis produces a different result. Vasquez stated that this interaction needs to be modeled carefully before a final position can be taken.
Both sides agreed to defer this issue to the full draft employment agreement, where the PSU acceleration provision will be addressed in the context of the equity award agreements and the overall Section 280G analysis.
Status: Deferred to the full draft employment agreement. To be modeled in connection with the Section 280G analysis.
E. CIC Benefit Continuation
The parties briefly addressed the duration of post-termination benefit continuation following a qualifying CIC termination.
Hargrove reiterated Harding's position of 36 months of continued participation in NTP's group health, dental, vision, and other welfare benefit plans (or equivalent coverage) following a qualifying CIC termination, at NTP's expense.
Vasquez reiterated Northgate's position of 24 months of COBRA continuation coverage, with NTP paying the employer portion of the premium during the continuation period.
Neither side moved from its stated position during this call. Vasquez characterized the benefit continuation issue as a secondary matter relative to the CIC multiplier and tax gross-up questions, and both sides appeared to agree that this issue could be resolved in the context of the broader CIC package once the higher-priority items are addressed. No further substantive discussion occurred on this point.
Status: Unresolved. Noted as a secondary issue relative to the multiplier and gross-up.
III. Discussion of Restrictive Covenant Provisions
A. Non-Compete Duration
The discussion of restrictive covenant provisions opened with the duration of the post-termination non-competition restriction.
Hargrove reiterated Harding's position that the non-compete period should be 12 months following the termination of employment, regardless of the reason for termination. Hargrove noted that this is consistent with Harding's current non-compete obligation under his employment agreement at Marlowe Asset Management Digital Holdings, which imposes a 12-month post-termination non-competition restriction with a geographic scope limited to the United States.
Vasquez noted that Northgate had already demonstrated significant flexibility on this issue over the course of the negotiation. Northgate's original term sheet (v1) proposed a 24-month non-compete period. In the v3 counter-proposal circulated on June 25, 2024, Northgate reflected a willingness to discuss an 18-month non-compete period as a fallback position, based on guidance received from the Remuneration Committee on June 22, 2024. Vasquez characterized the 18-month duration as a meaningful concession from Northgate's original position and stated that the Remuneration Committee views 18 months as the minimum duration necessary to protect Northgate's legitimate business interests, given the sensitivity and strategic nature of the CEO role and the extent of confidential information to which Harding will have access.
Hargrove stated that 12 months is the maximum non-compete duration that Harding will accept. Hargrove offered several arguments in support of this position:
First, Hargrove cited Harding's existing Marlowe Asset Management non-compete (12 months, US geographic scope) as the appropriate benchmark, arguing that Harding should not be required to accept more restrictive post-employment obligations at Northgate than he currently has at Marlowe Asset Management.
Second, Hargrove argued that a non-compete period longer than 12 months would be unreasonable given the pace of technological change and competitive dynamics in the telecommunications and SaaS industries. Hargrove stated that the skills and market knowledge of a CEO in this sector have a relatively short shelf life, and that an 18-month or longer restriction would effectively exclude Harding from the industry for an excessive period.
Third, Hargrove noted that longer non-compete periods are increasingly disfavored by courts and legislatures, and that enforceability risk increases significantly with duration beyond 12 months.
Status: Unresolved. Northgate's position remains at 18 months; Harding's position remains at 12 months. A 15-month compromise was floated by Underwood (see Section III.B below) but not accepted by either side.
B. Non-Compete Geographic Scope — Hargrove's New Movement
Hargrove introduced a modified position on the geographic scope of the non-compete restriction. Hargrove stated that, if the non-compete duration remains at 12 months, Harding would accept a geographic scope encompassing North America and Western Europe — an expansion from Harding's original position of North America only, as stated in the v2 redline circulated on June 14, 2024.
