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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 27, 1996

REGISTRATION NO. 333-
===============================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 4813 54-1708481
(PRIMARY STANDARD (I.R.S. EMPLOYER
(STATE OR OTHER INDUSTRIAL IDENTIFICATION NO.)
JURISDICTION OF CLASSIFICATION CODE
INCORPORATION OR NUMBER)
ORGANIZATION)

8180 GREENSBORO DRIVE
SUITE 1100
MCLEAN, VIRGINIA 22102
(703) 848-4625
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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K. PAUL SINGH
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
8180 GREENSBORO DRIVE
SUITE 1100
MCLEAN, VIRGINIA 22102
(703) 848-4625
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

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COPIES TO:
JAMES D. EPSTEIN, ESQ. DAVID J. BEVERIDGE, ESQ.
PEPPER, HAMILTON & SCHEETZ SHEARMAN & STERLING
3000 TWO LOGAN SQUARE 599 LEXINGTON AVENUE
PHILADELPHIA, PA 19103-2799 NEW YORK, NY 10022
(215) 981-4000 (212) 848-4000

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

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If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

PROPOSED
MAXIMUM
AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF OFFERING REGISTRATION
SECURITIES TO BE REGISTERED PRICE(1) FEE
- --------------------------------------------------------------------------------

Common Stock, $.01 par value.......................... $86,250,000 $29,742

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SECTION 8(A), MAY DETERMINE.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion, dated August 27, 1996

PROSPECTUS

[LOGO FOR PRIMUS TELECOMMUNICATIONS GROUP APPEARS HERE]

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED

COMMON STOCK

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All of the shares of Common Stock offered hereby are being sold by Primus
Telecommunications Group, Incorporated ("Primus" or the "Company"). Prior to
this offering, there has been no public market for the Common Stock of the
Company. It is currently estimated that the initial public offering price for
the Common Stock will be between $ and $ per share. See "Underwriting"
for a discussion of the factors considered in determining the initial public
offering price. Application will be made to have the Common Stock approved for
quotation on the Nasdaq National Market under the symbol "PRTL."

-------------

THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 9.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

Underwriting
Price to Discounts and Proceeds to
Public Commissions(1) Company(2)
- --------------------------------------------------------------------------------

Per Share.................................. $ $ $
- --------------------------------------------------------------------------------
Total(3)................................... $ $ $

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting estimated expenses of $ payable by the Company.
(3) The Company has granted the Underwriters a 30-day option to purchase up to
additional shares of Common Stock on the same terms and conditions set
forth herein, solely to cover over-allotments, if any. If such option is
exercised in full, the total Price to Public, Underwriting Discounts and
Commissions and Proceeds to Company will be $ , $ and $ ,
respectively. See "Underwriting."

-------------

The shares of Common Stock offered by this Prospectus are offered by the
Underwriters subject to prior sale, withdrawal, cancellation or modification of
the offer without notice, to delivery to and acceptance by the Underwriters and
to certain further conditions. It is expected that delivery of certificates
representing the shares of Common Stock will be made at the offices of Lehman
Brothers Inc., New York, New York on or about , 1996.

-------------

LEHMAN BROTHERS DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

, 1996.

[MAP OF WORLD SHOWING PRIMUS' NETWORK, INCLUDING SWITCH LOCATIONS (OPERATIONAL,
UNDER CONSTRUCTION AND PLANNED) AND FIBER LINKS BETWEEN SWITCH LOCATIONS
(EXISTING AND PLANNED)]

All references herein to "U.S. dollars," "dollars" or "US$" are to United
States dollars. All references to "A$" are to Australian dollars, the official
currency of Australia. All references to "(Pounds)" are to British pounds, the
official currency of the United Kingdom. All references to "Pesos" are to
Mexican pesos, the official currency of Mexico. The exchange rate of
Australian dollars was A$ to US$ 1.00 at , 1996, based on the noon
buying rate as reported by for , 1996. The exchange rate of British
pounds was (Pounds) to US$ 1.00 at , 1996, based on the noon buying
rate as reported by for , 1996. The exchange rate of Mexican Pesos was
P$ to US$ 1.00 at , 1996, based on the noon buying rate as reported by
for , 1996.

The Consolidated Financial Statements of the Company are presented in
accordance with United States generally accepted accounting principles, and
amounts originally measured in foreign currencies for all periods presented
have been translated into U.S. dollars in accordance with the methodology set
forth in Note 2 to the Consolidated Financial Statements of the Company.

ADDITIONAL INFORMATION

The Company is not currently subject to the information requirements of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"). As a
result of the Offering, the Company will be required to file reports and other
information with the Securities and Exchange Commission (the "Commission")
pursuant to the informational requirements of the Exchange Act.

The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the securities offered hereby. As permitted by the rules and
regulations of the Commission, this Prospectus, which is part of the
Registration Statement, omits certain information, exhibits, schedules and
undertakings set forth in the Registration Statement. For further information
pertaining to the Company and the securities offered hereby, reference is made
to such Registration Statement and the exhibits and schedules thereto.
Statements contained in this Prospectus as to the contents or provisions of
any documents referred to herein are not necessarily complete, and in each
instance, reference is made to the copy of the document filed as an exhibit to
the Registration Statement. The Company will issue annual and quarterly
reports. Annual reports will include audited financial statements prepared in
accordance with accounting principles generally accepted in the United States
and a report of its independent auditors with respect to the examination of
such financial statements. In addition, the Company will issue to its
securityholders such other unaudited quarterly or other interim reports as it
deems appropriate.

The Registration Statement may be inspected without charge at the office of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of
the Registration Statement may be obtained from the Commission at prescribed
rates from the Public Reference Section of the Commission at such address, and
at the Commission's regional offices located at 7 World Trade Center, 13th
Floor, New York, New York 10048, and at Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. In addition, registration
statements and certain other filings made with the Commission through its
Electronic Data Gathering, Analysis and Retrieval ("EDGAR") system are
publicly available through the Commission's site on the Internet's World Wide
Web, located at http://www.sec.gov. The Registration Statement, including all
exhibits thereto and amendments thereof, has been filed with the Commission
through EDGAR.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the financial statements and notes thereto appearing elsewhere
in this Prospectus. As used in this Prospectus, except where the context
otherwise requires, the terms "Primus" and the "Company" refer to Primus
Telecommunications Group, Incorporated and all of its subsidiaries. The
offering of the shares of Common Stock, par value $.01 per share, of the
Company (the "Common Stock") pursuant to this Prospectus is referred to as the
"Offering." Investors should carefully consider the information set forth under
the heading "Risk Factors." Unless otherwise noted, all information in this
Prospectus assumes that the Underwriters' over-allotment option has not been
exercised and has been adjusted to give effect to a -for- stock split (the
"Stock Split") and the conversion of all outstanding shares of Series A
Convertible Preferred Stock of the Company into shares of Common Stock (the
"Preferred Stock Conversion"). This Prospectus contains certain statements of a
forward-looking nature relating to future events or the future financial
performance of the Company. Prospective investors are cautioned that such
statements are only predictions and that actual events or results may differ
materially. In evaluating such statements, prospective investors should
specifically consider the various factors identified in this Prospectus,
including the matters set forth under the caption "Risk Factors" that could
cause actual results to differ materially from those indicated by such forward-
looking statements.

THE COMPANY

Primus is a multinational telecommunications company that focuses on the
provision of international and domestic long distance services. The Company
seeks to capitalize on the increasing business and consumer demand for
international telecommunications services generated by the globalization of
world economies and the worldwide trend toward deregulation of the
telecommunications sector. The Company has targeted North America, Asia-Pacific
and Europe as its primary service regions (the "Targeted Regions"). The Company
currently provides services in the United States, Australia and the United
Kingdom (the "Operating Hubs"), which are the most deregulated countries within
the Targeted Regions and which serve as regional hubs for expansion into
additional markets within the Targeted Regions. As part of the execution of
this strategy, the Company has commenced operations in Canada and Mexico. The
Company expects to expand into additional markets as deregulation occurs and
the Company is permitted to offer a full range of switched public telephone
services.

For the year ended December 31, 1995 and the six months ended June 30, 1996,
the Company had pro forma net revenue of approximately $126 million and $92
million, respectively, after giving effect to the Company's March 1996
acquisition of Axicorp Pty., Ltd. ("Axicorp"), the fourth largest
telecommunications provider in Australia. For the three months ended June 30,
1996, the Company had net revenue of approximately $48 million. As of July 31,
1996, the Company had 221 full-time employees and approximately 24,000
customers.

The Company targets, on a retail basis, small- and medium-sized businesses
with significant international long distance traffic and ethnic residential
consumers and, on a wholesale basis, other telecommunications carriers and
resellers with international traffic. The Company provides a broad array of
competitively priced telecommunications services, including international long
distance to over 200 countries, domestic long distance, and international and
domestic private networks, as well as local switched and cellular services in
Australia, prepaid and calling cards in the United States and the United
Kingdom and toll-free services in the United States. The Company markets its
services through a variety of sales channels, including direct sales,
independent agents, direct marketing and associations.

The Company is implementing its international telecommunications network (the
"Network") to reduce and control costs, improve service reliability and
increase flexibility to introduce new products and services. The Network
currently consists of an international gateway switch in Washington, D.C.,
points-of-presence in New York and London, and leased transmission capacity
connecting to the networks of other international and domestic carriers. The
Company also has correspondent agreements with the government-owned Postal,
Telephone and Telegraph Companies ("PTTs") in India, Iran and Honduras. The
Company has installed three additional international gateway switches in
Melbourne, Sydney and Toronto, has acquired two international gateway switches
for installation in New York and Los Angeles and three other switches for
installation in Adelaide, Brisbane and Perth, all eight of which are expected
to be operational by the end of the first quarter of 1997. The Company expects
to acquire an additional switch for installation in London and additional
switches and points-of-presence for installation in other major metropolitan
areas of the Targeted Regions. The Company expects to connect its gateway
switches between Sydney and Los Angeles with a trans-Pacific fiber-optic cable
link by the end of the first quarter of 1997. The Company also intends to
purchase additional switches and ownership in international fiber-optic cables,
install international gateway satellite earth station facilities, lease
additional transmission capacity and, where necessary, obtain additional
correspondent agreements.

The Company's objective is to become a leading provider of international and
domestic long distance voice, data and value-added services to its target
customers. The Company's strategy to achieve this objective is to focus on
providing a full range of competitively priced, high-quality services in the
Targeted Regions. Key elements in the Company's strategy include:

. Focus on Customers with Significant International Long
Distance Usage. The Company's primary focus is providing
telecommunications services to small- and medium-sized
businesses with significant international long distance
traffic and to ethnic residential consumers and, on a
wholesale basis, to other telecommunications carriers and
resellers with international traffic. The Company believes
that the international long distance market offers an
attractive business opportunity given its size and, as
compared to the domestic long distance market, its higher
revenue per minute, gross margin and expected growth rate.
Although the Company expects to obtain a significant
percentage of its revenues from offering international long
distance services, the Company currently generates, and
expects to continue to generate over the near term, a greater
percentage of net revenue from domestic long distance
services in an effort to build network traffic more quickly.

. Pursue Early Entry into Selected Deregulating Markets. Primus
seeks to be an early entrant into selected overseas
deregulating telecommunications markets where it believes
there is significant demand for international long distance
services, substantial growth and profit potential, and the
opportunity to establish a customer base and achieve name
recognition. The Company intends to use each Operating Hub as
a base to expand into deregulating markets within the
Targeted Regions and will focus its expansion efforts on
major metropolitan areas with a high concentration of target
customers with international traffic. The Company believes
that management's international telecommunications experience
will assist it in successfully identifying and launching
operations in deregulating markets.

. Implement Intelligent International Network. The Company
expects that the strategic development of the Network will
lead to reduced transmission and other operating costs as a
percentage of net revenue, reduced reliance on other carriers
and more efficient network utilization. The Network will
consist of (i) a global backbone network connecting
intelligent gateway switches in the Targeted Regions, (ii) a
domestic long distance network presence in each of the
Operating Hubs and certain additional countries within the
Targeted Regions and (iii) a combination of leased
facilities, resale arrangements and correspondent agreements.

. Deliver Quality Services at Competitive Prices. The Company
delivers high-quality services at competitive prices and
provides a high level of customer service. The Company
intends to maintain a low-cost structure in order to offer
its customers international and domestic long distance
services priced below that of its major competitors. In
addition, the Company intends to maintain strong customer
relationships through the use of trained and experienced
service representatives and the provision of customized
billing services.

. Provide a Comprehensive Package of Services. The Company
seeks to provide a comprehensive package of services to
create "one-stop shopping" for its targeted customers'
telecommunications needs, particularly for small- and medium-
sized businesses and ethnic residential consumers that prefer
a full service telecommunications provider. The Company
believes this approach strengthens its marketing efforts and
increases customer retention.

The Company acquired Axicorp, the fourth largest telecommunications provider
in Australia, in March 1996. Axicorp provides the Company early entry into the
deregulating Australian telecommunications market and will serve as the
Company's gateway to the Asia-Pacific region. Prior to the acquisition, Axicorp
was a switchless reseller of long distance, local switched and cellular
services. Since the acquisition, the Company has acquired five switches for use
in Australia, which are expected to be operational by the end of the first
quarter of 1997, and has focused on increasing the number of higher-margin,
higher-volume business customers with significant international long distance
traffic. As part of its increasing focus on business customers, the Company is
increasing Axicorp's direct sales force and reducing its reliance on marketing
through associations. The Company believes that the ongoing transformation of
Axicorp's strategy and operations to those of a facilities-based carrier
focused on the provision of international and domestic long distance services
is an example of the execution of the Company's business model. For the twelve
months ended March 31, 1996, Axicorp generated net revenue of approximately
$144 million. See "Business--Axicorp."

Primus was co-founded in 1994 by K. Paul Singh, its Chairman and Chief
Executive Officer, who formerly served as Vice President of Marketing for MCI.
Mr. Singh previously founded two other telecommunications companies, Overseas
Telecommunications, Inc. ("OTI") and the Cygnus Satellite Corporation
("Cygnus"), both of which focused on international telecommunications. OTI and
Cygnus were acquired by MCI and PanAmSat, respectively. The executive officers
of the Company and several of the other members of its management team have
substantial experience in the telecommunications and other related industries,
and have served in management positions with companies such as MCI, OTI, IBM
and M/A Com (now known as Hughes Network Systems, Inc.). See "Management--
Executive Officers, Directors and Key Employees."

On July 31, 1996, the Soros/Chatterjee Group (as defined in "Certain
Transactions") purchased an equity interest in the Company for an aggregate
purchase price of approximately $16.0 million (the "Private Equity Sale") and,
after giving effect to the Offering, will collectively beneficially own % of
the Common Stock. Additionally, on January 12, 1996, Teleglobe USA, Inc.
("Teleglobe"), invested approximately $1.46 million in the Company and, after
giving effect to the Offering, will beneficially own % of the Common Stock.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Certain Transactions."

The Company was incorporated in February 1994. The executive offices of the
Company are located at 8180 Greensboro Drive, Suite 1100, McLean, Virginia
22102 and its telephone number is (703) 848-4625.

THE OFFERING

Common Stock Offered by the
Company..................... shares
Common Stock Outstanding af-
ter the Offering............ shares (1)
Use of Proceeds.............. Up to $50 million of the net proceeds will be
used to expand the Network, including purchasing
transmission equipment facilities and support
systems, international fiber capacity and
satellite earth station facilities for new and
existing routes. The remaining net proceeds will
be used to fund operating losses and for working
capital and other general corporate purposes.
The net proceeds also may be used for
investments in potential joint ventures,
strategic alliances or acquisitions, although
the Company is not currently party to any
agreement or understanding relating to any such
transaction. See "Use of Proceeds."
Proposed Nasdaq National
Market System Symbol........ PRTL

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(1) Excludes shares of Common Stock which may be issued upon exercise of
outstanding options granted pursuant to the Company's employee stock
option plan (the "Employee Plan") and the Company's director stock option
plan (the "Director Plan," together with the Employee Plan, the "Plans"),
and an additional shares of Common Stock reserved for issuance pursuant
to the Plans. The weighted average exercise price of all outstanding
options is $ per share. Also excludes up to shares of Common Stock
which may be issued upon exercise of certain warrants held by the
Soros/Chatterjee Group (the "Soros/Chatterjee Warrants"), assuming such
warrants were exercised on the date of the Offering at an assumed exercise
price of $ . The actual number of shares of Common Stock issuable upon
exercise of these warrants will be shares of Common Stock plus an
indeterminate number of shares having a fair market value of $10 million
as of the date of exercise. See "Management--Stock Option Plans," "Certain
Transactions--Private Equity Sale," "Description of Capital Stock--
Warrants" and Notes 8 and 13 to the Consolidated Financial Statements of
the Company.

RISK FACTORS

See "Risk Factors" beginning on page 9 for a discussion of certain
information that should be considered by prospective investors.

SUMMARY UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA

The following table presents summary unaudited pro forma consolidated
financial data and certain actual balance sheet data which has been derived
from, and should be read in conjunction with, the Company's Unaudited Pro Forma
Consolidated Statements of Operations and related notes thereto, the Company's
Consolidated Balance Sheets and related notes thereto and with "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere herein.

PRO FORMA STATEMENT OF OPERATIONS DATA:

YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
------------ ----------------------------
1995 1995 1996
------------ ------------- --------------
(IN THOUSANDS, EXCEPT SHARE AND PER
SHARE)

Net revenue......................... $125,628 $47,930 $91,783
Cost of revenue..................... 114,639 43,141 83,918
-------- ------- -------
Gross margin...................... 10,989 4,789 7,865
Operating expenses:
Selling, general and
administrative................... 12,955 5,376 8,791
Depreciation and amortization..... 1,842 879 1,098
-------- ------- -------
Total operating expenses........ 14,797 6,255 9,889
-------- ------- -------
Income (loss) from operations....... (3,808) (1,466) (2,024)
Interest expense.................... (885) (446) (473)
Interest income..................... 132 30 209
Other income (expense).............. -- -- (268)
-------- ------- -------
Income (loss) before income taxes... (4,561) (1,882) (2,556)
Income taxes........................ 124 68 743
-------- ------- -------
Net income (loss)................... $ (4,685) $(1,950) $(3,299)
======== ======= =======
Net earnings (loss) per common and
common share equivalent............ $ $ $
======== ======= =======
Weighted average number of common
and common share equivalents
outstanding........................
======== ======= =======

AS OF JUNE 30, 1996
-----------------------------------------
PRO FORMA
ACTUAL PRO FORMA (1) AS ADJUSTED(2)
------------ ------------- --------------
(IN THOUSANDS)

BALANCE SHEET DATA:
Cash and cash equivalents........... $ 4,398 $ $
Total assets........................ 62,297
Total long-term obligations......... 16,929
Stockholders' equity (deficit)...... 11,800

- --------
(1) After giving effect to the Private Equity Sale.
(2) After giving effect to the Private Equity Sale and the sale of shares of
Common Stock offered hereby (assuming an initial public offering price of $
per share), less underwriting discounts, commissions, and estimated
expenses of the Offering payable by the Company.

RISK FACTORS

In addition to the other information contained in this Prospectus, the
following risk factors should be considered carefully in evaluating the
Company and its business before purchasing the shares of the Common Stock
offered hereby.

LIMITED OPERATING HISTORY; ENTRY INTO DEVELOPING MARKETS

The Company was founded in February 1994 and began generating operating
revenues in March 1995. Axicorp, the Company's principal operating subsidiary,
was acquired in March 1996. The Company has generated only limited net revenue
and has limited experience in operating its business. In addition, the Company
intends to enter markets where it has limited or no operating experience.
Furthermore, in many of the Company's target markets, the Company intends to
offer services that have previously been provided only by the local PTT.
Accordingly, there can be no assurance that the Company's future operations
will generate operating or net income, and the Company's prospects must
therefore be considered in light of the risks, expenses, problems and delays
inherent in establishing a new business in a rapidly changing industry. See
"Selected Financial Data" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

MANAGING RAPID GROWTH

The Company's strategy of continuing its growth and expansion has placed,
and is expected to continue to place, a significant strain on the Company's
management, operational and financial resources and increased demands on its
systems and controls. The Company plans to develop the Network by adding
switches, cable and satellite facilities, expand its operations within the
United States, Australia and the United Kingdom, and expand into selected
additional markets within the Targeted Regions when business and regulatory
conditions warrant. In order to manage its growth effectively, the Company
must continue to implement and improve its operational and financial systems
and controls, purchase and utilize other transmission facilities, and expand,
train and manage its employee base. Inaccuracies in the Company's forecasts of
traffic could result in insufficient or excessive transmission facilities and
disproportionate fixed expenses. There can be no assurance that the Company
will be able to develop a facilities-based network or expand within its target
markets at the rate presently planned by the Company, or that the existing
regulatory barriers to such expansion will be reduced or eliminated. As the
Company proceeds with its development, there will be additional demands on the
Company's customer support, sales and marketing and administrative resources
and network infrastructure. There can be no assurance that the Company's
operating and financial control systems and infrastructure will be adequate to
maintain and effectively manage future growth. The failure to continue to
upgrade the administrative, operating and financial control systems or the
emergence of unexpected expansion difficulties could materially adversely
affect the Company's business, results of operations and financial condition.

HISTORICAL AND FUTURE NET LOSSES

The Company incurred net losses in 1994 and 1995 and had an accumulated
deficit of approximately $6.2 million as of June 30, 1996. Although the
Company has experienced net revenue growth in each of its last six quarters,
such growth should not be considered to be indicative of future net revenue
growth, if any. The Company expects its net losses to increase as the Company
uses the proceeds of the Offering to accelerate the expansion of its
operations and build-out of the Network. There can be no assurance that the
Company's revenue will grow or be sustained in future periods or that the
Company will be able to achieve profitability in any future period. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

NEED FOR ADDITIONAL FINANCING

The Company believes that the net proceeds from the Offering, together with
the net proceeds from the Private Equity Sale, borrowing capacity under an
expected line of credit, available capital lease financing and cash flow from
operations will be sufficient to meet the Company's working capital, capital
expenditure and other

cash needs for the next 18 months. The Company, however, will need to raise
additional capital from public or private equity or debt sources in order to
finance its future growth, including financing the further construction of the
Network and expanding service within existing markets and to new markets,
which can be capital intensive, as well as its unanticipated working capital
needs and capital expenditure requirements. Furthermore, the Company may need
to raise additional funds in order to take advantage of unanticipated
opportunities, including more rapid international expansion or acquisitions
of, investments in or strategic alliances with, companies that are
complementary to the Company's current operations, or to develop new products
or otherwise respond to unanticipated competitive pressures. There can be no
assurance that the Company will be able to raise such capital on satisfactory
terms or at all. If the Company decides to raise additional funds through the
incurrence of debt, it would likely become subject to restrictive financial
covenants. In the event that the Company is unable to obtain such additional
capital or is unable to obtain such additional capital on acceptable terms,
the Company may be required to reduce the scope of its expansion, which could
adversely affect the Company's business, results of operations and financial
condition and its ability to compete. Additionally, if additional funds are
raised through the issuance of equity securities, the percentage ownership of
the Company's then current stockholders would be reduced and, if such equity
securities take the form of preferred stock, the holders of such preferred
stock may have rights, preferences or privileges senior to those of holders of
Common Stock. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources" and "Description
of Capital Stock--Preferred Stock."

INTENSE DOMESTIC AND INTERNATIONAL COMPETITION

The long distance telecommunications industry is intensely competitive and
is significantly influenced by the marketing and pricing decisions of the
larger industry participants. In most countries, the industry has relatively
limited barriers to entry with numerous entities competing for the same
customers. Customers frequently change long distance providers in response to
the offering of lower rates or promotional incentives by competitors.
Generally, the Company's customers can switch carriers at any time. The
Company believes that competition in all of its markets is likely to increase
and that competition in non-United States markets is likely to become more
similar to competition in the United States market over time as such non-
United States markets continue to experience deregulatory influences. In each
of its Targeted Regions, the Company competes primarily on the basis of price
(particularly with respect to its sales to other carriers), and also on the
basis of customer service and its ability to provide a variety of
telecommunications products and services. There can be no assurance that the
Company will be able to compete successfully in the future.

Many of the Company's competitors are significantly larger, have
substantially greater financial, technical and marketing resources and larger
networks than the Company and a broader portfolio of services, control
transmission lines and have strong name recognition and loyalty, long-standing
relationships with the Company's target customers, and economies of scale
which can result in a lower cost structure for transmission and related costs.
These competitors include, among others, AT&T, MCI, Sprint, WorldCom, Frontier
and LCI in the United States; Telstra, Optus and AAPT in Australia; and
British Telecom, Mercury, AT&T, WorldCom, Sprint and ACC in the United
Kingdom. The Company also competes with numerous other long distance
providers, some of which focus their efforts on the same customers targeted by
the Company. In addition to these competitors, recent and pending deregulation
in various countries may encourage new entrants. For example, as a result of
the recently enacted Telecommunications Act of 1996 (the "1996
Telecommunications Act") in the United States, once certain conditions are
met, Regional Bell Operating Companies ("RBOCs") will be allowed to enter the
domestic long distance market, AT&T, MCI and other long distance carriers will
be allowed to enter the local telephone services market, and any entity
(including cable television companies and utilities) will be allowed to enter
both the local service and long distance telecommunications markets. Increased
competition in the United States as a result of the foregoing, and other
competitive developments, including entry by Internet service providers into
the long-distance market, could have an adverse effect on the Company's
business, results of operations and financial condition. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Business--Competition" and "Business--Government Regulation."

DEPENDENCE ON TRANSMISSION FACILITIES-BASED CARRIERS

Telephone calls made by the Company's customers are connected through
transmission lines that the Company leases under a variety of arrangements with
transmission facilities-based long distance carriers, many of which are, or may
become, competitors of the Company. The Company's ability to maintain and
expand its business is dependent upon whether the Company continues to maintain
favorable relationships with the transmission facilities-based carriers from
which the Company leases transmission lines. Although the Company believes that
its relationships with carriers generally are satisfactory, the deterioration
or termination of the Company's relationships with one or more of those
carriers could have a material adverse effect upon the Company's cost
structure, service quality, Network diversity, results of operations and
financial condition.

Presently, most transmission lines used by the Company are obtained on a per-
call (or usage) basis, subjecting the Company to unanticipated changes such as
price increases and service cancellations. Currently, usage rates generally are
less than the rates the Company charges its customers for connecting calls
through these lines. To the extent these variable costs increase, the Company
may experience reduced or, in certain circumstances, negative margins for some
services. As its traffic volume increases between particular international
markets, the Company expects to cease using variable usage arrangements and
enter into fixed monthly or longer-term leasing arrangements, subject to
obtaining any requisite authority. To the extent the Company does so, and
incorrectly projects traffic volume in a particular geographic area, the
Company would experience higher fixed costs without the increased revenue.
Moreover, certain of the vendors from whom the Company leases transmission
lines, including RBOCs and other Local Exchange Carriers ("LECs") in the United
States, currently are subject to tariff controls and other price constraints
which in the future may be changed. Regulatory proposals are pending that may
affect the prices charged by the RBOCs and other LECs to the Company, which
could have a material adverse effect on the Company's margins, business,
financial condition and results of operations. See "--Potential Adverse Effects
of Regulation" and "Business--Government Regulation."

RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS

A key component of the Company's strategy is its planned expansion in
international markets. In many international markets, the existing carrier will
control access to the local networks, enjoy better brand recognition and brand
and customer loyalty, and have significant operational economies, including a
larger backbone network and correspondent agreements with PTTs. Moreover, the
incumbent may take many months to allow competitors, including the Company, to
interconnect to its switches within the target market. Pursuit of international
growth opportunities may require significant investments for an extended period
before returns, if any, on such investments are realized. In addition, there
can be no assurance that the Company will be able to obtain the permits and
operating licenses required for it to operate, obtain access to local
transmission facilities or to market, sell and deliver competitive services in
these markets.

In addition to the uncertainty as to the Company's ability to expand its
international presence, there are certain risks inherent in doing business on
an international level, such as unexpected changes in regulatory requirements,
tariffs, customs, duties and other trade barriers, difficulties in staffing and
managing foreign operations, problems in collecting accounts receivable,
political risks, fluctuations in currency exchange rates, foreign exchange
controls which restrict or prohibit repatriation of funds, technology export
and import restrictions or prohibitions, delays from customs brokers or
government agencies, seasonal reductions in business activity during the summer
months in Europe and certain other parts of the world, and potentially adverse
tax consequences resulting from operating in multiple jurisdictions with
different tax laws, which could materially adversely impact the Company's
international operations. A significant portion of the Company's net revenue
and expenses is denominated, and is expected to continue to be denominated, in
currencies other than U.S. dollars, and changes in exchange rates may have a
significant effect on the Company's results of operations. In addition, the
Company's business could be adversely affected by a reversal in the current
trend toward deregulation of telecommunications carriers. In Mexico, and in
certain other countries into which the Company may choose to expand in the
future, the Company may need to enter into a joint venture or other strategic

relationship with one or more third parties in order to successfully conduct
its operations (often with the PTT or other dominant carrier in a developing
country). There can be no assurance that such factors will not have a material
adverse effect on the Company's future operations and, consequently, on the
Company's business, results of operations and financial condition, or that the
Company will not have to modify its current business practices. In addition,
there can be no assurance that laws or administrative practices relating to
taxation, foreign exchange or other matters of countries within which the
Company operates will not change. Any such change could have a material
adverse effect on the Company's business, financial condition and results of
operations.

