Exhibit 10.1

TERMINATION AGREEMENT

THIS TERMINATION AGREEMENT (the “Agreement”), entered into as of September 17,
2010, by and between THOMAS R. KLOSTER (the “Executive”) and PRIMUS
TELECOMMUNICATIONS GROUP, INCORPORATED and PRIMUS TELECOMMUNICATIONS, INC., both
Delaware corporations (together, the “Company”)

RECITALS:

A. Executive has been employed by the Company as Chief Financial Officer;

B. The parties wish to provide for termination of Executive’s employment with
the Company on mutually satisfactory terms with such termination to be effective
on August 31, 2010 (the “Termination Date”);

C. Executive and the Company and its subsidiary, Primus Telecommunications,
Inc., are parties to a Separation Agreement dated June 30, 2009 (the “Separation
Agreement”); and

D. Executive and the Company wish to memorialize the terms for Executive’s
termination of employment and set forth their understandings on certain related
matters.

Now, Therefore, in consideration of the mutual covenants herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:

1. Termination Date. Executive agrees that his employment with the Company shall
terminate effective as of the Termination Date. That termination shall be deemed
to be without “Cause” as defined under the Separation Agreement. Effective upon
the termination, Executive shall have been deemed to have resigned from all
director and officer positions he holds with the Company and any of its
affiliates.

2. Payments and Welfare Benefits for Executive.

(a) Provided that the Executive executes the Release attached hereto as Exhibit
A (the “Release”) on or before September 30, 2010, and such Release has become
effective in accordance with the terms of Section 1(b)(v) thereof, the Company
shall pay to Executive the following amounts:

(i) On March 1, 2011, an amount equal to $200,000.00 in a single lump sum,
without interest.

(ii) Beginning on March 15, 2011 and on the fifteenth and last day of each month
occurring thereafter through and including August 31, 2011, an amount equal to
$16,666.67.

(iii) On March 1, 2011, an amount equal to $125,000.00 in a single lump sum,
without interest.

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(iv) On March 31, 2011, and on the last day of each calendar month thereafter
through and including August 31, 2011, an amount equal to $20,833.34.

(v) In satisfaction of the Company’s obligations to Executive under
Section 2(b)(iii) of the Separation Agreement with respect to Executive’s right
to participate in the Company’s group health plans (i.e., medical, dental and
vision), for each month of the first 12 months following the Termination Date
that Executive elects to receive COBRA continuation coverage, the Company will
reimburse Executive the amount of the COBRA premium required to be paid for such
coverage. In addition, in satisfaction of the Company’s obligations to Executive
under Section 2(b)(iii) of the Separation Agreement with respect to Executive’s
right to participate in the Company’s welfare benefit plans other than any group
health plans (i.e., short-term disability, long-term disability and life
insurance) for a period of 12 months beginning on the Termination Date at the
same cost to the Executive as he would be required to pay if he were actively
employed by the Company during that period, the Company shall pay the Executive
on March 1, 2011, an amount equal to $46,000.

(b) The Company shall continue to pay to Executive his current base salary and
shall pay any accrued and unused vacation leave through the Termination Date in
accordance with the Company’s standard payroll practices.

(c) Restricted Stock Units. The Company and Executive hereby stipulate and agree
that 17,087 Management Restricted Stock Units (“RSUs”) granted under the
Restricted Stock Unit Agreement dated July 2, 2009 (the “RSU Agreement”) are
vested and have been exchanged for common stock. In addition, if the Company
equals or exceeds ninety percent (90%) of the Adjusted EBITDA Target for 2010 as
set forth in the RSU Agreement, 11,390 additional RSUs will become vested. The
remaining 5,695 unvested or contingent RSUs are hereby forfeited and terminated.
Any additional vested RSUs will be settled on a one for one basis at the time
provided in Section 3 of the RSU Agreement. Except as set forth in this
subsection (c), the vested RSUs will remain subject to the terms of the RSU
Agreement and the Company’s Management Compensation Plan.

