THIS
AGREEMENT is made and entered into as of the December 23,
2005, by and between Golden Telecom, Inc. (“GTI”), a
Delaware corporation, and Derek Anthony Bloom, an adult citizen of
the United States of America (the
“Employee”).
WHEREAS ,
the Employee has been employed as Senior Vice President, General
Counsel and Corporate Secretary of GTI since the 10th day of
January 2005; and
WHEREAS ,
GTI desires to amend the Employee’s employment agreement, and
the Employee agrees to be employed by GTI subject to the terms and
provisions of this employment agreement (the
“Agreement”);
NOW
THEREFORE , GTI and the Employee mutually agree as
follows:
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(a)
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GTI
hereby employs the Employee, and the Employee agrees to be employed
on the terms and conditions set forth herein.
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(b)
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The
Employee is employed in the position of Senior Vice President,
General Counsel and Corporate Secretary of GTI, and shall be
seconded to one or more of GTI’s affiliates, based in Moscow,
Russia, but may from time to time be given such additional titles
or be requested to perform such duties and exercise such power and
authority commensurate with the Employee’s position as may be
delegated to the Employee by the Chief Executive Officer or the
Board of Directors of GTI.
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(c)
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The
Employee shall devote all necessary business time and attention,
and employ the Employee’s best efforts, toward the
fulfillment and execution of all assigned duties, and the
satisfaction of defined annual and/or longer-term performance
criteria.
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(a)
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This Agreement is effective as of
December 23, 2005, the date of execution of this Agreement,
and shall continue unless terminated in accordance with
Section 10 herein.
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(b)
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GTI
reserves the right to pay the Employee in lieu of any period of
notice.
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(c)
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Further, GTI reserve the right to
require the Employee not to attend GTI’s premises or the
premises of the Employee’s business unit or to provide the
Employee with alternative work of a broadly similar nature to the
work the Employee normally performs, during any period of
suspension or whilst the Employee is under notice of termination
(served either by GTI or the Employee) provided that the Employee
continues to be paid the salary and benefits to which
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the Employee is
entitled under this Agreement and further provided that the period
of any such requirement does not exceed six
(6) months.
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(a)
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For
the purposes of this Agreement, “Salary” shall mean all
payments by GTI to the Employee pursuant to this
Section 3.
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(b)
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Commencing on the date hereof and
continuing thereafter unless adjusted as set forth herein, the
Employee shall be paid an annual Salary of three hundred thousand
dollars (USD 300,000) payable in accordance with GTI’s
customary payroll practices for Employees, but no less frequently
than bi-monthly and prorated for any partial year of
employment.
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(c)
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As
soon as practicable following the last day of each fiscal year of
GTI, GTI shall review the Salary of the Employee and shall
consider, based upon the Employee’s performance and
GTI’s financial position, potential increases, but not
decreases, to the Employee’s Salary as GTI shall, in its sole
and absolute discretion, deem appropriate. Any such increased
Salary shall be the “Salary” for all purposes under
this Agreement.
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Subject to the terms and conditions
of the Golden Telecom Group, Inc. Incentive Bonus Plan for Senior
Management (“Bonus Plan”), attached hereto as Annex A
and forming an integral part hereof, GTI shall pay to the Employee
an annual performance-based, incentive compensation payment
(“Target Bonus”), which in the first year of the
Employee’s employment, ending January 10, 2006 was in
the amount of one hundred and five thousand dollars (USD
105,000).
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5.
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Grant of Stock Appreciation
Rights .
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The
Employee has been awarded thirty thousand (30,000) Stock
Appreciation Rights (“SARs”) pursuant to the Golden
Telecom, Inc. 2005 Stock Appreciation Rights Plan (the
“Plan”) pursuant to the standard pricing and vesting
schedule and award agreement for participants in the
Plan.
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(a)
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During the term of this Agreement,
the Employee shall be entitled to receive such benefits and to
participate in such employee group pension and welfare benefit
plans, property, life, and disability insurance, and worldwide
medical insurance and health benefits for the Employee and his
family with a reputable international insurance agency, initially
Aetna Global Benefits, and dental and medical coverage policies as
are generally provided by GTI to its employees of comparable level
and responsibility in accordance with the plans, practices and
programs of GTI (“Benefits”). The Employee’s life
insurance policy shall carry a value of $500,000 and his disability
insurance policy shall carry a value of sixty (60) percent of
the Employee’s Salary, and in the absence of valid
insurance
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policies with independent insurance
companies, these insurance obligations shall be direct obligations
of the Employer.