DEPENDENCE ON EFFECTIVE INFORMATION SYSTEMS

To complete its billing, the Company must record and process massive amounts
of data quickly and accurately. While the Company believes its management
information system is currently adequate, it will have to grow as the
Company's business expands and to change as new technological developments
occur. The Company expects to upgrade many of its accounting systems within
the upcoming 12-month period. The Company believes that the successful
implementation and integration of new information systems and backroom support
will be important to its continued growth, its ability to monitor and control
costs, to bill customers accurately and in a timely fashion and to achieve
operating efficiencies. There can be no assurance that the Company will not
encounter delays or cost-overruns or suffer adverse consequences in
implementing these systems. See "Business--Management Information and Billing
Systems." Any such delay or other malfunction of the Company's management
information systems could have a material adverse effect on the Company's
business, financial condition and results of operations.

RISKS OF INDUSTRY CHANGES AFFECTING COMPETITIVENESS AND FINANCIAL RESULTS

The international telecommunications industry is changing rapidly due to
deregulation, privatization of PTTs, technological improvements, expansion of
telecommunications infrastructure and the globalization of the world's
economies. There can be no assurance that one or more of these factors will
not vary in a manner that could have a material adverse effect on the Company.
In addition, deregulation in any particular market may cause such market to
shift unpredictably. There can be no assurance that the Company will be able
to compete effectively or adjust its contemplated plan of development to meet
changing market conditions.

The telecommunications industry generally is in a period of rapid
technological evolution, marked by the introduction of new product and service
offerings and increasing satellite transmission capacity for services similar
to those provided by the Company. Potential developments that could adversely
affect the Company if not anticipated or appropriately responded to include
improvements in transmission equipment, development of switching technology
allowing voice/data/video multimedia transmission simultaneously and
commercial availability of Internet-based domestic and international switched
voice/data/video services at prices lower than comparable services offered by
the Company. The Company's profitability will depend on its ability to
anticipate, access and adapt to rapid technological changes and its ability to
offer, on a timely and cost-effective basis, services that meet evolving
industry standards. There can be no assurance that the Company will be able to
access or adapt to such technological changes at a competitive price, maintain
competitive services or obtain new technologies on a timely basis or on
satisfactory terms.

DEVELOPMENT OF THE NETWORK

The Company has only recently begun operating the Network. The long-term
success of the Company is dependent upon its ability to design, implement,
operate, manage and maintain the Network, activities in which the Company has
limited experience. In expanding the Network, the Company will incur
substantial indebtedness and additional fixed operating costs. There can be no
assurance that the Network can

be completed in a timely manner or operated efficiently. See "Business--
Network." Any failure by the Company to properly design, implement, operate,
manage or maintain the Network could have a material adverse effect on the
Company's business, results of operations and financial condition. See
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations" and "Business."

DEPENDENCE ON KEY PERSONNEL

The Company is dependent on the efforts of its management team and its key
technical, marketing and sales personnel, particularly those of K. Paul Singh,
its Chairman and Chief Executive Officer. The loss of services of one or more
of these key individuals, particularly Mr. Singh, could materially and
adversely affect the business of the Company and its future prospects. The
Company has entered into an employment agreement with Mr. Singh, which expires
on May 30, 1999. The Company maintains key person life insurance on the life
of Mr. Singh, but not on the lives of any other officer or director. The
Company's future success will also depend on its ability to attract and retain
additional key management, technical and sales personnel required in
connection with the growth and development of its business. Competition for
qualified employees and personnel in the telecommunications industry is
intense, particularly in non-U.S. markets and, from time to time, there are a
limited number of persons with knowledge of and experience in particular
sectors of the telecommunications industry. There can be no assurance that the
Company will be successful in attracting and retaining such executives and
personnel. The loss of the services of key personnel, or the inability to
attract additional qualified personnel, could have a material adverse effect
on the Company's results of operations, development efforts and ability to
expand. See "Management."

POTENTIAL ADVERSE EFFECTS OF REGULATION

As a multinational telecommunications company, Primus is subject to varying
degrees of regulation in each of the jurisdictions in which it provides its
services. Local laws and regulations, and the interpretation of such laws and
regulations, differ significantly among the jurisdictions in which the Company
operates. There can be no assurance that future regulatory, judicial and
legislative changes will not have a material adverse effect on the Company,
that domestic or international regulators or third parties will not raise
material issues with regard to the Company's compliance or noncompliance with
applicable regulations or that regulatory activities will not have a material
adverse effect on the Company. Certain risks regarding the regulatory
framework in the principal jurisdictions in which the Company provides its
services are briefly described below.

United States. In the United States, the provision of the Company's services
is subject to the provisions of the Communications Act of 1934, as amended
(the "Communications Act"), the 1996 Telecommunications Act and the Federal
Communications Commission (the "FCC") regulations thereunder, as well as the
applicable laws and regulations of the various states administered by the
relevant state public service commission ("PSCs"). The recent trend in the
United States, for both federal and state regulation of telecommunications
service providers, has been in the direction of reduced regulation. Although
this trend facilitates market entry and competition by multiple providers, it
has also given AT&T, the largest international and domestic long distance
carrier in the United States, increased pricing and market entry flexibility
that has permitted it to compete more effectively with smaller carriers, such
as the Company. In addition, the recently enacted 1996 Telecommunications Act
has opened the Company's U.S. market to increased competition. There can be no
assurance that future regulatory, judicial and legislative changes in the
United States will not have a material adverse effect on the Company.

Despite recent trends toward deregulation, the FCC and relevant state PSCs
continue to exercise extensive authority to regulate ownership of transmission
facilities, provision of services and the terms and conditions under which the
Company's services are provided. In addition, the Company is required by
federal and state law and regulations to file the tariffs listing the rates,
terms and conditions of the services it provides. Any failure to maintain
proper federal and state tariffs or certification or any finding by the
federal or state agencies that the Company is not operating under permissible
terms and conditions may result in an enforcement action or investigation,
either of which could have a material adverse effect on the Company.

To originate and terminate calls in connection with providing their
services, long distance carriers such as the Company must purchase "access"
from the LECs or Competitive Local Exchange Carriers ("CLECs"). Access charges
represent a significant portion of the Company's cost of revenue and,
generally, such access charges are regulated by the FCC. The FCC has
informally announced that it intends, in the near future, to undertake a
comprehensive review of its regulation of LEC access charges to better account
for increasing levels of local competition. Under alternative access charge
rate structures being considered by the FCC, LECs would be permitted to allow
volume discounts in the pricing of access charges. While the outcome of these
proceedings is uncertain, if these rate structures are adopted, many long
distance carriers, including the Company, could be placed at a significant
cost disadvantage to larger competitors.

The FCC and certain state agencies also impose prior approval requirements
on transfers of control, including pro forma transfers of control and
corporate reorganizations, and assignments of regulatory authorizations. The
FCC also regulates the nature and extent of foreign ownership and foreign
carrier affiliations of the Company. Such requirements may delay, prevent or
deter a change in control of the Company.

Regulatory requirements pertinent to the Company's operations have recently
changed and will continue to change as a result of federal legislation, court
decisions, and new and revised policies of the FCC and state public service
commissions. Among other things, such changes may alter the ability of the
Company to compete with other service providers, to continue providing the
same services, or introduce services currently planned for the future. The
impact on the Company's operations of any changes in applicable regulatory
requirements cannot be predicted.

Australia. In Australia, the provision of the Company's services is subject
to federal regulation pursuant to the Telecommunications Act 1991 of Australia
(the "Telecom Act") and federal regulation of anticompetitive practices
pursuant to the Trade Practices Act 1974. In addition, other federal
legislation, various regulations pursuant to delegated authority and
legislation, ministerial declarations, codes, directions, licenses, statements
of Commonwealth Government policy and court decisions affecting
telecommunications carriers also apply to the Company. There can be no
assurance that future declarations, codes, directions, licenses, regulations,
and judicial and legislative changes will not have a material adverse effect
on the Company.

The Australian telecommunications industry continues to undergo
deregulation, and it is currently expected that the Australian Government will
license additional carriers, including the Company, to own transmission
facilities in July 1997. Both Telstra and Optus have requested that the
Australian Government defer such date, and there can be no assurance that the
deregulatory process will proceed in accordance with the Australian
Government's announced timetable. Any delay in such deregulatory process or in
the granting of a license to the Company would prohibit the Company from
owning transmission facilities in Australia and thereby limit the Company's
ability to realize additional efficiencies expected to result from the
incorporation of owned facilities into its Network.

The Australian Telecommunications Authority ("AUSTEL"), as the federal
telecommunications regulatory authority, currently has control over a broad
range of issues affecting the operation of the Australian telecommunications
industry including the licensing of carriers, the promotion of competition,
consumer protection and technical matters. As a reseller of domestic, local
and long distance service, cellular service, and international service, the
Company must comply with the terms of the class license that applies to all
service providers until July 1997 or later, if the deregulatory process in
Australia is delayed. The Company currently plans to become a licensed general
carrier as soon as it is practicable to do so. As a general licensed carrier,
the Company will be required to comply with the terms of its own license and
would be subject to greater regulatory controls such as in areas of regulation
of connectivity, provision of access to service providers, land access and
contributions to the net cost of universal service throughout Australia (to
provide telecommunications services at reasonable prices to remote sections of
that country) applicable to licensed facilities-based carriers.

There can be no assurance that a change in government, in government policy
in relation to telecommunications or competition, in AUSTEL's enforcement of
the Telecom Act, in government policy for

the restructuring of the various regulatory authorities that is expected to
occur as part of the July 1997 changes, or a deferral of the implementation of
the Australian Government's deregulation policy (particularly due to current
requests for a deferral by Telstra and Optus), will not have a material
adverse effect on the Company's business, results of operations or financial
condition.

United Kingdom. In the United Kingdom, the provision of the Company's
services is subject to and affected by regulations introduced by the U.K.
telecommunications regulatory authority, the Office of Telecommunications
("Oftel") under the Telecommunications Act of 1984 (the "U.K.
Telecommunications Act"). Since the break up of the U.K. telecommunications
duopoly consisting of British Telecom and Mercury in 1991, it has been the
stated goal of Oftel to create a competitive marketplace from which detailed
regulation could eventually be withdrawn. The regulatory regime currently
being introduced by Oftel has a direct and material effect on the ability of
the Company to conduct its business. Oftel has imposed mandatory rate
reductions on British Telecom in the past, which reductions are expected to
continue for the foreseeable future, and this has had, and may continue to
have, the effect of reducing the prices the Company can charge its customers.
The Company currently holds a license to provide international simple resale
("ISR") services over leased lines to all international points from the United
Kingdom. In addition, the Company (along with approximately 45 other
applicants including AT&T, WorldCom, and ACC) has recently made application to
the U.K. Secretary for Trade and Industry for a license to provide
international facilities based voice services. Although the Company currently
expects such license to be granted by the end of the first quarter of 1997,
there can be no assurance that the Company will be granted the license by such
time, or at all. Failure to obtain such license would prevent the Company from
providing facilities based services in the United Kingdom and would have an
adverse effect on the Company's ability to expand its operations. In addition,
there can be no assurance that future changes in regulation and government
will not have a material adverse effect on the Company's business, results of
operations and financial condition.

Other Jurisdictions. The Company currently provides limited services in
Mexico and Canada, and intends to expand its operations into other
jurisdictions as such markets deregulate and the Company is able to offer a
full range of switched public telephone services to its customers. In
addition, in countries which enact legislation intended to deregulate the
telecommunications sector, there may be significant delays in the adoption of
implementing regulations and uncertainties as to the implementation of the
deregulatory programs which could delay or make more expensive the Company's
entry into such additional markets. The ability of the Company to enter a
particular market and provide telecommunications services, particularly in
Mexico and other developing countries, is dependent upon the extent to which
the regulations in a particular market permit new entrants. In some countries,
regulators may make subjective judgments in awarding licenses and permits,
without any legal recourse for unsuccessful applicants. In the event the
Company is able to gain entry to such a market, no assurances can be given
that the Company will be able to provide a full range of services in such
market, that it will not have to significantly modify its operations to comply
with changes in the regulatory environment in such market, or that any such
changes will not have a material adverse effect on the Company's business,
results of operations or financial condition.

CONTROL OF THE COMPANY

After completion of this Offering, the executive officers and directors of
the Company will continue to beneficially own shares of Common Stock,
representing % of the Common Stock, including options to purchase shares
of Common Stock exercisable on or prior to October , 1996. The executive
officers and directors have also been granted options to purchase an
additional shares of Common Stock which vest after October , 1996. Of
these amounts, Mr. K. Paul Singh, the Company's Chairman and Chief Executive
Officer owns shares of Common Stock and options to purchase an additional
shares, none of which vests and is exercisable before October , 1996. In
addition, the Soros/Chatterjee Group owns shares and has the right to
acquire an additional shares (assuming they exercise their rights to
acquire these shares at the time of the consummation of the Offering). As a
result, if they act as a group, the executive officers, directors and the
Soros/Chatterjee Group will exercise significant influence over such matters
as the

election of the directors of the Company, amendments to the Company's charter,
other fundamental corporate transactions such as mergers, asset sales, and the
sale of the Company, and otherwise the direction of the Company's business and
affairs. See "Principal Stockholders" and "Description of Capital Stock."

HOLDING COMPANY STRUCTURE; RELIANCE ON SUBSIDIARIES FOR DIVIDENDS

Primus is a holding company, the principal assets of which are its operating
subsidiaries in the United States, Australia, the United Kingdom and Mexico.
As a holding company, the Company's internal sources of funds to meet its cash
needs, including payment of expenses, are dividends and other permitted
payments from its direct and indirect subsidiaries, as well as its own credit
arrangements. The ability of the Company's operating subsidiaries to pay
dividends or make other payments to Primus may be restricted by the terms of
various credit arrangements entered into by such operating subsidiaries, as
well as statutory and other legal restrictions, and such payments may have
adverse tax consequences. The failure to pay any such dividends or make any
such other payments would restrict Primus's ability to utilize cash flow from
one subsidiary to cover shortfalls in working capital at another subsidiary
and could otherwise have a material adverse effect upon the Company's
business, financial condition and results of operations.

ABSENCE OF PRIOR PUBLIC MARKET; DETERMINATION OF PUBLIC OFFERING PRICE;
POSSIBLE VOLATILITY OF STOCK PRICE

Prior to this Offering, there has been no public market for the Common
Stock, and there can be no assurance that following this Offering, an active
trading market will develop or, if developed, will be maintained. The initial
public offering price of the Common Stock offered hereby was determined by
negotiations between the Company and the Representatives (as herein defined)
of the Underwriters and may bear no relationship to the price at which the
Common Stock will trade after completion of this Offering. For factors
considered in determining the initial public offering price, see
"Underwriting." Historically, the market prices for securities of emerging
companies in the telecommunications industry have been highly volatile. After
completion of this Offering, the market price of the Common Stock could be
subject to significant fluctuations in response to various factors and events,
including the liquidity of the market for the Common Stock, variations in the
Company's quarterly operating results, regulatory or other changes (both
domestic and international) affecting the telecommunications industry
generally, announcements of business developments by the Company or its
competitors, the addition of customers in connection with acquisitions,
changes in the cost of long distance service or other operating costs and
changes in general market conditions.

ANTI-TAKEOVER PROVISIONS

Prior to the completion of this Offering, the Company's Amended and Restated
Certificate of Incorporation (the "Certificate of Incorporation") and Amended
and Restated By-Laws (the "By-Laws") will be amended to include certain
provisions which may have the effect of delaying, deterring or preventing a
future takeover or change in control of the Company unless such takeover or
change in control is approved by the Company's Board of Directors. Such
provisions may also render the removal of directors and management more
difficult. Specifically, the Company's Certificate of Incorporation or By-Laws
will be amended to provide for a classified Board of Directors serving
staggered three-year terms, restrictions on who may call a special meeting of
stockholders and a prohibition on stockholder action by written consent. In
addition, the Company's Board of Directors has the authority to issue up to
2,000,000 additional shares of preferred stock (the "Preferred Stock") and to
determine the price, rights, preferences, and privileges of those shares
without any further vote or actions by the stockholders. The rights of the
holders of Common Stock will be subject to, and may be adversely affected by,
the rights of the holders of any Preferred Stock that may be issued in the
future. The issuance of such additional shares of Preferred Stock, while
potentially providing desirable flexibility in connection with possible
acquisitions and serving other corporate purposes, could have the effect of
making it more difficult for a third party to acquire, or may discourage a
third party from attempting to acquire, a majority of the outstanding voting
stock of the Company. The Company has no present intention to issue such
additional shares of Preferred Stock. In addition, the Company is subject to
the anti-takeover provisions of Section 203 of the Delaware General

Corporation Law (the "DGCL"), which will prohibit the Company from engaging in
a "business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an
interested stockholder unless the business combination is approved in a
prescribed manner. The application of Section 203 also could have the effect of
delaying or preventing a change of control of the Company. Furthermore, certain
provisions of the Company's By-Laws, including provisions that provide that the
exact number of directors shall be determined by a majority of the Board of
Directors, that vacancies on the Board of Directors may be filled by a majority
vote of the directors then in office, though less than a quorum, and that limit
the ability of new majority stockholders to remove directors, all of which may
have the effect of delaying or preventing changes in control or management of
the Company, which could adversely affect the market price of the Company's
Common Stock. Additionally, certain Federal regulations require prior approval
of transfers of control which could also have the effect of delaying, deferring
or preventing a change of control. See "Business--Government Regulations." See
"Management--Classified Board of Directors," "Description of Capital Stock" and
"Business--Government Regulation."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of a substantial number of shares of Common Stock in the public market
after this Offering could adversely affect the market price of the shares of
Common Stock. In addition to the shares of Common Stock offered hereby
which will be freely tradeable, an additional shares will become eligible
for public sale beginning 180 days after the effective date of the Registration
Statement of which this Prospectus forms a part (the "Effective Date"), subject
to the provisions of Rule 144 promulgated under the Securities Act. The volume
limitations of Rule 144 will apply to the sale of all of such shares held by
affiliates of the Company. Following this Offering, sales of substantial
amounts of shares of Common Stock in the public market, or even the potential
for such sales, could adversely affect the prevailing market price of the
Common Stock and impair the Company's ability to raise capital through the sale
of equity securities. See "Principal Stockholders" and "Shares Eligible for
Future Sale."

DILUTION

Purchasers of Common Stock in this Offering will experience immediate and
substantial dilution in net tangible book value of $ per share (assuming an
initial public offering price of $ per share). See "Dilution."

USE OF PROCEEDS

The net proceeds from the Offering will be approximately $ million ($
million if the Underwriter's over-allotment option is exercised in full),
based on an assumed public offering price of $ per share, less underwriting
discounts and commissions and estimated expenses payable by the Company. Up to
$50 million of the net proceeds will be used to expand the Network, including
purchasing transmission equipment facilities and support systems,
international fiber capacity and satellite earth station facilities for new
and existing routes. The remaining net proceeds will be used to fund operating
losses and for working capital and other general corporate purposes. The net
proceeds also may be used for investments in potential joint ventures,
strategic alliances or acquisitions, although the Company is not currently
party to any agreement or understanding relating to any such transaction.

The Company also may use a portion of the net proceeds to repay certain
existing indebtedness as it matures, including A$9.0 million of indebtedness
incurred as a portion of the purchase price for Axicorp, which is interest-
free and matures February 17, 1997 subject to extension at the Company's
option for an additional year at the prime rate plus one percent.

The Company believes that the net proceeds from the Offering will be
sufficient, together with the net proceeds from the Private Equity Sale,
borrowing capacity under an expected line of credit, available capital lease
financing and cash flow from operations to meet the Company's working capital,
capital expenditure and other cash needs for the next 18 months. The Company
is currently in discussions to obtain a line of credit to provide it with
additional liquidity, although no assurance can be given that such a line of
credit can be obtained on satisfactory terms, if at all.

Pending use of the net proceeds for the above purposes, the Company intends
to invest such funds in short-term investment grade securities or shares of
investment companies investing primarily in such securities.

DILUTION

The pro forma net tangible book value of the Company at June 30, 1996 was
$ , or $ per share of Common Stock. "Net tangible book value" per share
represents the amount of total tangible assets of the Company reduced by the
amount of its total liabilities and divided by the total number of shares of
Common Stock outstanding. The pro forma net tangible book value per share as
of June 30, 1996 gives effect to the Private Equity Sale, Preferred Stock
Conversion and Stock Split. Without taking into account any other change in
such pro forma net tangible book value after June 30, 1996, other than to give
effect to the sale by the Company of shares of Common Stock offered hereby
at an assumed public offering price of $ per share and the receipt of the
estimated net proceeds therefrom, the pro forma as adjusted net tangible book
value of the Company at June 30, 1996 would have been approximately $ , or
$ per share of Common Stock. This represents an immediate increase in such
pro forma net tangible book value of $ per share of Common Stock to
existing stockholders and an immediate dilution of $ per share of Common
Stock to persons purchasing shares at the public offering price ("New
Investors").

The following table illustrates this per share dilution:

Assumed initial public offering price............................ $
Pro forma net tangible book value per share at June 30, 1996... $
Increase attributable to New Investors.........................
----
Pro forma as adjusted net tangible book value per share after
this Offering...................................................
----
Dilution in pro forma net tangible book value per share to New
Investors....................................................... $
====

The following table summarizes, on a pro forma as adjusted basis as of June
30, 1996, the differences between the existing holders of Common Stock,
including as a result of the Private Equity Sale and the Preferred Stock
Conversion, and the New Investors with respect to the number of shares of
Common Stock purchased from the Company, the total consideration to the
Company and the average price per share paid:

SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------- ---------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
-------- -------- ---------- ---------- ---------

Existing Stockholders... % $ % $
New Investors........... $
-------- -------- ---------- ---------
Total................. % $ %
======== ======== ========== =========

The above computations assume no exercise of any outstanding options or
warrants. At June 30, 1996, there were outstanding options to purchase
shares of Common Stock at a weighted average exercise price of $ per share.
Additionally, on July 31, 1996, the Company issued the Soros/Chatterjee
Warrants, which may be exercised for up to shares of Common Stock,
assuming such warrants were exercised on the date of the Offering at an
assumed exercise price of $ . The actual number of shares of Common Stock
issuable upon exercise of the Soros/Chatterjee Warrants will be shares
plus an indeterminate number of shares having a fair market value of $10
million as of the date of exercise. To the extent outstanding options or the
Soros/Chatterjee Warrants are exercised, there will be further dilution to new
investors. See "Certain Transactions--Private Equity Sale," "Management--Stock
Option Plans" and Notes 8 and 13 to the Consolidated Financial Statements of
the Company.

DIVIDEND POLICY

To date, the Company has not paid any dividends on its capital stock. The
Company currently intends to retain any future earnings to fund operations and
the continued development of its business and, therefore, does not anticipate
paying any cash dividends on its Common Stock in the foreseeable future.
Future cash dividends, if any, will be determined by the Board of Directors,
and will be based upon the Company's earnings, capital requirements, financial
condition and other factors deemed relevant by the Board of Directors.

CAPITALIZATION

The following table sets forth as of June 30, 1996: (i) the actual
capitalization of the Company; (ii) the pro forma capitalization of the
Company after giving effect to the Stock Split, the Private Equity Sale and
the Preferred Stock Conversion; and (iii) the pro forma as adjusted
capitalization of the Company after giving effect to the Stock Split, Private
Equity Sale, the Preferred Stock Conversion, and the sale of shares of
Common Stock offered by the Company hereby (assuming an initial public
offering price of $ per share), less underwriting discounts, commissions,
and estimated expenses of the Offering payable by the Company, and the
application of the estimated net proceeds therefrom. This table should be read
in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial Statements
of the Company and notes thereto included elsewhere in this Prospectus.

JUNE 30, 1996
-------------------------------
PRO FORMA AS
ACTUAL PRO FORMA ADJUSTED
------- --------- ------------
(IN THOUSANDS)

Cash and cash equivalents...................... $ 4,398 $ $
======= ==== ====
Long-term obligations due within one year...... $10,627 $ $
Long-term obligations.......................... 6,302
Stockholders' Equity:
Preferred Stock, $.01 par value--2,455,000
shares authorized:
Series A Convertible Preferred Stock--455,000
shares
authorized, issued and outstanding; none
issued and outstanding pro forma and pro forma
as adjusted................................... 5
Common Stock, $.01 par value--10,455,000 shares
authorized;
2,817,034, , and shares actual, pro
forma and pro
forma as adjusted, respectively, issued and
outstanding(1)................................ 28
Additional paid-in capital..................... 18,052
Accumulated deficit............................ (6,235)
Cumulative translation adjustment.............. (50)
------- ---- ----
Total stockholders' equity................... 11,800
------- ---- ----
Total capitalization........................ $28,729 $ $
======= ==== ====

- --------
(1) Excludes and shares reserved for issuance under the Employee Plan
and Director Plan, respectively, of which options to purchase and
shares, respectively, have been granted and are outstanding as of June
30, 1996. Also excludes shares which may be issued under the
Soros/Chatterjee Warrants assuming such warrants were exercised on the
date of the Offering at an assumed exercise price of $ . The actual
number of shares of Common Stock issuable upon exercise of the
Soros/Chatterjee Warrants will be shares plus an indeterminate number
of shares having a fair market value of $10 million as of the date of
exercise. See "Management--Stock Option Plans" and "Description of
Capital Stock--Warrants."

SELECTED FINANCIAL DATA

The following selected financial data should be read in conjunction with the
financial statements and the notes thereto contained elsewhere herein and with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The statements of operations data for the Company for the period
from the Company's inception on February 4, 1994 to December 31, 1994 and the
year ended December 31, 1995, and the balance sheet data as of December 31,
1994 and 1995 have been derived from the financial statements of the Company,
which have been audited by Deloitte & Touche LLP, independent auditors. The
historical financial data for the Company for the six month periods ended June
30, 1995 and 1996 have been derived from the Company's unaudited financial
statements which, in the opinion of management, include all significant normal
and recurring adjustments necessary for a fair presentation of the financial
position and results of operations for such unaudited period. The statements
of operations data for Axicorp for the nine month period ended March 31, 1995
and the twelve months ended March 31, 1996 have been derived from the
financial statements of Axicorp, which have been audited by Price Waterhouse,
independent chartered accountants. The historical financial data for Axicorp
for the period from Axicorp's inception on September 17, 1993 to June 30, 1994
has been derived from Axicorp's unaudited financial statements which, in the
opinion of management, include all significant normal and recurring
adjustments necessary for a fair presentation of the financial position and
results of operations for such unaudited period.

AXICORP (THE PREDECESSOR) THE COMPANY
--------------------------------- --------------------------------------------
PERIOD FROM TWELVE PERIOD FROM
INCEPTION NINE MONTHS MONTHS INCEPTION SIX MONTHS ENDED
THROUGH ENDED ENDED THROUGH YEAR ENDED JUNE 30,
JUNE 30, MARCH 31, MARCH 31, DECEMBER 31, DECEMBER 31, ------------------
1994 1995 1996 1994 1995 1995 1996
----------- ----------- --------- ------------ ------------ -------- ---------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

STATEMENT OF OPERATIONS
DATA:
Net revenue............. $12,587 $44,797 $144,345 $ -- $ 1,167 $ 221 $ 65,415
Cost of revenue......... 11,366 40,405 131,712 -- 1,384 203 60,162
------- ------- -------- ----- ------- ------- ---------
Gross margin
(deficit)............. 1,221 4,392 12,633 -- (217) 18 5,253
Operating expenses:
Selling, general and
administrative........ 1,313 4,277 11,558 557 2,024 714 6,707
Depreciation and
amortization.......... 5 43 235 12 160 65 798
------- ------- -------- ----- ------- ------- ---------
Total operating
expenses............. 1,318 4,320 11,793 569 2,184 779 7,505
------- ------- -------- ----- ------- ------- ---------
Income (loss) from
operations............. (97) 72 840 (569) (2,401) (761) (2,252)
Interest expense........ -- -- -- (13) (59) (33) (335)
Interest income......... -- 30 219 5 35 1 85
Other income (expense).. -- -- -- -- -- -- (268)
------- ------- -------- ----- ------- ------- ---------
Income (loss) before
income taxes........... (97) 102 1,059 (577) (2,425) (793) (2,770)
Income taxes............ -- 4 492 -- -- -- 462
------- ------- -------- ----- ------- ------- ---------
Net income (loss)....... $ (97) $ 98 $ 567 $(577) $(2,425) $ (793) $ (3,232)
======= ======= ======== ===== ======= ======= =========
Net loss per common and
common share
equivalents............ $ $ $ $
===== ======= ======= =========
Weighted average number
of common and common
share equivalents
outstanding............
===== ======= ======= =========

THE COMPANY
-----------------------
DECEMBER 31,
-------------- JUNE 30,
1994 1995 1996
------ ------- --------
(IN THOUSANDS)

BALANCE SHEET DATA:
Cash and cash equivalents............................... $ 221 $ 2,296 $ 4,398
Total assets............................................ 487 5,042 62,297
Total long-term obligations............................. 13 528 16,929
Stockholders' equity (deficit).......................... (71) 2,562 11,800

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

The following unaudited pro forma consolidated statements of operations data
give effect to the March 1, 1996 acquisition of Axicorp in each case as if it
occurred on January 1, 1995. The unaudited pro forma consolidated statement of
operations data for the six months ended June 30, 1996 includes the operations
of the Company for the six months ended June 30, 1996, which includes the
results of operations of Axicorp since March 1, 1996 (the date of acquisition)
and the operations of Axicorp for the months of January and February 1996. The
unaudited pro forma consolidated statement of operations data for the six
months ended June 30, 1995 includes the results of operations of the Company
and of Axicorp for six months ended June 30, 1995. The unaudited consolidated
pro forma statement of operations data for the year ended December 31, 1995
includes the results of operations data of the Company and Axicorp for the
year ended December 31, 1995.

