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                                                                    EXHIBIT 10.5

                       EXECUTIVE RETENTION BONUS AGREEMENT

     THIS EXECUTIVE RETENTION BONUS AGREEMENT (this "Agreement") is by and
between Allegiance Telecom Company Worldwide (the "Company") and Clay Myers (the
"Employee"), effective as of the date set forth under the signature of the
Company below.

     WHEREAS, Employee is an employee of the Company or an Affiliate of the
Company; and WHEREAS, the Compensation Committee of Allegiance Telecom, Inc.'s
Board of Directors recognizes the uncertainty and questions that may arise in
the context of a recapitalization transaction which could result in the
departure or distraction of key employee personnel to the detriment of
Allegiance Telecom, Inc., its Affiliates and its stakeholders; and WHEREAS, the
Company has determined that it is in the best interests of the Company, its
Affiliates and its stakeholders to incentivize key employees to remain at the
Company or its Affiliates during the process of, and for a reasonable time
after, the recapitalization transaction.

     NOW, THEREFORE, in consideration for the promises and mutual covenants
herein contained, it is hereby agreed by the parties as follows:

1.   RETENTION PAYMENT. Employee will be entitled to an aggregate retention
     bonus equal to $375,000 (the "Retention Payment"), provided that Employee
     has been continuously employed by the Company or any Affiliate through
     December 31, 2004 and subject to the other terms and conditions of this
     Agreement. The entire Retention Payment will be advanced to Employee on
     March 20, 2003.

2.   TERMINATION OF EMPLOYMENT.

     (a) TERMINATION DUE TO DEATH, DISABILITY OR BY COMPANY WITHOUT CAUSE.
     Notwithstanding anything herein to the contrary, if, prior to December 31,
     2004, Employee's employment with the Company and all Affiliates is
     terminated because of (i) death of Employee, (ii) Disability of Employee or
     (iii) termination by the Company or any Affiliate without Cause, then
     Employee will be entitled to the FULL AMOUNT of the Retention Payment.

     (b) TERMINATION BY COMPANY FOR CAUSE. If, prior to December 31, 2004,
     Employee's employment with the Company and all Affiliates is terminated by
     the Company or any Affiliate for Cause, then Employee will (i) immediately
     repay all Net Retention Payment received and (ii) not have any rights to
     any Retention Payment.

     (c) TERMINATION BECAUSE OF EMPLOYEE RESIGNATION FOR ANY REASON PRIOR TO
     DECEMBER 31, 2003. If, prior to December 31, 2003, Employee's employment
     with the Company and all Affiliates is terminated because of Employee's
     resignation for any reason, then Employee will (i) immediately repay all
     Net Retention Payment received and (ii) not have any rights to any
     Retention Payment.

     (d) TERMINATION BECAUSE OF EMPLOYEE RESIGNATION FOR ANY REASON BETWEEN
     JANUARY 1, 2004 AND DECEMBER 31, 2004. Notwithstanding anything herein to
     the contrary, if, between January 1, 2004 and December 31, 2004, Employee's
     employment with the Company and all Affiliates is terminated because of
     Employee's resignation for any reason, then Employee shall (i) keep an
     amount equal to (A) 50% of the Net Retention Payment plus (B) 50% of the
     Net Retention Payment multiplied by the Pro-Rata Fraction (with respect to
     clauses (A) and (B), such amounts rounded up to the nearest dollar and in
     any event not to exceed the amount of Net Retention Payment) and (ii)
     immediately repay the difference between the Net Retention Payment less the
     amount calculated in clause (i) preceding.

     "Pro-Rata Fraction" means: The number of days continuously employed by the
     Company and all Affiliates starting January 1, 2004 through Employee's
     termination date (that date to be determined by the Company in its good
     faith discretion) divided by 365 days.

     EXAMPLE - Employee receives $375,000, but after taxes and governmental
     charges of 30%, his net amount is $262,500. Employee resigns on January 31,
     2004. Employee would be entitled to keep $131,250 plus $11,148 (50% of
     $262,500 times 31 days/365 days) and would be required to repay $120,102
     (which is the $262,500 Net Retention Payment less $142,398).

3.   REPAYMENT OF LOAN FROM COMPANY. Employee agrees that promptly after receipt
     of the Retention Payment (but in no event later than five business days),
     Employee will repay all outstanding amounts (including

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     accrued but unpaid interest) under that certain Secured Promissory Note
     issued by Employee payable to Allegiance Telecom, Inc. dated December 6,
     1999.