This represented a meaningful concession from Harding's side, as Northgate's initial term sheet proposed a worldwide non-compete scope. The Remuneration Committee's fallback position, as communicated on June 22, 2024, was a geographic scope of North America and Western Europe combined with an 18-month duration. The current state of the geographic scope discussion was therefore as follows:
Vasquez noted the convergence on geographic scope — both sides are now at North America and Western Europe — but observed that a gap remains on duration (18 months vs. 12 months). Vasquez stated that the Remuneration Committee's fallback position contemplated the North America and Western Europe scope in conjunction with an 18-month duration, and that the two parameters were linked in the Committee's analysis. Vasquez did not indicate whether the Committee would accept the reduced scope at a different duration.
Underwood asked whether Harding would consider a compromise duration of 15 months, given the convergence on geographic scope. Hargrove responded that she did not have authority to agree to anything beyond 12 months on this call but stated that she would take the 15-month compromise back to Harding and revert. Hargrove noted that Harding's general position is that 12 months is the outer limit of what is reasonable, but she acknowledged the question and did not reject it outright.
Status: Geographic scope has converged at North America and Western Europe. Duration remains unresolved (18 months vs. 12 months); a 15-month compromise has been proposed by Calderwood & Harkness and will be taken to Harding by Hargrove & Liddell.
C. Non-Compete Activity Definition
The parties continued the discussion from the July 1, 2024 negotiation call (Call #2) regarding the scope of activity that would be restricted under the non-compete provision — i.e., the definition of what constitutes competitive activity.
The two positions are as follows:
Northgate's position: The non-compete would restrict Harding from accepting employment with, or providing consulting or advisory services to, any company that derives more than 15% of its annual consolidated revenue from (i) telecommunications services, (ii) telecommunications infrastructure, or (iii) enterprise SaaS platforms serving telecommunications operators. This revenue-based test is designed to capture entities that are meaningful competitors to NTP, regardless of how they are organized or branded, without limiting the restriction to a static list of named companies.
Harding's position: The non-compete restriction should be limited to "direct competitors" of NTP, identified on a schedule to be attached to the employment agreement. Harding proposed a schedule listing eight named companies that he considers to be NTP's direct competitors. The identities of the eight companies were not discussed on this call, though they were identified in the v2 redline and are on file. Harding's position is that the revenue-based approach is overbroad and would capture a wide range of companies that are not genuine competitors.
Hargrove elaborated on Harding's objections to the revenue-based test, arguing that a 15% revenue threshold is too low and would capture diversified technology companies that have a small telecommunications division or product line but are not, in any meaningful sense, competitors to NTP. Hargrove offered the hypothetical example of a large cloud computing company that derives 16% of its revenue from infrastructure services sold to telecom operators — such a company would be captured by the 15% test, even though the vast majority of its business is unrelated to NTP's core market. Hargrove argued that this result would be unreasonable and would unduly restrict Harding's employment opportunities.
Vasquez acknowledged that the 15% revenue threshold could be discussed and that Northgate is open to considering a higher threshold. However, Vasquez argued that a scheduled-competitor approach (i.e., a fixed list of named companies) is too narrow and becomes quickly outdated as companies merge, are acquired, enter new markets, or spin off divisions. Vasquez noted that a static schedule drafted in 2024 may bear little resemblance to the competitive landscape in 2027 or 2028, when the non-compete might be triggered.
Vasquez proposed a possible middle ground in the form of a combination approach:
The non-compete would include (i) a scheduled list of primary competitors — to be agreed upon by the parties and attached to the employment agreement — and (ii) a revenue-based catch-all applying to any company not on the schedule that derives more than a specified percentage (Vasquez suggested 25% or 30%) of its annual consolidated revenue from telecommunications services, telecommunications infrastructure, or enterprise SaaS platforms serving telecommunications operators. This combination approach would provide certainty (through the schedule) while also capturing future competitors that may not exist or may not be identifiable at the time the agreement is executed.
Hargrove expressed interest in the combination approach and stated that it was a constructive proposal. However, Hargrove did not commit to the approach on this call and stated that she would need to discuss the concept — including the appropriate revenue threshold and the composition of the schedule — with Harding before responding. Hargrove also noted that the question of how the schedule would be updated over time (if at all) would need to be addressed.