The unaudited pro forma consolidated statements of operations are presented
for informational purposes only and are not necessarily indicative of the
results of operations that would have been achieved had the acquisition of
Axicorp been completed as of the beginning of the periods presented, nor are
they necessarily indicative of the Company's future results of operations. The
unaudited pro forma consolidated statements of operations should be read in
conjunction with the historical financial statements of the Company and
Axicorp, including the related notes thereto.

PRIMUS TELECOMMUNICATIONS GROUP,
INCORPORATED AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996

PRO FORMA
ADJUSTMENTS
THE RELATED TO
COMPANY(1) AXICORP(2) ACQUISITION(3) AS ADJUSTED
---------- ---------- -------------- -----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Net revenue................... $65,415 $26,368 $ -- $91,783
Cost of revenue............... 60,162 23,756 -- 83,918
------- ------- ----- -------
Gross margin................ 5,253 2,612 -- 7,865
Operating expenses:
Selling, general and admin-
istrative.................. 6,707 2,084 -- 8,791
Depreciation and amortiza-
tion....................... 798 48 252 1,098
------- ------- ----- -------
Total operating expenses.. 7,505 2,132 252 9,889
------- ------- ----- -------
Income (loss) from opera-
tions........................ (2,252) 480 (252) (2,024)
Interest expense.............. (335) -- (138) (473)
Interest income............... 85 124 -- 209
Other income (expense)........ (268) -- -- (268)
------- ------- ----- -------
Income (loss) before income
taxes........................ (2,770) 604 (390) (2,556)
Income taxes.................. 462 281 -- 743
------- ------- ----- -------
Net income (loss)............. $(3,232) $ 323 $(390) $(3,299)
======= ======= ===== =======
Net loss per common and common
share equivalents............ $ $
======= =======
Weighted average number of
common and common share
equivalents outstanding......
======= =======

- --------
(1) Reflects the historical results of operations of the Company for the six
months ended June 30, 1996, including Axicorp's operations from March 1,
1996 (acquisition date) to June 30, 1996, as set forth in the Consolidated
Financial Statements of the Company appearing elsewhere in this
Prospectus.
(2) Reflects the historical results of operations of Axicorp for the months of
January and February 1996.
(3) The pro forma adjustments to depreciation and amortization reflect the
following:

Increase in amortization of the excess of cost over fair value of
net assets acquired related to the purchase of Axicorp (computed us-
ing the straight line method over thirty years--represents two
months) $100
Increase in amortization of the value associated with the customer
list acquired related to the purchase of Axicorp (computed using the
estimated run-off of the customer base (approximately five years)--
represents two months) 152
----
$252
====
The pro forma adjustment to increase interest expense relates to the
issuance of notes payable of $8,110 related to the acquisition of
Axicorp--represents two months $138
====
The pro forma adjustment to the income tax provision is zero as a val-
uation reserve was applied in full to the tax benefit associated with
the pro forma net loss before income taxes.

PRIMUS TELECOMMUNICATIONS GROUP,
INCORPORATED AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1995

PRO FORMA
ADJUSTMENTS
THE RELATED TO
COMPANY(1) AXICORP(2) ACQUISITION(3) AS ADJUSTED
---------- ---------- -------------- -----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Net revenue................... $ 221 $47,709 $ -- $47,930
Cost of revenue............... 203 42,938 -- 43,141
----- ------- ------- -------
Gross margin................ 18 4,771 -- 4,789
Operating expenses:
Selling, general and admin-
istrative.................. 714 4,662 -- 5,376
Depreciation and amortiza-
tion....................... 65 58 756 879
----- ------- ------- -------
Total operating expenses.. 779 4,720 756 6,255
----- ------- ------- -------
Income (loss) from opera-
tions........................ (761) 51 (756) (1,466)
Interest expense.............. (33) -- (413) (446)
Interest income............... 1 29 -- 30
Other income (expense)........ -- -- -- --
----- ------- ------- -------
Income (loss) before income
taxes........................ (793) 80 (1,169) (1,882)
Income taxes.................. -- 68 -- 68
----- ------- ------- -------
Net income (loss)............. $(793) $ 12 $(1,169) $(1,950)
===== ======= ======= =======
Net loss per common and common
share equivalents............ $ $
===== =======
Weighted average number of
common and common share
equivalents outstanding......
===== =======

- --------
(1) Reflects the historical results of operations of the Company for the six
months ended June 30, 1995, as set forth in the Consolidated Financial
Statements of the Company appearing elsewhere in this Prospectus.
(2) Reflects the historical results of operations of Axicorp for the six
months ended June 30, 1995.
(3) The pro forma adjustments to depreciation and amortization reflect the
following:

Increase in amortization of the excess of cost over fair value of
net assets acquired related to the purchase of Axicorp (computed us-
ing the straight line method over thirty years--represents six
months) $300
Increase in amortization of the value associated with the customer
list acquired related to the purchase of Axicorp (computed using the
estimated run-off of the customer base (approximately five years)--
represents six months) 456
----
$756
====
The pro forma adjustment to increase interest expense relates to the
issuance of notes payable of $8,110 related to the acquisition of
Axicorp--represents six months $413
====
The pro forma adjustment to income tax provision is zero as a valua-
tion reserve was applied in full to the tax benefit associated with
the pro forma net loss before income taxes.

PRIMUS TELECOMMUNICATIONS GROUP,
INCORPORATED AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995

PRO FORMA
ADJUSTMENTS
THE RELATED TO
COMPANY(1) AXICORP(2) ACQUISITION(3) AS ADJUSTED
---------- ---------- -------------- -----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Net revenue................... $ 1,167 $124,461 $ -- $125,628
Cost of revenue............... 1,384 113,255 -- 114,639
------- -------- ------- --------
Gross margin (deficit)...... (217) 11,206 -- 10,989
Operating expenses:
Selling, general and admin-
istrative.................. 2,024 10,931 -- 12,955
Depreciation and amortiza-
tion....................... 160 169 1,513 1,842
------- -------- ------- --------
Total operating expenses.. 2,184 11,100 1,513 14,797
------- -------- ------- --------
Income (loss) from opera-
tions........................ (2,401) 106 (1,513) (3,808)
Interest expense.............. (59) -- (826) (885)
Interest income............... 35 97 -- 132
Other income (expense)........ -- -- -- --
------- -------- ------- --------
Income (loss) before income
taxes........................ (2,425) 203 (2,339) (4,561)
Income taxes.................. -- 124 -- 124
------- -------- ------- --------
Net income (loss)............. $(2,425) $ 79 $(2,339) $ (4,685)
======= ======== ======= ========
Net loss per common and common
share equivalents............ $ $
======= ========
Weighted average number of
common and common share
equivalents outstanding......
======= ========

- --------
(1) Reflects the historical results of operations of the Company for the year
ended December 31, 1995 as set forth in the Consolidated Financial
Statements of the Company appearing elsewhere in this Prospectus.
(2) Reflects the historical results of operations of Axicorp for the year ended
December 31, 1995.
(3) The pro forma adjustments to depreciation and amortization reflect the
following:

Increase in amortization of the excess of cost over fair value of
net assets acquired related to the purchase of Axicorp (computed
using the straight line method over thirty years--represents
twelve months). $ 600
Increase in amortization of the value associated with the customer
list acquired related to the purchase of Axicorp (computed using
the estimated run-off of the customer base (approximately five
years)--represents twelve months) 913
------
$1,513
======
The pro forma adjustment to interest expense relates to the issuance
of notes payable of $8,110 related to the acquisition of Axicorp--
represents twelve months $ 826
======
The pro forma adjustment to the income tax provision is zero as a
valuation reserve was applied in full to the tax benefit associated
with the pro forma net loss before income taxes.

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the
financial statements and notes thereto contained elsewhere in this Prospectus.

OVERVIEW

Primus is a multinational telecommunications company that focuses on the
provision of international and domestic long distance services. The Company
seeks to capitalize on the increasing business and consumer demand for
international telecommunications services generated by the globalization of
world economies and the worldwide trend toward deregulation of the
telecommunications sector. The Company has targeted North America, Asia-
Pacific and Europe as its primary service regions. The Company currently
provides services in the United States, Australia and the United Kingdom,
which are the most deregulated countries within the Targeted Regions and which
serve as regional hubs for expansion into additional markets within the
Targeted Regions. As part of the execution of this strategy, the Company has
commenced operations in Canada and Mexico. The Company expects to expand into
additional markets as deregulation occurs and the Company is permitted to
offer a full range of switched public telephone services.

The Company was founded in February 1994 and through the first half of 1995
was a development stage enterprise involved in various start-up activities
including raising capital, obtaining licenses, acquiring equipment, leasing
space, developing markets and recruiting and training personnel. The Company
began generating revenue during March 1995. On March 1, 1996 the Company
acquired Axicorp, the fourth largest telecommunications provider in Australia.
The acquisition of Axicorp has had a material effect on the Company's results
of operations for the six months ended June 30, 1996. The acquisition of
Axicorp furthers the Company's objectives by providing a substantial customer
base and significant hub location in the Asia-Pacific market.

The Company is investing substantial resources to transform Axicorp's
strategy and operations to those of a facilities-based carrier focused on the
provision of international and domestic long distance services. Prior to the
acquisition, Axicorp was a switchless reseller of long distance, local and
cellular service. Since the acquisition, the Company has acquired five
switches for use in Australia, all of which are expected to be operational by
the end of the first quarter of 1997, and has focused on increasing the number
of higher-margin, higher-volume business customers with significant
international long-distance traffic. As part of its increasing focus on
business customers, the Company is increasing the direct sales force of
Axicorp and lessening its reliance on marketing through associations. The
Company has experienced and expects to continue to experience lower gross
margin as a percentage of net revenue for Axicorp's local switched and
cellular services, as compared to long distance services.

Net revenue is derived from the number of minutes billed by the Company and
is recorded upon completion of calls. The Company generally prices its
services at a savings compared to the major carriers operating in the Targeted
Regions, which allows the Company to offer competitive pricing to its
customers. The Company's net revenue in the United States is derived from
carrying a mix of business, consumer and wholesale carrier long distance
traffic. In Australia, net revenue is currently derived equally from the
provision of long distance and from local and cellular services, primarily to
a broad mix of small- and medium-sized business customers and ethnic
residential consumers. In the United Kingdom, net revenue is derived from the
provision of long distance services, primarily to ethnic residential
consumers, as well as to small- and medium-sized businesses. The Company seeks
to continue to expand its net revenue from internal growth through focused
sales and marketing efforts toward small- and medium-sized businesses with
significant international long distance traffic and, ethnic residential
consumers and, on a wholesale basis, other telecommunications carriers and
resellers with international traffic in the Target Regions.

Prices in the long distance industry in the United States and the United
Kingdom have declined in recent years and as competition continues to
increase, the Company believes that prices are likely to continue to decrease.
Additionally, the Company believes that because deregulatory influences only
recently have begun to affect non-U.S. and non-U.K. telecommunications
markets, the deregulatory trend in such markets is expected to result in
greater competition which could adversely affect net revenue per minute and
gross margin as a percentage of net revenue. The Company believes, however,
that such decreases in prices will be at least partially offset by increased
telecommunications usage and decreased costs.

Cost of revenue is primarily comprised of costs incurred from other domestic
and foreign telecommunications carriers to access, transport and terminate
calls. The majority of the Company's cost of revenue is variable, based upon
the number of minutes of use, with transmission and termination costs being
the Company's most significant expense. As the Company increases the portion
of traffic transmitted over its own facilities, cost of revenue increasingly
will reflect lease, ownership and maintenance costs of the Network. In order
to manage such costs, the Company pursues a flexible approach with respect to
Network expansion. The Company initially obtains transmission capacity on a
variable-cost, per-minute leased basis, next acquires additional capacity on a
fixed-cost basis when traffic volume makes such a commitment cost-effective,
and ultimately purchases and operates its own facilities only when traffic
levels justify such investment. The Company also seeks to lower its cost of
revenue through (a) optimizing the routing of calls over the least cost
routing, (b) increasing volumes on its fixed cost leased lines, thereby
spreading the allocation of fixed costs over a larger number of minutes, (c)
negotiating lower variable usage based costs with domestic and foreign service
providers and negotiating additional and lower cost correspondent agreements
with foreign PTTs, and (d) continuing to expand the Network when traffic
volumes justify such investment. See "Risk Factors--Managing Rapid Growth" and
"Business--Network."

Typical of the long distance telecommunications industry, the Company
generally realizes a higher gross margin as a percentage of net revenue on its
international compared to its domestic long distance services and expects to
realize a higher gross margin as a percentage of net revenue on its retail
services compared to those realized on its wholesale services. In addition,
the Company generally realizes a higher gross margin as a percentage of net
revenue on its long distance services as compared to those realized on local
switched and cellular services. Although, after giving effect to the
acquisition of Axicorp, the Company's wholesale services represent only a
small percentage of its net revenue, the Company expects such services to
represent a significantly larger percentage of net revenue over time. While
wholesale services generate a lower gross margin as a percentage of net
revenue, the additional traffic volume of such wholesale customers improves
the utilization of the Network and allows the Company to obtain greater volume
discounts from its suppliers than it otherwise would realize. The Company's
overall gross margin as a percentage of net revenue may fluctuate in the
future based on its relative volumes of international versus domestic long
distance services and wholesale versus retail long distance services.

Selling, general and administrative expenses are comprised primarily of
salaries and benefits, commissions, occupancy costs, sales and marketing
expenses, advertising and administrative costs. These expenses have been
increasing over the past year, which is consistent with the development stage
nature of the Company, expansion of the United States and United Kingdom
operations, and the transformation of Axicorp's operations. The Company
expects this trend to continue and believes that additional selling, general
and administrative expenses will be necessary to support the expansion of
sales and marketing efforts and operations.

Since its inception, the Company has made, and expects to continue to make,
significant investments in the development of its operations in its Targeted
Regions and the development and expansion of the Network. The costs of
developing its operations and expanding the Network, including the purchase
and installation of switches, sales and marketing expenses and other
organizational costs, are significant. In addition, increased capital
investment activity in the future can be expected to affect the Company's
operating results in the near term due to increased depreciation charges and
interest expense in connection with borrowings to fund such expenditures,
which costs will be incurred in advance of the realization of the expected
improvements in

operating results from such investments. Such costs and investment activity
have resulted in negative cash flows and operating losses for the Company on
an historical basis, which are expected to continue to increase in the near
future as the Company uses the proceeds of the Offering to accelerate the
expansion of its business and the build-out of the Network. The Company
currently anticipates spending approximately $50 million on the improvement
and expansion of the Network during the next 18 months. See "--Liquidity and
Capital Resources" and "Use of Proceeds."

Although the Company's functional currency is the U.S. dollar, the majority
of the Company's net revenue is derived from its sales and operations outside
the United States. On a pro forma basis, approximately 94% and 99% of the
Company's net revenue was earned, and approximately 91% and 97% of the
Company's operating costs was incurred, in currencies other than the U.S.
dollar for the six months ended June 30, 1996 and the year ended December 31,
1995, respectively. In the future, the Company expects to continue to derive
the majority of its net revenue and incur the majority of its operating costs
outside the United States. The international scope of the Company's net
revenue and operating costs creates numerous offsetting positions which the
Company believes reduce its exposure to foreign currency fluctuations relative
to the U.S. dollar. The Company historically has not engaged, and does not
currently contemplate engaging, in hedging transactions to mitigate foreign
exchange risks. See "Risk Factors--Risks Associated with International
Operations."

RESULTS OF OPERATIONS

As a result of the Company's acquisition of Axicorp on March 1, 1996 and the
development stage nature of the Company in the first quarter of 1995, the
Company believes that a comparison of the historical results of operations for
the six-month periods ended June 30, 1995 and 1996 is not meaningful and that
such results are not necessarily indicative of results for any future period.
Accordingly, the historical results of operations are supplemented with a more
extensive discussion of the pro forma results of operations for the six months
ended June 30, 1995 and 1996 and the pro forma quarterly results of operations
for each of the six quarters in the period ended June 30, 1996, which results
give effect to the acquisition of Axicorp as if it had occurred on January 1,
1995. A discussion of the Company's historical results of operations for the
six months ending June 30, 1995 and 1996, the period from inception (February
4, 1994) through December 31, 1994 and the year ended December 31, 1995, and a
discussion of Axicorp's historical results of operations for the years ended
March 31, 1995 and 1996 follow the discussion of the Company's pro forma
results of operations.

PRO FORMA RESULTS

Results of Operations for the Six Months Ended June 30, 1996 Compared to the
Six Months Ended June 30, 1995

The following table presents certain items from the Company's Unaudited Pro
Forma Consolidated Statements of Operations:

SIX MONTHS ENDED JUNE 30,
YEAR ENDED -------------------------------
DECEMBER 31, 1995 1995 1996
-------------------- -------------- --------------
$ % $ % $ %
---------- -------- ------- ----- ------- -----
(IN THOUSANDS, EXCEPT PERCENTAGE DATA)

Net revenue............. $ 125,628 100.0% $47,930 100.0% $91,783 100.0%
Cost of revenue......... 114,639 91.3 43,141 90.0 83,918 91.4
---------- ------- ------- ----- ------- -----
Gross margin.......... 10,989 8.7 4,789 10.0 7,865 8.6
Operating expenses:
Selling, general and
administrative........ 12,955 10.3 5,376 11.2 8,791 9.6
Depreciation and amor-
tization.............. 1,842 1.5 879 1.8 1,098 1.2
---------- ------- ------- ----- ------- -----
Total operating ex-
penses............... 14,797 11.8 6,255 13.1 9,889 10.8
---------- ------- ------- ----- ------- -----
Income (loss) from oper-
ations................. (3,808) (3.0) (1,466) (3.1) (2,024) (2.2)
Interest expense........ (885) (0.7) (446) (0.9) (473) (0.5)
Interest income......... 132 0.1 30 0.1 209 0.2
Other income (expense).. -- -- -- -- (268) (0.3)
---------- ------- ------- ----- ------- -----
Income (loss) before in-
come taxes............. (4,561) (3.6) (1,882) (3.9) (2,556) (2.8)
Income taxes............ 124 0.1 68 0.1 743 0.8
---------- ------- ------- ----- ------- -----
Net income (loss)....... $ (4,685) (3.7)% $(1,950) (4.1)% $(3,299) (3.6)%
========== ======= ======= ===== ======= =====

Net revenue increased 92%, or $43.9 million, from $47.9 million for the six
months ended June 30, 1995 to $91.8 million for the six months ended June 30,
1996. The Australian net revenue increased 80%, or $37.9 million, from $47.7
million to $85.6 million. The increase was attributable to growth in minutes
of traffic primarily from business customers, as well as an increased number
of cellular customers. Non-Australian net revenue was $6.2 million for the six
months ended June 30, 1996 as compared to minimal revenue of $0.2 million for
the six months ended June 30, 1995. The increase was attributable to a greater
number of customers in all non-Australian geographical regions of the
Company's business and an increase in minutes of use to higher rate per minute
countries, including India, Iran, Japan and Argentina. As the Company
continues to build its sales and marketing staff, establish additional carrier
arrangements and expand the Network, the Company expects the minutes of
traffic and associated revenue to continue to increase.

Cost of revenue increased 95%, or $40.8 million, from $43.1 million for the
six months ended June 30, 1995 to $83.9 million for the six months ended June
30, 1996. The increase was a direct reflection of the increased traffic the
Company carried for customers. The Australian cost of revenue increased 79%,
or $34.1 million, from $42.9 million for the six months ended June 30, 1995 to
$77.0 million for the six months ended June 30, 1996. The Australian cost of
revenue increase is primarily driven by increased traffic and, to a lesser
extent, lower tariff rate discounts implemented by Telstra in February 1996.
The Australian cost of revenue as a percentage of revenue remained constant at
90%. The non-Australian cost of revenue increased $6.8 million as a result of
increased traffic. Cost of revenue as a percentage of net revenue increased
from 90% to 91%. The non-Australian cost of revenue as a percentage of net
revenue increased as a result of the lack of return traffic associated with
newly initiated correspondent agreements, and traffic being carried on more
expensive carriers because of lack of adequate capacity with lower cost
carriers.

Gross margin increased 64%, or $3.1 million, from $4.8 million for the six
months ended June 30, 1995 to $7.9 million for the six months ended June 30,
1996. The Australian gross margin percentage remained constant at 10%. The
non-Australian operations reported a gross deficit of $0.8 million.

Selling, general and administrative expenses increased 64%, or $3.4 million,
from $5.4 million for the six months ended June 30, 1995 to $8.8 million for
the six months ended June 30, 1996. The Australian operations increased
selling, general and administrative expenses $1.4 million as a result of
increased salaries and benefits, commissions and administrative expenses to
support the continued growth in the business. The Australian selling, general
and administrative expenses as a percentage of net revenue decreased from 10%
to 7% for the six months ended June 30, 1995 and 1996, respectively, as a
result of fixed costs being spread over an increasing revenue base. The non-
Australian operations account for the remaining increase of $2.0 million due
to growth in sales and marketing staffing levels, network operations expenses,
and customer service costs.

Depreciation and amortization increased 25%, or $0.2 million, from $0.9
million for the six months ended June 30, 1995 to $1.1 million for the six
months ended June 30, 1996. The increase was primarily attributable to
depreciation for $0.7 million for capital additions associated with the
development of the customer billing system in Australia and $0.9 million of
capital additions for network equipment in the non-Australian markets.

Interest expense increased 6% as a result of additional capital leases to
finance network switching equipment in the United States, as well as the
incurrence of $2.0 million of debt from Teleglobe in February of 1996.

Interest income increased from a negligible amount in the six months ended
June 30, 1995 to $0.2 million in the six months ended June 30, 1996 as a
result of higher average cash balances invested overnight generated from the
private equity placements in December 1995 and February 1996.

Other income (expense) is comprised of a foreign currency transaction loss
of $0.3 million for the six months ended June 30, 1996 associated with the
debt related to the acquisition of Axicorp, which is denominated in Australian
dollars. Fluctuations in the currency exchange rates between the Australian
and U.S. dollar will cause currency transaction gains or losses which will be
recognized in the current period results of operations.

Income taxes is based on the income before taxes generated by Axicorp and
payable to the Australian federal government. There was no income tax
provision (benefit) reflected in either period for the non-Australian
operations as pre-tax losses were incurred in both periods and a full
valuation reserve was applied to the tax benefit.

Quarterly Results of Operations

The following table sets forth unaudited pro forma consolidated statement of
operations data for each of the six fiscal quarters in the period ending June
30, 1996 and has been prepared assuming the acquisition of Axicorp occurred as
of January 1, 1995. The pro forma quarterly information has been derived from,
and should be read in conjunction with, the Consolidated Financial Statements
of the Company, the Financial Statements of Axicorp and the notes thereto
included elsewhere in this Prospectus, and in management's opinion, reflects
all adjustments, consisting only of normal recurring adjustments, necessary
for a fair presentation of the information for the quarters presented. The
operating results for any quarter are not necessarily indicative of results
for any future period.

CONSOLIDATED PREDECESSOR AND COMPANY COMPANY
-------------------------------------------------------- --------
QUARTER ENDED:
-----------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1995 1995 1995 1995 1996 1996
--------- -------- ------------- ------------ --------- --------
(IN THOUSANDS, EXCEPT PERCENTAGE DATA)

Net revenue:
United States, United
Kingdom and Mexico... $ 17 $ 204 $ 276 $ 670 $ 1,931 $ 4,229
Australia............. 20,701 27,008 37,193 39,559 41,574 44,049
------- ------- ------- ------- ------- -------
Total net revenue... 20,718 27,212 37,469 40,229 43,505 48,278
Cost of revenue......... 18,491 24,650 34,366 37,130 39,284 44,634
------- ------- ------- ------- ------- -------
Gross margin.......... 2,227 2,562 3,103 3,099 4,221 3,644
Operating expenses:
Selling, general and
administrative....... 2,574 2,802 3,593 3,986 3,958 4,834
Depreciation and amor-
tization............. 419 460 473 490 525 571
------- ------- ------- ------- ------- -------
Total operating ex-
penses............. 2,993 3,262 4,066 4,476 4,483 5,405
------- ------- ------- ------- ------- -------
Loss from operations.... (766) (700) (963) (1,377) (262) (1,761)
Interest expense........ (221) (226) (219) (221) (236) (238)
Interest income......... 22 8 36 66 170 38
Other income (expense).. -- -- -- -- (213) (55)
------- ------- ------- ------- ------- -------
Loss before income tax-
es..................... (965) (918) (1,146) (1,532) (541) (2,016)
Income taxes............ -- 68 59 (2) 648 96
------- ------- ------- ------- ------- -------
Net loss................ $ (965) $ (986) $(1,205) $(1,530) $(1,189) $(2,112)
======= ======= ======= ======= ======= =======
Net revenue growth per-
centage:
United States, United
Kingdom and Mexico... -- 1,100.0% 35.3% 142.8% 188.2% 119.0%
Australia............. -- 30.5% 37.7% 6.4% 5.1% 6.0%
Total............... -- 31.3% 37.7% 7.4% 8.1% 11.0%
Gross margin percent-
age.................... 10.7% 9.4% 8.3% 7.7% 9.7% 7.5%
Selling, general and
administrative expenses
as a percentage of net
revenue................ 12.4% 10.3% 9.6% 9.9% 9.1% 10.0%

Quarterly net revenue increased from $20.7 million in the quarter ended
March 31, 1995 to $48.3 million in the quarter ended June 30, 1996. The
Australian net revenue growth in each quarter was due to an increase in
traffic volume primarily as a result of an increase in the business customer
base. The lower rate of growth in Australian net revenue from the quarter
ended September 30, 1995 as compared to the subsequent two quarters is
primarily a result of management's shift in focus to the sale of Axicorp to
the Company and, in the quarter ended June 30, 1996, management's strategic
decision to focus on higher-margin, higher-volume business

customers and an increase in the level of competition. The lower rate of
growth in the Company's net revenue from the quarter ended September 30, 1995
as compared to the three subsequent quarters is primarily a result of
management's strategic decision to focus on higher-margin, higher-volume
business customers and an increase in the level of competition in Australia,
offset by an increase in the traffic volumes primarily associated with
increased carrier traffic in the United States and the introduction of service
in the United Kingdom.

Quarterly gross margin percentages have trended downward during the six
quarters from 11% in the quarter ended March 31, 1995 to 8% in the quarter
ended June 30, 1996. The reduction in the quarterly gross margin percentage in
each of the quarters of 1995 was primarily a result of the lower tariff rate
discounts implemented by Telstra in the Australian market. In the next two
quarters, gross margin percentages were favorably affected by, in Australia,
lower cost per minute of cellular service due to volume discounts and, in the
last quarter, current management's focus on higher-margin, higher-volume
business customers, offset by negative gross margin due to start-up of non-
Australian operations.

The Company's quarterly selling, general and administrative expenses have
trended upward during the six month period from $2.6 million in the quarter
ended March 31, 1995 to $4.8 million in the quarter ended June 30, 1996. The
quarterly selling, general and administrative expense increase is reflective
of the worldwide growth in the Company's operations, including increased
personnel costs, network operations costs, sales and marketing expenses and
internal billing systems development costs. The selling, general and
administrative expenses in the fourth quarter of 1995 increased due to the
conversion costs associated with the Australian operations providing direct
billing and customer service to its customer base. In the quarter ended June
30, 1996, selling, general and administrative expenses increased as a
percentage of net revenue due to substantial expenditures incurred in the
commencement of non-Australian operations.

