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                                                                   EXHIBIT 10.26

                                [FLAG LETTERHEAD]


                                  CONFIDENTIAL

October ___, 2002


Adnan Othman Omar
Villa No. 13
Bin Himd Residential Compound
Kayyal Street, Rawdah District
Jeddah, Western Province
Saudi Arabia 21411

             AMENDMENT TO EMPLOYMENT AGREEMENT FOR ADNAN OTHMAN OMAR
              PURSUANT TO THE THIRD AMENDED AND RESTATED JOINT PLAN
                        OF REORGANIZATION OF THE COMPANY

Dear Adnan:

Pursuant to the Third Amended and Restated Joint Plan of Reorganization of
Debtors under Chapter 11 of the Bankruptcy Code (such debtors referred to
collectively herein as the "COMPANY"), as may be amended from time to time (the
"PLAN"), your Employment Agreement dated 1 April 2002 (your "AGREEMENT"), as
amended by the Addendum to your Agreement dated 10 April 2002 (your "ADDENDUM"),
is hereby, effective as of the Effective Date (as defined in the Plan), assumed
by FLAG Telecom Group Limited ("FTGL") as further amended below.

1.   DEFINITIONS. As used herein, "Cause" and "Good Reason" shall have the
     definitions set forth below:

     (a)  "GOOD REASON" shall mean, without your consent, the occurrence of any
          of the following events which is not cured by FTGL within ten (10)
          business days following your written notice to FTGL of the event
          constituting Good Reason; provided, however, that any such written
          notice received by FTGL following the thirty (30) day period after the
          date on which you had first hand knowledge of the occurrence of such
          event giving rise to Good Reason shall not be effective and you shall
          be deemed to have waived your right to terminate employment for Good
          Reason with respect to such event: (i) reduction in your salary or
          target bonus opportunity; (ii) material reduction in any material
          employee benefits generally provided to other employees (unless such
          reduction is done on a

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          company-wide basis); (iii) a breach of any material term of your
          Agreement; (iv) material adverse change in your position, status,
          responsibilities or reporting lines or change in your position,
          status, responsibilities or reporting lines as a result of which such
          position, status, responsibilities or reporting lines are materially
          inconsistent with such position, status, responsibilities or reporting
          lines prior to such change; (v) relocation of your primary office
          location or location where your principal business duties are
          performed more than fifty (50) miles from your current office or
          business location; or (vi) relocating the FLAG management subsidiary
          more than fifty (50) miles from London, England.

     (b)  "CAUSE" shall mean the occurrence of any of the following events or
          circumstances: (i) willful continued failure to substantially perform
          the duties of your position after written notice thereof which, if
          curable, is not cured by you within ten (10) business days following
          FTGL's written notice to you of the event or circumstance constituting
          Cause; provided, however, that any such written notice received by you
          following the thirty (30) day period after the date on which FTGL had
          first hand knowledge of the occurrence of such event or circumstance
          giving rise to Cause shall not be effective and FTGL shall be deemed
          to have waived its right to terminate your employment for Cause with
          respect to such event or circumstance; or (ii) conviction of or plea
          of guilty or no contest for a felony or other crime which, if it were
          made public, could reasonably be expected to have a material adverse
          affect on the business reputation or affairs of FTGL.

2.   RETENTION PAYMENT AMOUNT. You shall vest in your Retention Payment Amount
     on the Effective Date. Notwithstanding anything to the contrary in your
     Agreement or Addendum, you shall be obligated to repay your Retention
     Payment Amount if, prior to the Effective Date, you resign without Good
     Reason or you are terminated for Cause.

3.   ENTERPRISE VALUE BONUS. You shall not be entitled to payment of the
     percentage of the Enterprise Value of the Company as contemplated under
     your Addendum.