Status: No resolution reached. The combination approach has been discussed and received a tentatively favorable response from Hargrove & Liddell. Further discussion deferred to the next call or to the redline of the full draft agreement.
D. Garden Leave
The parties discussed the proposed garden leave provision, which would require Harding to remain employed by NTP (but not actively working) for a specified period following notice of termination, during which the non-compete restrictions would begin to run.
Northgate's position: A 6-month paid garden leave period at base salary only ($1,750,000 annualized = approximately $875,000 for the 6-month garden leave period). The non-compete would begin to run at the commencement of the garden leave period, such that if the non-compete duration is 18 months, the effective post-garden-leave non-compete restriction would be 12 months (18 months total minus 6 months served during garden leave).
Harding's position: A 12-month garden leave period at full compensation (base salary plus pro-rata target bonus). Critically, Harding's position is that the garden leave period and the non-compete period should run concurrently in their entirety, so that the effective post-garden-leave non-compete restriction would be zero additional months — i.e., upon completion of the garden leave, Harding would have no further non-compete obligation.
Vasquez stated that the concept of concurrent running — i.e., allowing the non-compete clock to run during the garden leave period — is acceptable to Northgate in principle. However, Vasquez argued that the garden leave period and compensation level need to be aligned with the overall non-compete duration. Using Northgate's proposed framework as an example, Vasquez outlined the following structure:
If the non-compete is set at 18 months, and 6 months of paid garden leave run concurrently with the first 6 months of the non-compete, the effective post-employment restriction beyond the garden leave would be 12 months. Vasquez noted that this structure may, in practical terms, address some of Harding's concerns about the total duration of restriction, since Harding would be compensated during the first 6 months (the garden leave period) and would only be subject to an uncompensated restriction for the remaining 12 months.
Hargrove stated that she understood the logic of this structure but reiterated that Harding views the total period of restriction — garden leave plus any post-garden-leave non-compete — as the relevant measure of how long his employment opportunities are constrained. From Harding's perspective, whether the restriction takes the form of paid garden leave or an uncompensated non-compete, he is still unable to work for a competitor. Hargrove stated that Harding's position remains that the total period of restriction should not exceed 12 months, whether structured as 12 months of garden leave with no additional non-compete, 6 months of garden leave plus 6 months of non-compete, or any other combination.
Status: Unresolved. This issue is directly linked to the non-compete duration discussion and will likely need to be resolved in conjunction with the duration and scope questions.
E. Non-Solicitation.  The parties briefly discussed the post-termination non-solicitation restrictions.
Northgate's position: A 24-month post-termination non-solicitation restriction covering both (i) employees of NTP and its affiliates and (ii) customers of NTP and its affiliates.
Harding's position: An 18-month post-termination non-solicitation restriction covering employees only. Harding does not accept a customer non-solicitation provision.
Hargrove argued that a customer non-solicitation provision is impractical for a CEO who, by the nature of the role, is expected to interact with virtually all of NTP's major customers, strategic partners, and key accounts. Hargrove stated that enforcement of a customer non-solicitation against a former CEO would be problematic, as it would be difficult to distinguish between the executive's personal relationships (which predate the employment) and customer relationships developed on behalf of NTP during the employment. Hargrove also argued that a broad customer non-solicitation would effectively function as an additional non-compete, since any role at a competitor would necessarily involve interaction with many of the same customers.
Vasquez stated that Northgate considers customer non-solicitation to be an important element of the restrictive covenant package, given the relationship-driven nature of Harding's expected role as CEO. Vasquez noted that NTP's largest enterprise and carrier customers — several of which represent nine-figure annual revenue relationships — would be directly managed by the CEO, and that Harding's personal relationships with these customers would be a significant asset that NTP has a legitimate interest in protecting.