Quarterly depreciation and amortization reflects an increasing trend as a
result of the Company's continued investment in property and equipment
primarily associated with the expansion of the Network. This trend is expected
to continue in the foreseeable future.

HISTORICAL RESULTS--PRIMUS

Results of Operations for the Six Months Ended June 30, 1996 Compared to the
Six Months Ended June 30, 1995

Net revenue increased $65.2 million, from $0.2 million for the six months
ended June 30, 1995 to $65.4 million for the six months ended June 30, 1996.
The growth was attributable to $59.3 million of net revenue associated with
Axicorp from the purchase date of March 1, 1996 through June 30, 1996. The
remaining $5.9 million of net revenue growth was associated primarily with the
commencement of the Company's United States and United Kingdom operations.

Cost of revenue increased $60.0 million, from $0.2 million for the six
months ended June 30, 1995 to $60.2 million for the six months ended June 30,
1996 as a direct result of the increased net revenue. Axicorp's cost of
revenue for the four months ended June 30, 1996 was $53.2 million, or 90% of
Axicorp's net revenue during such period, while the non-Australian cost of
revenue for the full six months ended June 30, 1996 was $7.0 million or 113%
of non-Australian net revenue. The non-Australian cost of revenue reflects the
start-up nature of the Network and traffic being carried on more expensive
carriers until adequate capacity on lower cost carriers could be established.
In addition, the Company's cost of revenue as a percentage of net revenue was
effected by the lack of return traffic associated with newly-initiated
correspondent agreements.

Selling, general and administrative expenses increased from $0.7 million to
$6.7 million for the six months ended June 30, 1995 to June 30, 1996.
Approximately $4.0 million of the increase was attributable to the four months
of activity associated with Axicorp and the remaining $2.0 million related to
the non-Australian operations as a result of increased staffing levels,
increased sales and marketing activity and network operation costs. The non-
Australian selling, general and administrative costs as a percentage of net
revenue for the six months ended June 30, 1996 was 44%, which is reflective of
the growth stage of such business. The Australian selling, general and
administrative expense as a percentage of net revenue was 7% for the four
months from acquisition to June 30, 1996.

Depreciation and amortization increased $0.7 million, from $0.1 million for
the six months ended June 30, 1995 to $0.8 million for the six months ended
June 30, 1996. The majority of the increase was a result of the acquisition of
Axicorp and was comprised of amortization of goodwill and the customer lists
which totaled $0.5 million. The remaining increase is associated with
depreciation related to Axicorp's assets and increased depreciation expense
for the Company as a result of additional capital expenditures for switching
and network related equipment.

Interest expense increased $0.3 million as a result of the additional debt
incurred by the Company in connection with the acquisition of Axicorp, which
totaled $8.4 million as of June 30, 1996, and was outstanding for the four-
month period from March 1, 1996 (the date of acquisition) to June 30, 1996.
Additionally, the Company incurred increased interest expense as a result of
the issuance of a $2.0 million note payable to a stockholder (Teleglobe) in
February 1996.

Interest income of $0.1 million during the six months ended June 30, 1996
relates to the temporary investment of the funds received from the private
placements of equity made by the Company in 1995 and 1996.

Other income (expense) of $0.3 million for the six months ended June 30,
1996 related to foreign currency transaction losses on the Australian dollar-
denominated debt incurred by the Company payable to the sellers for its
acquisition of Axicorp as a result in the appreciation of the Australian
dollar against the U.S. dollar during the period.

Income taxes amount was fully attributable to the operations of Axicorp for
the four months from the date of purchase, and represented the amount of
expense for Australian federal government taxes.

Results of Operations for the Year Ended December 31, 1995 Compared to the
Period from Inception (February 4, 1994) to December 31, 1994

Net revenue and cost of revenue in 1995 were $1.2 million and $1.4 million,
respectively. During the period ended December 31, 1994, the Company did not
have net revenue or cost of revenue as it was in the development stage and
involved in various start-up activities including raising capital, obtaining
licenses, acquiring equipment, leasing space, developing markets, and
recruiting and training personnel. In March 1995, the Company began generating
net revenue and associated cost of revenue.

Gross deficit for 1995 was $0.2 million. As the Company began generating
revenue in 1995, there were fixed network costs that were not offset by the
net revenue generated.

Selling, general and administrative expenses increased from $0.6 million in
1994 to $2.0 million in 1995. The increase was primarily due to additional
costs incurred to support the formation of the Company's administrative,
management, sales and operations personnel.

Depreciation and amortization increased to $0.2 million in 1995. The
increase in depreciation and amortization expense was directly related to the
purchase of Network equipment, including the Company's switch in Washington,
D.C.

HISTORICAL RESULTS--AXICORP

Results of Operations for the Twelve Months Ended March 31, 1996 Compared to
the Twelve Months Ended March 31, 1995

The audited financial statements of Axicorp included in this Prospectus
cover the twelve month period ended March 31, 1996 and the nine month period
ended March 31, 1995. In order to provide a more meaningful presentation of
the changes in the operations of Axicorp, the unaudited results of operations
for the three months ended June 30, 1994 have been combined with the audited
results for the nine-month period ended March 31, 1995 to arrive at a twelve-
month period ended March 31, 1995 ("fiscal 1995") for purposes of comparison
to the audited twelve-month period ended March 31, 1996 ("fiscal 1996").

The following table presents certain items from Axicorp's Statement of
Operations:

THREE NINE
MONTHS MONTHS
ENDED ENDED TWELVE MONTHS ENDED MARCH 31,
JUNE 30, MARCH 31, ----------------------------------
1994 1995 1995 1996
-------- --------- ---------------- -----------------
$ % $ %
-------- ------- --------- -------
(IN THOUSANDS, EXCEPT PERCENTAGE DATA)

Net revenue.............. $4,269 $44,797 $ 49,066 100.0% $ 144,345 100.0%
Cost of revenue.......... 3,855 40,405 44,260 90.2 131,712 91.2
------ ------- -------- ------ --------- ------
Gross margin........... 414 4,392 4,806 9.8 12,633 8.8
Operating expenses:
Selling, general and
administrative........ 480 4,277 4,757 9.7 11,558 8.0
Depreciation and amor-
tization.............. 5 43 48 0.1 235 0.2
------ ------- -------- ------ --------- ------
Total operating ex-
penses.............. 485 4,320 4,805 9.8 11,793 8.2
------ ------- -------- ------ --------- ------
Income (loss) from opera-
tions................... (71) 72 1 -- 840 0.6
Interest expense......... -- -- -- -- -- --
Interest income.......... -- 30 30 0.1 219 0.2
Other income (expense)... -- -- -- -- -- --
------ ------- -------- ------ --------- ------
Income (loss) before in-
come taxes.............. (71) 102 31 0.1 1,059 0.8
Income taxes............. -- 4 4 -- 492 0.3
------ ------- -------- ------ --------- ------
Net income (loss)........ $ (71) $ 98 $ 27 0.1% $ 567 0.4%
====== ======= ======== ====== ========= ======

Net revenue increased 194%, or $95.2 million, from $49.1 million in fiscal
1995 to $144.3 million in fiscal 1996 primarily due to an increase in volume of
traffic as a result of an increased number of business customers. Net revenue
also increased as a result of an increase in the number of cellular customers.
The Company became one of four authorized resellers of Telstra's analog and
digital cellular service in May 1995.

Cost of revenue increased 198%, or $87.4 million, from $44.3 million in
fiscal 1995 to $131.7 million in fiscal 1996. The increase was attributable to
increased minutes of use, a higher percentage of net revenue being attributable
to cellular services, which have lower margins than non-cellular services, and
price reductions by Axicorp in response to lower tariff rate discounts
implemented by Telstra which were effective in February 1996. Cost of revenue
is comprised of those costs associated with the transmission and termination of
traffic by Telstra. As a percentage of net revenue, cost of revenue increased
from 90% in fiscal 1995 to 91% in fiscal 1996.

Gross margin increased 163%, or $7.8 million, from $4.8 million in fiscal
1995 to $12.6 million in fiscal 1996. As a percentage of revenue, gross margin
decreased from 10% in fiscal 1995 to 9% in fiscal 1996 as a result of higher
cost of revenue.

Selling, general and administrative expenses increased 143%, or $6.8 million,
from $4.8 million in fiscal 1995 to $11.6 million in fiscal 1996. The increase
consisted of personnel costs, network operations cost, sales and marketing
expenses and internal billing systems development costs which were attributable
to the overall growth in the business during this period. As a percentage of
net revenue, selling, general and administrative expenses decreased from 10% in
fiscal 1995 to 8% in fiscal 1996, primarily as a result of fixed costs being
spread over a higher revenue base.

Depreciation and amortization increased to $0.2 million in fiscal 1996. The
entire increase was attributable to $0.7 million of fiscal 1996 asset
expenditures primarily related to the internal development of Axicorp's billing
system and fiscal 1995 asset purchases of $0.3 million having a full year of
depreciation and amortization.

Interest income increased $0.2 million from fiscal 1995 to fiscal 1996 as a
result of higher average cash and cash equivalent balances generated primarily
from cash generated from operations.

Income taxes represented the Australian federal statutory tax rate applied
to income before income taxes, net of permanently non-deductible items.

LIQUIDITY AND CAPITAL RESOURCES

The Company's liquidity requirements arise from working capital needs,
purchases of network equipment including switches, peripheral equipment, and
international fiber cable capacity and interest and principal payments on
outstanding indebtedness, including capital leases. From time to time the
Company evaluates acquisitions of businesses which complement the business of
the Company. Depending on the cash requirements of potential transactions, the
Company may finance such transactions with a portion of the proceeds of the
Offering, bank borrowings or its cash flow from operations, or the Company may
raise additional funds through other financing vehicles. The Company, however,
has no present understanding, commitment or agreement with respect to any
acquisition, and is not currently involved in negotiations. There can be no
assurance that if the Company were to pursue such an opportunity, any such
acquisition would occur or that the funds to finance any such acquisition
would be available on reasonable terms, if at all.

Historically, the Company's working capital and liquidity needs have been
funded from the private placement of equity securities and, to a lesser
extent, through stockholder loans and capital leases. As of June 30, 1996, the
Company had a working capital deficit of $13.5 million primarily attributable
to the current portion of long-term obligations of $10.6 million. On July 31,
1996, the Company sold $15.8 million, net of transaction costs, of additional
equity in the Private Equity Sale which, on a pro forma basis as of June 30,
1996, would result in working capital of $2.3 million.

The Company currently anticipates spending approximately $50 million on the
improvement and expansion of the Network during the next 18 months, including
$10 million of capital expenditures in the remainder of 1996, which includes
the purchase of switches and related peripheral equipment for the
implementation of international gateways in Los Angeles and New York. The
expected 1997 and 1998 capital expenditures include switches, network
equipment, international fiber cable capacity, and other international
facilities.

The Company currently is in discussions to obtain a line of credit to
provide it with additional funding to meet its capital requirements and will
use capital lease financings as appropriate. There can be no assurance that
the Company will be able to obtain a line of credit or capital lease financing
on commercially reasonable terms, if at all. The Company believes that the net
proceeds from the Offering, together with the net proceeds from the Private
Equity Sale, borrowing capacity under an expected line of credit, available
vendor financing and cash flow from operations, will be sufficient to fund the
Company's working capital, capital expenditures and other cash needs for the
next 18 months. Additional funding through the incurrence of debt or sale of
additional equity will be required to meet the Company's growth plans beyond
the second quarter of 1998, although there can be no assurance that such
additional funds can be obtained on acceptable terms, if at all. If necessary
funds are not available, the Company's business and results of operations and
the future expansion of the business could be materially adversely affected.

BUSINESS

GENERAL

Primus is a multinational telecommunications company that focuses on the
provision of international and domestic long distance services. The Company
seeks to capitalize on the increasing business and consumer demand for
international telecommunications services generated by the globalization of
world economies and the worldwide trend toward deregulation of the
telecommunications sector. The Company has targeted North America, Asia-
Pacific and Europe as its primary service regions. The Company currently
provides services in the United States, Australia and the United Kingdom,
which are the most deregulated countries within the Targeted Regions and which
serve as regional hubs for expansion into additional markets within the
Targeted Regions. As part of the execution of this strategy, the Company has
commenced operations in Canada and Mexico. The Company expects to expand into
additional markets as deregulation occurs and the Company is permitted to
offer a full range of switched public telephone services.

For the year ended December 31, 1995 and the six months ended June 30, 1996,
the Company had pro forma net revenue of approximately $126 million and $92
million, respectively, after giving effect to the Company's March 1996
acquisition of Axicorp, the fourth largest telecommunications provider in
Australia. For the three months ended June 30, 1996, the Company had net
revenue of approximately $48 million. As of July 31, 1996, the Company had 221
full-time employees and approximately 24,000 customers.

The Company targets, on a retail basis, small- and medium-sized businesses
with significant international long distance traffic and ethnic residential
consumers and, on a wholesale basis, other telecommunications carriers and
resellers with international traffic. The Company provides a broad array of
competitively priced telecommunications services, including international long
distance to over 200 countries, domestic long distance, international and
domestic private networks, prepaid and calling cards and toll-free services,
as well as local switched and cellular services in Australia. The Company
markets its services through a variety of channels, including direct sales,
independent agents, direct marketing and associations.

The Company is implementing an international telecommunications Network to
reduce and control costs, improve service reliability and increase flexibility
to introduce new products and services. The Network currently consists of an
international gateway switch in Washington, D.C., points-of-presence in New
York and London, and leased transmission capacity connecting to the networks
of other international and domestic carriers. The Company also has
correspondent agreements with government-owned PTTs in India, Iran and
Honduras. The Company has installed three additional international gateway
switches in Melbourne, Sydney and Toronto, has acquired two international
gateway switches for installation in New York and Los Angeles and three other
switches for installation in Adelaide, Brisbane and Perth, all eight of which
are expected to be operational by the first quarter of 1997. The Company
expects to acquire an additional switch for installation in London and
additional switches and points-of-presence for installation in other major
metropolitan areas of the Targeted Regions. The Company expects to connect its
gateway switches between Sydney and Los Angeles with a trans-Pacific fiber-
optic cable link by the end of the first quarter of 1997. The Company also
intends to purchase additional switches and ownership in international fiber-
optic cables, install international gateway satellite earth station
facilities, lease additional transmission capacity and, where necessary,
obtain additional correspondent agreements.

INDUSTRY OVERVIEW

General. The international long distance industry, which involves the
transmission of voice and data from the domestic telephone network of one
country to another, is undergoing a period of fundamental change that has
resulted, and is expected to continue to result, in significant growth in
usage of international telecommunication services. In 1994, the international
long distance industry accounted for $50 billion in revenues and 53 billion
minutes of use, up from $29 billion in revenues and 28 billion minutes of use
in 1989. Industry sources estimate that by the year 2000 this market will have
expanded to $93 billion in revenues and 111 billion minutes of use,
representing compound annual growth rates from 1994 of 11% and 13%,
respectively. The following chart illustrates the estimated total 1994
domestic and international revenues for long distance calls in the Operating
Hubs and Mexico:

(PIE CHART SHOWING 1994 ESTIMATED TOTAL DOMESTIC AND INTERNATIONAL REVENUE FOR
LONG DISTANCE CALLS IN THE UNITED STATES, THE UNITED KINGDOM, AUSTRALIA AND
MEXICO.)

The Company believes the growth in international long distance services is
being driven by (i) increased demand for international telecommunications
services generated by the globalization of world economies and the worldwide
trend toward deregulation of the telecommunications sector, (ii) declining
prices and a wider choice of products and services driven by greater
competition resulting from privatization and deregulation, (iii) increased
telephone density and accessibility resulting from technological advances and
greater investment in telecommunications infrastructure, including deployment
of wireless networks, and (iv) increased international business and leisure
travel.

The competition spurred by privatization and deregulation, in addition to
resulting in a wider choice of products and services, has resulted in lower
prices. The Company believes, however, that the lower price environment
resulting from the increase in competition has been more than offset by cost
decreases, as well as an increase in telecommunications usage. For example,
based on FCC data for the period 1989 through 1994, per minute settlement
payments by U.S. based carriers to PTTs fell 26%, from $0.70 per minute to
$0.52 per minute. Over this same period, however, per minute international
billed revenue fell only 5%, from $1.02 in 1989 to $0.97 in 1994. Therefore,
gross profit per international minute (before local access charges) grew from
$0.32 in 1989 to $0.45 in 1994, a 41% increase. Although there can be no
assurances, the Company believes that as settlement rates and costs for leased
capacity continue to decline, international long distance will continue to
provide high revenue and gross profit per minute.

Classification of Service Providers. International long distance carriers
generally can be categorized according to ownership and use of transmission
facilities and switches. Although no carrier utilizes exclusively owned
facilities for the transmission of all of its long distance traffic, carriers
vary from being primarily facilities-based (i.e. they own and operate their
own land based or undersea cable and switches) to those that are purely
resellers of another carrier's transmission network. Generally, the first-tier
long distance companies (e.g., AT&T, MCI and Sprint in the United States;
British Telecom and Mercury in the United Kingdom; and Telstra and Optus in
Australia) are transmission facilities-based carriers that own and operate a
domestic fiber-based network. Second-tier long distance companies (e.g.,
Frontier and LCI in the United States; WorldCom and ACC in the United Kingdom;
and AAPT in Australia) own switching facilities but generally do not own cable

transmission facilities. The third-tier of the market consists of long
distance companies that are generally switchless resellers that rely on the
transmission facilities of other carriers.

Regulatory and Competitive Environment. Prior to deregulation, the long
distance carriers in any particular country generally were government-owned
monopoly carriers, such as British Telecom in the United Kingdom, Telstra in
Australia and Telmex in Mexico. Deregulation of a particular
telecommunications market typically has begun with the introduction of a
second long distance carrier, followed by the authorization of multiple
carriers. In the United States, one of the first deregulated markets,
deregulation began in the 1960's with MCI's authorization to provide long
distance service and was followed in 1984 by AT&T's divestiture of the RBOCs
and, most recently, by the passage of the 1996 Telecommunications Act.
Deregulation has occurred elsewhere, such as in the United Kingdom, and is
being implemented in other countries, including Australia and Mexico.

Call Dynamics. A long distance telephone call consists of three parts:
origination, transport and termination. Generally, a domestic long distance
call originates on a local exchange network and is transported to the network
of a long distance carrier. The call is then carried along the long distance
network to another local exchange network where the call is terminated. An
international long distance call is similar to a domestic long distance call,
but typically involves at least two long distance carriers: the first carrier
transports the call from the country of origination, and the second carrier
terminates the call in the country of termination. These long distance
telephone calls are classified as one of three types of traffic. A call made
from the United States to the United Kingdom is referred to as outbound
traffic for the United States carrier and inbound traffic for the United
Kingdom carrier. The third type of traffic, international transit traffic,
originates and terminates outside a particular country, but is transported
through that country on a carrier's network. Since most major international
fiber optic cable systems are connected to the United States, and
international long-distance prices are substantially lower in the United
States than in other countries, a large volume of international transit
traffic is routed through the United States.

International calls are transported by land-based or undersea cable or by
microwave via satellites. A carrier can obtain voice circuits on cable systems
either through ownership or leases. Ownership in cables is acquired either
through Indefeasible Rights of Use ("IRUs") or Minimum Assignable Ownership
Units ("MAOUs"). The fundamental difference between an IRU holder and an owner
of MAOUs is that the IRU holder is not entitled to participate in management
decisions relating to the cable system. Between two countries, a carrier from
each country owns a "half-circuit" of a cable, essentially dividing the
ownership of the cable into two equal components. Additionally, any carrier
generally may lease circuits on a cable from another carrier. Unless a carrier
owns a satellite, satellite circuits also must be leased from one of several
existing satellite systems.

Accounting Rate System. Under the accounting rate system (also known as the
settlement system), which is the traditional regulatory model, international
long distance traffic is exchanged under bilateral operating agreements, or
correspondent agreements, between carriers in two countries. Operating
agreements generally are three to five years in length and provide for the
termination of traffic in, and return traffic to, the carriers' respective
countries at a negotiated accounting rate, known as the Total Accounting Rate
("TAR"). In addition, operating agreements provide for network coordination
and accounting and settlement procedures between the carriers. Both carriers
are responsible for their own costs and expenses related to operating their
respective halves of the end-to-end international connection.

Settlement costs, which equal one-half of the TAR, are the fees owed to
another international carrier for transporting traffic on its facilities.
Settlement costs are reciprocal between each party to an operating agreement
at a negotiated rate (which must be the same for all United States-based
carriers, unless the FCC approves an exception). For example, if a foreign
carrier charges a U.S. carrier $0.30 per minute to terminate a call in the
foreign country, the U.S. carrier would charge the foreign carrier the same
$0.30 per minute to terminate a call in the United States. Additionally, the
TAR is the same for all carriers transporting traffic into a particular
country, but varies from country to country. The term "settlement costs"
arises because carriers essentially pay each other on a net basis determined
by the difference between inbound and outbound traffic between them. The
following chart illustrates an international long distance call using the
settlement system:

[DIAGRAM SHOWING TRADITIONAL METHOD OF TRANSPORTING INTERNATIONAL TRAFFIC
USING CORRESPONDENT AGREEMENTS]

Operating agreements typically provide that a carrier will return
terminating traffic ("return traffic") in proportion to the traffic it
receives. Return traffic generally is more profitable than outgoing traffic
because the settlement rate per minute is substantially greater than the
incremental cost of terminating a call in the country due to the lack of
marketing expense and billing costs, as well as the lower cost structure
associated with terminating calls in the United States. Generally, there is a
six-month lag between outbound traffic and the allocation of the corresponding
return traffic and, in certain instances, a minimum volume commitment must be
achieved before qualifying for receipt of return traffic.

Alternative Calling Procedures. As the international long distance market
has deregulated, long distance companies have devised alternative calling
procedures ("ACPs") in order to complete calls more economically than under
the accounting rate system. Some of the more significant ACPs include (i)
transit, (ii) refiling or "hubbing," (iii) international simple resale ("ISR")
and (iv) call-back. The most common method is transit, which allows traffic
between two countries to be carried through a third country on another
carrier's network. This procedure, which requires agreement among the
particular long distance companies and the countries involved, generally is
used either for overflow traffic during peak periods or where a direct circuit
may not be available or justified based on traffic volume. Refiling or
"hubbing" of traffic, which takes advantage of disparities in settlement rates
between different countries, allows traffic to a potential country to be
treated as if it originated in another country that enjoys lower settlement
rates with the destination country, thereby resulting in a lower overall costs
on an end-to-end basis. United States based carriers are beneficiaries of
refiling on behalf of other carriers because of low international rates. The
difference between transit and refiling is that, with respect to transit, the
carrier in the destination country has a direct relationship with the
originating carrier, while with refiling, the carrier in the destination
country is likely not to even know the identity of the originating carrier.
The choice between transit and refiling is determined primarily by cost. With
ISR, a carrier may completely bypass the settlement system by connecting an
international leased line to the public switch telephone network ("PSTN") of a
foreign country or directly to a customer premise. ISR currently is allowed by
applicable regulatory authorities between a limited number of international
routes, including Canada-United Kingdom, United States-United Kingdom, United
States-Sweden and United Kingdom-Australia and is currently increasing in use.
Call-back avoids the high international rates in a particular country of
origin by providing dial tone in a second country with a lower rate, typically
the United States.

Industry Strategies. Strategies to provide international long distance
services are driven by the emergence of ACPs and the increased demand for
seamless services on a global basis. First-tier service providers primarily
utilize correspondent agreements in order to provide international service.
Second-tier carriers and new entrants primarily are utilizing ACPs and are
developing networks to compete with the first-tier carriers and gain market
share. In response, first-tier carriers have formed alliances to provide
seamless services and one-stop shopping on a global basis. Examples include
Global One (an alliance among Sprint, Deutsche Telekom, France Telecom and
others), Concert (an alliance between British Telecom and MCI) and
WorldPartners (an alliance among AT&T, Unisource and others). Certain new
entrants, including the Company, are establishing their own operations in
multiple countries and, to the extent required to serve other selected
markets, alliances or other arrangements with other carriers. The following
chart illustrates an international long distance call using the Network:

[DIAGRAM SHOWING DIRECT METHOD OF TRANSPORTING INTERNATIONAL TRAFFIC THROUGH
PRIMUS CONNECTIONS]

Description of Operating Markets. The following is a summary of the size,
growth prospects and competitive and regulatory environments of the domestic
and international long distance industries in the Targeted Regions:

UNITED STATES. The United States long distance market is highly deregulated
and is the largest in the world. According to the FCC, in 1994 long distance
telephone revenue was $71.8 billion, including $13.2 billion from
international services (representing 15.5% of the total market). AT&T has
remained the largest long distance carrier in the U.S. market, with market
share of slightly more than 55%, while MCI and Sprint have market shares of
17% and 10%, respectively. AT&T, MCI and Sprint constitute what generally is
regarded as the first-tier in the United States long distance market. Other
large long distance companies with more limited ownership of transmission
capacity, such as WorldCom, Frontier and LCI, constitute the second-tier of
the industry. The remainder of the United States long distance market is
comprised of several hundred smaller companies, largely resellers, which are
known as third-tier carriers.

UNITED KINGDOM. Oftel estimates that the market for international and
domestic long distance services in the United Kingdom accounted for
approximately (Pounds)1.3 billion and (Pounds)4.2 billion in revenues,
respectively, during fiscal 1994. In the United Kingdom, British Telecom
historically has dominated the telecommunications market

and is the largest carrier. Mercury, which owns and operates interchange
transmission facilities, is the second largest carrier. The remainder of the
United Kingdom long distance market is comprised of an emerging market of
licensed telecommunications service providers, such as Energis, and switch-
based resellers, such as AT&T, WorldCom, MFS, ACC and Esprit.

AUSTRALIA. Austel estimates that during 1994, the market for all
telecommunication services was A$15 billion and the Company believes that the
market for international and domestic long distance services in Australia
during 1994 accounted for approximately A$10 billion in revenues. Telstra and
Optus are classified as "carriers" because they can own and operate local,
national and international transmission networks. Telstra, which is owned by
the Australian government, is a traditional facilities-based carrier with a
market share of approximately 80%. In addition to the Company and Optus,
Telstra currently competes against switched-based resellers such as AAPT, and
several switchless resellers and call-back service providers, including
PacStar. Australia is planning to further deregulate its long distance market
in June 1997 by allowing service providers other than Telstra and Optus to own
transmission facilities.

MEXICO. The market for long distance voice and data telephone services in
Mexico accounted for approximately 22.6 billion Pesos in 1994. In Mexico,
Telmex is currently the monopoly provider of long distance and local services.
In late 1996, however, the long distance market is scheduled to be opened to
competition. As a result, several United States-based long distance carriers
(such as AT&T and MCI) have formed alliances with Mexican partners to
construct long distance networks. Primus, along with MCI, WorldCom and others,
currently provides United States-Mexico cross border private line services.

PRIMUS STRATEGY

. Focus on Customers with Significant International Long Distance
Usage. The Company's primary focus is providing telecommunications
services to small- and medium-sized businesses with significant
international long distance traffic and to ethnic residential
consumers and, on a wholesale basis, to other telecommunications
carriers and resellers with international traffic. The Company
believes that the international long distance market offers an
attractive business opportunity given its size and, as compared to
the domestic long distance market, its higher revenue per minute,
gross margin and expected growth rate. Although the Company expects
to obtain a significant percentage of its revenue from offering
international long distance services, the Company currently
generates, and expects to continue to generate over the near term, a
greater percentage of net revenue from domestic long distance
services in an effort to build network traffic more quickly.

. Pursue Early Entry into Selected Deregulating Markets. Primus seeks
to be an early entrant into selected deregulating telecommunications
markets where it believes there is significant demand for
international long distance services, substantial growth and profit
potential, and the opportunity to establish a customer base and
achieve name recognition. The Company intends to use each Operating
Hub as a base to expand into deregulating markets within the Targeted
Regions and will focus its expansion efforts on major metropolitan
areas with a high concentration of target customers with
international traffic. The Company believes that management's
international telecommunications experience will assist it in
successfully identifying and launching operations in deregulating
markets.

consist of (i) a global backbone network connecting intelligent
gateway switches in the Targeted Regions, (ii) a domestic long
distance network presence in each of the Operating Hubs and certain
additional countries within the Targeted Regions and (iii) a
combination of leased facilities, resale arrangements and
correspondent agreements. In an effort to manage transmission costs,
the Company pursues a flexible approach with respect to Network
expansion. The Company initially obtains additional transmission
capacity on a variable-cost, per-minute leased basis, next acquires
additional capacity on a fixed-cost basis when traffic volume makes
such a commitment cost-effective, and ultimately purchases and
operates its own facilities only when traffic levels justify such
investment.

