FLAG TELECOM HOLDINGS LTD
EXHIBIT 10.1
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<TYPE>EX-10.1
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<FILENAME>a2079553zex-10_1.txt
<DESCRIPTION>EXHIBIT 10.1
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                                                                    Exhibit 10.1

THIS IS AN ADDENDUM TO THE CONTRACT OF EMPLOYMENT OF ANDRES BANDE AND FLAG
LIMITED DATED 11 DECEMBER 1997 ("THE CONTRACT")


Dear Andres:

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 sum of US$1.25 million minus applicable tax
withholding (the "RETENTION PAYMENT AMOUNT") on 9 April 2002 (the "PAYMENT
DATE").

Furthermore, you will be entitled to 1.5% 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 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 net Retention Payment Amount to FLAG immediately.

Furthermore, in respect of termination of your employment with FLAG without
cause by FLAG or due to your death or disability, Clause 5(b)(i)(A) of the
Contract is hereby varied to state as follows:

         (A) shall receive a lump sum payment in an amount calculated by
         multiplying by 2 the Executive's annual Base Salary (US$450,000) and
         maximum Annual Incentive Bonus (US$900,000) which amounts to US$2.7
         million.

In respect of voluntary resignation of your employment with FLAG, Clause 5(c) of
the Contract is hereby amended as follows:

         If Executive provides notice of resignation effective after 31 December
         2003, he shall be entitled to the lump sum payment indicated in Clause
         5(b)(i)(A) as amended.

Finally, each of FLAG Limited, FLAG Telecom Holdings Limited and you agree that
the Contract is hereby assigned to FLAG Telecom Holdings Limited by FLAG
Limited.

If you agree to these revised terms please sign and return to me the attached
copy of this agreement.

/s/ Adnan Omar                           /s/ Andres Bande
--------------------------------------   ---------------------------------------
ADNAN OMAR         DATE  April 9, 2002   ANDRES BANDE        DATE  April 9, 2002
                         -------------                             -------------

FOR AND ON BEHALF OF FLAG TELECOM
HOLDINGS LIMITED BY RESOLUTION OF THE
BOARD OF DIRECTORS ON 4 APRIL 2002

/s/ Ed McCormack
--------------------------------------
ED MCCORMACK       DATE  April 9, 2002
                         -------------

FOR AND ON BEHALF OF FLAG LIMITED

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