(d) Non-Qualified Stock Options. The Company and Executive hereby stipulate and
agree that 13,123 of the shares of Common Stock issuable under the Non-Qualified
Stock Option Agreement dated July 1, 2009 (the “Option Agreement”), are fully
vested and exercisable in accordance with the terms of the Option Agreement and
the Plan. The remaining 13,123 of such stock options under the Option Agreement
are hereby terminated. Except as set forth in this subsection (d), the vested
options shall remain subject to the terms of the Option Agreement and the
Company’s Management Compensation Plan.

(e) Performance Based Non-Qualified Stock Option. The Company and the Executive
hereby stipulate and agree that 4,272 of the shares of Common Stock issuable
under the performance based Non-Qualified Stock Option Agreement dated July 1,
2009 (the “Performance Option Agreement”), are fully vested and exercisable in
accordance with the terms of the Performance Option Agreement. In addition, if
the Company equals or exceeds one hundred fifteen percent (115%) of the Adjusted
EBITDA Target for 2010 as set forth in the Performance Option Agreement, options
on 2,847 additional shares will become vested. The options on the remaining
1,424 shares are hereby forfeited and terminated. Except as set forth in this
subsection (e), the vested options will remain subject to the terms of the
Performance Option Agreement and the Company’s Management Compensation Plan.

 

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(f) Withholding. All compensation and other compensatory benefits provided to
Executive pursuant to this Termination Agreement shall be reduced by all amounts
required or authorized to be withheld by the Company by applicable federal,
state and local law.

(g) No Additional Benefits. Executive acknowledges and agrees that the payments
and other benefits provided for in this Agreement represent the only
compensation and benefits to which Executive is entitled and, except for the
fees for periods following the Termination Date payable under the Consulting
Agreement identified in Section 7 below, Executive is not entitled to any other
compensation, remuneration, benefits or entitlements, whether pursuant to the
Separation Agreement, Restricted Stock Unit Agreement, Option Agreement or
Performance Option Agreement or otherwise, excluding any accrued benefits the
Executive may have under the Company’s 401(k) plan.

3. Restrictive Covenants. Executive hereby reaffirms and agrees that all of the
terms, restrictions and covenants of Executive set forth in Sections 4, 5, 6, 7
and 8 of the Separation Agreement shall remain in full force and effect in
accordance with their terms, without waiver, amendment, or release.

4. Return of Company Property. Except as useful or necessary in performing his
duties under the Consulting Agreement, Executive agrees that all files, records,
documents, computer disks, drawings, specifications, equipment, keys, credit
cards and other property of the Company, including copies thereof, shall be
returned to the Company on or before the Termination Date and all such property
used by Executive in performing under the Consulting Agreement, except for
Executive’s laptop computer (which shall convey after Executive has delivered
the laptop to the Company and the Company has removed from it any confidential
or proprietary information), shall be returned to the Company on or before the
termination of the Consulting Agreement.

5. Cooperation in Litigation. The Executive agrees to cooperate with and assist
the Company in the prosecution or defense of any claims arising out of or
related to any matters with which the Executive was involved during his
employment with the Company (including, without limitation, attendance at
out-of-town proceedings for which the Company may require travel). The Company
and Executive shall cooperate in determining mutually acceptable times and
locations for Executive to provide such cooperation. The Company agrees to
directly pay or reimburse the Executive for the actual expenses incurred by the
Executive (including reasonable travel expenses) as a result of his providing
such cooperation pursuant to this provision. Following the termination of the
Consulting Agreement, the Executive agrees to continue to cooperate with respect
to such matters as is reasonably requested and compensated by the Company.

6. Non-Disparagement. Executive and the Company agree that he/it shall not take
any actions or make any verbal or written statements to the public, or to the
Company’s employees and customers, that disparage the Executive, the Company,
its affiliates, officers and directors.

 

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7. Consulting Agreement. The Company and Executive hereby execute the Consulting
Agreement attached hereto as Exhibit B that shall become effective on the
Termination Date.

8. Miscellaneous Provisions.

(a) Waiver. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by Executive and by an authorized officer of the Company. No waiver
by either party of any breach of, or of compliance with, any condition or
provision of this Agreement by the other party shall be considered a waiver of
any other condition or provision or of the same condition or provision at
another time.