4.   2002 BONUS. Your bonus for 2002 shall be paid in accordance with the
     following:

     (a)  You shall be eligible to earn your target bonus as in effect prior to
          the Commencement Date (as defined in the Plan) if (i) you are employed
          on 31 December 2002 by FTGL or (ii) your employment with FTGL
          terminates prior to 31 December 2002 for any reason other than a
          termination for Cause or voluntary resignation for other than Good
          Reason; provided that the conditions of Section 4(c) below are met.

     (b)  Your bonus shall be payable in a cash lump sum as soon as practicable
          following 31 December 2002, but in no event later than 20 January
          2003; provided that, if fourth quarter financial results are not
          available on 15

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          January 2003, the portion of the bonus based upon such results shall
          be payable within five days of such results becoming available, but in
          no event later than March 31, 2003.

     (c)  Fifty percent of your target bonus shall be payable if available cash
          plus working capital of FTGL and its subsidiaries as of the Effective
          Date is equal to or greater than projected or if the available cash
          plus working capital of FTGL and its subsidiaries as of the Effective
          Date is within 2.5 percent of such projection. The remaining fifty
          percent of the target bonus shall be payable if each of cash revenue
          and cash flow in fourth quarter 2002 is equal to or greater than
          projected or if each of cash revenue and cash flow in fourth quarter
          2002 is within 2.5 percent of each such projection.

     (d)  For purposes hereof, the projections referenced in Section 4(c) above
          and the meaning of "available cash plus working capital", "cash
          revenue" and "cash flow" shall be determined consistent with Section
          6.7.4 of the Plan.

5.   TERMINATION OF EMPLOYMENT.

     Clause 8 of your Agreement shall be deleted and replaced with the
     following:

     This Agreement shall continue for a period of two years (the "Fixed Term")
     from 1 April 2002.

     Notwithstanding any other provision herein, you may terminate your
     employment for any reason by 60 days' written notice to FTGL. If you
     terminate your employment with Good Reason, you will be paid a lump sum
     payment of US$610,000. If you terminate your employment for any other
     reason, you will receive no further salary or allowances or any other
     benefit. For the avoidance of doubt, you shall be entitled to your salary,
     allowances and other benefits until your actual termination date.

     Notwithstanding any other provision herein, FTGL may terminate your
     employment at any time. If FTGL terminates your employment for Cause or due
     to your death or disability or if your employment terminates due to the
     expiration of the Fixed Term, you will receive no further salary or
     allowances or any other benefit. If FTGL terminates your employment without
     Cause, you will be paid a lump sum payment of US$610,000.

     In the event of a change in Control, you will be entitled to resign within
     30 days of the change in Control and receive a lump sum payment of
     US$610,000. You shall not be entitled to resign pursuant to this paragraph
     solely as a result of a change in composition of the Board of Directors of
     FTGL or a change in ownership of FTGL, in each case pursuant to the Plan.

     FTGL considers that the current change in control language in this Clause 8
     ("Change in Control") of the Agreement 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

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     Control at some future date, the Retention Payment Amount will be deducted
     from any entitlement in the event of a Change in Control.

     Control has the meaning given to it in Section 840 of the Income and
     Corporate Taxes Act 1988, where the company that gained control of FTGL was
     not at the date of the change in Control a Group Company of FTGL. Group
     Company means any company which for the time being is a holding company of
     FTGL or a subsidiary of FTGL (both as defined by S.736 of the Companies Act
     1985) or a subsidiary of a holding company (as defined).