However, Vasquez indicated that Northgate is willing to discuss narrowing the customer non-solicitation to cover only "active customers" with whom Harding had material personal involvement during the 12-month period immediately preceding his termination of employment. This limitation would exclude customers with whom Harding had no direct personal interaction or only de minimis contact.
Hargrove did not accept or reject this proposal on the call.
Status: Unresolved. To be addressed in the full draft employment agreement.
F. Enforceability Considerations
Vasquez briefly flagged a practical consideration relating to the enforceability of the proposed non-compete restrictions. Vasquez noted that Calderwood & Harkness's internal analysis has identified enforceability risks under New York law for a non-compete of 24 months duration, even with the worldwide scope reduced to North America and Western Europe. Vasquez referenced the multi-factor reasonableness analysis applicable under current New York common law, which considers the duration, geographic scope, and scope of restricted activity in light of the employer's legitimate protectable interests and the burden on the employee.
Vasquez also noted the pending New York state legislation (referenced as the proposed New York Non-Compete Ban, which has been under consideration in multiple legislative sessions) that would, if enacted, prohibit non-compete agreements entirely for most employees in New York. While the legislation has not yet been signed into law as of the date of this call, Vasquez stated that its pendency adds uncertainty to the enforceability landscape.
Vasquez emphasized that these observations were offered as a practical observation bearing on the reasonableness of the parties' respective positions, not as a concession by Northgate on the appropriate duration or scope. Vasquez stated that Northgate's position remains to seek the broadest enforceable restrictions and that the employment agreement will include standard provisions for judicial modification (i.e., "blue pencil" or reformation clauses) in the event a court determines that the restrictions as drafted are overbroad.
Hargrove noted the enforceability point and stated that it supports Harding's position that 12 months is the commercially reasonable and legally defensible duration for a post-termination non-compete. Hargrove stated that Harding does not wish to sign an agreement containing provisions that may be unenforceable, as litigation over enforceability would be disruptive and damaging to both parties.
Status: No resolution required; informational discussion. The enforceability analysis will inform both parties' positions going forward.
IV. Discussion of Transition Timeline
The parties briefly discussed the proposed start date for Harding's employment with NTP.
The original proposed start date as set forth in the v1 term sheet was October 1, 2024. Hargrove raised the possibility that this timeline may be too aggressive, noting several considerations:
First, Harding's departure from Marlowe Asset Management Digital Holdings will require a transition period. Harding currently serves as Chief Operating Officer of Marlowe Asset Management, and an orderly handover of his COO responsibilities is important to preserve professional relationships and his reputation in the industry. Hargrove noted that Harding's existing Marlowe Asset Management employment agreement likely requires a notice period (the specific length of which was not discussed on this call), and that Harding wishes to honor that obligation in full.
Second, Hargrove noted that Harding has not yet given notice to Marlowe Asset Management and will not do so until the material terms of the NTP employment arrangement are finalized and a binding agreement is in near-final form. Depending on the pace of negotiations, the notice period may not begin until late July or early August, which could push the earliest available start date to late October or early November.
Hargrove proposed that the parties discuss a revised start date of November 1, 2024.
Vasquez noted that Sir Alistair Kemble's retirement as CEO of NTP is effective December 31, 2024, and that a November 1 start date would allow for a two-month overlap and transition period between the outgoing and incoming CEO. Vasquez stated that this overlap period could be beneficial for NTP and for Harding, as it would provide an opportunity for Harding to familiarize himself with NTP's operations, Board dynamics, and key stakeholder relationships while Sir Alistair remains in an active role.
Both sides agreed that the start date question is secondary to the resolution of the substantive deal terms discussed above and that the start date would be finalized once (and if) the core terms of the employment arrangement are agreed. No further discussion of the start date occurred.
Status: Deferred. November 1, 2024 is under discussion as a revised start date, subject to resolution of the substantive terms.