4.   NO SPECIAL EMPLOYMENT RIGHTS. Nothing in this Agreement will (a) be deemed
     to confer on Employee any right to employment or continued employment with
     the Company or any Affiliate, or (b) affect any right that the Company or
     any Affiliate may have to terminate the employment of Employee at any time.

5.   OTHER EMPLOYEE BENEFITS. No payments made hereunder shall be includible as
     an annual or long-term bonus or other compensation in creditable
     compensation in computing benefits under any employee benefit plan of the
     Company or any Affiliate.

6.   WITHHOLDINGS. The Company may withhold from all payments due to Employee
     (or his/her beneficiary or estate) hereunder all taxes or other amounts
     which, by applicable federal, state, local or other law, the Company is
     required to withhold therefrom.

7.   RIGHT TO WITHHOLD FROM PAYCHECK. In the event Employee is required to repay
     any Net Retention Payment, Employee authorizes the Company and its
     Affiliates to deduct any amount of such payment from any salary, bonus,
     vacation pay, commissions or any other compensation earned by Employee and
     Employee specifically authorizes the Company and its Affiliates to deduct
     any amount of such payment from Employee's paycheck(s), including
     Employee's final paycheck (to the extent lawful). Any such deductions shall
     not relieve Employee of his/her obligation to pay any remaining amounts
     owing under this Agreement. CONSENT TO SUCH DEDUCTION(S) SHALL BE EVIDENCED
     BY EMPLOYEE'S SIGNATURE ON THIS AGREEMENT.

8.   CONFIDENTIAL INFORMATION. Employee shall keep the existence and contents of
     this Agreement in strictest confidence and shall not disclose it to anyone
     other than Employee's tax and financial advisors, attorneys and immediate
     family members, provided that Employee advises such persons that the
     information is confidential. Employee may discuss this Agreement with the
     Company's Human Resources or Legal departments or the head of Employee's
     department.

9.   DEFINITIONS. As used in this Agreement, the following terms shall have the
     respective meanings set forth below:

     (a)  "Affiliate" means any entity that directly or indirectly is controlled
          by, controls or is under common control with the Company.

     (b)  "Cause" means (i) embezzlement or misappropriation of funds of the
          Company, any of its Affiliates or their successors; (ii) use of
          illegal drugs or alcohol that materially impairs Employee's ability to
          fulfill his duties as an employee; (iii) willful disclosure of trade
          secrets or confidential information of or any material violation of
          any other material published policy of the Company, any of its
          affiliates or their successors; or (iv) conviction or confession of a
          criminal felony.

     (c)  "Company" means Allegiance Telecom Company Worldwide, a Delaware
          corporation and the successor to, or transferee of all or
          substantially all of the assets of, the Company.

     (d)  "Disability" means "disability" as defined in the Company's Long-Term
          Disability Insurance Plan.

     (e)  "Net Retention Payment" means the Retention Payment less any
          withholdings taken by the Company or any Affiliate for taxes and other
          governmental charges.

10.  SUCCESSORS; BINDING AGREEMENT. (a) This Agreement is personal to Employee
     and without the prior written consent of the Company, shall not be
     assignable by Employee otherwise than by will or the laws of descent and
     distribution. This Agreement shall inure to the benefit of and be
     enforceable by Employee's legal representatives. (b) This Agreement shall
     inure to the benefit of and be binding upon the Company and its successors.
     The Company agrees that, for so long as it has any obligations under this
     Agreement, it will cause any successor or transferee (if other than the
     Company) to unconditionally assume, by written instrument delivered to
     Employee (or his/her beneficiary or estate), all of the obligations of the
     Company hereunder.

11.  NOTICES. All notices, demands or other communications to be given or
     delivered under or by reason of the provisions of this Agreement shall be
     in writing and shall be deemed to have been given when personally delivered
     or on the fifth day after being sent via U.S. certified or registered mail,
     return receipt requested:

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          TO THE COMPANY:
          Allegiance Telecom Company Worldwide,
          Attn: Pati Marano, Human Resources Department
          9201 North Central Expressway
          Dallas, TX 75231
          Telephone: (469) 259-2325

          TO EMPLOYEE: at Employee's office location or primary residence listed
          in the Company's records

     or to such other address or to the attention of such other person as the
     recipient party has specified by prior written notice to the sending party.
     Notwithstanding anything herein to the contrary, the Company may provide
     Employee with written notice by sending Employee an email.