. Deliver Quality Services at Competitive Prices. The Company delivers
high-quality services at competitive prices and provides a high level
of customer service. The Company intends to maintain a low-cost
structure in order to offer its customers international and domestic
long distance services priced below that of its major competitors. In
addition, the Company intends to maintain strong customer
relationships through the use of trained and experienced service
representatives and the provision of customized billing services.

. Provide a Comprehensive Package of Services. The Company seeks to
provide a comprehensive package of services to create "one-stop
shopping" for its targeted customers' telecommunications needs,
particularly for small- and medium-sized businesses and ethnic
residential consumers that prefer a full service telecommunications
provider. The Company believes this approach strengthens its
marketing efforts and increases customer retention.

NETWORK

Network Design. The Network will consist of (i) a global backbone network
connecting intelligent gateway switches in the Targeted Regions, (ii) a
domestic long distance network presence within each of the Operating Hubs and
certain additional countries within the Targeted Regions and (iii) a
combination of leased facilities, resale arrangements and correspondent
agreements.

The Company has targeted North America, Asia-Pacific and Europe for the
development of the Network. Within each of these Targeted Regions, the Company
has selected the United States (North America), Australia (Asia-Pacific) and
the United Kingdom (Europe) as regional hubs for expansion into additional
markets within the Target Regions. These countries were selected based on their
market size, potential growth and favorable regulatory environments. The
Company has a domestic presence within each of these countries and plans to
construct its global backbone network by interconnecting these countries via
international gateway switches, and owned and leased transmission facilities.
The Company has an established customer base in Australia and is in the process
of building its customer base in major metropolitan areas in the Targeted
Regions, which will provide the Company with separate points of originating
traffic that experience peak network usage at different times of the day,
thereby allowing the Company to attain higher utilization of the Network. The
Company expects to expand into additional markets as deregulation occurs and
the Company is permitted to offer a full range of switched public telephone
services. For instance, the Company has used its United States operations to
initiate operations with and into Mexico and Canada. The Company intends to use
its United Kingdom operations to coordinate efforts to enter other major
metropolitan European markets in the European Union, including those in France
and Germany, in conjunction with the scheduled deregulation of the
telecommunication industry in certain European Union countries in 1998.

Network Implementation. The Network currently consists of an international
gateway switch in Washington, D.C., points-of-presence in New York and London,
and leased transmission capacity connecting to the networks of other
international and domestic carriers. The Company also has correspondent
agreements with India, Iran and Honduras. The Company has installed three
additional international gateway switches in Melbourne, Sydney and Toronto and
has acquired two international gateway switches for installation in New York
and Los Angeles and three other switches for installation in Adelaide, Brisbane
and Perth, all eight of

which are expected to be operational by the end of the first quarter of 1997.
The Company expects to acquire an additional switch for installation in London
and install additional points-of-presence and switches in other major
metropolitan areas of the Targeted Regions as the traffic usage warrants the
expenditure.

Each of the international gateway switches will be connected to the domestic
and international networks of both the Company and other carriers in a
particular market, allowing the Company to (i) provide seamless service, (ii)
package and market the voice and data services purchased from other carriers
under the "Primus" brand name and (iii) divert a portion of that market's
United States-bound return traffic through the Company's switches in the
United States. In addition, until the Company's customer base grows and it
penetrates other deregulating telecommunications markets, the Company intends
to transit a significant portion of its traffic through the United States.
After the Company's customer base grows and it develops sufficient traffic,
the Company intends to develop its own leased or owned facilities to connect
to its various switches. Where traffic is light or moderate, the Company
intends to obtain capacity to transmit traffic on a per-minute variable cost
basis. When traffic volume increases and such commitments are cost effective,
the Company intends to either lease or purchase lines on a monthly or longer
term basis at a fixed cost and acquire economic interests in transmission
capacity through IRUs to international points.

In countries with highly regulated markets and significant inbound traffic
from its customers and targeted customer segments, the Company intends to use
correspondent agreements when necessary. Assuming significant levels of
inbound and outbound traffic, correspondent agreements may allow the Company
to offer better value to customers calling these markets by improving the
Company's economics over these routes. The Company currently has correspondent
agreements with India, Iran and Honduras and is exploring the possibility of
obtaining additional correspondent agreements with PTTs in certain other
countries which are not expected to deregulate in the near future, although
there can be no assurance that the Company will enter into such agreements on
favorable terms, if at all.

SERVICES

Primus offers a broad array of telecommunications services through the
Network and through interconnection with the networks of other carriers. While
over time the Company intends to offer a broad range of bundled
telecommunication services, the availability of services within a particular
market will depend upon regulatory restraints and the availability of services
for resale. In order to create a global brand identity, the Company operates
under the name "Primus" in all of the Targeted Regions. In addition, the
Company operates under the name "Axicorp" in Australia.

The Company offers the following services in the United States, United
Kingdom and Australia:

. International and Domestic Long Distance. The Company provides
international long distance voice services to its customers to over
200 countries and provides domestic long distance voice services
within each of the Operating Hubs. On a market-by-market basis,
access methods required to originate a call vary according to
regulatory requirements and the existing domestic telecommunications
infrastructure. In the United States, access methods available to the
Company's customers include "1+", toll-free, dedicated (private line)
and prefix code access. In the United Kingdom, dedicated and prefix
code access are used to originate calls. In Australia, the Company
currently is a reseller of services provided by Telstra. When the
Company operates its own switches in Australia, its services will be
accessed through the use of toll-free, dedicated and prefix code
access.

. Private Network Services. For business customers, the Company designs
and implements international private network services that may be
used for voice, data and video applications. These services are
provided on a turnkey basis whereby the Company installs and operates
equipment necessary to provide end-to-end services at the customer's
premises. The Company's Mexican operations consist exclusively of the
provision of private network services to selected multinational
corporations.

In addition, on a market-by-market basis, the Company provides on a stand
alone and/or bundled basis the following services which the Company expects to
introduce over time in all of its markets:

. Prepaid and Calling Cards. The Company offers prepaid and calling
cards that may be used by customers for domestic and international
telephone calls within and from their home country. With the
Company's prepaid card service, a customer purchases a card that
entitles the customer to make phone calls on the card up to some
monetary limit. The customer is provided an access number (local or
toll free phone number) and personal identification number ("PIN").
The customer dials the access number that accesses the Company's
switch and an attached voice response unit. The unit confirms the
authority of the user to use the account by requiring the PIN to be
entered and confirms that a balance is available on the card. With
the Company's calling card service, the customer selects a PIN. The
account is then billed by Primus on a monthly basis as calls are made
using the card. The Company's prepaid cards are offered in the United
States and calling cards are offered in the United Kingdom. The
Company expects to introduce global prepaid and calling cards in 1997
that will enable customers to make telephone calls in most major
countries while they are outside their home country.

. Cellular Services. The Company is one of four national dealers
selling Telstra analog and digital cellular services in Australia.
The Company intends to provide cellular services on a resale basis in
the United States and the United Kingdom by the end of 1997.

. Local Switched Service. The Company intends to provide local service
on a resale basis as part of its "one-stop shopping" marketing
approach, subject to commercial feasibility and regulatory
limitations. The Company currently provides local switched service in
Australia.

. Toll-free Services. The Company currently provides domestic and
international toll-free services in the United States and intends to
offer such services in the United Kingdom and Australia when its
switches become operational in such countries.

New services the Company seeks to introduce in selected markets in 1997
include:

. Internet Services. The Company intends to offer switched and
dedicated access to the Internet for use by commercial and
residential customers. These services may be offered on a direct
connection to the Internet or on a resale basis. Once connected to
the Internet, customers will be able to access services provided by
others such as World Wide Web browsing, electronic mail, news feeds
and bulletin boards.

. Data Services. The Company intends to offer packet-switched and frame
relay data services in selected markets, a transmission standard
which utilizes statistical multiplexing technology. Frame relay
enables multiple users to share communication bandwidth for enhanced
data transmission.

. Value-Added Services. The Company intends to offer enhanced facsimile
services, audio and video conferencing, and voice-mail.

There can be no assurance that the Company will be able to launch such
services or that, if launched, such services will be successful.

The Company strives to provide personalized customer service and believes
that the quality of its customer service is one of its competitive advantages.
The Company's larger customers are actively covered by dedicated account and
service representatives who seek to identify, prevent and solve problems. The
Company provides toll-free, 24-hour a day customer service in the United
States, the United Kingdom and Australia. As of July 31, 1996, the Company
employed 44 full-time and 10 part-time customer service representatives.

CUSTOMERS

The Company's primary focus is providing telecommunications services, on a
retail basis, to small- and medium-sized businesses with significant
international long distance traffic and ethnic residential consumers and, on a
wholesale basis, other carriers and resellers with international traffic.
During the Company's initial growth

phase in each service market, however, the Company expects that it will build
revenue from a variety of customers with either local or long distance
(domestic or international) service needs. As of July 31, 1996, the Company
had 95 sales and marketing personnel operating from 10 offices.

Businesses. The Company's business sales and marketing efforts target small-
and medium-sized businesses with significant international long distance
traffic. The Company believes that these users are attracted to Primus
primarily due to its significant price savings compared to first-tier
carriers, and secondarily, its personalized approach to customer service and
support, including customized billing and bundled service offerings. The
Company also sells its services to large multinational corporations on an
opportunistic basis. As of July 31, 1996, the Company employed 60 full-time
direct sales representatives focused on the business market.

Residential Consumers. The Company's residential sales and marketing
strategy targets ethnic residential consumers who generate high international
traffic volumes. The Company believes that these consumers will be attracted
to Primus because of its significant price savings as compared to first-tier
carriers, simplified pricing structure, multilingual customer service and
support and bundled service offerings. As of July 31, 1996, the Company
employed 17 full-time direct sales representatives focused on the ethnic
residential consumers.

Telecommunications Carriers and Resellers. The Company competes for the
business of other telecommunications carriers and resellers primarily on the
basis of price and, to a lesser extent, service quality. The Company believes
that long distance services, when sold to telecommunications carriers and
other resellers, are, generally, a commodity product and therefore do not
benefit from special sales or promotional efforts. Sales to these other
carriers and resellers, however, help the Company maximize the use of the
Network and thereby minimize fixed costs per minute of use. As of July 31,
1996, the Company employed two direct sales professionals focused on
telecommunications carriers and resellers.

SALES AND MARKETING

The Company markets its services through a variety of sales channels as
summarized below:

AGENTS AND MEDIA
DIRECT INDEPENDENT AND
SALES SALES DIRECT
FORCE REPRESENTATIVES TELEMARKETING ASSOCIATIONS MAIL
------ --------------- ------------- ------------ ------

Small/Medium Business-
es..................... * * * * *
Consumers............... * * * * *
Telecommunications
Carriers/Resellers..... *
Multinational Business-
es..................... *

Direct Sales Force. The Company's direct sales force is comprised of 60
full-time employees who focus on the Company's small- to medium-sized business
customers with substantial international telecommunications traffic or traffic
potential. The Company also employs 17 full-time direct sales representatives
focused on ethnic residential consumers and two direct sales representatives
who exclusively sell wholesale services to other long distance carriers and
resellers. Direct sales personnel are compensated with a base salary plus
sales commissions.

The Company's direct sales efforts will be organized around regional hubs
supported by sales offices. The Company currently has offices in Washington,
D.C., Tampa, Toronto, Mexico City, London, Melbourne, Sydney, Adelaide,
Brisbane and Perth. The Company intends to open additional offices in Los
Angeles and New York City by the end of 1996 and thereafter, other major
United States metropolitan areas thereafter. These targeted metropolitan areas
have a large number of small- and medium-sized businesses and significant
ethnic populations.

Agents and Independent Sales Representatives. The Company supplements its
direct sales efforts with a network of agents and independent sales
representatives. These agents and representatives, who typically focus

on small- and medium-sized businesses, as well as ethnic residential
consumers, are paid commissions based on long distance revenue generated.
Within major metropolitan regions, the Company usually grants only
nonexclusive sales rights, requires its agents and representatives to maintain
minimum quotas and prohibits them from selling competitors' products.

Telemarketing. The Company employs 16 full-time telemarketing sales persons
to supplement sales efforts to ethnic residential consumers and small- and
medium-sized business customers. From time to time, the Company also engages
outside telemarketing agents to supplement its internal telemarketing efforts.

Associations. Axicorp successfully markets telecommunications services in
Australia to members of trade and professional associations. Axicorp develops
tailored marketing materials jointly with each association, attends meetings
and trade shows, sponsors events and advertises in newsletters. These
associations receive a fee based on revenue generated by sales to its members.
The Company intends to employ similar marketing programs in the United
Kingdom, the United States and in other markets as appropriate.

Media and Direct Mail. The Company uses a variety of print, television and
radio to increase name recognition in new markets. The Company uses targeted
media and direct mail primarily to reach specific small business or consumer
groups. For example, the Company reaches ethnic residential consumers by
print, media advertising campaigns in ethnic newspapers, and on ethnic radio
and television programs.

MANAGEMENT INFORMATION AND BILLING SYSTEMS

The Company uses various management information, network, and customer
billing systems in its different operating subsidiaries to support the
functions of network and traffic management, customer service, customer
billing, and financial reporting. Management believes that its systems are
adequate to meet the Company's needs in the near term, but as the Company
continues to grow, it will invest additional capital to purchase hardware and
software, license more specialized software, increase capacity and link its
systems among different countries.

United States. In the United States, the Company operates systems for
billing and financial reporting. The Company uses a customer billing system
developed by Electronic Data Systems Inc. ("EDS"). Under an agreement with EDS
through the year 2000, EDS supplies, operates and maintains this system and is
responsible for providing back-up facilities and disaster recovery. The EDS
system is widely used in the telecommunications industry and has been
customized to meet the Company's specific needs. The Company direct bills its
business, reseller, and the majority of its residential customers. The Company
also has capabilities established through suppliers to bill certain
residential customers through their respective LECs, which charge for the
Company's service in a monthly, all inclusive invoice. In addition, the
Company has developed a proprietary, local area network-based customer service
and support information system which is on-line with the EDS platform. The
Company believes that using an EDS billing platform ensures access to one of
the most technologically advanced and feature rich multifunctional platforms
in the industry. In addition to the billing capabilities, the platform
includes on-line customer service, fraud control and the ability to generate a
variety of reports. For financial reporting, the Company uses a combination of
the EDS system and a PC-based accounting system package.

Australia. In Australia, prior to its acquisition by the Company, Axicorp
had developed an in-house proprietary system for customer billing and customer
service and support. The Axicorp billing system is technologically advanced
and possesses features that allow Axicorp to provide its customers with a
single integrated invoice for long distance, local, and cellular services. All
customers are billed directly by Axicorp. Axicorp uses a purchased accounting
system package for financial reporting.

United Kingdom. In the United Kingdom, the Company direct bills its
customers through a billing system provided by Telia, which is the Company's
main network provider. Customer service is supported by in-house systems and
financial reporting is done through a PC-based accounting system package. The
Company is evaluating use of a third party billing platform once the Company
installs its own switch in the United Kingdom.

COMPETITION

The international telecommunications industry is highly competitive and
significantly affected by regulatory changes, marketing and pricing decisions
of the larger industry participants and the introduction of new services made
possible by technological advances. The Company believes that long distance
service providers compete on the basis of price, customer service, product
quality and breadth of services offered. The Company's Operating Hubs have
numerous competitors and there are limited barriers to entry in these markets.
The Company believes that as international telecommunications markets continue
to deregulate, competition in these markets will increase, similar to the
competitive environment that has developed in the United States following the
AT&T divestiture in 1984.

Many of the competitors are significantly larger, have substantially greater
financial, technical and marketing resources and larger networks than the
Company. These competitors include, among others, AT&T, MCI, Sprint, WorldCom,
Frontier and LCI in the United States; Telstra and Optus in Australia; and
British Telecom, Mercury, WorldCom and ACC in the United Kingdom.
Additionally, many larger competitors have formed global alliances, including
WorldPartners (AT&T), Concert (MCI and British Telecom) and Global One
(Sprint, France Telecom and Deutsche Telekom), in an attempt to capture market
share on a global basis.

Privatization and deregulation have had, and are expected to continue to
have, significant effects on competition in the industry. For example, as a
result of legislation recently enacted in the United States, RBOCs will be
allowed to enter the long distance market, AT&T, MCI and other long distance
carriers will be allowed to enter the local telephone services market, and
cable television companies and utilities will be allowed to enter both the
local and long distance telecommunications markets. In addition, competition
has begun to increase in the European Union telecommunications markets in
anticipation of the scheduled 1998 deregulation of the telecommunications
industry in most European Union countries.

The following is a brief summary of the competitive environment in each of
the three Operating Hubs:

United States. In the United States, which is the most competitive and among
the most deregulated markets in the world, competition in the long distance
industry is based upon pricing, customer service, network quality, and the
ability to provide value-added services. AT&T is the largest supplier of long
distance services, with MCI and Sprint being the next largest providers. In
the future, under provisions of recently enacted federal legislation, the
Company anticipates that it will also compete with RBOCs, LECs and Internet
providers in providing domestic and international long-distance services.

Australia. Australia is one of the most deregulated and competitive
telecommunications markets in the Asia-Pacific region. The Company's principal
competitors in Australia are Telstra, the dominant carrier, Optus, Vodafone,
AAPT and WXL, three other switched-based carriers and a number of switchless
resellers, including PacStar and CorpTel. See "--Network." The Company
believes that when certain carrier-status regulations are modified, currently
expected to occur in June 1997, competition in Australia will increase. The
Company competes in Australia by offering a comprehensive menu of
competitively-priced products and services, including value-added services,
and by providing superior customer service and support.

United Kingdom. The Company's principal competitors in the United Kingdom
are British Telecom, the dominant supplier of telecommunications services in
the United Kingdom, and Mercury, a subsidiary of Cable & Wireless. The Company
also faces competition from licensed public telephone operators (which are
constructing their own facilities-based networks) such as Energis, Colt and
MFS, from cable companies such as Telewest and SBC CableComms, and from
switch-based resellers such as WorldCom, ACC and Esprit. Other United States-
based carriers also may enter the United Kingdom market. The Company competes
in the United Kingdom by offering competitively-priced bundled and stand-alone
services, personalized customer service and value-added services.

GOVERNMENT REGULATION

As a multinational telecommunications company, Primus is subject to varying
degrees of regulation in each of the jurisdictions in which it provides its
services. Local laws and regulations, and the interpretation of such laws and
regulations, differ significantly among the jurisdictions in which the Company
operates. There can be no assurance that future regulatory, judicial and
legislative changes will not have a material adverse effect on the Company,
that domestic or international regulators or third parties will not raise
material issues with regard to the Company's compliance or noncompliance with
applicable regulations or that regulatory activities will not have a material
adverse effect on the Company. See "Risk Factors--Potential Adverse Effects of
Regulation." The regulatory framework in certain jurisdictions in which the
Company provides its services is briefly described below.

United States. In the United States, the provision of the Company's services
is subject to the provisions of the Communications Act, the 1996
Telecommunications Act and the FCC regulations thereunder, as well as the
applicable laws and regulations of the various states. The FCC exercises
jurisdiction over all facilities of, and services offered by,
telecommunications common carriers to the extent such services involve
jurisdictionally interstate communications, while state regulatory authorities
retain jurisdiction over jurisdictionally intrastate communications.

As a carrier offering services to the public, the Company must comply with
the requirements of common carriage under the Communications Act, including
the offering of service on a non-discriminatory basis at just and reasonable
rates, and obtaining FCC approval prior to any assignment of authorizations or
any transfer of de jure or de facto control of the Company. The Company is
classified as a non-dominant common carrier for domestic service and is not
required to obtain specific prior FCC approval to initiate or expand domestic
interstate services. The FCC requires domestic carriers, including the
Company, to maintain tariffs on file at the Commission. Although the
interstate tariffs of non-dominant carriers are subject to FCC review, they
are presumed lawful and are seldom contested. As a domestic non-dominant
carrier, the Company is permitted to make tariff filings on a single day's
notice and without cost support to justify specific rates. The FCC is
currently considering whether to exempt non-dominant domestic carriers from
federal tariffing requirements, pursuant to authority granted to the
Commission in the 1996 Telecommunications Act, although there can be no
assurance that the FCC will adopt this policy.

DOMESTIC SERVICE REGULATION. The 1996 Telecommunications Act, enacted in
February 1996, is intended to increase competition in the United States
telecommunications markets. The legislation opens the local services markets
by requiring LECs to permit interconnection to their networks and by
establishing LEC obligations with respect to unbundled access, resale, number
portability, dialing parity, access to rights-of-way, mutual compensation and
other matters. In addition, the legislation codifies the LECs' equal access
and nondiscrimination obligations and preempts inconsistent state regulation.
The legislation also contains special provisions that eliminate the
restrictions on the RBOCs and the GTE Operating Companies (the "GTOCs") from
providing long distance services. These new provisions permit an RBOC to enter
the "out-of-region" long distance market immediately upon the receipt of any
state and/or federal regulatory approvals otherwise applicable to the
provision of long distance service. These new provisions also permit an RBOC
to enter the "in-region" long distance market if it satisfies procedural and
substantive requirements, including obtaining FCC approval upon a showing that
in certain situations facilities-based competition is present in its market,
and that it has entered into interconnection agreements which satisfy a 14-
point "checklist" of competitive requirements. The GTOCs are permitted to
enter the long distance market as of the date of enactment of the 1996
Telecommunications Act, without regard to limitations by region, although
necessary regulatory approvals to provide long distance services must be
obtained, and the GTOCs are subject to the provisions of the 1996
Telecommunications Act that impose interconnection and other requirements on
LECs. The 1996 Telecommunications Act also addresses a wide range of other
telecommunications issues that may potentially impact the Company's
operations. It is unknown at this time precisely the nature and extent of the
impact that the legislation will have on the Company. As required by the
legislation, the FCC will be conducting a large number of proceedings over the
next year to adopt rules and regulations to implement the new statutory

provisions and requirements. On August 1, 1996, the FCC adopted an
Interconnection Order implementing the requirements that incumbent LECs make
available to new entrants interconnection and unbundled network elements, and
offer retail services for resale at wholesale rates.

STATE REGULATION. The Company's intrastate long distance operations are
subject to various state laws and regulations including, in most
jurisdictions, certification and tariff filing requirements. The vast majority
of the states require the Company to apply for certification to provide
intrastate telecommunications services, or at least to register or to be found
exempt from regulation, before commencing intrastate service. Certificates of
authority can generally be conditioned, modified, canceled, terminated, or
revoked by state regulatory authorities for failure to comply with state law
and/or the rules, regulations, and policies of the state regulatory
authorities. Fines and other penalties also may be imposed for such
violations.

The Company has received the necessary certificate and tariff approvals to
provide intrastate long distance service in 37 states. Applications for
certification are pending or will be filed in 11 other states. Although the
Company intends and expects to obtain operating authority in each jurisdiction
in which operating authority is required, there can be no assurance that one
or more of these jurisdictions will not deny the Company's request for
operating authority. The Company monitors regulatory developments in all 50
states to ensure regulatory compliance. The Company provides interstate
service nationwide under FCC interstate tariffs. To the extent that any
incidental intrastate service is provided in any state where the Company has
not yet obtained any required certification, the state commissions in that
state may impose penalties for any such unauthorized provision of service.

PSCs also regulate access charges and other pricing for telecommunications
services within each state. The RBOCs and other local exchange carriers have
been seeking reduction of state regulatory requirements, including greater
pricing flexibility. This could adversely affect the Company in several ways.
If regulations are changed to allow variable pricing of access charges based
on volume, the Company could be placed at a competitive disadvantage over
larger long distance carriers. The Company also could face increased price
competition from the RBOCs and other local exchange carriers for intra-LATA
and inter-LATA long distance services, which competition may be increased by
the removal of former restrictions on long distance service offerings by the
RBOCs as a result of the 1996 Telecommunications Act.

INTERNATIONAL SERVICE REGULATION. International common carriers, such as
the Company, are required to obtain authority under Section 214 of the
Communications Act and file a tariff containing the rates, terms, and
conditions applicable to their services prior to initiating their
international telecommunications services. The Company has obtained all
required authorizations from the FCC to use, on a facilities and resale basis,
various transmission media for the provision of international switched
services and international private line services.

Under new tariff rules applicable to international carriers, nondominant
international carriers such as the Company must file their international
tariffs and any revisions thereto with one day's notice in lieu of the 14-day
notice previously required. The Company has filed international tariffs for
switched and private line services with the FCC. Additionally, international
telecommunications service providers are required to file copies of their
contracts with other carriers, including correspondent agreements, with the
FCC within 30 days of execution. The Company has filed each of its
correspondent agreements with the FCC. The FCC's rules also require the
Company to file periodically a variety of reports regarding its international
traffic flows and use of international facilities. The FCC has recently
proposed to reduce certain reporting requirements of common carriers, although
the Company is unable to predict the outcome of this proposal.

In addition to the general common carrier principles, the Company must
conduct its international business in compliance with the FCC's international
settlements policy ("ISP"). The ISP establishes the permissible boundaries for
U.S.-based carriers and their foreign correspondents to settle the cost of
terminating each other's traffic over their respective networks. The amount of
payments (the "settlement rate") is determined by the negotiated accounting
rate specified in the correspondent agreement. Under the ISP, unless prior
approval is obtained, the settlement rate generally must be one-half of the
accounting rate. Carriers must obtain waivers of

the FCC's rules if they wish to use an accounting rate that differs from the
prevailing rate or vary the settlement rate from one-half of the accounting
rate. As a result of the FCC's pro-competition policies, the recent trend has
been to reduce accounting rates.

As a U.S.-based international carrier, the Company is also subject to the
FCC's "uniform settlements policy" designed to eliminate foreign carriers'
incentives and opportunities to discriminate in their correspondent agreements
among different U.S.-based carriers through "whipsawing." Whipsawing refers to
the practice of a foreign carrier to vary the accounting and/or settlement
rate offered to different U.S.-based carriers for the benefit of the foreign
carrier, which could secure various incentives by favoring one U.S-based
carrier over another. Under the uniform settlements policy, U.S.-based
carriers can only enter into correspondent agreements that contain the same
accounting rate offered to all U.S.-based carriers. When a U.S.-based carrier
negotiates an accounting rate with a foreign correspondent that is lower than
the accounting rate offered to another U.S.-based carrier for the same
service, the U.S.-based carrier with the lower rate must file a notification
letter with the FCC. If a U.S.-based carrier varies the terms and conditions
of its correspondent agreement in addition to lowering the accounting rate,
then the U.S.-based carrier must request a waiver of the FCC's rules. Both the
notification and the waiver requests are designed to ensure that all U.S.-
based carriers have an opportunity to compete for foreign correspondent return
traffic.

Among other efforts to prevent the practice of whipsawing and inequitable
treatment of similarly situated U.S.-based carriers, the FCC adopted the
principle of proportionate return to ensure that competing U.S.-based carriers
have roughly equitable opportunities to receive the return traffic that
reduces the marginal cost of providing international service. Consistent with
its pro-competition policies, the FCC prohibits U.S.-based carriers from
bargaining for special concessions from foreign partners.

FOREIGN OWNERSHIP LIMITATIONS. The Communications Act limits the ownership
of an entity holding a common carrier radio license by non-U.S. citizens,
foreign corporations and foreign governments. The Company does not currently
hold any radio licenses. These ownership restrictions currently do not apply
to non-radio facilities, such as fiber optic cable. There can be no assurance,
however, that foreign ownership restrictions will not be imposed on the
operation of non-radio facilities used for the provision of international
services. The FCC recently adopted new rules relating to the entry and
participation of foreign entities in the U.S. telecommunications market. Under
those rules, the FCC will scrutinize an ownership interest greater than 25%,
or a controlling interest at any level in a U.S. carrier by a dominant foreign
carrier, to determine whether the destination market of the foreign carrier
offers "effective, competitive opportunities" ("ECO"). The Commission imposes
the same ECO test and affiliation standard on U.S.-based carriers that invest
in dominant foreign carriers. The FCC may impose restrictions on affiliated
carriers not meeting the ECO test. The new rules also require international
carriers to notify the FCC 60 days in advance of an acquisition of a 10% or
greater interest by a foreign carrier in that U.S. carrier. The FCC has
discretion to determine that unique factors require application of the ECO
test or a change in regulatory status of the U.S. carrier even though the
foreign carrier's interest is less than 25%. These rules also reduce
international tariff notice requirements for dominant, foreign-affiliated
carriers from 45 days' notice to 14 days' notice. Such reduced tariff notice
requirements may make it easier for dominant, foreign-affiliated carriers to
compete with the Company. The 1996 Telecommunications Act partially amends
existing restrictions on foreign ownership of radio licenses by allowing
corporations with non-U.S. citizen officers or directors to hold radio
licenses. Other non-U.S. ownership restrictions, however, remain unchanged.
The effect on the Company of the 1996 Telecommunications Act or other new
legislation or regulations which may become applicable to the Company cannot
be determined.