(b) Non-Reliance. Executive acknowledges and agrees that in signing this
Agreement, he does not rely and has not relied on any representation or
statement by the Company or by its directors, officers, agents, representatives
or attorneys with regard to the subject matter, basis or effect of this
Agreement.

(c) Whole Agreement. No agreements, representations or understandings (whether
oral or written and whether express or implied) which are not expressly set
forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof. Effective as of the date hereof, this
Agreement supersedes any prior employment agreement or other Agreement between
the Company, any of its subsidiary or parent entities and Executive, except that
the Separation Agreement, Restricted Stock Unit Agreement, Option Agreement,
Performance Option Agreement and Release, shall remain in force and effect in
accordance with their respective terms, except as such terms are expressly
modified, amended, terminated or released by this Agreement.

(d) No Admission of Wrongdoing. This Agreement is not an admission by the
Company or Executive of any liability or wrongdoing.

(e) Choice of Law. This Agreement shall be deemed a contract made under, and for
all purposes the validity, interpretation, construction and performance of this
Agreement shall be governed by, the laws of the State of Delaware, without
reference to principles of conflicts of laws, except to the extent superseded by
applicable federal law.

(f) No Assignment. The rights of any person to payments or benefits under this
Agreement shall not be made subject to option or assignment, either by voluntary
or involuntary assignment or by operation of law, including (without limitation)
bankruptcy, garnishment, attachment or other creditor’s process, and any action
in violation of this Subsection (f) shall be void.

(g) Successors and Assigns. This Agreement will be binding upon and inure to the
benefit of the Executive and his beneficiaries, heirs, executors, successors and
assigns; and the Company, its affiliates, subsidiaries, successors and assigns.

 

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(h) Confidentiality of Agreement. Executive agrees to keep strictly confidential
the existence and terms of this Agreement and to not disclose them to any person
or entity, other than to Executive’s immediate family, attorney, financial
advisor, or except through confidential due diligence investigations or as
required by law or except with respect to matters that have been publicly
disclosed by the Company in filings with the Securities and Exchange Commission
or otherwise publicly disclosed by the Company .

(i) Section 409A. This Agreement is intended to comply with the requirements of
Section 409A of the Internal Revenue Code of 1986, as amended, and shall be
interpreted accordingly.

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized representative, as of the day and year
first above written.

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED and PRIMUS TELECOMMUNICATIONS,
INC.

 

By  

    /s/ THOMAS R. KLOSTER

     Date:   

9/17/2010

  

Title:  

Acting Chief Executive Officer

           THOMAS R. KLOSTER           

              /s/ THOMAS R. KLOSTER

     Date:   

9/17/2010

  

 

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EXHIBIT A

Release Agreement

This Release Agreement (the “Release Agreement”) is made this      day of
            , 2010, by and between THOMAS R. KLOSTER (the “Executive”) and
PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED and PRIMUS TELECOMMUNICATIONS,
INC., both Delaware corporations (together, the “Company”)

Recitals:

Executive and the Company are parties to a Termination Agreement dated
            , 2010 (the “Termination Agreement”) pursuant to which Executive is
entitled to certain payments and benefits pursuant to Section 2(a) of the
Termination Agreement in consideration for granting a release of claims to the
Company and the parties wish to state the terms of such release in this Release
Agreement.

Now Therefore, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Executive and the Company hereby agree as
follows:

1. Release of Claims. In consideration for Executive’s right to receive the
payments and benefits in the amount, manner and time of payment described in
Section 2(a) of the Termination Agreement, Executive hereby agrees to the
following release of claims (the “Release”):