12.  GOVERNING LAW; VALIDITY. The validity, interpretation, and enforcement of
     this Agreement shall be governed by the laws of the State of Texas as to
     all matters, including, but not limited to, matters of validity,
     construction and performance, without regard to principles of conflict of
     laws. Whenever possible, each provision of this Agreement shall be
     interpreted in such manner as to be effective and valid under applicable
     law, but if any provision of this Agreement is held to be invalid, illegal
     or unenforceable in any respect under any applicable law or rule in any
     jurisdiction, such invalidity, illegality or unenforceability shall not
     affect any other provision or any other jurisdiction, but this Agreement
     shall be reformed, construed and enforced in such jurisdiction as if such
     invalid, illegal or unenforceable provision had never been contained
     herein.

13.  CONSENT TO JURISDICTION; AGENT FOR SERVICE OF PROCESS; LIMITATION OF
     LIABILITY. Employee consents to the non-exclusive jurisdiction and venue in
     the state and federal courts located in Dallas County, Texas and waives any
     defense of forum non conveniens. Service of legal process on the Company
     with respect to a claim under this Agreement shall be made upon the General
     Counsel of Allegiance Telecom, Inc. IN NO EVENT SHALL THE COMPANY OR ANY
     AFFILIATE BE LIABLE UNDER OR RELATING TO THIS AGREEMENT FOR ANY AMOUNT IN
     EXCESS OF THE RETENTION PAYMENT. NOTWITHSTANDING ANY OTHER PROVISION
     HEREOF, THE COMPANY SHALL NOT BE LIABLE FOR ANY INDIRECT, INCIDENTAL,
     SPECIAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES.

14.  INTEREST; PAYMENT OF COLLECTION FEES. Employee agrees to repay all amounts
     due under this Agreement to the Company within ten (10) days of Employee's
     termination date. Any amounts due to the Company under this Agreement and
     not paid shall accrue interest at 1.5% per month (or if less, the maximum
     rate permissible under law) starting from the 11th day after Employee's
     termination date until paid. Employee agrees to pay all of Company's costs
     of collection relating to or in connection with this Agreement, including
     reasonable attorneys' fees.

15.  WAIVER. Employee's or the Company's failure to insist upon strict
     compliance with any provision hereof or any other provision of this
     Agreement or the failure to assert any right Employee or the Company may
     have hereunder shall not be deemed to be a waiver of such provision or
     right or any other provision or right of this Agreement.

16.  ENTIRE AGREEMENT; NO AMENDMENT. This Agreement contains the entire
     agreement and supersedes all prior and contemporaneous oral or written
     communications and agreements between the parties relating to the subject
     matter of this Agreement. Neither this Agreement, nor any of its terms, may
     be changed, added to, amended, waived or varied except in writing signed by
     Employee and by either the CEO of the Company, the General Counsel of the
     Company or the General Counsel of Allegiance Telecom, Inc.

17.  COUNTERPARTS; DELIVERY BY FACSIMILE. This Agreement may be executed in
     counterparts, each of which shall be deemed to be an original and all of
     which together shall constitute one and the same instrument. This Agreement
     any amendments hereto to the extent signed and delivered by means of a
     facsimile machine, will be treated in all manner and respects as an
     original agreement and will be considered to have the same binding legal
     effect as if it were the original signed version thereof delivered in
     person. At the request of any party, each other party hereto will reexecute
     original forms thereof and deliver them to all other parties. No party
     hereto will raise the use of a facsimile machine to deliver a signature or
     the fact that any signature or agreement or instrument was transmitted or
     communicated through the use of a facsimile machine as a defense to the
     formation or enforceability of a contract and each such party forever
     waives any such defense.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
dates set forth below.

BY SIGNING BELOW, EMPLOYEE ACKNOWLEDGES THAT HE/SHE HAS (A) READ THIS AGREEMENT;
AND (B) UNDERSTANDS THE TERMS AND CONDITIONS OF THIS AGREEMENT.

ALLEGIANCE TELECOM COMPANY WORLDWIDE
By: _____________________________________
Name: Royce J. Holland
Its: Chairman and Chief Executive Officer
Effective Date: _________________________

EMPLOYEE: _______________________________
Printed Name: ___________________________
Date: ___________________________________



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