V. Sign-On Equity — Brief Confirmation
Hargrove confirmed that the sign-on equity terms as agreed during the July 8 call (Call #3) remain acceptable to Harding, subject to one outstanding item regarding PSU performance hurdles. The agreed sign-on equity package consists of:
•  Sign-on RSUs: $12,000,000 in grant-date value, vesting ratably over three years (one-third per year on each anniversary of the grant date).
•  Sign-on PSUs: $6,400,000 in grant-date value, cliff vesting at the end of the three-year performance period, subject to achievement of specified performance conditions.
•  Total Sign-On Equity: $18,400,000.
Hargrove noted that the sign-on PSU grant remains subject to final agreement on the applicable performance hurdles, which are expected to include relative total shareholder return ("TSR") and revenue growth metrics. The specific performance targets, threshold/target/maximum payout levels, and peer group composition for the TSR metric are to be specified in the equity award agreement and have not yet been negotiated. Hargrove stated that Harding expects to engage on these terms once the full draft employment agreement and related equity award agreements are circulated.
Hargrove reiterated that the total sign-on equity of $18,400,000 represents a $5,000,000 shortfall relative to Harding's estimated forfeited Marlowe Asset Management equity of $23,400,000 (consisting of unvested RSUs and PSUs at Marlowe Asset Management that would be forfeited upon Harding's departure). The $5,000,000 sign-on cash bonus (agreed on July 8) is intended to bridge this gap. Hargrove confirmed that Harding views the overall make-whole package — $18,400,000 in sign-on equity plus $5,000,000 in sign-on cash — as acceptable in the aggregate and considers the make-whole issue to be resolved.
Vasquez confirmed NTP's understanding of the make-whole structure and its economic rationale. Vasquez offered the following additional observations regarding share utilization:
The sign-on RSU and PSU grants would be issued under the Northgate Telecommunications PLC 2022 Omnibus Incentive Plan (the "Plan"), which currently has 14,200,000 shares remaining in its authorized share reserve. At the current NTP ADR price of $15.87 (as of the close of trading on July 11, 2024), the combined sign-on equity ($18,400,000) plus first-year annual LTI ($9,000,000), totaling $27,400,000, would require the issuance of approximately 1,726,529 shares (calculated as $27,400,000 ÷ $15.87). This represents approximately 0.25% of NTP's approximately 699 million shares outstanding. Vasquez noted that this level of dilution is well within the Plan's remaining capacity and should not require shareholder approval for an increase to the share reserve.
Status: Sign-on equity terms confirmed as agreed. PSU performance hurdles to be negotiated in connection with the equity award agreements.
VI. Procedural Next Steps
The parties discussed the procedural path forward. The following next steps were identified and agreed upon:
1.  Draft 1 of Employment Agreement: Vasquez stated that Calderwood & Harkness intends to circulate the first full draft employment agreement ("Draft 1") by approximately July 22, 2024. Draft 1 will incorporate all agreed terms from the v4 term sheet and will reflect Northgate's positions on the remaining open items. Specifically, the CIC and restrictive covenant provisions in Draft 1 will be drafted as follows:
•  CIC multiplier: 2.5x (Northgate's position).
•  CIC tax treatment: best-net cutback (no gross-up).
•  CIC definition: three triggers only (no Board turnover trigger).
•  Non-compete duration: 18 months.
•  Non-compete geographic scope: North America and Western Europe.
•  Non-compete activity definition: revenue-based test (specific threshold to be determined, potentially reflecting the combination approach discussed on this call).
•  Garden leave: 6 months at base salary only.
•  Non-solicitation: 24 months, covering both employees and customers.
It is expected that Hargrove & Liddell will redline the CIC and restrictive covenant sections of Draft 1 to reflect Harding's positions on the disputed items. This approach is intended to produce a clean redline that identifies the remaining points of disagreement in the full agreement context.
2.  CIC Multiplier — Remuneration Committee Review: Vasquez will take the 2.75x CIC multiplier compromise proposal to the Remuneration Committee for deliberation and will revert to Hargrove with the Committee's response.