CHANGING U.S. REGULATIONS. Regulation of the telecommunications industry is
changing rapidly. The FCC is considering a number of international service
issues in the context of several policy rulemaking proceedings and in response
to specific petitions and applications filed by other international carriers.
The FCC's resolution of some of these issues in other proceedings may
adversely affect the Company's international business (by, for example,
permitting larger carriers to take advantage of accounting rate discounts for
high traffic

volumes). The Company is unable to predict how the FCC will resolve the
pending international policy issues or how such resolution will affect its
international business. There can be no assurance that future regulatory
changes will not have a material adverse impact on the Company.

Australia. In Australia, the provision of the Company's services is subject
to federal regulation pursuant to the Telecom Act and federal regulation of
anti-competitive practices pursuant to the Trade Practices Act 1974. In
addition, other federal legislation, various regulations pursuant to delegated
authority and legislation, ministerial declarations, codes, directions,
licenses, statements of the Commonwealth Government policy and court decisions
affecting telecommunications carriers also apply to the Company.

The Australian market is undergoing deregulation in two phases. The first
phase of the deregulation process commenced in 1991 and continued in 1992 with
(1) the enactment of the Telecom Act, (2) the corporatization of the local
PTT, Telecom Australia, into the corporation now known as Telstra, (3) the
creation and licensing of a second general carrier, Optus, (4) an agreement by
the Australian Government with Optus not to grant another general carrier
license before July 1, 1997, (5) the creation of a system to enable service
providers to compete with the carriers in the provision of telecommunications
services from 1992, (6) the licensing of Vodafone as a third digital mobile
carrier, and (7) a declared Government policy of achieving full competition by
July 1, 1997, subject to regulation by the Australian Government and the
telecommunications regulatory authority (at the present time, AUSTEL), and
also by the competition regulatory authority (the Australian Competition and
Consumer Commission or "ACCC"), which is expected to be given new jurisdiction
over competition aspects of the Australian telecommunications industry. These
regulatory authorities will have responsibility for economic and technical
regulation of the telecommunications industry as well as promoting competition
and protecting consumers.

The Australian telecommunications industry continues to undergo
deregulation, and it is currently expected that the Australian Government will
license additional carriers, including the Company, to own transmission
facilities in July 1997. Amendments to the Telecom Act and possibly to
Australia's competition law, the Trade Practices Act, are expected to be made
prior to July 1, 1997 in order to change some aspects of, and to clarify, the
regulatory framework for this second phase of deregulation. Both Telstra and
Optus have requested that the Australian Government defer such date, and there
can be no assurance that the deregulatory process will proceed in accordance
with the Australian Government's announced timetable. Any delay in such
deregulatory process or in the granting of a license to the Company would
prohibit the Company from owning transmission facilities in Australia and
thereby limit the Company's ability to realize additional efficiencies
expected to result from the incorporation of owned facilities into its
Network.

In the Australian context, a distinction is drawn between carriers licensed
under the Telecom Act and all other providers of telecommunications services.
Telstra, Optus and Vodafone are the only licensed facilities-based carriers
currently operating in Australia with exclusive rights to the transmission
facilities that constitute their networks. Both Telstra and Optus are licensed
by the Australian Government as general carriers and mobile carriers. Telstra
has been designated by AUSTEL as a dominant carrier for international
services. However, Telstra is currently challenging AUSTEL's finding of
dominance in the Australian federal courts.

Until July 1997, other operators may provide service on a resale basis
pursuant to a class license established by Part 10 of the Telecom Act. These
resellers operate in a switched-based or switchless environment and rely on
one or more of the licensed carriers. There are currently three types of class
licenses--service providers license, international service providers license,
and the public access cordless telecommunications services license. The class
licenses set forth the regulatory requirements applicable to all operators
providing services governed by such license. As a reseller of domestic, local
and long distance service, cellular service and international service, the
Company must comply with the terms of the class license that applies to all
service providers until July 1997, or later if the deregulatory process in
Australia is delayed.

A service provider does not need to apply or register for a class license.
However, a registration system does exist, providing some advantages of
certainty to the service provider by ensuring that particular service is
provided under the relevant class license. The system has the commercial
disadvantage of disclosing certain information about a provider's activities.
In addition, a system of forced enrollment exists for AUSTEL to monitor certain
activities. This requirement for enrollment has been applied to eligible
international services and eligible PACT services.

The remainder of the telecommunications services in Australia, including
value-added services, is open to competition. From July 1997, operators other
than Telstra, Optus and Vodafone may become general licensed carriers. Axicorp
currently plans to become a licensed general carrier after July 1997. As a
general licensed carrier, Axicorp will be required to comply with the terms of
its own license and will be subject to the greater regulatory controls
applicable to licensed facilities-based carriers.

United Kingdom. In the United Kingdom, the provision of the Company's
services is subject to the provisions of the U.K. Telecommunications Act. The
Secretary of State for Trade and Industry, acting on the advice of the U.K.
Department of Trade and Industry (the "DTI") is responsible for granting UK
telecommunications licenses, while the Director General of Telecommunications
(the "Director General") and Oftel are responsible for enforcing the terms of
such licenses. Oftel attempts to promote effective competition both in networks
and in services to redress anticompetitive behavior. The Company is also
subject to general European Union law.

Until 1981, British Telecom was virtually the sole provider of public
telecommunications services throughout the United Kingdom. This virtual
monopoly ended when, in 1981, the British government granted Mercury a license
to run its own telecommunications system under the British Telecommunications
Act 1981. Both British Telecom and Mercury are licensed under the subsequent
U.K. Telecommunications Act to run transmission facilities-based
telecommunications systems and provide telecommunications services. In 1991,
the British government established a "multi-operator" policy to replace the
duopoly that had existed between British Telecom and Mercury. Under the multi-
operator policy, the DTI will recommend the grant of a license to operate a
telecommunications network to any applicant that the DTI believes has a
reasonable business plan and where there are no other overriding considerations
not to grant such license. All public telecommunications operators and
international simple resellers operate under individual licenses granted by the
Secretary of State for Trade and Industry pursuant to the U.K.
Telecommunications Act. Any telecommunications system with compatible equipment
that is authorized to be run under an individual license is permitted to
interconnect to British Telecom's network. Under the terms of British Telecom's
license, it is required to allow any such licensed operator to interconnect its
system to British Telecom's system, unless it is not reasonably practicable to
do so (e.g., due to incompatible equipment).

The Company's subsidiary, Primus Telecommunications, Inc., holds an ISR
license that authorizes it to provide switched voice services over leased
private lines to all international points. In addition, the Company (along with
approximately 45 other applicants, including AT&T, WorldCom and ACC) has
recently made application to the U.K. Secretary for Trade and Industry for a
license to provide international facilities-based voice services. Although the
Company currently expects such license to be granted by the end of the first
quarter of 1997, there can be no assurance that the Company will be granted the
license by such time, or at all. Failure to obtain such license would prevent
the Company from providing facilities-based services in the United Kingdom and
would have an adverse effect on the Company's ability to expand its operations.

TARIFFS. Telecommunications tariffs on operators in the United Kingdom
(excluding British Telecom) are generally not subject to prior review or
approval by regulatory authorities, although Oftel has historically imposed
price caps on British Telecom. The current price caps on British Telecom expire
at the end of July 1997. Oftel is considering whether it will be able to police
anti-competitive behavior effectively and is currently conducting a price
control review of the U.K. telecommunications industry. Key elements of Oftel's
final proposals in connection with this review include terminating price
controls on British Telecom in 2001, limiting increases in telecommunications
services charges for residential customers to the rate of inflation, and
continued

regulation of access charges by British Telecom to its competing
telecommunications service providers. With respect to the creation of a
detailed effective regulatory regime for the future, Oftel has published its
proposals in July 1995 in a document entitled "Effective Competition:
Framework for Action." Key elements of Oftel's plans included (1) moving to an
incremental cost basis for interconnection charges from 1997, (2) withdrawing
from detailed setting of some interconnection charges, (3) providing for
industry-wide contribution to the cost of maintaining "universal service," (4)
eliminating access deficit charges, (5) moving towards pricing based on
capacity charging for interconnection services and (6) developing an
interconnection regime for service providers. There can be no assurances that
such proposals will be implemented, in whole or in part, in the time frame
specified.

FAIR TRADING PRACTICES. Oftel is the principal regulator of the competitive
aspects of the U.K. telecommunications industry. Oftel's limited authority in
this area is derived from the powers given to Oftel under the U.K.
Telecommunications Act and from the terms of the licenses granted under the
U.K. Telecommunications Act. Any dispute between Oftel and a
telecommunications service provider may be referred on appeal to the U.K.
Monopolies and Mergers Commission, which may conduct a detailed and lengthy
review of the facts surrounding such dispute. Furthermore, Oftel has no
authority to impose fines for a breach of the terms of a license issued under
the U.K. Telecommunications Act, and third parties have no right to damages
for a past breach. Oftel has expressed its view that the current regulatory
regime is both obscure and uncertain. Although Oftel is currently seeking more
power to police the competitive aspects of the U.K. telecommunications
industry, no assurances can be given that it will be successful in its efforts
or that it will be able to prohibit anti-competitive conduct harmful to the
Company. The Company is also subject to general European law, which, among
other things, prohibits certain anti-competitive agreements and abuses of
dominant market positions through Articles 85 and 86 of the Treaty of Rome.
The European Commission is entrusted with the principal enforcement powers
under European Union competition law. It has the power to impose fines of up
to 10% of a group's annual revenue in respect of breaches of Articles 85 and
86. In most cases notification of potentially infringing agreements to the
Commission under Article 85 with a request for an exemption protects against
the risk of fines from the date of notification.

In March 1996, Oftel published an interim report on incremental costs
detailing steps to develop a methodology to calculate such costs. The report
has identified two models: "top-down" developed by British Telecom, and
"bottom up" favored by the industry. Incremental costs play a key role in
Oftel's proposals for the control of British Telecom's interconnection charges
as of August 1997. There is a risk that if agreement to costing methodologies
to be used by British Telecom is delayed or does not occur, the matter will be
referred to the MMC which could mean that the implementation of proper
transparency and allocation of costs when operators are seeking
interconnection with British Telecom will be seriously delayed.

Mexico. In Mexico, the provision of the Company's services is subject to the
provisions of the 1940 General Communications Law, 1995 Federal
Telecommunications Law and 1990 Telecommunications Regulations, which provide
the general legal framework for the regulation of telecommunications services
in Mexico. Since the enactment of the 1995 Federal Telecommunications Law, the
Mexican government has adopted several implementing rules regarding
interconnection, long distance services, numbering and signaling, and other
rules are pending.

Pursuant to the 1995 Federal Telecommunications Law, the Mexican government
recently created an independent telecommunications commission that will
regulate and oversee the telecommunications sector in Mexico. The Federal
Telecommunications Commission will take over many of the functions and
responsibilities of the Secretariat of Communications and Transportation
("SCT"). In particular, the Commission's powers and attributions include (i)
the administration of the radioelectric spectrum, (ii) the administration of
the Telecommunications Registry, (iii) to promote and oversee the efficient
interconnection between the public telecommunications networks, (iv) to
resolve interconnection disputes between the concessionaires, (v) to impose
specific obligations on concessionaires that have substantial market power in
the relevant market and (vi) to opine regarding the granting, extension,
assignment or revocation of concessions and permits.

The 1995 Federal Telecommunications Law classifies telecommunications
networks into public or private depending on the use of the network. Public
telecommunications networks are those networks that are used to

provide commercial telecommunications services to the public. Private
telecommunications networks are those that are used to satisfy the specific
telecommunications needs of persons and that do not offer telecommunications
services to the public.

Operators of private networks do not require any authority from the
government unless they use the radio frequency spectrum. Public
telecommunications network operators require specific authority from the
government, which will vary depending on whether a carrier intends to resell
or operate as a facilities-based carrier. "Concessionaires" of public
telecommunications networks are those facilities-based carriers that require a
concession from the federal government to use the radio spectrum, satellite
links or any form of terrestrial cables to provide public telecommunications
services. "Resellers" (or "vendors") of telecommunication services are those
carriers that provide telecommunications services to the public through the
use of capacity acquired from concessionaires of public telecommunications
networks. Resellers only require a permit. No specific authority from the SCT
is required to provide value-added services. However, parties that wish to
provide value-added services must register in the SCT's Telecommunications
Registry. The Company obtained registration to provide such services in August
1996, and currently plans to provide value-added services including Internet
access, enhanced facsimile, voice mail retrieve functionalities, electronic
mail and call store and forward.

The Company, through its subsidiary Primus Telecommunicaciones de Mexico,
S.A. de C.V., is currently providing private network management services to
companies that already have leased a private network to serve their internal
corporate needs. Private network management services qualify as unregulated
services in Mexico and do not require any type of authorization from any
government authority.

In July 1994, the SCT issued the rules for the interconnection of competing
long distance carriers with Telmex's network. The rules provide that Telmex is
required to make 60 of its switches available to its competitors by January 1,
1997, and gradually increase the number of switches until all of its switches
are available to competitors after January 1, 2001. In addition, the rules
provide that as of January 1, 1997, competing carriers may, at their own cost,
interconnect to other switches in Mexico even if they are not included in the
list of 60 switches that Telmex has to make available by 1997.

In this regard, in April 1996, the SCT established the structure of the
principal rates that Telmex will charge new long distance carriers for
interconnection with its network and set the rates for 1997 and 1998. On June
21, 1996, the SCT issued rules governing long distance services, as well as
the Basic Technical Plans for Numbering and for Signaling, which address a
number of technical issues relating to the commencement of competition in long
distance services. The new long distance rules establish the framework and
schedule for the provision of competitive long distance services including
rules regarding presubscription, numbering access codes, allocation of service
related liability, billing and collection and certain consultation and
information sharing mechanisms among service providers and the SCT. The rules,
however, do not address the transmission of international long distance
traffic.

AXICORP

Axicorp began operations in September 1993 in order to capitalize on the
opportunities arising from the advent of the deregulation of the
telecommunications industry in Australia. Prior to the acquisition, Axicorp
pursued a strategy of reselling long distance, local switched and cellular
services at a discount to the prices charged by Telstra, the former monopoly
telecommunications provider in Australia. Axicorp originally marketed

and sold its services through sales agents to professional and trade
associations. All of Axicorp's billing and collection functions were conducted
by Telstra.

Since acquiring Axicorp in March 1996, Primus has been investing substantial
resources to transform Axicorp's strategy and operations to those of a
facilities-based carrier focused on the provision of international and
domestic long distance services. The Company has acquired five switches for
use in Australia, which are expected to be operational by the end of the first
quarter of 1997, and has focused on increasing the number of higher-margin,
higher-volume business customers with significant international long distance
traffic. As part of its increasing focus on business customers, the Company is
increasing Axicorp's direct sales force and reducing its reliance on marketing
through associations. In addition, Axicorp's switch network will be integrated
into the Network and the Company intends to offer additional services in
Australia, including prepaid and calling cards, audio-conferencing and toll-
free services.

The Company believes that the integration of Axicorp into the Company's
operations and strategy will be enhanced by certain Australian regulatory
changes expected to become effective in July 1997. Under current regulations,
only Telstra and Optus are licensed as full service facilities-based carriers.
The Australian government, however, has indicated plans to deregulate the
Australian telecommunications market in July 1997, which would permit Axicorp
and others to own transmission facilities. Although both Telstra and Optus
have requested the government to delay the July 1997 implementation of
deregulation, the Company believes that any such delay would not affect the
Company's ability to own and operate its network of switches within Australia.
See "--Government Regulation."

The Company acquired Axicorp for $5.7 million in cash, including transaction
costs, 455,000 shares of Series A Stock and seller financing consisting of two
notes (the "Seller Notes"), one for $4.1 million payable to Fujitsu Australia
Limited, and the other for $4.0 million payable to the individual shareholder
sellers. The sellers are holding as security approximately 25% of their shares
in Axicorp under a share mortgage for the Seller Notes. These shares will be
delivered to the Company when the notes are paid in full. In turn, the Company
is holding 248,334 shares of the Series A Stock issued to the sellers as
collateral for the Axicorp shares withheld. These shares of Series A Stock
will be released to the sellers once the remaining Axicorp shares are
received. Pusuant to its terms, the Series A Stock will be converted into
Common Stock upon the completion of the Offering.

EMPLOYEES

The following table summarizes the number of full-time employees of the
Company, by region and classification:

UNITED KINGDOM/ ASIA-
NORTH AMERICA EUROPE PACIFIC TOTAL
------------- --------------- ------- -----

Management and Administrative...... 7 6 22 35
Sales and Marketing................ 29 15 51 95
Customer Service and Support....... 11 7 26 44
Technical.......................... 8 6 33 47
--- --- --- ---
Total............................ 55 34 132 221
=== === === ===

The Company never has experienced a work stoppage, and none of its employees
is represented by a labor union or covered by a collective bargaining
agreement. The Company considers its employee relations to be good.

PROPERTIES

The Company's headquarters in McLean, Virginia consist of approximately
4,585 square feet of office space under a lease that expires in September
1997. The Company anticipates extending this lease and to lease

additional space in the same building. In addition the Company leases a sales
office in Tampa, Florida consisting of 2,859 square feet, which lease expires
in April 1998. The Company also leases a 2,575 square foot facility which
houses the Company's Washington, D.C. switch through May 1997, and leases a
5,350 square foot facility in Los Angeles, California at which it intends to
locate an international gateway switch.

The Axicorp facilities consist of administrative offices and other
facilities aggregating approximately 30,000 square feet. Axicorp's leases
expire at varying times from January 1997 to August 1999. In the United
Kingdom, the Company leases approximately 3,250 square feet of office space
which expires in April 1999. In Mexico, the Company leases approximately 83
square feet of office space in Mexico City for a term expiring in October
1997. In Toronto, the Company leases approximately 420 square feet expiring
July 2001.

Management believes that the Company's present office facilities, together
with additional space currently under discussion with its Virginia landlord,
are adequate for its anticipated operations, and that similar space can
readily be obtained as needed. As its network of owned digital switches grows,
the Company will have to lease additional locations to house these facilities.

LEGAL PROCEEDINGS

The Company is from time to time involved in litigation incidental to the
conduct of its business. There is no pending legal proceeding to which the
Company is a party which the Company believes is likely to have a material
adverse effect on the Company's business, financial condition or results of
operations.

MANAGEMENT

EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES

The executive officers, directors and key employees of the Company are as
follows:

YEAR OF EXPIRATION
NAME AGE POSITION OF TERM AS DIRECTOR
---- --- -------- -------------------

K. Paul Singh(1)........ 45 Chairman of the Board of Directors, 1999
President, and Chief Executive
Officer
Neil L. Hazard.......... 44 Executive Vice President and Chief N/A
Financial Officer
John F. DePodesta....... 51 Executive Vice President, Law and 1999
Regulatory Affairs, and Director
George E. Mattos........ 46 Vice President of Operations N/A
John Melick............. 37 Vice President of Sales and Marketing N/A
Thomas R. Kloster....... 36 Corporate Controller N/A
Ravi Bhatia............. 48 Chief Operating Officer, Axicorp N/A
Peter Slaney............ 55 General Manager, Primus N/A
Telecommunications International,
Inc.
Paul Keenan............. 37 General Manager of Mobile Services, N/A
Axicorp
Sim Thiam Soon.......... 43 General Manager of Operations, Axicorp N/A
Herman Fialkov(2)....... 74 Director 1997
David E. Hershberg(2)... 59 Director 1997
Andrew B. Krieger(3).... 50 Director 1998
John Puente(1)(3)....... 66 Director 1998

- --------
(1) Member of Nominating Committee
(2) Member of Compensation Committee
(3) Member of Audit Committee

K. Paul Singh co-founded the Company in 1994 with Mr. DePodesta and serves
as its Chairman, President and Chief Executive Officer. From 1991 until he co-
founded the Company, he served as the Vice President of Global Product
marketing for MCI. Prior to joining MCI, Mr. Singh was the Chairman and Chief
Executive Officer of OTI, a provider of private digital communications in over
26 countries which he founded in 1984 and was purchased by MCI in 1991. See
"Certain Transactions."

Neil L. Hazard joined the Company in 1996 as its Executive Vice President
and Chief Financial Officer. Prior to joining the Company, Mr. Hazard was
employed by MCI in several executive positions, most recently as its Director
of Corporate Accounting and Financial Reporting, responsible for consolidation
of MCI's financial results, external reporting to stockholders and SEC
reporting. Mr. Hazard served as acting Controller of MCI for six months and as
Director of Global Product Marketing. Prior to joining MCI in 1991, Mr. Hazard
served as the Chief Financial Officer of OTI.

John F. DePodesta co-founded the Company in 1994 with Mr. Singh, and serves
as a director and its Executive Vice President Law and Regulatory Affairs. In
addition to his position with the Company, Mr. DePodesta serves as the Senior
Vice President, Law and Public Policy for Genesis Health Ventures, Inc. and
the Chairman of the Board of Iron Road Railways Incorporated, which he co-
founded in 1994. Additionally, since 1994 he has been "of counsel" to the law
firm of Pepper, Hamilton & Scheetz, where he was previously a partner. Before
joining Pepper, Hamilton & Scheetz, Mr. DePodesta served as the General
Counsel of Consolidated Rail Corporation. See "Certain Transactions."

George E. Mattos joined the Company in 1994 as its Vice-President of
Operations. Prior to joining the Company, Mr. Mattos held several positions
with MCI, most recently as a Senior Manager responsible for the development of
a software monitoring system for customer service, installation, operation and
maintenance of MCI's international telecommunications network. Mr. Mattos
previously was part of MCI's switching and network intelligence facilities
where he was responsible for commencing switched voice service to various
countries.

John Melick joined the Company in 1994 as its Vice President of Sales and
Marketing. Prior to joining the Company, he was a Senior Manager with MCI
responsible for the day-to-day management of its global product portfolio in
Latin American and the Caribbean region. He joined MCI in 1991 at the time of
the acquisition of OTI where he managed the development of OTI's service
expansion into Mexico and Latin America.

Thomas R. Kloster joined the Company in 1996 as its Corporate Controller.
Prior to joining the Company, Mr. Kloster was employed by MCI as Senior
Manager of Corporate Accounting and Reporting, responsible for various facets
of MCI's consolidation of financial results, external and internal reporting,
and accounting for ventures and emerging businesses. Prior to joining MCI in
1994, Mr. Kloster served as a Senior Manager with Price Waterhouse LLP.

Ravi Bhatia joined the Company in October 1995 as the Managing Director of
Primus Telecommunications Pty., Ltd. (Australia) and in March 1996 became the
Chief Operating Officer of Axicorp and as such is responsible for implementing
the Company's business strategy in Australia. Mr. Bhatia has over 26 years of
international experience in the telecommunications industry, which includes 9
years of employment with MCI in various sales and marketing positions. Most
recently, he served as the Director of Sales and Marketing for MCI in the
South Pacific Region, based in Sydney.

Peter Slaney joined the Company in 1996 as the Managing Director of Axicorp.
Mr. Slaney was previously a co-founder and served as Managing Director of
Axicorp since its inception in 1993. Prior to forming Axicorp, Mr. Slaney
served as General Manager of the Telecommunications Group of Paxus Australia,
a group that provided professional services and consulting to Telstra. The
majority of Mr. Slaney's career was spent at IBM Corporation where he worked
for 20 years in various capacities, including as an Account Executive Manager
in the personal computer market.

Paul Keenan joined the Company in 1996 as General Manager of Axicorp's
cellular business unit. Mr. Keenan co-founded Axicorp in 1993 and served as
its General Manager, Finance and Administration until he joined the Company.
Previously, Mr. Keenan held several positions, including that of Chief
Manager, Accounting and Administration with the Victorian Development Fund, an
investment banking organization.

Sim Thiam Soon joined the Company in 1996 as General Manager of Operations
of Axicorp. Mr. Sim co-founded Axicorp in 1993 and served as its General
Manager of Operations until joining the Company. Previously, Mr. Sim managed
systems development and integration for financial institutions and consultants
in Australia and New Zealand, including the ABN Bank, the Australian Bank and
the DMR Group.

Herman Fialkov became a director of the Company in 1995. He is currently the
General Partner of PolyVentures Associates, L.P., a venture capital firm and
has been associated with various venture capital firms since 1968. Previously,
he was an officer and director of General Instrument Corporation which he
joined in 1960 as a result of its acquisition of General Transistor
Corporation, a company Mr. Fialkov founded.

David E. Hershberg became a director of the Company in 1995. Mr. Hershberg
is the founder, President and CEO of WorldComm Systems, Inc., a system
integrator of satellite earth stations. From 1976 to 1994, Mr. Hershberg was
the President and Chief Executive Officer of Satellite Transmission Systems,
Inc., a global provider of satellite telecommunications equipment, and became
a Group President of California Microwave, Inc., a company that acquired
Satellite Transmission Systems, Inc.

Andrew B. Krieger became a director of the Company in 1995 while serving as
the Managing Director of Horowitz and Goldman, a New York based law firm. In
1977, Mr. Krieger founded, and is President and Chief Executive Officer of
what is currently Krieger Associates, an investment banking, asset management
and estate planning financial services firm. He also serves on the board of
WorldComm Systems, Inc. See "Certain Transactions."

John Puente became a director of the Company in 1995. From 1987 to 1995, he
was Chairman of the Board and CEO of Orion Network Systems, a satellite
telecommunications company. Mr. Puente is currently Chairman of the Board of
Telogy Networks, Inc., a privately-held company. Prior to joining Orion, Mr.
Puente was Vice Chairman of M/A-Com Inc., now known as Hughes Network Systems,
Inc., a diversified telecommunications and manufacturing company, which he
joined in 1978 when M/A-Com acquired Digital Communications Corporation, a
satellite terminal and packet switching manufacturer of which Mr. Puente was a
founder and Chief Executive Officer.

CLASSIFIED BOARD OF DIRECTORS

Pursuant to the Company's By-Laws, the Board of Directors is divided into
three classes of directors each containing, as nearly as possible, an equal
number of directors. Directors within each class are elected to serve three-
year terms and approximately one-third of the directors sit for election at
each annual meeting of the Company's stockholders. A classified board of
directors may have the effect of deterring or delaying any attempt by any
group to obtain control of the Company by a proxy contest since such third
party would be required to have its nominees elected at two separate annual
meetings of the Board of Directors in order to elect a majority of the members
of the Board of Directors. Directors who are elected to fill a vacancy
(including vacancies created by an increase in the number of directors) must
be confirmed by the stockholders at the next annual meeting of stockholders
whether or not such director's term expires at such annual meeting. See
"Description of Capital Stock--Takeover Protection."

DIRECTOR COMPENSATION

The Company pays cash compensation to outside board members who are not
otherwise consultants to the Company. Each such board member is entitled to
receive $500 for each meeting of the Board of Directors, or any committee
thereof, attended by such board member in person or by telephone. The Company
also has adopted a Director Plan under which options for up to a total of
shares of Common Stock will be issued to those directors of the Company that
are not also employees of the Company. Under the Director Plan, each of the
current non-employee directors has received options with respect to a total of
shares at an exercise price of $ per share.

COMMITTEES OF THE BOARD

The Company's Board of Directors has appointed an Audit Committee,
Nominating Committee and a Compensation Committee.

Audit Committee. The Audit Committee, which currently consists of Messrs.
Krieger (Chairman) and Puente, has the authority and responsibility to hire
one or more independent public accountants to audit the Company's books,
records and financial statements and to review the Company's systems of
accounting (including its systems of internal control); to discuss with such
independent public accountants the results of such audit and review; to
conduct periodic independent reviews of the systems of accounting (including
systems of internal control); and to make reports periodically to the Board of
Directors with respect to its findings.

Nominating Committee. The Nominating Committee, which currently consists of
Messrs. Puente (Chairman) and Singh, is responsible for selecting those
persons to be nominated to the Company's Board of Directors.

Compensation Committee. The Compensation Committee, which currently consists
of Messrs. Fialkov (Chairman) and Hershberg, is responsible for fixing the
compensation of the Chief Executive Officer and the other executive officers,
as well as making recommendations to the Board of Directors with respect to
other compensation matters such as those relating to the operation of the
Plans and approving certain aspects of the Company's management bonus plan.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

None of the members of the Compensation Committee has any interlocking or
other relationship with the Company that would call into question his
independence with respect to his duties.

EXECUTIVE COMPENSATION

The following table sets forth the compensation paid by the Company for
services rendered in all capacities during 1995 to the Company's chief
executive officer. No other executive officer of the Company received total
annual salary and bonus in excess of $100,000 during 1995.

SUMMARY COMPENSATION TABLE

LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------- ------------
OTHER ANNUAL SECURITIES
COMPENSATION UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS ($) OPTIONS ($) COMPENSATION
- --------------------------- ---- -------- ----- ------------ ------------ ------------

K. Paul Singh,
Chairman and Chief
Executive Officer..... 1995 $185,000(1) -- -- -- --

- --------
(1) Of this amount, the payment of $77,200 was deferred and subsequently paid
on July 31, 1996. See""--Employment Contract."