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(b)
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During the term of this Agreement,
GTI shall pay the reasonable school fees for the Employee’s
eligible children in accordance with the policies and practices of
GTI.
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(c)
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Upon termination of this Agreement
under any of the eventualities described in paragraphs (b)-(e) of
Section 10 hereof, GTI shall provide the Employee with
reimbursement (i) for the cost of a one-way business class
airline ticket for the Employee and his spouse (or if he is not
married, his significant other) and his children from their place
of secondment to their place of relocation or their domicile in
their home country; and (ii) for the cost of moving the
Employee’s and his spouse’s (or if he is not married,
his significant other’s) and children’s household goods
and other personal property from their place of secondment to their
place of relocation or to any storage facility designated by the
Employee.
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In
conjunction with the foregoing, in the event of the
Employee’s voluntary resignation under Subsection 10(d)
hereof, the benefits provided under this Subsection 6(c) shall be
payable only if (i) the effective date of the Employee’s
voluntary resignation is on or after the first anniversary of his
commencement of employment under this Agreement, and (ii) the
Employee and his spouse (or if he is not married, his significant
other) and his children incur the foregoing travel and relocation
expenses within one (1) year of the effective date of the
termination of his employment.
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Furthermore, in the event of the
Employee’s death or termination of employment due to Total
Disability under Subsections 10(b) and (c) hereof,
respectively, the foregoing travel and relocation expense shall
include the cost, as appropriate, of shipping the Employee’s
body to a place designated by him or his spouse (or if he is not
married, his significant other) or alternatively, if appropriate
due to the Employee’s Total Disability, shall include the
cost of providing the Employee with an appropriate medical
evacuation mode of travel.
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(d)
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During the term of this Agreement
and for the tax reporting year twelve months after the termination
of this Agreement, GTI shall pay the cost of services by Ernst
& Young, or some other reputable international accounting/tax
firm as determined by GTI, to prepare the Employee’s and his
spouse’s (or if he is not married, his significant
other’s) tax declarations in Russia and in the
Employee’s and his spouse’s (or if he is not married,
his significant other’s) country of citizenship, to the
extent required and requested by the Employee. In addition, it is
the intent of the parties hereto that GTI shall equalize the
Employee’s income tax obligation as if the Employee’s
compensation and other benefits provided under this Agreement were
earned in the Employee’s home country and subject only to
income tax by the Employee’s home country; provided, that the
Employee will retain the benefit of his “Foreign Tax Credit
carryforwards” from years prior to his commencement of
employment with GTI and the effect of these Foreign Tax Credits
should not be lost for the Employee and the actual and
economic
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benefit of any equivalent benefit in
the Employee’s home country as is allowed to US citizens
pursuant to any Foreign Earned Income Exclusion and the Foreign
Housing Exclusion and Deduction (the “Exclusions”) as
set forth in Section 911 of the Internal Revenue Code of 1986,
as amended (the “Code”), (the Foreign Income Exclusion
currently being eighty thousand dollars (USD 80,000)). As such, the
parties hereto expressly acknowledge and agree that (i) GTI or
its affiliates shall pay all of the Employee’s Russian tax
obligations associated with the Employee’s compensation and
other benefits provided under this Agreement, in such amounts and
at such times as required by applicable Russian tax law (whether
directly to the Russian taxing authority, or through reimbursement
to the Employee), plus pay to the Employee such additional amounts
as are required to gross up the Employee’s compensation and
benefits provided under this Agreement for any Russian income taxes
or other income taxes of the Employee’s home country
associated with the payments and reimbursements required by this
Section 6(d) and (ii), notwithstanding any change in applicable tax
law after the date hereof, the potential benefit to the Employee
associated with the Exclusions shall in no event be less than the
amount that would be available to the Employee under Code
Section 911 as of the date hereof.
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(e)
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During the term of this Agreement,
GTI shall provide necessary visa support for the Employee and his
family.
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(f)
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During the term of this Agreement,
GTI shall make available, at its sole expense, foreign language
training for the Employee, his spouse (or if not married, his
significant other) and children.
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(g)
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During the term of this Agreement,
GTI will match 50% of Employee’s maximum allowed annual
contribution into GTI’s-sponsored 401(k) Plan.
