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                                                                    EXHIBIT 10.3

                    AGREEMENT REGARDING CERTAIN COMPENSATION

                  This AGREEMENT REGARDING CERTAIN COMPENSATION, dated and
effective (except as otherwise set forth herein) this 23rd day of June, 2001
(the "Effective Date"), is made by and between Global TeleSystems, Inc., a
Delaware corporation (the "Company"), and Grier C. Raclin (the "Executive" and
collectively, the "Parties").

                  WHEREAS, the Executive has heretofore been employed by the
Company pursuant to (i) that certain Amended and Restated Employment Agreement
dated and effective November 1, 2000 (the "Employment Agreement") which sets
forth certain terms and conditions with respect to the Executive's employment
with the Company, and which is attached hereto as Exhibit A and (ii) that
certain letter agreement (the "Letter Agreement") which sets forth certain terms
and conditions with respect to that certain Performance Bonus payable to the
Executive by the Company (the "Performance Bonus"), and which is attached hereto
as Exhibit B; and

                  WHEREAS Executive has in good faith fully performed all his
duties and responsibilities to the Company pursuant to the Employment and Letter
Agreements by, for example, obtaining for the Company approximately 85% of the
economic value sought to be obtained through, inter alia, the Letter Agreement;
and

                  WHEREAS, Executive has unique experience and expertise in
financial restructuring of the kind in which the Company is currently engaged
and it is the desire of the Company to assure itself of continuous access to
Executive's services; and

                  WHEREAS, it can be presumed that the Executive has available
to him numerous alternative sources of employment; and

                  WHEREAS, due to the Company's changed economic and financial
circumstances and strategies, it is likely that the compensation packages and
retention incentives set forth in the Employment Agreement and the Letter
Agreement no longer provide appropriate incentives to the Executive to perform
and to remain in the employ of the Company; and

                  WHEREAS, the Parties have agreed that it is in their mutual
best interest to amend the Employment Agreement to increase the Executive's
salary and to provide the Executive with certain other retention and incentive
payments in lieu of certain severance programs now set forth therein; and

                  WHEREAS, the Parties have agreed that it is in their mutual
best interest that the Company pay a portion of the Performance Bonus in lieu of
other payments possibly called for under the Letter Agreement and to terminate
the Letter Agreement and Executive's right to further payments of the
Performance Bonus thereunder;

                  NOW THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the Parties, the Parties do hereby agree as follows:

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         A. FIRST AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT. The
Employment Agreement is hereby amended, effective as of the Effective Date, as
follows:

             1. Annual Base Salary. Section 5(a) of the Employment Agreement is
         hereby amended as follows:

                a. The first sentence of Section 5(a) is hereby deleted in its
             entirety and replaced with the following sentence: "During the
             Term, Executive shall receive a base salary at a rate of not less
             than $350,000 per annum, which shall be increased to $1,000,000 per
             annum as of July 1, 2001 (the "Annual Base Salary"), less standard
             deductions, paid in accordance with the Company's general payroll
             practices for executives, but no less frequently than monthly."

                b. The following sentence is hereby added to the end of Section
             5(a): "The Executive agrees that, in partial consideration for the
             increase in his Annual Base Salary to $1,000,000 described above,
             he shall not, except in extraordinary circumstances approved by the
             Board, be entitled to receive any bonus payments pursuant to
             Section 5(b) hereof on or after July 1, 2001."

             2. Special Retention Bonus. A new Section 5(h) shall be added to
         the Employment Agreement to read as follows:

                           "(h) Special Retention Bonus. On July 1, 2001 (or
                  within a reasonable time thereafter), the Company shall pay to
                  the Executive a retention bonus in the amount of $1,500,000
                  (the "Special Retention Bonus"), provided, however, that in
                  the event the Executive's employment with the Company
                  terminates under circumstances other than (a) the Executive's
                  termination by the Company without Cause (as such term is
                  defined in this Agreement including, without limitation, in
                  Section 6(a)(v) hereof); (b) the Executive's death or
                  Disability or (c) the Executive's resignation for Good Reason,
                  the Executive shall pay to the Company, in cash, (x) within
                  ten days of such termination, an amount equal to the Special
                  Retention Bonus less any taxes paid by or on behalf of
                  Executive based upon or due to his receipt of such Special
                  Retention Bonus and (y) within ten days of Executive's receipt
                  thereof, an amount equal to the amount of any tax refund,
                  credit or other tax benefit received or recognized by the
                  Executive pursuant to his previous compliance under Section
                  5(h)(x) or (y) hereof Provided that, if the Company shall have
                  withheld portions of the Special Retention Bonus for tax
                  payments and such Special Retention Bonuses shall have to be
                  repaid by Executive under the terms hereof, or for any other
                  reason, the amount of such withholding shall be deemed repaid
                  by the Executive at the same time Executive repays the net
                  amount of the Special Retention Bonus actually paid to him."

             3. Certain Amendments to Severance Arrangements. In partial
         consideration for the awarding and payment of the Special Retention
         Bonus described in Section 2 of this agreement, Executive agrees to
         waive his right to the severance payments set forth and described in
         Section 7(a)(i)(B) of the Employment Agreement (but, for clarity, other
         severance benefits set forth in the Employment Agreement will

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         continue to be due and paid to Executive under their terms) and Section
         7(a)(i)(B) of the Employment Agreement shall be deleted in its entirety
         and replaced with the phrase "Intentionally Deleted".