STOCK OPTION PLANS

Employee Stock Option Plan. The Company established the Employee Plan for
its employees on January 2, 1995 which provides for the grant to selected
employees of the Company and its Subsidiaries who contribute to the
development and success of the Company and its Subsidiaries of both "incentive
stock options" within the meaning of Section 422 of the Code ("ISOs") and
options that are non-qualified for federal income tax purposes ("NQSOs"). The
total number of shares of Common Stock for which options may be granted
pursuant to the Employee Plan is , subject to certain adjustments
reflecting changes in the Company's capitalization. The Employee Plan is
currently administered by the Board of Directors, although it provides for its
administration by a Committee of the Board. The Board of Directors determines,
among other things, which employees will receive options under the Employee
Plan; the time when options will be granted; the type of option (ISO or NQSO,
or both) to be granted, the number of shares subject to each option, the time
or times when the options will become exercisable and expire, and, subject to
certain conditions discussed below, the option price and duration of the
option. Board members administering the Employee Plan may vote on any matters
affecting the administration of the Plan, except that no member may act upon
the granting of an option to himself or herself.

The exercise price of the options granted under the Employee Plan is
determined by the Board of Directors, but may not be less than the fair market
value per share of the Common Stock on the date the option is granted. If,
however, an ISO is granted to any person who, at the time of the grant, owns
capital stock possessing more than 10% of the total combined voting power of
all classes of the Company's capital stock, then the exercise price for such
ISO may not be less than 110% of the fair market value per share of the Common
Stock on the date the option is granted. The Board of Directors also
determines the method of payment for the exercise of options under the
Employee Plan, and may consist entirely of cash, check, promissory notes or
Common Stock having a fair market value on the date of surrender equal to the
aggregate exercise price.

Options are not assignable or transferrable other than by will or the laws
of descent and distribution. If an employee's employment with the Company is
terminated for any reason, such employee's options exercisable on the date of
termination are exercisable for three months following the date of
termination. If the Board of Directors makes a determination that a terminated
employee engaged in disloyalty to the Company, disclosed proprietary
information, is convicted of a felony, or breached the terms of a written
confidentiality agreement or non-competition agreement, all unexercised
options held by such employee terminate upon the earlier of the date of such
determination or the date of termination. If an employee becomes disabled or
deceased while an employee of the Company, such employee's options that are
exercisable on the date of disability or death will remain exercisable for
twelve months following the date of disability or death; provided, however,
that if a disabled employee commences employment with a competitor of the
Company during that twelve-month period, all options held by the employee
terminate immediately.

Options issued pursuant to the Employee Plan outstanding on the date of a
"change in control" of the Company become immediately exercisable on such
date. A change in control for purposes of the Employee Plan includes the
acquisition by any person or entity of the beneficial ownership of 50% or more
of the voting power of the Company's stock, the approval by the Company's
shareholders of a merger, reorganization or consolidation of the Company in
which the Company's shareholders do not own 50% or more of the voting power of
the stock of the entity surviving such a transaction, the approval of the
Company's shareholders of an agreement of sale of all or substantially all of
the Company's assets, and the acceptance by the Company's shareholders of a
share exchange in which the Company's shareholders do not own 50% or more of
the voting power of the stock of the entity surviving such exchange.

There are no federal income tax consequences to the Company on the grant or
exercise of an ISO. If an employee disposes of stock acquired through the
exercise of an ISO within one year after the date such stock is acquired or
within two years after the grant of the ISO (a "Disqualifying Disposition"),
the Company will be entitled to a deduction in an amount equal to the
difference between the fair market value of such stock on the date it is
acquired and the exercise price of the ISO. There are no tax consequences to
the Company if an ISO lapses before exercise or is forfeited. The grant of a
NQSO has no immediate tax consequences to the Company. Upon the exercise of a
NQSO by an employee, the Company is entitled to a deduction in an amount equal
to the difference between the fair market value of the share acquired through
exercise of the NQSO and the exercise price of the NQSO. There are no tax
consequences to the Company if a NQSO lapses before exercise or is forfeited.

An employee who receives an ISO is not subject to federal income tax on the
grant or exercise of the ISO; however, the difference between the option price
and the fair market value of the Common Stock received on the exercise of the
ISO ("ISO Stock") is an adjustment for purposes of the alternative minimum
tax. Upon the exercise of an ISO, an employee will have a basis in the ISO
Stock received equal to the amount paid. An employee will be subject to
capital gain or loss upon the sale of ISO Stock, unless such sale constitutes
a Disqualifying Disposition, equal to the difference between the amount
received for the stock and the employee's basis in such. The gain or loss will
be long- or short-term, depending on the length of time the ISO Stock was held
prior to disposition. There are no tax consequences to an employee if an ISO
lapses before exercise or is forfeited.

In the event of a Disqualifying Disposition, an employee will be required to
recognize (1) taxable ordinary income in an amount equal to the difference
between the fair market value of the ISO Stock on the date of exercise of the
ISO and the exercise price; and (2) capital gain or loss (long- or short-term,
as the case may be) in an amount equal to the difference between (a) the
amount realized by the employee upon the Disqualifying Disposition and (b) the
exercise price paid by the employee for the stock, increased by the amount of
ordinary income recognized by the employee, if any. If the disposition
generates an allowable loss (e.g., a sale to an unrelated party not within 30
days of purchase of Common Stock), then the amount required to be recognized
by the employee as ordinary income will be limited to the excess, if any, of
the amount realized on the sale over the basis of the stock.

The Employee Plan allows an employee to pay an exercise price in cash or
shares of the Company's Common Stock. If the employee pays with shares of the
Company's Common Stock that are already owned, the basis of the newly acquired
ISO Stock will depend on the tax character and number of shares of the
previously owned stock used as payment. If an employee pays with shares
acquired upon other than the exercise of an ISO ("non-ISO Stock"), the
transaction will be tax-free to the extent that the number of shares received
does not exceed the number of shares of non-ISO Stock paid. The basis of the
number of shares of newly acquired ISO Stock which does not exceed the number
of shares of non-ISO Stock paid will be equal to the basis of the shares paid.
The employee's holding period with respect to such shares will include the
holding period of the shares of non-ISO Stock paid. To the extent that the
employee receives more new shares than shares surrendered, the "excess" shares
of ISO Stock will take a zero basis. If an employee exercises an ISO by using
stock that is previously acquired ISO Stock, however, certain special rules
apply. If the employee has not held the previously acquired ISO Stock for at
least two years from the date of grant of the related ISO and one year from
the date the employee acquired the previously acquired ISO Stock, the use of
such ISO Stock to pay the exercise price will constitute a Disqualifying
Disposition and subject the employee to income tax with respect to the ISO
Stock as described above. In such circumstances, the basis of the newly
acquired ISO Stock will be equal to the fair market value of the previously
acquired ISO Stock used as payment.

The grant of a NQSO has no immediate tax consequences to an employee. The
exercise of a NQSO requires an employee to include in gross income the amount
by which the fair market value of the acquired shares exceeds the exercise
price on the exercise date. The Company is required to withhold income and
employment taxes from the employee's wages on account of this income. The
employee's basis in the acquired shares will be their fair market value on the
date of exercise. Upon a subsequent sale of such shares, the employee will
recognize capital gain or loss equal to the difference between the sales price
and the basis in the stock. The capital gain or loss will be long- or short-
term, depending on the length of time that the employee held the shares. There
are no tax consequences to an employee if a NQSO lapses before exercise or is
forfeited. If an employee uses previously owned Common Stock as payment for
the exercise price of a NQSO, to the extent the employee surrenders the same
number of shares received, the exchange is tax-free and the new shares will
have a basis equal to that of the shares surrendered. The holding period for
the new shares, moreover, will include the period the employee held the
surrendered shares. To the extent the employee receives more new shares than
shares surrendered, the "excess" shares are treated as having been acquired
for no consideration and the fair market value of such "excess" shares is
includible in the employee's income as compensation. The basis of the "excess"
shares is their fair market value at the time of receipt. If the previously
owned shares consist of ISO Stock for which the holding requirements were not
met such that their use as payment of the exercise price constituted a
Disqualifying Disposition, the employee will have the income tax consequences
described above.

The Board of Directors has authority to suspend, terminate or discontinue
the Employee Plan or revise or amend it in any manner with respect to options
granted after the date of revision. No such revision, however, can change the
aggregate number of shares subject to the Employee Plan, change the
designation of employees eligible thereunder, or decrease the price at which
options may be granted. The Board may not grant any options under the Employee
Plan after January 2, 2005.

Mr. Singh did not receive a grant or exercise any stock option or stock
appreciation right prior to or during the last fiscal year.

Director Stock Option Plan. The Company also established a Director Plan on
July 27, 1995. The purpose of the Director Plan is to encourage ownership in
the Company by outside directors (present or future incumbent directors who
are not employees of the Company or any subsidiary) whose services are
considered essential to the Company's continued progress. Options granted
under the Director Plan are NQSOs. The Director Plan is administered by a
committee of the Board of Directors consisting of those directors who are not
eligible to receive grants thereunder. The total number of shares of Common
Stock for which options may be granted pursuant to the Director Plan is .
On the effective date of the Director Plan or the first date thereafter that
any director becomes eligible to receive an award under the Director Plan,
each eligible director will

automatically receive an option to purchase shares of Common Stock,
exercisable for shares immediately, and on each of the next two
anniversary dates of the grant date. All options become immediately
exercisable, however, upon the retirement of a director in accordance with any
mandatory retirement policy of the Board, upon the death or permanent
disability of a director, or if the Company merges with another Company and is
not the surviving corporation, the Company enters into an agreement to sell or
otherwise dispose of all or substantially all of its assets, or any person or
group acquires more than 20% of the Company's outstanding voting stock.

The option price is the fair market value at the date on which an option is
granted. Payment for the exercise of options may consist of cash or Common
Stock. Options issued under the Director Plan are not transferrable other than
by will or the laws of descent and distribution. Options expire upon the
earlier of five years from the date they were granted or three years following
either the retirement or resignation of the director, the failure of the
director to be re-elected, or the permanent disability or death of the
director. No options may be granted under the Director Plan after December 31,
2005.

The grant of a NQSO has no immediate tax consequences to the Company. Upon
the exercise of a NQSO by a director, the Company is entitled to a deduction
in an amount equal to the difference between the fair market value of the
share acquired through exercise of the NQSO and the exercise price of the
NQSO. There are no tax consequences to the Company if a NQSO lapses before
exercise or is forfeited.

The tax consequences to a director upon the grant and exercise of a NQSO,
and the sale of Common Stock acquired upon exercise thereof, are identical to
those described for NQSOs under "--Employee Stock Option Plan" above, except
that the Company has no withholding obligations upon the exercise of a NQSO by
a director.

EMPLOYMENT CONTRACT

The Company has entered into an employment agreement with Mr. Singh (the
"Singh Agreement"). The Singh Agreement is a five-year contract, with a term
beginning on June 1, 1994 and continuing until May 30, 1999, and from year to
year thereafter unless terminated. Under the terms of the Singh Agreement, Mr.
Singh is required to devote his full time efforts to the Company as Chairman
of the Board, President and CEO. The Company is required to compensate Mr.
Singh at an annual rate of $185,000 (which amount is reviewed annually by the
Board of Directors and is subject to increase at their discretion). Mr. Singh,
however, agreed to defer payment of his base salary from June 1, 1994 through
May 31, 1995, which was subsequently paid to him on July 31, 1996. The Company
is also obligated to (i) allow Mr. Singh to participate in any bonus or
incentive compensation plan approved for senior management of the Company,
(ii) provide life insurance in an amount equal to three times Mr. Singh's base
salary and disability insurance which provides monthly payments in an amount
equal to one-twelfth of his then applicable base salary, (iii) provide medical
insurance and (iv) pay up to $2,500 annually for Mr. Singh's personal tax and
financial planning services.

The Company may terminate the Singh Agreement at any time in the event of
his disability or for cause, each as defined in the Singh Agreement. Mr. Singh
may resign from the Company at any time without penalty (other than the non-
competition obligations discussed below). If the Company terminates the Singh
Agreement for disability or cause, the Company will have no further
obligations to Mr. Singh. If, however, the Company terminates the Singh
Agreement other than for disability or cause, the Company will have the
following obligations: (i) if the termination is after May 30, 1999, the
Company must pay Mr. Singh one-twelfth of his then applicable base salary as
severance pay; and (ii) if the termination is before June 1, 1999, the Company
must pay to Mr. Singh, as they become due, all amounts otherwise payable if he
had remained employed by the Company until June 1, 1999. If Mr. Singh resigns,
he may not directly or indirectly compete with the Company's business until
six months after his resignation. If the Company terminates Mr. Singh's
employment for any reason, Mr. Singh may not directly or indirectly compete
with the Company's business until six months after the final payment of any
amounts owed to him under the Singh Agreement become due.

CERTAIN TRANSACTIONS

PRIVATE EQUITY SALE

In July 1996, Primus completed the sale of shares of Common Stock to
the (i) Quantum Industrial Partners LDC, the principal operating subsidiary of
Quantum Industrial Holdings Ltd., an investment fund advised by Soros Fund
Management, a private investment firm owned by Mr. George Soros, (ii) Winston
Partners II LDC, the principal operating subsidiary of Winston Partners II
Offshore Ltd., an investment fund advised by Chatterjee Management Company, a
private entity owned by Dr. Purnendu Chatterjee, (iii) Winston Partners II
LLC, an investment fund advised by Chatterjee Management Company and (iv) S-C
Phoenix Holdings, L.L.C., an investment vehicle owned by affiliates of Mr.
Soros and Dr. Chatterjee, for an aggregate purchase price of approximately
$8.0 million. The Soros/Chatterjee Group also purchased, for an additional
$8.0 million, the Soros/Chatterjee Warrants which afford the Soros/Chatterjee
Group the right to receive, upon exercise, an indeterminate number of shares
of Common Stock with a fair market value of $10.0 million as of the date of
exercise, plus up to additional shares of Common Stock. Except for
shares (of the shares) which are currently exercisable, the
Soros/Chatterjee Warrants are exercisable on or after July 31, 1997 and until
July 31, 1999. The Soros/Chatterjee Warrants are entitled to certain customary
antidilution protection in the event of stock splits, stock dividends,
reorganizations and other similar events.

The Soros/Chatterjee Group was granted registration rights pursuant to a
registration rights agreement with the Company (the "Registration Rights
Agreement"). Under the Registration Rights Agreement, the Soros/Chatterjee
Group is entitled to demand registration of its shares after July 31, 1998, a
maximum of three times, the third demand being available only if the
Soros/Chatterjee Group has not registered 80% of its shares of Common Stock
after the first demand registration. The Company is not required to effect any
demand registration within 180 days after the effective date of a previous
demand registration and may postpone, on one occasion in any 365-day period
the filing or effectiveness of a registration statement for a demand
registration for up to 120 days under certain circumstances, including pending
material transactions or the filing by the Company of a registration statement
relating to the sale of shares for its own account. The Soros/Chatterjee Group
is also entitled to unlimited piggyback registrations. Such rights with
respect to this Offering have been waived. All such registrations would be at
the Company's expense, exclusive of underwriting discounts and commissions,
and legal fees (up to $25,000 for each such offering) incurred by the holders
of the registrable securities. The Company and the Soros/Chatterjee Group have
entered into customary indemnification and contribution provisions.

The Soros/Chatterjee Group also entered into a securityholders agreement
with the Company and K. Paul Singh (the "Securityholders Agreement") under
which the Soros/Chatterjee Group has the right to appoint a nominee for a
position as a member of the Board of Directors of the Company (and Mr. Singh
has agreed to vote shares over which he has voting control for such nominee).
Pursuant to this agreement, members of the Soros/Chatterjee Group were granted
preemptive rights in connection with most future issuances of capital stock,
including public offerings. Such rights were waived with respect to this
Offering. Additionally, members of the Soros/Chatterjee Group are entitled to
tag-along rights to participate with Mr. Singh and members of his family in
sales of capital stock on the same terms and conditions as Mr. Singh and
members of his family. See "Description of Capital Stock--Registration
Rights." The Soros/Chatterjee Group shares are also subject to drag along
rights in the event holders of a majority of the Common Stock decide to sell
80% or more of the outstanding capital stock of the Company. The
Securityholders Agreement provides that members of the Soros/Chatterjee Group
will not transfer shares of Common Stock to a company, or any affiliate, that
competes with the Company to a material extent in the provision of
telecommunications services in the United States, Australia, the United
Kingdom, France, Germany, Mexico, Canada, Italy or Hong Kong.

TELEGLOBE

The Company entered into an agreement on January 12, 1996 with Teleglobe,
pursuant to which Teleglobe purchased shares of Common Stock for a
total of $1,458,060. The equity investment was consummated

in February 1996 as was by a loan by Teleglobe of $2.0 million to the Company.
The loan, which bears interest at 6.9% per annum (payable quarterly) and
matures on February 9, 1998, is secured by all the assets of the Company,
comprised principally of the stock of the subsidiaries (65% of the stock of
foreign subsidiaries was pledged). Related to the Teleglobe investments, the
Company and a number of its subsidiaries have entered into trading agreements
with Teleglobe with respect to their respective service offerings. The parties
have also agreed to cooperate in an effort to maximize efficiencies with
respect to network facilities.

As part of the transaction, Teleglobe, the Company and Mr. Singh are party
to a shareholders' agreement (the "Teleglobe Agreement") providing Teleglobe
the same consent, preemptive and registration rights as may be granted in the
future to other shareholders of an equal or lesser percentage ownership in the
Company, and participation and tag-along rights whereby Teleglobe is entitled
to sell its shares of Common Stock when certain other shareholders sell or
when the Company issues equity securities that would result in a change of
control of the Company. The Teleglobe Agreement also obligates Teleglobe to
sell its shares if certain other shareholders sell and specified conditions
are met, and grants the Company a right of first refusal upon a sale of the
Teleglobe-owned Common Stock to any competitor of the Company. Teleglobe
waived any preemptive rights and registration rights that arose as a result of
the Private Equity Sale. See "--Teleglobe".

NSI PRIVATE PLACEMENTS

In 1995 and 1996, the Company engaged Northeast Securities, Inc. ("NSI") to
serve as the placement agent for two private placements of the Company's
Common Stock. Mr. Andrew B. Krieger, a director of Primus, served as a broker-
dealer in the private placements through an affiliation with NSI. In
connection with these offerings, the Company paid Mr. Krieger cash commissions
aggregating approximately $1,007,000. The Company also retained Krieger
Associates, of which Mr. Krieger is the President and Chief Executive Officer,
to perform certain financial and other consulting services and paid a total of
approximately $77,000 for the performance of such services during 1995 and
1996 (to date). In addition, in connection with these private placements, the
Company issued a total of 57,296 shares of Common Stock to Krieger Associates
and Mr. Krieger, and at the direction of Mr. Krieger issued a total of 21,888
shares of Common Stock to other individuals associated with the transaction.
The Company also issued, in connection with these private placements, a total
of 72,628 shares of Common Stock to NSI and certain of its employees
associated with the transactions. See "Management" and "Principal
Stockholders."

LOAN FROM CHAIRMAN AND CHIEF EXECUTIVE OFFICER

In connection with the initial organization of the Company, K. Paul Singh,
the Company's Chairman of the Board and Chief Executive Officer, loaned the
Company approximately $320,000, accruing interest at a variable rate tied to
the prime rate. On March 31, 1995, the Company and Mr. Singh converted all
then outstanding principal and interest due ($350,000) into 164,318 shares of
Common Stock, at a price per share of $2.13, which shares were issued on such
date.

MANAGEMENT FEES

Prior to the Company's acquisition of Axicorp, Axicorp paid a management fee
based on a percentage of revenue to a company owned primarily by certain
current officers of the Company, including Paul Keenan, Sim Thiam Soon and
Peter Slaney. Total management fees for the nine month period ended March 31,
1995, and the twelve month period ended March 31, 1996 were $616,000 and
$426,000, respectively.

LEGAL SERVICES

From time to time, the Company has retained the law firm of Pepper, Hamilton
& Scheetz, of which John F. DePodesta, a director and an Executive Vice
President of the Company, is "of counsel," to perform legal services for it
and has paid such firm fees totaling $151,807 in 1996 (to date). See "Legal
Matters."

PRINCIPAL STOCKHOLDERS

The following table sets forth information as of July 31, 1996 concerning
each person or group known to the Company to be the beneficial owner of more
than 5% of Common Stock, and concerning the beneficial ownership of Common
Stock by the Company's directors, K. Paul Singh and all executive officers and
directors of the Company as a group. Except as otherwise noted and subject to
community property laws, where applicable, each beneficial owner of the Common
Stock listed below has sole investment and voting power.

SHARES BENEFICIALLY OWNED(1)
-----------------------------------
PERCENT OF CLASS
-------------------------
NUMBER BEFORE AFTER
NAME AND ADDRESS(2) OF SHARES OFFERING(14) OFFERING(15)
- ------------------- --------- ------------ ------------

K. Paul Singh............................ (3) % %
Quantum Industrial Partners LDC.......... (4) % %
c/o Curacao Corporation Company N.V.
Kaya Flamboyan 9
Willemstad, Curacao
Netherlands Antilles
Winston Partners II LLC.................. (5)
c/o Chatterjee Advisors L.L.C.
c/o The Chatterjee Group
888 Seventh Avenue
New York, New York 10106
S-C Phoenix Holdings, L.L.C. ............ (6)
c/o The Chatterjee Group
888 Seventh Avenue
New York, New York 10106
Winston Partners II LDC.................. (7)
c/o Curacao Corporation Company N.V.
Kaya Flamboyan 9
Willemstad, Curacao
Netherlands Antilles
John F. DePodesta........................ (8) % %
Herman Fialkov........................... (9) * *
David E. Hershberg....................... (10) * *
Andrew B. Krieger........................ (11) % %
John Puente.............................. (12) % *
All executive officers and directors as a
group................................... (13) % %

- --------
* Less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
Commission, and includes voting or investment power with respect to the
shares beneficially owned. Shares of Common Stock subject to options or
warrants currently exercisable or exercisable on or prior to October ,
1996 are deemed outstanding for computing the percentage ownership of the
person holding such options or warrants, but are not deemed outstanding
for computing the percentage ownership of any other person.
(2) Unless otherwise noted in the chart, the address of all persons listed is
c/o Primus Telecommunications Group, Incorporated, 8180 Greensboro Drive,
Suite 1100, McLean, Virginia 22102.
(3) Includes shares of Common Stock issuable upon the exercise of options
granted to Mr. Singh and exercisable on or prior to October , 1996 and
shares of Common Stock owned by Mr. Singh's spouse and children.
(4) Quantum Industrial Partners LDC ("Quantum Industrial") has vested
investment discretion with respect to its portfolio investments,
including the Common Stock, in an entity over which Mr. George Soros may
be deemed to have sole and ultimate control. Mr. Soros and Dr. Purnendu
Chatterjee, as a sub-advisor to Quantum Industrial, may be deemed to have
shared beneficial ownership of Common Stock held by Quantum Industrial.
(5) Winston Partners II LLC has vested investment discretion in its portfolio
investments, including the Common Stock, in Chatterjee Management
Company, an entity over which Dr. Chatterjee may be deemed to have sole
and ultimate control. Dr. Chatterjee may be deemed to have beneficial
ownership of Common Stock held by Winston Partners II LLC.
(6) Mr. Soros and Dr. Chatterjee may be deemed to have shared beneficial
ownership of Common Stock held by S-C Phoenix Holdings, L.L.C.
(7) Winston Partners II LDC has vested investment discretion in its portfolio
investments, including the Common Stock, in Chatterjee Management
Company, an entity over which Dr. Chatterjee may be deemed to have sole
and ultimate control. Dr. Chatterjee may be deemed to have beneficial
ownership of Common Stock held by Winston Partners II LDC.

(8) Includes shares of Common Stock issuable upon the exercise of options
granted to Mr. DePodesta and exercisable on or prior to October , 1996.
(9) Includes shares of Common Stock issuable upon the exercise of options
granted to Mr. Fialkov and exercisable on or prior to October , 1996.
(10) Includes shares of Common Stock issuable upon the exercise of options
granted to Mr. Hershberg and exercisable on or prior to October , 1996.
(11) Includes shares of Common Stock issuable upon the exercise of options
granted to Mr. Krieger and exercisable on or prior to October , 1996 and
shares of Common Stock owned by Mr. Krieger's spouse.
(12) Includes shares of Common Stock issuable upon the exercise of options
granted to Mr. Puente and exercisable on or prior to October , 1996.
(13) Includes shares of Common Stock issuable upon the exercise of options
granted to directors and executive officers and exercisable on or prior
to October , 1996.
(14) Applicable percentage of ownership as of August , 1996 is based upon
shares of Common Stock outstanding.
(15) Applicable percentage ownership after this Offering is based upon
shares of Common Stock outstanding after giving effect to the issuance of
the shares of Common Stock offered hereby.

DESCRIPTION OF CAPITAL STOCK

COMMON STOCK

The Company is authorized to issue up to 10,455,000 shares of Common Stock,
par value $0.01 per share. As of July 31, 1996, the Company had presently
outstanding, shares of Common Stock reserved for issuance upon exercise of
options granted pursuant to the Plans. An additional shares of Common
Stock may be issued pursuant to the Soros/Chatterjee Warrants assuming such
warrants were exercised on the date of the Offering at an assumed price of
$ . The actual number of shares of Common Stock issuable under the
Soros/Chatterjee Warrants will be shares plus an indeterminate number of
shares having a fair market value of $10 million as of the date of exercise.
Holders of shares of Common Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to such preferential
rights of the issued and outstanding Series A Stock more particularly
described below, and such preferential rights as the Company's Board of
Directors may grant in connection with future issuances of Preferred Stock,
holders of shares of Common Stock are entitled to receive such dividends as
the Board of Directors may declare in its discretion out of funds legally
available therefor. In the event of a liquidation, dissolution or winding up
of the Company, after payment of liabilities and any liquidation preference on
any shares of Preferred Stock then outstanding, the holders of shares of
Common Stock are entitled to a distribution of any remaining assets of the
Company. Holders of shares of Common Stock have no cumulative voting or
preemptive rights. All outstanding shares of Common Stock are, and the shares
of Common Stock offered hereby, when issued and paid for, will be, fully paid
and nonassessable.

PREFERRED STOCK

The Company is authorized to issue up to 2,455,000 shares of Preferred
Stock, par value $0.01 per share, of which 455,000 shares are designated
Series A Stock. All shares of the Series A Stock were issued to the sellers in
the Axicorp transaction, 206,666 shares of which were delivered at closing and
the balance of which are being held by the Company to secure certain post-
closing obligations of the sellers. As a consequence of the consummation of
the Offering, all of the Series A Stock will convert into Common Stock.

Dividends are paid on Series A Stock when, as and in the same amount as paid
from time to time on the Common Stock. Holders of Series A Stock are not
entitled to vote on matters related to the Company other than certain matters
related to the capital structure of the Company or matters for which the law
provides for such vote. If the Company grants preemptive rights in connection
with certain issuances, sales or exchanges of Common Stock of the Company or
of securities convertible into Common Stock of the Company, holders of Series
A Stock are also granted such preemptive rights. A holder of Series A Stock
has the right at any time after March 1, 1998 to convert its Series A Stock,
share for share, into Common Stock of the Company. Upon the occurrence of
certain events, including the elimination of certain foreign ownership
restrictions on the Company, the occurrence of certain transfers of the
Company's stock or assets, or the public offering of more than 20% of the
Company's Common Stock, shares of Series A Stock automatically convert into
shares of Common Stock of the Company. Any particular conversion of shares of
Series A Stock held by certain foreign owners into shares of Common Stock of
the Company may be limited by foreign ownership restrictions applicable to the
Company.

In addition to the Series A Stock, the Company, without further action by
the Stockholders, is also authorized to issue up to 2,000,000 shares of other
Preferred Stock, par value $0.01 per share ("Other Preferred Stock"). The
Company's Board of Directors may determine the timing, series, designation and
number of shares of Other Preferred Stock to be issued, as well as the rights,
preferences and limitations of such shares, including those related to voting
power, redemption, conversion, dividend rights and liquidation preferences.
The issuance of Other Preferred Stock could adversely affect the voting power
of the holders of Common Stock of the Company or have the effect of deterring
or delaying any attempt by a person, entity or group to obtain control of the
Company. See "--Takeover Protection."

WARRANTS

As of , 1996, there were outstanding Soros/Chatterjee Warrants granting
the Soros/Chatterjee Group the right to receive, upon exercise, shares of
Common Stock plus an indeterminate number of shares the fair market value of
which is $10.0 million on the date of exercise. of the Soros/Chatterjee
Warrants are currently exercisable, with the remainder being exercisable on or
after July 31, 1997 and until July 31, 1999. The Soros/Chatterjee Warrants are
entitled to certain customary antidilution protection in the event of stock
splits, stock dividends, reorganizations and other similar events. The shares
of Common Stock issued pursuant to the Soros/Chatterjee Warrants as entitled
to certain registration rights described below. See "Certain Transactions--
Private Equity Sale."