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(h)
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During the term of this Agreement,
GTI shall provide Employee with blanket accident insurance, which
insures against accidental loss of life or bodily
injury.
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(i)
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During the term of this Agreement,
GTI shall make available to Employee personal property insurance
coverage against physical loss to items of Employee’s
personal property which are lost, damaged or destroyed.
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7.
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Expense Reimbursement
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During the term of employment, GTI
shall reimburse the Employee for all reasonable and necessary
expenses incurred by the Employee in connection with the
performance of Employee’s duties as an employee of GTI. Such
reimbursement is subject to the submission to GTI by the Employee
of appropriate documentation and/or vouchers in accordance with the
customary procedures of GTI for expense reimbursement, as such
procedures may be revised by GTI from time to time
hereafter.
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8.
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Vacation
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During each of GTI’s fiscal
years during the term of employment, the Employee shall be entitled
to no less than four (4) weeks vacation, or such greater
number of days as provided by any policy of GTI. Unused vacation
days will not carry-over or accumulate from year to year without
the prior written consent of the Director, Human
Resources.
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9.
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Taxation Policy
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Notwithstanding Section 6(d) of this
Agreement, to the extent that the Golden Telecom Group, Inc.
Expatriate Taxation Policy, as amended from time to time
(“Policy”), provides more favorable treatment to the
Employee, the Policy will control.
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10.
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Termination
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(a)
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GTI
shall have “Cause” to terminate the Employee’s
employment hereunder upon the Employee’s:
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(i)
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failure to follow a legal order of
the Board of Directors or the Chief Executive Officer of GTI, other
than any such failure resulting from the Employee’s physical
or mental disability, sickness or other periods of excused absence
after notice and reasonable opportunity for cure;
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(ii)
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fraud, embezzlement, or any other
similar illegal act committed by the Employee in connection with
the Employee’s duties as an employee of GTI or any subsidiary
or affiliate or parent, direct or indirect, of GTI;
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(iii)
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conviction of any felony involving
moral turpitude which causes or may reasonably be expected to cause
substantial economic injury to or substantial injury to the
reputation of GTI or any subsidiary or affiliate or parent, direct
or indirect, of GTI; or
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(iv)
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willful commission of an act or
willful omission of an act which is intended to cause or may
reasonably be expected (as of the time of such occurrence) to cause
substantial economic injury to or substantial injury to the
reputation of GTI or any subsidiary or affiliate or parent, direct
or indirect, of GTI, including, without limitation, any material
violation of the Foreign Corrupt Practices Act, as described herein
below.
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Action or inaction by the Employee
shall not be considered “willful” unless done or
omitted by the Employee intentionally and without the
Employee’s reasonable belief that the Employee’s action
or inaction was in the best interests of GTI, and shall not include
failure to act by reason of total or partial incapacity due to
physical or mental illness. The cessation of employment of the
Employee shall not be deemed to be for Cause unless prior to such
termination there shall have been delivered to the Employee a copy
of a resolution duly adopted by the affirmative vote of not less
than a majority of the disinterested membership of the Board of
Directors of GTI at a meeting of such Board of Directors called and
held for such purpose (after reasonable notice is provided to the
Employee and the Employee is given an opportunity, together with
counsel, to be heard
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before such
Board of Directors), finding, that, in the good faith opinion of
the Board of Directors, the Employee is guilty of the conduct
described in clause (i), (ii) (iii) or (iv) above, and
specifying the particulars thereof in detail.
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(b)
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Termination by Reason of Total
Disability .
Notwithstanding anything to the contrary in this Agreement, GTI
shall at all times have the right to terminate this Agreement and
the employment of the Employee immediately by delivering written
notice to the Employee if the Employee experiences a Total
Disability. For the purpose of this Agreement, the term
“Total Disability” means any mental or physical
illness, condition, disability or incapacity that:
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(i)
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prevents the Employee from
discharging essential job responsibilities and employment
duties;
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(ii)
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shall be attested to in writing by a
physician or a group of physicians acceptable to GTI;
and
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(iii)
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continues for period of six
(6) consecutive months.
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A
Total Disability shall be deemed to have occurred on the last day
of such applicable six (6) month period, and shall be
determined in accordance with applicable law relating to
disability.
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(c)
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Termination by Reason of
Death . This
Agreement shall terminate immediately upon the death of the
Employee.