             4. Special Restructuring Success Bonus. A new Section 5(i) shall be
         added to the Employment Agreement to read as follows:

                           "(i) Special Restructuring Success Bonus. The Company
                  shall pay to the Executive a bonus in the amount of $1,750,000
                  (the "Special Restructuring Success Bonus") in payments as set
                  forth below, provided that (i) Executive is employed hereunder
                  on the date that the payment in question becomes due; or (ii)
                  if he is not employed hereunder at that time, his employment
                  had been previously terminated either (x) by the Company
                  without Cause; (y) by the Executive for Good Reason; or (z)
                  due to Executive's death that occurred within one year prior
                  to the date that such payment become due under the terms
                  hereof:

                                    (A) Restructuring -- In the event of a
                           contemplated restructuring (a "Restructuring") of the
                           balance sheet of the Company and Global TeleSystems
                           Europe B.V. (collectively, the "Companies") pursuant
                           to consensual written agreements (the "Restructuring
                           Agreements") between the Companies on the one hand
                           and formal or informal committees representing the
                           holders of publicly-traded debt, common stock and/or
                           preferred shares of or issued by the Companies (the
                           "Committees") on the other hand:

                                                   (x) 50% of the Special
                                          Restructuring Success Bonus shall vest
                                          and be payable upon the execution of
                                          the Restructuring Agreements, and

                                                   (y) the remainder of the
                                          Special Restructuring Success Bonus
                                          shall vest and be payable upon the
                                          earlier of (a) the issuance of any
                                          court orders required in the
                                          Restructuring Agreements as a
                                          condition for the effectiveness
                                          thereof, or, (b) if no such court
                                          orders are required in the
                                          Restructuring Agreements, upon
                                          execution of the Restructuring
                                          Agreements.

                                    (B) Sale of the Company - In the event of
                           the sale of all or substantially all of the equity in
                           or assets of either of the Companies that is approved
                           by the relevant Company's governing Board, (a
                           "Sale"):

                                                   (x) 50% of the Special
                                          Restructuring Bonus shall vest and be
                                          payable upon the signing of the
                                          definitive agreement for such Sale,
                                          and

                                                   (y) the remainder of the
                                          Special Restructuring Success Bonus
                                          shall vest and be payable upon the
                                          closing of such Sale."

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         B. PAYMENT IN LIEU OF PERFORMANCE BONUSES. In full satisfaction of all
of its obligations under the Letter Agreement, and in recognition of his
assistance in achieving approximately 85% of the economic value sought to be
obtained through, inter alia, the letter agreement, the Company shall pay to the
Executive $850,000, which represents 85% of the total Performance Bonus, as
follows:

             1. $566,667 shall be payable upon the Effective Date (or as soon as
         reasonably practical thereafter); and

             2. $283,333 shall be payable upon completion or waiver of all of
         the transactions listed in Part II paragraphs 2.1 to 2.28 of the
         Explanatory Statement to the Scheme of Arrangement between Global
         TeleSystems (Europe) Limited and certain of its creditors (pursuant to
         section 425 of the Companies Act 1985).

         IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement Regarding Certain Compensation as of the day and year first above
written.

                                       GLOBAL TELESYSTEMS, INC.

                                       By: /s/ ADAM SOLOMON
                                          --------------------------------------
                                       Name:  Adam Solomon
                                       Title: Chairman, Senior Executive
                                              Compensation Committee

EXECUTIVE:

/s/ GRIER C. RACLIN
----------------------------------
Grier C. Raclin
104 Summerfield Road
Chevy Chase, MD  20815<PAGE>
                                                                    EXHIBIT 4.16

                              CERTIFICATE OF TRUST

                                       OF

                     CONTINENTAL AIRLINES FINANCE TRUST III

         This Certificate of Trust is being executed as of October 18, 2001 for
the purpose of creating a business trust pursuant to the Delaware Business Trust
Act, 12 Del. C. Sections 3801 et seq. (the "Act").

         The undersigned hereby certify as follows:

         1. Name: The name of the business trust is Continental Airlines Finance
Trust III (the "Trust").

         2. Delaware Trustee. The name and business address of the Delaware
resident trustee of the Trust meeting the requirements of Section 3807 of the
Act are as follows:

                           Bank One Delaware, Inc.
                           3 Christiana Center
                           201 North Walnut Street
                           Wilmington, Delaware 19801

         3. Effective. The Certificate of Trust shall be effective immediately
upon filing in the Office of the Secretary of State of the State of Delaware.

         4. Counterparts. This Certificate of Trust may be executed in one or
more counterparts.

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         IN WITNESS WHEREOF, the undersigned, being all of the trustees of the
Trust, have duly executed this Certificate of Trust as of the day and year first
above written.

                                         bank one Delaware, inc.,
                                         as Delaware Trustee

                                         By:      /s/ Sandra L. Caruba
                                              ----------------------------------
                                              Name:      Sandra L. Caruba
                                              Title:     Vice President

                                                  /s/ Jacques Lapointe
                                              ----------------------------------
                                                Jacques Lapointe, as Trustee

                                                  /s/ Jeffrey J. Misner
                                              ----------------------------------
                                                Jeffrey J. Misner, as Trustee

                                      -2-

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