Addendum to Employment Contract and Executive Retention Program Agreement between Adnan Othman Omar and FLAG Telecom Holdings Limited

Summary

This addendum to the employment contract between Adnan Othman Omar and FLAG Telecom Holdings Limited outlines an executive retention program. Under the agreement, Mr. Omar will receive a $650,000 retention payment and may be eligible for an additional payment based on the company's enterprise value if a court-approved restructuring plan is adopted. If Mr. Omar resigns or gives notice before the restructuring decision, he must repay the retention payment. The agreement also clarifies how these payments interact with any future change in control provisions.

EX-10.5 7 a2079553zex-10_5.txt EXHIBIT 10.5 THIS IS AN ADDENDUM TO THE CONTRACT OF EMPLOYMENT OF ADNAN OTHMAN OMAR AND FLAG TELECOM HOLDINGS LIMITED ("FLAG") DATED 1 APRIL, 2002 ("THE CONTRACT") Dear Adnan: EXECUTIVE RETENTION PROGRAM ("THE PROGRAM") The purpose of the Program is to retain executives who are critical to maintaining the ongoing operations of FLAG Telecom Holdings Limited and its group companies. You will become entitled to a gross sum of US$650,000 (the "RETENTION PAYMENT AMOUNT") on 9 April 2002 (the "PAYMENT DATE"). Any applicable taxes on this amount will be your responsibility. Furthermore, you will be entitled to 0.75% of the Enterprise Value (as defined in the William M. Mercer Report addressed to John Draheim, "Enterprise value is defined as Working Capital + Market Value of Debt + Market Value of Equity") of FLAG Telecom Holdings Limited and its group companies over a threshold of US$150 million at the time a restructuring plan is decided upon by the Court in the context of the current restructuring of FLAG Telecom Holdings Limited. If you terminate your employment with FLAG or give notice to terminate your employment with FLAG prior to the decision on a restructuring plan by the Court then you will repay the Retention Payment Amount to FLAG immediately. FLAG considers that the current change in control language in Clause 8 ("Change in Control") of the Contract linked to payment is not triggered by the Court's decision on a restructuring plan, its implementation, or any part of such process. In the event that such restructuring is held to be a Change in Control at some future date, the Retention Payment Amount will be deducted from any entitlement in the event of a Change in Control. If you agree to these revised terms please sign and return to me the attached copy of this agreement. /s/ Andres Bande - --------------------------------- FOR AND ON BEHALF OF FLAG DATE April 10, 2002 -------------- /s/ Adnan Othman Omar - --------------------------------- ADNAN OTHMAN OMAR DATE April 10, 2002 --------------