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(d)
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Voluntary Resignation
. The Employee may
terminate the Agreement at any time by giving ninety (90) days
prior written notice to GTI (the “Employee’s Notice
Period”). Upon receipt of such notice to GTI, GTI, in its
sole and absolute discretion, may either continue to employ the
Employee during all or part of the Employee’s Notice Period,
or may continue to pay the Employee’s Salary and continue
Benefits during the Employee’s Notice Period in lieu of
continued employment.
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(e)
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Termination Without Cause
. GTI may terminate the
Employee’s employment at any time, for any reason, by
providing the Employee with ninety (90) days prior written
notice (the “Employer’s Notice Period”) of
pending termination. Upon providing such notice to the Employee,
GTI, in its sole and absolute discretion, may either continue to
employ the Employee during all or part of the Employer’s
Notice Period, or may continue to pay the Employee’s Salary
and continue Benefits during the Employer’s Notice Period in
lieu of continued employment.
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(f)
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Notice of Termination
. Any termination by GTI
shall be communicated by Notice of Termination to the Employee
given in accordance with Section 19. For purposes of this
Agreement, a “Notice of Termination” means a written
notice given within ten (10) business days of the GTI’s
having actual knowledge of the events giving rise to such
termination, which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the
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Employee’s employment under
the provision so indicated, and (iii) if the termination date
is other than the date of receipt of such notice, specifies the
termination date of this Agreement (which date shall be not more
than fifteen (15) days after the giving of such
notice).
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11.
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Payments Upon
Termination .
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(a)
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Payment . Except as specifically set forth
herein, all payments to be made under the terms of this section may
be made, in GTI’s sole and absolute discretion, in one lump
sum payment paid as soon as reasonably practical following the date
of Employee’s termination or in installments over the term of
the period covered by the payments, paid in accordance with
GTI’s customary payroll practices.
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(b)
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Termination For Cause
. In the event that the
Employee’s employment under this Agreement is terminated for
Cause, GTI shall have no obligation to pay the Salary or provide
any other compensation or Benefits provided under this Agreement
to, or for the benefit of, the Employee for any period after the
date of such termination, or to pay any Bonus for the fiscal year
in which such termination occurs; provided, however , that
GTI shall promptly pay (i) all Salary earned by the Employee
prior to the date of such termination, (ii) any Benefits under
any plans of GTI in which the Employee is a participant to the full
extent of the Employee’s rights under such plans prior to
termination, and (iii) reimbursement of any appropriate
business and/or entertainment expenses incurred by the Employee
prior to termination and properly submitted to GTI.
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(c)
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Termination by Reason of Total
Disability .
In the event that the Employee’s employment under this
Agreement is terminated by reason of Total Disability, GTI shall
have no obligation to pay the Salary provided under this Agreement
to or for the benefit of the Employee for any period after the date
of such termination; provided, however , that GTI shall
promptly pay to the Employee (i) all Salary earned by the
Employee prior to the date of such termination, (ii) the pro
rata share of any Bonus for the fiscal year in which the total
disability occurred (which payment shall be made based on the
assumption that GTI had met the requirement for the payment of the
Target Bonus) (iii) any Benefits under any plans of GTI in
which the Employee is a participant to the full extent of the
Employee’s rights under such plans, and (iv) reimbursement of
appropriate business and/or entertainment expenses incurred by the
Employee prior to such termination and properly submitted to GTI,
each such item to be paid to the date of such termination with the
exception of disability benefits, which shall continue to be paid
from the GTI’s insured or self-insured long-term disability
plan, as the case may be, for the period specified in such plan. In
the event there is a period of time during which the Employee is
not being paid Salary and not receiving long-term disability
payments for any reason, and conditioned upon the Employee or the
Employee’s representative immediately notifying GTI in
writing, the GTI Compensation Committee shall make all necessary
inquiries and shall decide in its sole and absolute discretion
whether GTI shall make interim payments to the Employee until the
commencement of payments under the long-term disability
plan.
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(d)
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Termination by Reason of
Death . If
the Employee dies during the Employee’s employment pursuant
to this Agreement, GTI shall have no obligation to pay the Salary
provided under this Agreement to or for the benefit of the Employee
for any period after the date of the Employee’s death;
provided, however , that GTI shall promptly pay to the
Employee’s designated beneficiary, to the degree earned but
not paid prior to the date of the Employee’s death:
(i) all Salary; (ii) the pro rata share of any Bonus for
the fiscal year in which the death
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