3.  Non-Compete Duration — Client Instruction: Hargrove will take the 15-month non-compete compromise (proposed by Underwood on this call) and the combination activity-definition approach (proposed by Vasquez) to Harding for his consideration and will revert to Vasquez with Harding's response.
4.  Negotiation Call #5: The parties agreed to schedule a fifth negotiation call for July 19, 2024, to address any remaining term-sheet-level issues before the full draft is circulated. The July 19 call is intended to narrow the open items further so that Draft 1 can be prepared with the greatest possible clarity regarding which provisions are agreed and which remain in dispute.
5.  Hargrove & Liddell Review Timeline: Hargrove noted that she expects Hargrove & Liddell will need approximately two weeks to review and redline the full draft employment agreement once received. Assuming Draft 1 is circulated on or about July 22, this would place the anticipated return of the Hargrove & Liddell redline at approximately August 5, 2024.
VII. Summary of Status — Open Items
The following table summarizes the status of all remaining open items as of the conclusion of Negotiation Call #4:
VIII. Administrative Information
Next Scheduled Call: July 19, 2024 — Negotiation Call #5
Draft 1 of Employment Agreement: Target circulation date of July 22, 2024
Notes Prepared by: Devon Archer, Associate, Calderwood & Harkness LLP
Notes Reviewed by: James Underwood, Associate, Calderwood & Harkness LLP
Distribution (Calderwood & Harkness Internal Only):
•  Renata Vasquez, Partner
•  Bernard Crawford, Partner
•  James Underwood, Associate
•  Devon Archer, Associate
These call notes are for internal Calderwood & Harkness use only. They have not been shared with the client (Northgate Telecommunications PLC or its representatives) or with opposing counsel (Hargrove & Liddell LLP) and must not be distributed outside of the Calderwood & Harkness deal team without the prior review and approval of Renata Vasquez.
ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT CONFIDENTIAL TREATMENT REQUESTED
Multiplier | Calculation | CIC Cash Severance
2.5x (NTP position) | 2.5 × ($1,750,000 + $3,062,500) = 2.5 × $4,812,500 | $12,031,250
2.75x (Harding compromise) | 2.75 × ($1,750,000 + $3,062,500) = 2.75 × $4,812,500 | $13,234,375
3.0x (Harding original) | 3.0 × ($1,750,000 + $3,062,500) = 3.0 × $4,812,500 | $14,437,500
Party | Geographic Scope | Duration
NTP (initial) | Worldwide | 24 months
NTP (current fallback) | North America + Western Europe | 18 months
Harding (initial) | North America only | 12 months
Harding (current) | North America + Western Europe | 12 months
Issue | NTP Position | Harding Position | Status
CIC Definition — Board turnover trigger | Excluded | Included | Unresolved; NTP firm
CIC Multiplier | 2.5x ($12,031,250) | 2.75x ($13,234,375) — moved from 3x ($14,437,500) | Under advisement by NTP Remuneration Committee
CIC Tax Treatment | Best-net cutback | Full 280G gross-up (~$6,072,000 estimated excise tax) | Unresolved; both sides firm
CIC Benefit Continuation | 24 months COBRA | 36 months | Unresolved
CIC PSU Acceleration | At actual performance or target if <1 year | At target regardless | Deferred to full draft
Non-Compete Duration | 18 months (fallback from 24) | 12 months | Unresolved; 15-month compromise floated
Non-Compete Geographic Scope | North America + Western Europe | North America + Western Europe (moved from N. America only) | Converged
Non-Compete Activity Definition | >15% revenue from telecom/SaaS | Scheduled 8 competitors | Combination approach discussed; not resolved
Garden Leave | 6 months at base salary | 12 months at full comp, concurrent with non-compete | Unresolved; linked to non-compete duration
Non-Solicitation Duration | 24 months (employees + customers) | 18 months (employees only) | Unresolved
Start Date | October 1, 2024 | Possibly November 1, 2024 | Secondary; deferred

CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / WORK PRODUCT

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