6.   LEGAL EXPENSES.

     (a)  FTGL shall pay your actual documented litigation-related costs and
          expenses (including attorneys fees) to the extent that (i) such costs
          and expenses are pending reimbursement or not actually reimbursed by
          the insurers under the directors and officers liability insurance
          policies of the Company in existence prior to the Effective Date (the
          "POLICIES"), regardless of whether such costs and expenses were
          incurred pre- or post-petition, and (ii) the aggregate amount of the
          payments described in this sentence, together with all other payments
          made pursuant to Section 6.4.1(b) of the Plan, shall not exceed $3.25
          million and the aggregate amount of such payments for the period
          through the first anniversary of the Effective Date shall not exceed
          $1.625 million. Notwithstanding the foregoing, FTGL shall not be
          required to advance costs and expenses that are pending reimbursement
          by the insurers under the Policies if such advancement would result in
          the contravention of the Sarbanes-Oxley Act of 2002 (as defined
          below). "Sarbanes-Oxley Act of 2002" means that certain U.S. federal
          legislation adopted on July 30, 2002, as amended or supplemented from
          time to time, or any U.S. federal statute or regulation adopted by the
          U.S. Securities and Exchange Commission in effect that has replaced,
          amended or supplemented or will replace, amend or supplement such
          statute.

     (b)  You shall take all reasonably necessary action to collect from the
          directors and officers liability insurers of the Company the costs and
          expenses described in Section 6(a) above and fully cooperate with FTGL
          in connection with any coverage disputes under Section 6(f) below. In
          the event of a material violation of your obligation to cooperate with
          FTGL pursuant to the preceding sentence, FTGL's obligation to make
          payments under Section 6(a) above shall terminate.

     (c)  You hereby represent and certify that you have not knowingly made any
          fraudulent statements or material misrepresentations to the directors
          and officers liability insurers of the Company or persons acting on
          their behalf in connection with the directors and officers insurance
          application process. In the event that you are found by a judgment or
          other final adjudication to have knowingly made such a fraudulent
          statement or material misrepresentation, FTGL's obligation to make the
          payments in Section 6(a) above shall immediately terminate and you
          shall be required to refund

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          your pro rata share of any payments made by FTGL pursuant to Section
          6.4.1(b) of the Plan. Such pro rata share shall be determined by
          dividing the total amount of such payments by the total number of
          defendants in the relevant litigation.

     (d)  All payments made pursuant to Section 6(a) above, to the extent
          actually paid by FTGL, shall be immediately reimbursable upon
          collection by you to the extent of and out of any indemnified fees,
          costs and expenses actually reimbursed by the insurers under the
          Policies.

     (e)  FTGL shall reimburse you for attorneys fees and expenses incurred in
          connection with the Chapter 11 Cases (as defined in the Plan), in an
          amount not to exceed, together with all other reimbursements pursuant
          to Section 6.4.2 of the Plan, $180,000 in the aggregate. Any such
          reimbursement shall reduce the maximum amount payable under Section
          6(a) above.

     (f)  FTGL shall pay its own attorneys fees and costs in connection with
          disputes as to coverage under the Policies and take all reasonably
          necessary action to resolve any such disputes; provided, however, that
          FTGL shall not be responsible, either directly or through
          reimbursement, for costs associated with any legal or other
          professionals retained by you in connection with such disputes.

7.   INDEMNIFICATION. You shall be indemnified by FTGL with respect to acts and
     omissions occurring on or after the Effective Date to the same extent as
     the other directors and officers of FTGL.

8.   DEFERRED COMPENSATION. Except with respect to your bonus for 2002, you
     shall not be entitled to receive any deferred compensation earned or
     incurred prior to the Effective Date. For the avoidance of doubt, it is
     understood that the foregoing sentence shall not prevent you from receiving
     the Retention Payment Amount referred to in Section 2 above, to the extent
     eligible.

9.   NO DEFAULTS/CURE OBLIGATIONS. You hereby acknowledge that no default exists
     under your Agreement or Addendum that is required to be cured upon
     assumption.

10.  OTHER TERMS IN EFFECT. Except as specifically modified herein, the
     employment period and other terms of your Agreement and Addendum remain in
     force.

Please indicate your acceptance of the above by signing and dating below.

Sincerely,


FLAG Telecom Group Limited

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By:
   -------------------------------

Name:
Title:


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Adnan Othman Omar

Date
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