Vice President International Employment Agreement

Exhibit 10.5.2


EXECUTIVE EMPLOYMENT AGREEMENT
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This Agreement made and entered into as of January 1, 1998 (the "Effective Date") by and between PACIFIC GATEWAY EXCHANGE (the "Company") and GAIL GRANTON (the "Executive"),


WITNESSETH THAT:
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WHEREAS, the parties desire to enter into this Agreement pertaining to the continued employment of the Executive by the Company;


NOW THEREFORE, in consideration of the mutual covenants and agreements set forth below, it is hereby covenanted and agreed by the Company and the Executive as follows:


1. Employment Period. Subject to the terms and conditions of this
----------------- Agreement, the Company hereby agrees to employ the Executive during the Employment Period (as defined below) and the Executive hereby agrees to remain in the employ of the Company and to provide services during the Employment Period in accordance with this Agreement. The "Employment Period" shall be the period beginning on the Effective Date and ending on the third anniversary thereof. After the third anniversary of the Effective Date, the Employment Period shall be automatically extended for 12-month periods, unless one party to this Agreement provides written notice of non-renewal to the other at least 90 days before the last day of the Employment Period.


2. Duties.
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(a) Subject to the terms of this Agreement, the Company hereby agrees to employ
the Executive as its Executive Vice President, International Business
Development during the Employment Period, and the Executive hereby agrees
to remain in the employ of the Company during the Employment Period.
During the Employment Period, while the Executive is employed by the
Company, the Executive shall devote substantially all of her business time,
energies and talents to serving as its Executive Vice President,
International Business Development. The Executive agrees that she shall
perform her duties faithfully and efficiently subject to the directions of
the President of the Company (the "President"). The Executive will have
such authority and power as are inherent to the undertakings applicable to
her positions and necessary to carry out her responsibilities and the
duties required of her hereunder.


(b) Except as set forth in paragraph 2(c), during the Employment Period,
Executive will not render services to any other person or entity, for
compensation or otherwise, without the prior written consent of the Board,
and Executive will not engage in any activity which conflicts or interferes
in any material way with the performance of the duties and responsibilities
of her position with the Company. During her employment with the Company,
Executive will not, either as an employee, employer, consultant,
independent contractor, agent, principal, partner, stockholder or in any
other individual or representative capacity, engage or participate in any
employment, consulting, business or other activity that is in competition
in any manner with the business of the Company.


(c) Notwithstanding paragraph 2(a), Executive may devote a reasonable amount of
personal time to the supervision of her personal investments which may
include securities of Matrix Telecom, Pacific Telecom America and passive
investments of up to 1% of the outstanding securities of any public
company; and activities involving professional, charitable, civic,
educational, religious and similar activities and engagements, to the
extent that such activities do not conflict or interfere in any material
way with her duties and responsibilities to the Company.


3. Compensation. Subject to the terms and conditions of this Agreement,
------------ during the Employment Period while the Executive is employed by the Company, the Company shall compensate her for her services as follows:


(a) The Executive shall receive, for each 12-consecutive month period
beginning on the Effective Date and each anniversary thereof, an
annual salary of $200,000 (the "Salary"), which Salary shall be
payable in substantially equal monthly installments. The Executive's
Salary rate shall be reviewed annually on or about the anniversary of
the Effective Date, to determine whether an increase in the amount of
Salary is appropriate. In no event shall the Salary of the Executive
be reduced to an amount that is less than the amount specified in this
paragraph (a), or to an amount that is less than the amount that she
was previously receiving.


(b) The Executive shall be entitled to incentive compensation in the form
of a target annual cash bonus of $100,000. The amount of such bonus,
if any, shall be determined by the President taking into consideration
whether the


Executive has met the performance targets that may have been set by
the President for such year, the relative contribution by the
Executive to the business of the Company, general economic conditions,
and such other factors as the President deems relevant.
Notwithstanding the foregoing, the President may award additional
bonus amounts in recognition of outstanding performance.