(a) Release. Executive, for himself and his heirs, executors and administrators,
voluntarily, knowingly and willingly agrees to release the Company, together
with its direct and indirect parents, subsidiaries, affiliates, predecessors and
successors and assigns, past and present directors, managers, officers,
executives, agents, clients, accountants, attorneys, and servants (collectively,
the “Company Releasees”) from any and all claims, charges, complaints, promises,
agreements, controversies, liens, demands, causes of action, obligations,
damages, expenses (including attorneys’ fees and costs) and liabilities of any
nature whatsoever (“Claims”), known or unknown, suspected or unsuspected, which
Executive, or his heirs, executors or administrators ever had, now have, or may
hereafter claim to have against any of the Company Releasees arising out of or
relating to: (i) any matter, cause or thing whatsoever arising from the
beginning of time to the date of this Release, (ii) Executive’s employment
relationship with the Company or any of the Company Releasees or the separations
thereof including, but not limited to, any such rights or claims arising under
any statute or regulation including the Age Discrimination in Employment Act of
1967, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991,
the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of
1993, the Employee Retirement Income Security Act of 1974, the Delaware Equal
Accommodations Law, the Virginia Human Rights Act, each as amended, or any other
federal, state or local law, regulation, ordinance or common law, or (ii) any
policy, agreement, understanding or promise,

 

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written or oral, formal or informal, between Executive on the one hand and the
Company or any of the Company Releasees on the other hand. Executive
acknowledges that the amounts referred to in Section 2 of the Termination
Agreement are in lieu of and in full satisfaction of any amounts that might
otherwise be payable under any contract, agreement (oral or written), plan,
policy or practice, past or present, of the Company or any of the Company
Releasees; provided, however, that notwithstanding the foregoing, nothing
contained in this Release shall in any way terminate, modify or release the
rights, if any, that the Executive may have, from and after the date the Release
is executed, under the Company’s Primary Directors & Officers Liability Policy,
the Excess Directors & Officers Liability Policy, and the Run-Off Endorsement,
provided that the foregoing shall not preclude the amendment or termination of
such policies from time to time in accordance with their respective terms
(collectively, the “Excluded Claims”).

(b) Representations of Executive. Executive hereby makes the following
representations and acknowledgements:

(i) Executive understands and agrees that, except for the Excluded Claims, he
has knowingly relinquished, waived and forever released any and all rights to
any personal recovery in any action or proceeding that may be commenced on
Executive’s behalf arising out of the Claims that are released under the
Release, including, without limitation, Claims for back pay, front pay,
liquidated damages, compensatory damages, general damages, special damages,
punitive damages, exemplary damages, costs, expenses and attorneys’ fees.

(ii) Executive represents that he has no claims, complaints, charges or lawsuits
pending against the Company or any of the Company Releasees.

(iii) Executive acknowledges and agrees that he has had a sufficient period of
time of up to 21 days within which to review the Termination Agreement and this
Release, including, without limitation, with Executive’s attorney, and that
Executive has done so to the extent desired. If Executive timely signs and
returns this Agreement, he will have seven days following the date on which he
signed the Agreement to revoke it.

(iv) Executive understands and agrees that the severance and benefits set forth
in Section 2 of the Termination Agreement are the only consideration for the
Executive’s signing the Release and no promise or inducement has been offered or
made to induce the Executive to sign the Release, except as expressly set forth
therein.

(v) Executive understands and agrees that the Release shall not become effective
until the 8th day after the Executive signs this Release and the Executive may
at any time before the effective date revoke the Release by hand delivering or
sending via overnight mail a written notice of revocation to the Company: Primus
Telecommunications Group, Incorporated, 7901 Jones Branch Drive, Suite 900,
McLean, VA 22102, Attention: General Counsel. If Executive elects to revoke the
Release as provided above, this Release Agreement and the Termination Agreement
shall automatically terminate without liability or obligation to either party
and the Separation Agreement shall remain in full force and effect without
amendment or modification in accordance with its respective terms.

 

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2. Choice of Law. This Agreement shall be deemed a contract made under, and for
all purposes the validity, interpretation, construction and performance of this
Agreement shall be governed by, the laws of the State of Delaware, without
reference to principles of conflicts of laws, except to the extent superseded by
applicable federal law.

3. Successors and Assigns. This Agreement will be binding upon and inure to the
benefit of the Company Releases and their successors and assigns.

IN WITNESS WHEREOF, each of the parties has executed this Release Agreement, in
the case of the Company by its duly authorized representative, as of the day and
year first above written.

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED and PRIMUS TELECOMMUNICATIONS,
INC.

 

By  

 

     Date:   

 

  

Title:  

 

           THOMAS R. KLOSTER           

 

     Date:   

 

  

 

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