(c) Except as otherwise specifically provided to the contrary in this
Agreement, the Executive shall be provided with the retirement,
welfare benefits and other fringe benefits to the same extent and on
the same terms as those benefits are provided by the Company from time
to time to the Company's other senior management employees. During
the term of this Agreement, the Executive shall be provided with four
weeks paid vacation annually.


(d) The Executive shall be reimbursed by the Company, on terms and
conditions that are substantially similar to those that apply to other
similarly situated senior management employees of the Company, for
reasonable expenses for entertainment, travel, meals, lodging and
similar items which are authorized by the Company and actually
incurred by the Executive in the promotion of the Company's business.


(e) The Executive may elect to defer the receipt of all or part of any
bonus payable under paragraph 3(b) in accordance with the terms of a
deferred compensation plan to be established by the Compensation
Committee. Under such deferred compensation plan the deferred bonus
amounts will be converted to stock units, based on the value of the
Company's stock on the date the bonus would otherwise have been paid.
Such stock units will be credited to a bookkeeping account maintained
by the Company and shall be fully vested at all times. Additional
stock units shall also be credited to the Executive's account in an
amount equal to 25% of the amount of the deferred bonus, and such
additional stock units shall vest 50% one year after initial crediting
and the remaining 50% shall vest two years after initial crediting.
If dividends are paid on shares of the Company's stock while any stock
units are credited to the Executive's bookkeeping account, dividend
equivalents will be credited to the Executive's account as additional
stock units subject to the same vesting provisions as the stock units
on which such dividend equivalents are based.


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4. Rights and Payments Upon Termination or Change in Control. The
--------------------------------------------------------- Executive's right to benefits and payments, if any, for periods after the date on which her employment with the Company terminates for any reason (her "Termination Date") shall be determined in accordance with this Section 4:


(a) Minimum Payments. If the Executive's Termination Date occurs during
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the Employment Period for any reason, the Executive shall be entitled
to the following payments, in addition to any payments or benefits to
which the Executive may be entitled under the following provisions of
this Section 4 (other than this paragraph (a)):


(i) her earned but unpaid Salary for the period ending on her
Termination Date; and


(ii) her accrued but unpaid vacation pay for the period ending with
her Termination Date, as determined in accordance with the
Company's policy as in effect from time to time.


Payments to be made to the Executive pursuant to this paragraph 4(a)
shall be made in a lump sum as soon as practicable after the
Executive's Termination Date. Except as may be otherwise expressly
provided to the contrary in this Agreement, nothing in this Agreement
shall be construed as requiring the Executive to be treated as
employed by the Company following her Termination Date for purposes of
any employee benefit plan or arrangement in which she may participate
at such time.


(b) Termination By Company for Cause. If the Executive's Termination Date
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occurs during the Employment Period and is a result of the Company's
termination of the Executive's employment on account of Cause (as
defined in paragraph (f) below), then, except as agreed in writing
between the Executive and the Company, the Executive shall have no
right to future payments or benefits under this Agreement (and the
Company shall have no obligation to make any such future payments or
provide any such future benefits) for periods after the Executive's
Termination Date.


(c) Termination for Death or Disability. If the Executive's Termination
-----------------------------------
Date occurs during the Employment Period on account of the Executive's
death or disability (as defined below), then the Executive (or in the
event of her


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death, her estate) shall be entitled to continuing payments of her
Salary for the period commencing on her Termination Date and ending on
the earliest of (i) 30 days from her Termination Date, (ii) the last
day of the Employment Period, or (iii) in the case of the Executive's
disability, the date on which the Executive violates the provisions of
Section 7 of this Agreement.


(d) Termination for Good Reason or by the Company for Reasons Other Than
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Cause. If the Executive's Termination Date occurs during the
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Employment Period and before the date of a Change in Control (as
defined in Exhibit A hereto), and ...