REGISTRATION RIGHTS

Soros. Pursuant to a registration rights agreement dated July 31, 1996, the
Soros/Chatterjee Group is entitled to demand registration of its shares of
Common Stock after July 31, 1998, up to three times, the third demand being
available only if the first two did not result in the Soros/Chatterjee Group
having registered 80% of its shares of Common Stock. The Company is not
required to effect any demand registration within 180 days after the effective
date of a previous demand registration and may postpone, on one occasion in
any 365-day period the filing or effectiveness of a registration statement for
a demand registration for up to 120 days under certain circumstances,
including pending material transactions or the filing by the Company of a
registration statement relating to the sale of shares for its own account. The
Soros/Chatterjee Group is also entitled to unlimited piggyback registrations.
Such rights with respect to this Offering have been waived. All such
registrations would be at the Company's expense, exclusive of underwriting
discounts and commissions, and legal fees (up to $25,000 for each such
offering) incurred by the holders of registrable securities. The Company and
the Soros/Chatterjee Group have entered into customary indemnification and
contribution provisions.

Teleglobe. Under a shareholders' agreement between the Company, Mr. Singh
and Teleglobe, Teleglobe has the same consent, preemptive and registration
rights as may be granted in the future to other shareholders of an equal or
lesser percentage ownership in the Company. No such rights have been granted
to other shareholders other than in one instance in which Teleglobe waived its
rights. The shareholders' agreement also provides Teleglobe participation and
tag-along rights whereby Teleglobe is entitled to sell its shares of Common
Stock when certain other shareholders sell or when the Company issues equity
securities that would result in a change of control of the Company. The
agreement also obligates Teleglobe to sell its shares if certain other
shareholders sell and specified conditions are met, and grants the Company a
right of first refusal upon a sale of the Teleglobe-owned Common Stock to any
competitor of the Company.

TAKEOVER PROTECTION

The Company is subject to Section 203 of the DGCL which, subject to certain
exceptions, prohibits a Delaware corporation, the voting stock of which is
generally publicly traded (i.e., listed on a national securities exchange or
authorized for quotation on an inter-dealer quotation system of a registered
national securities association) or held of record by more than 2,000
stockholders, from engaging in any "business combination" (as defined below)
with any "interested stockholder" (as defined below) for a period of three
years following the date that such stockholder became an interested
stockholder, unless: (i) prior to such date, the board of directors of the
corporation approved either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder; (ii) upon
consummation of the transaction which resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding for purposes of determining the number of shares
outstanding those shares owned (x) by persons who are directors and also
officers, and (y) by employee stock plans in which employee participants do
not have the right to determine confidentially whether shares held subject to
the plan will be tendered in a tender or exchange offer; or (iii) on or
subsequent to such date, the business combination is approved by the board of
directors and authorized at an

annual or special meeting of stockholders, and not by written consent, by the
affirmative vote of at least 66 2/3% of the outstanding voting stock which is
not owned by the interested stockholder. Section 203 of the DGCL defines
"business combination" to include: (i) any merger or consolidation involving
the corporation and the interested stockholder; (ii) any sale, transfer,
pledge or other disposition involving the interested stockholder of 10% or
more of the assets of the corporation; (iii) subject to certain exceptions,
any transaction which results in the issuance or transfer by the corporation
of any stock of the corporation to the interested stockholder; (iv) any
transaction involving the corporation which has the effect of increasing the
proportionate share of the stock of any class or series of the corporation
beneficially owned by the interested stockholder, or (v) the receipt by the
interested stockholder of the benefit of any loans, advances, guarantees,
pledges or other financial benefits provided by or through the corporation. In
general, Section 203 defines an "interested stockholder" as any person who,
together with any affiliates or associates of such person, beneficially owns,
directly or indirectly, 15% or more of the outstanding voting stock of a
Delaware corporation.

Pursuant to the Company's Certificate of Incorporation, the Company's Board
of Directors is divided into three classes of directors each containing, as
nearly as possible, an equal number of directors. Directors within each class
are elected to serve three-year terms and approximately one-third of the
directors sit for election at each annual meeting of the Company's
stockholders. A classified board of directors may have the effect of deterring
or delaying any attempt by any group to obtain control of the Company by a
proxy contest since such third party would be required to have its nominees
elected at two separate annual meetings of the Board of Directors in order to
elect a majority of the members of the Board of Directors. Directors who are
elected to fill a vacancy (including vacancies created by an increase in the
number of directors) must be confirmed by the stockholders at the next annual
meeting of stockholders whether or not such director's term expires at such
annual meeting.

The Company's By-Laws allow the Board of Directors to increase the number of
directors from time to time (though a decrease in the number of directors may
not have the effect of shortening the term of any incumbent director) and to
fill any vacancies on the Board of Directors, including vacancies resulting
from an increase in the number of directors. This provision is designed to
provide the Board of Directors with flexibility to deal with an attempted
hostile takeover by a stockholder who may acquire a majority voting interest
in the Company without paying a premium therefor. This provision allows the
Board of Directors to increase its size and prevent a "squeeze-out" of any
remaining minority interest soon after a new majority stockholder gains
control over the Company. Further, the By-Laws limit the new majority
stockholder's power to remove a current or all current directors before the
annual meeting in the absence of "cause." Cause for removal of a director is
limited to (i) a judicial determination that a director is of unsound mind,
(ii) a conviction of a director of an offense punishable by imprisonment for a
term of more than one year, (iii) a breach or failure by a director to perform
the statutory duties of said director's office if the breach or failure
constitutes self-dealing, willful misconduct or recklessness, or (iv) a
failure of a director, within 60 days after notice of his or her election, to
accept such office either in writing or by attending a meeting of the Board of
Directors and fulfilling such other requirements of qualification as the By-
Laws or Certificate of Incorporation may provide.

Options under the Employee Plan outstanding on the date of a "change in
control" of the Company become immediately exercisable on such date. A change
in control for purposes of this exercise right includes the acquisition by any
person or entity of the beneficial ownership of 50% or more of the voting
power of the Company's stock, the approval by the Company's shareholders of a
merger, reorganization or consolidation of the Company in which the Company's
shareholders do not own 50% or more of the voting power of the stock of the
entity surviving such a transaction, the approval of the Company's
shareholders of an agreement of sale of all or substantially all of the
Company's assets, and the acceptance by the Company's shareholders of a share
exchange in which the Company's shareholders do not own 50% or more of the
voting power of the stock of the entity surviving such exchange.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is StockTrans, Inc.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this Offering, the Company will have shares of Common
Stock outstanding. Of these shares, the shares of Common Stock offered
hereby (plus up to additional shares if the Underwriters exercise in full
their over-allotment option), will be freely tradeable without restriction or
further registration, except for shares purchased by "affiliates" or
"underwriters" of the Company, as these terms are defined under the Securities
Act, subject to the resale limitations of Rule 144 under the Securities Act
and the regulations promulgated thereunder. The remaining shares of Common
Stock are restricted securities (the "Restricted Shares") and may not be sold
unless they are registered under the Securities Act or are sold pursuant to an
exemption from registration, such as the exemption provided by Rule 144 under
the Securities Act. Of these Restricted Shares, shares will be subject
to 180-day "lock-up" agreements with Lehman Brothers more particularly
described below. Upon expiration of such lock-up agreements, of the
Restricted Shares will become eligible for sale, subject to compliance with
Rule 144. The remaining Restricted Shares, shares are immediately
eligible for sale and shares will become eligible for sale at various
times over a period of less than two years. In addition, the shares underlying
certain warrants and options will become eligible for sole subject to
applicable lock-up agreements and compliance with Rule 144.

In general, Rule 144 allows a person who has beneficially owned Restricted
Shares for at least two years, including persons who may be deemed affiliates
of the Company, to sell, within any three-month period, up to the number of
Restricted Shares that does not exceed the greater of (i) one percent of the
then outstanding shares of Common Stock, and (ii) the average weekly trading
volume during the four calendar weeks preceding the date on which notice of
the sale is filed with the Commission. A person who is not deemed to have been
an affiliate of the Company at any time during the 90 days preceding a sale
and who has beneficially owned his or her Restricted Shares for at least three
years would be entitled to sell such Restricted Shares without regard to the
volume limitations described above and certain other conditions of Rule 144.
The Commission has proposed certain amendments to Rule 144 that would reduce
by one year the holding periods required for shares subject to Rule 144 and
144(k) to become eligible for resale in the public market. This proposal, if
adopted, would increase the number of shares of Common Stock eligible for
immediate resale following the expiration of the lock-up to agreements
described below. No assurance can be given concerning whether or when the
proposal will be adopted by the Commission.

Under Rule 701, any employee, officer or director or consultant to the
Company who purchased shares pursuant to a written compensatory plan or
contract, including the Employee Plan and the Director Plan, who is not an
affiliate of the Company, is entitled to sell such shares without having to
comply with the public information, holding period, volume limitation or
notice provisions of Rule 144 and permits affiliates to sell such shares
without having to comply with the Rule 144 period restrictions, in each case
commencing 90 days after the Effective Date.

The Company intends to file one or more registration statements under the
Securities Act to register Common Stock to be issued pursuant to the exercise
of options, including options granted or to be granted under the Employee Plan
and the Director Plan.

The holders of approximately shares of Common Stock upon the closing of
this Offering and shares of Common Stock issuable upon the exercise of
outstanding warrants and their permitted transferees and entitled to certain
demand and piggy-back registration rights in respect of their shares. See
"Description of Capital Stock--Registration Rights."

Prior to this Offering, there has been no public market for the securities
of the Company. No predictions can be made of the effect, if any, that the
sale or availability for sale of shares of additional Common Stock will have
on the market price of the Common Stock. Nevertheless, sales of a substantial
number of such shares by existing stockholders or by stockholders purchasing
in this Offering could have a negative impact on the market price of the
Common Stock.

UNDERWRITING

Under the terms and subject to the conditions contained in the Underwriting
Agreement, dated , 1996 (the "Underwriting Agreement") between the Company
and the Underwriters named below (the "Underwriters"), for whom Lehman
Brothers Inc. and Donaldson, Lufkin & Jenrette Securities Corporation are
acting as representatives (the "Representatives"), the Underwriters have
severally agreed to purchase from the Company, and the Company has agreed to
sell to each Underwriter, the aggregate number of shares of Common Stock set
forth opposite the name of each such Underwriter below:

NUMBER OF
UNDERWRITERS SHARES
------------ ---------

Lehman Brothers Inc................................................
Donaldson, Lufkin & Jenrette Securities Corporation................
---
Total..........................................................
===

The Company has been advised by the Representatives that the Underwriters
propose to offer the shares of Common Stock to the public at the public
offering price set forth on the cover page hereof, and to certain dealers at
such public offering price less a selling concession not in excess of $ per
share. The Underwriters may allow, and such dealers may reallow, a concession
not in excess of $ per share to certain other Underwriters or to certain
other brokers or dealers. After the offering to the public, the offering price
and other selling terms may be changed by the Representatives.

The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Common Stock
offered hereby are subject to approval of certain legal matters by counsel and
to certain other conditions, including the condition that no stop order
suspending the effectiveness of the Registration Statement (of which this
Prospectus forms a part) is in effect and no proceedings for such purpose are
pending or threatened by the Commission and that there has been no material
adverse change in the condition of the Company from that set forth in the
Registration Statement otherwise than as set forth or contemplated in this
Prospectus, and that certain certificates, opinions and letters have been
received from the Company and its counsel and independent auditors. The
Underwriters are obligated to take and pay for all of the above shares of
Common Stock if any such shares are taken.

The Company and the Underwriters have agreed in the Underwriting Agreement
to indemnify each other against certain liabilities, including liabilities
under the Securities Act.

The Company has granted to the Underwriters an option to purchase up to an
additional shares of Common Stock, exercisable solely to cover over-
allotments, at the public offering price, less the underwriting discounts and
commissions shown on the cover page of this Prospectus. Such option may be
exercised at any time until 30 days after the date of the Underwriting
Agreement. To the extent that the option is exercised, each Underwriter will
be committed to purchase a number of the additional shares of Common Stock
proportionate to such Underwriter's initial commitment as indicated in the
table above.

The Representatives have informed the Company that the Underwriters do not
intend to confirm sales to accounts over which they exercise discretionary
authority.

Stockholders of the Company, including all directors and officers,
beneficially owning an aggregate of shares of Common Stock and certain
common stock equivalents have agreed not to offer, sell or otherwise dispose
of their shares, with certain limited exceptions, for a period of 180 days
after the Effective Date, without the prior written consent of Lehman Brothers
Inc. on behalf of the Representatives. Except for the

Common Stock to be sold in this offering, the Company has agreed not to offer,
sell, contract to sell or otherwise issue any Common Stock or other capital
stock with certain limited exceptions, prior to the expiration of 180 days
after the Effective Date, without the prior written consent of Lehman Brothers
Inc. on behalf of the Representatives.

Prior to this Offering, there has been no public market for the Common
Stock. The public offering price was negotiated between the Company and the
Representatives. The material factors considered in determining the public
offering price of the Common Stock, in addition to the prevailing market
conditions, were the Company's historical performance, capital structure,
estimates of the business potential, revenues and earnings prospects of the
Company, an assessment of the Company's management and consideration of the
above factors in relation to the market values of companies in related
businesses.

Application will be made to have the Common Stock approved for quotation on
the Nasdaq National Market under the symbol "PRTL."

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby is being passed
upon for the Company by Pepper, Hamilton & Scheetz, Philadelphia, Pennsylvania
and for the Underwriters by Shearman & Sterling, New York, New York. Mr. John
DePodesta, "of counsel" to Pepper, Hamilton & Scheetz, is a director and an
Executive Vice President of the Company, and the beneficial owner of
shares of Common Stock.

EXPERTS

The Consolidated Financial Statements of the Company as of December 31, 1994
and 1995, and for the period from inception (February 4, 1994) to December 31,
1994 and the year ended December 31, 1995 included in this Prospectus, have
been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report appearing herein. Such Consolidated Financial Statements have
been included herein in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.

The Financial Statements of Axicorp, as of March 31, 1995 and 1996, and for
the nine months ended March 31, 1995 and the twelve months ended March 31,
1996 included in this Prospectus and in the Registration Statement have been
audited by Price Waterhouse, independent chartered accountants, as indicated
in their report with respect thereto, and are included herein in reliance upon
the authority of said firm as experts in accounting and auditing.

INDEX TO FINANCIAL STATEMENTS

PAGE
----

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED:
Independent Auditors' Report............................................ F-2
Consolidated Balance Sheets as of December 31, 1994 and 1995 and June
30, 1996 (unaudited)................................................... F-3
Consolidated Statements of Operations for the period from February 4,
1994 (inception) to December 31, 1994, the year ended December 31, 1995
and the six months ended June 30, 1995 (unaudited) and 1996
(unaudited)............................................................ F-4
Consolidated Statements of Stockholders' Equity (Deficit) for the period
from February 4, 1994 (inception) to December 31, 1994, the year ended
December 31, 1995 and the six months ended June 30, 1996 (unaudited)... F-5
Consolidated Statements of Cash Flows for the period from February 4,
1994 (inception) to December 31, 1994, the year ended December 31, 1995
and the six months ended June 30, 1995 (unaudited) and 1996
(unaudited)............................................................ F-6
Notes to Consolidated Financial Statements.............................. F-7
AXICORP PTY., LTD.:
Report of Independent Accountants....................................... F-16
Balance Sheets as of March 31, 1995 and 1996............................ F-17
Statements of Operations for the nine months ended March 31, 1995 and
for the twelve months ended March 31, 1996............................. F-18
Statements of Stockholders' Equity for the nine months ended March 31,
1995 and for the twelve months ended March 31, 1996.................... F-19
Statements of Cash Flows for the nine months ended March 31, 1995 and
for the twelve months ended March 31, 1996............................. F-20
Notes to Financial Statements........................................... F-21

F-1

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of Primus Telecommunications Group, Incorporated:

We have audited the accompanying consolidated balance sheets of Primus
Telecommunications Group, Incorporated and subsidiaries as of December 31,
1994 and 1995, and the related consolidated statements of operations,
stockholders' equity (deficit), and cash flows for the period from February 4,
1994 (date of incorporation) to December 31, 1994 and for the year ended
December 31, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on the
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Primus Telecommunications
Group, Incorporated and subsidiaries as of December 31, 1994 and 1995, and the
results of their operations and their cash flows for the period from February
4, 1994 (date of incorporation) to December 31, 1994 and the year ended
December 31, 1995, in conformity with generally accepted accounting
principles.

DELOITTE & TOUCHE LLP
Washington, D.C.
April 23, 1996, except for the first
and second paragraphs of Note 13,
as to which the dates are July 31,
1996, and the effective date of the
Registration Statement,
respectively

------------------

The foregoing report is in the form that will be signed upon the completion
of the restatement of capital accounts to effect the conversion of all
outstanding shares of preferred stock into shares of common stock and the
split of all shares of common stock at a ratio to be determined.

Washington, D.C.
April 23, 1996

F-2

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31,
---------------------- JUNE 30,
1994 1995 1996
--------- ----------- ------------
(UNAUDITED)

ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............. $ 220,904 $ 2,295,843 $ 4,397,604
Accounts receivable (net of allowance
of $132,353 at December 31, 1995 and
$1,605,570 (unaudited) at June 30,
1996)................................. -- 664,697 24,848,696
Prepaid expenses and other current as-
sets.................................. 42,743 388,263 557,103
--------- ----------- ------------
Total current assets................. 263,647 3,348,803 29,803,403
PROPERTY AND EQUIPMENT--Net.............. 116,919 948,876 5,570,230
INTANGIBLES.............................. -- -- 22,002,091
DEFERRED INCOME TAXES.................... -- -- 4,211,808
OTHER ASSETS............................. 106,250 743,932 709,278
--------- ----------- ------------
TOTAL ASSETS............................. $ 486,816 $ 5,041,611 $ 62,296,810
========= =========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
CURRENT LIABILITIES:
Accounts payable....................... $ 92,273 $ 1,284,341 $ 25,329,431
Accrued expenses and other current lia-
bilities.............................. 122,300 667,748 3,501,252
Due to related party................... 330,850 -- --
Deferred income taxes.................. -- -- 4,737,298
Current portion of long-term obliga-
tions................................. 12,882 101,804 10,626,541
--------- ----------- ------------
Total current liabilities............ 558,305 2,053,893 44,194,522
LONG-TERM OBLIGATIONS.................... -- 425,866 6,302,152
--------- ----------- ------------
Total liabilities.................... 558,305 2,479,759 50,496,674
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $.01 par value--
2,455,000 shares authorized; issued
and outstanding, 455,000 shares of
Series A Convertible (unaudited) at
June 30, 1996......................... -- -- 4,550
Common stock, $.01 par value--
authorized 5,000,000 shares in 1994
and 1995; 10,455,000 shares
(unaudited) June 30, 1996; issued and
outstanding, 1,194,835 shares in 1994;
2,089,172 shares in 1995; 2,817,034
shares (unaudited) at June 30, 1996... 11,948 20,891 28,170
Additional paid-in capital............. 493,843 5,545,960 18,052,312
Accumulated deficit.................... (577,280) (3,002,518) (6,234,944)
Cumulative translation adjustment...... -- (2,481) (49,952)
--------- ----------- ------------
Total stockholders' equity (defi-
cit)................................ (71,489) 2,561,852 11,800,136
--------- ----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)........................ $ 486,816 $ 5,041,611 $ 62,296,810
========= =========== ============

See notes to consolidated financial statements.

F-3

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

PERIOD FROM
FEBRUARY 4, SIX MONTHS ENDED
1994 TO YEAR ENDED JUNE 30,
DECEMBER 31, DECEMBER 31, ----------------------
1994 1995 1995 1996
------------ ------------ --------- -----------
(UNAUDITED)

NET REVENUE.................. $ -- $ 1,167,058 $ 221,441 $65,414,924
COST OF REVENUE.............. -- 1,383,763 203,284 60,162,429
--------- ----------- --------- -----------
GROSS MARGIN (DEFICIT)....... -- (216,705) 18,157 5,252,495
OPERATING EXPENSES:
Selling, general, and ad-
ministrative.............. 556,545 2,024,383 714,710 6,707,373
Depreciation and amortiza-
tion...................... 12,474 160,024 64,764 797,421
--------- ----------- --------- -----------
Total operating ex-
penses.................. 569,019 2,184,407 779,474 7,504,794
--------- ----------- --------- -----------
LOSS FROM OPERATIONS......... (569,019) (2,401,112) (761,317) (2,252,299)
INTEREST EXPENSE............. (13,028) (58,732) (33,168) (334,775)
INTEREST INCOME.............. 4,767 34,606 1,405 85,191
OTHER INCOME (EXPENSE)....... -- -- -- (268,120)
--------- ----------- --------- -----------
LOSS BEFORE INCOME TAXES..... (577,280) (2,425,238) (793,080) (2,770,003)
INCOME TAXES................. -- -- -- (462,423)
--------- ----------- --------- -----------
NET LOSS..................... $(577,280) $(2,425,238) $(793,080) $(3,232,426)
========= =========== ========= ===========
NET LOSS PER COMMON AND
COMMON SHARE EQUIVALENTS.... $ -- $ -- $ -- $ --
========= =========== ========= ===========
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON SHARE
EQUIVALENTS OUTSTANDING..... -- -- -- --
========= =========== ========= ===========

See notes to consolidated financial statements.

F-4

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

PREFERRED STOCK COMMON STOCK ADDITIONAL CUMULATIVE STOCKHOLDERS'
--------------- ------------------ PAID-IN ACCUMULATED TRANSLATION EQUITY
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT ADJUSTMENT (DEFICIT)
------- ------- --------- -------- ------------ ------------ ----------- -------------

BALANCE, FEBRUARY 4,
1994 (DATE OF
INCORPORATION)......... -- $ -- -- $ -- $ -- $ -- $ -- $ --
Issuance of "founder's
stock" to the
Company's
incorporator.......... -- -- 52,817 528 -- -- -- 528
Investment made by
Chairman and Chief
Executive Officer..... -- -- 1,003,521 10,035 239,965 -- -- 250,000
Common shares issued
for services
performed............. -- -- 21,127 211 5,052 -- -- 5,263
Shares purchased by
outside investors in
the form of a trust... -- -- 117,370 1,174 248,826 -- -- 250,000
Net loss............... -- -- -- -- -- (577,280) -- (577,280)
------- ------- --------- -------- ------------ ------------ --------- ------------
BALANCE, DECEMBER 31,
1994................... -- -- 1,194,835 11,948 493,843 (577,280) -- (71,489)
Common shares sold
through private
placement, net of
transaction costs..... -- -- 660,697 6,607 4,011,228 -- -- 4,017,835
Conversion of related
party debt to common
stock................. -- -- 164,318 1,643 348,357 -- -- 350,000
Common shares issued
for services
performed............. -- -- 69,322 693 692,532 -- -- 693,225
Foreign currency
translation
adjustment............ -- -- -- -- -- -- (2,481) (2,481)
Net loss............... -- -- -- -- -- (2,425,238) -- (2,425,238)
------- ------- --------- -------- ------------ ------------ --------- ------------
BALANCE, DECEMBER 31,
1995................... -- -- 2,089,172 20,891 5,545,960 (3,002,518) (2,481) 2,561,852
Common shares sold
through private
placement, net of
transaction costs
(unaudited)........... -- -- 523,867 5,239 4,678,118 -- -- 4,683,357
Common shares sold, net
of transaction costs
(unaudited)........... -- -- 121,505 1,215 1,383,729 -- -- 1,384,944
Common shares issued
for services performed
(unaudited)........... -- -- 82,490 825 989,055 -- -- 989,880
Preferred shares issued
for Axicorp
acquisition
(unaudited)........... 455,000 4,550 -- -- 5,455,450 -- -- 5,460,000
Foreign currency
translation adjustment
(unaudited)........... -- -- -- -- -- -- (47,471) (47,471)
Net loss (unaudited)... -- -- -- -- -- (3,232,426) -- (3,232,426)
------- ------- --------- -------- ------------ ------------ --------- ------------
BALANCE, JUNE 30, 1996
(UNAUDITED)............ 455,000 $ 4,550 2,817,034 $ 28,170 $ 18,052,312 $ (6,234,944) $ (49,952) $ 11,800,136
======= ======= ========= ======== ============ ============ ========= ============

See notes to consolidated financial statements.

F-5

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

PERIOD FROM
FEBRUARY 4, SIX MONTHS ENDED
1994 TO YEAR ENDED JUNE 30,
DECEMBER 31, DECEMBER 31, ----------------------
1994 1995 1995 1996
------------ ------------ --------- -----------
(UNAUDITED)

CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss.................. $(577,280) $(2,425,238) $(793,080) $(3,232,426)
Adjustments to reconcile
net loss to net cash used
in operating activities:
Depreciation and
amortization........... 12,474 160,024 64,763 790,420
Sales allowances........ -- 132,353 -- 614,738
Foreign currency
transaction loss....... -- -- -- 268,120
Deferred income taxes... -- -- -- 299,962
Changes in assets and
liabilities:
(Increase) decrease in
accounts receivable.. -- (797,050) (199,200) (8,040,516)
(Increase) decrease in
prepaid expenses and
other current
assets............... (42,743) (26,925) (46,703) (53,862)
(Increase) decrease in
deferred costs....... (25,000) (35,234) -- --
(Increase) decrease in
other assets......... (81,453) (532,530) (98,250) (213,920)
Increase (decrease) in
accounts payable..... 92,273 1,194,991 209,442 4,717,673
Increase (decrease) in
accrued expenses and
other liabilities.... 135,656 321,697 246,069 614,686
--------- ----------- --------- -----------
Net cash used in
operating
activities......... (486,073) (2,007,912) (616,959) (4,235,125)
--------- ----------- --------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of property and
equipment................ (105,547) (396,281) (88,116) (1,452,340)
Cash used in business
acquisition, net of cash
acquired................. -- -- -- (1,700,674)
--------- ----------- --------- -----------
Net cash used in
investing
activities......... (105,547) (396,281) (88,116) (3,153,014)
--------- ----------- --------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Principal payments on
capital lease............ (2,230) (63,595) (31,948) (35,486)
Principal borrowed from
Chairman and Chief
Executive Officer........ 314,754 -- -- --
Sale of common stock...... 500,000 4,542,727 964,591 7,376,776
Proceeds from notes
payable--related party... -- -- -- 2,000,000
--------- ----------- --------- -----------
Net cash provided by
financing
activities......... 812,524 4,479,132 932,643 9,341,290
--------- ----------- --------- -----------
EFFECT OF EXCHANGE RATE
CHANGES ON CASH AND CASH
EQUIVALENTS................ -- -- -- 148,610
--------- ----------- --------- -----------
NET INCREASE IN CASH........ 220,904 2,074,939 227,568 2,101,761
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD........ -- 220,904 220,904 2,295,843
--------- ----------- --------- -----------
CASH AND CASH EQUIVALENTS,
END OF PERIOD.............. $ 220,904 $ 2,295,843 $ 448,472 $ 4,397,604
========= =========== ========= ===========
SUPPLEMENTAL CASH FLOW
INFORMATION:
Cash paid for interest.... $ -- $ 36,249 $ 14,397 $ 39,354
--------- ----------- --------- -----------
Non-cash investing and
financing activities:
Common stock issued for
services............... $ 5,263 $ 693,225 $ -- $ 989,880
--------- ----------- --------- -----------
Conversion of related
party debt to common
stock.................. $ -- $ 350,000 $ 350,000 $ --
--------- ----------- --------- -----------
Increase in capital
lease liability for
acquisition of property
and equipment.......... $ 15,112 $ 578,381 $ 543,689 $ 168,302
--------- ----------- --------- -----------
Increase in notes
payable for acquisition
of switch equipment.... $ -- $ -- $ -- $ 2,362,500
--------- ----------- --------- -----------

See notes to consolidated financial statements.

F-6

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS

Primus Telecommunications Group, Incorporated (the "Company"), formerly
Global Telecommunications, Inc., was incorporated in Delaware in February
1994. The Company was formed to capitalize on the increase in business and
consumer demand for international telecommunication services. The Company
operates as a holding company and currently has wholly-owned subsidiaries in
the United States, United Kingdom, Australia, and Mexico. Subsequent to
December 31, 1995, the Company purchased all of the outstanding capital stock
of Axicorp, Pty., Ltd. ("Axicorp"), an Australian telecommunications company
(see Note 12).

In 1994, the Company, as a development stage enterprise, was involved in
various start-up activities including raising capital, obtaining licenses,
acquiring equipment, leasing space, developing markets, and recruiting and
training personnel. During 1995, the Company began revenue generating
operations and is no longer in the development stage.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation--The consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiaries. All
intercompany accounts and transactions have been eliminated.

Revenue Recognition--Revenues from long distance telecommunications services
are recognized when the services are provided.

Cost of Revenue--Cost of revenue includes network costs which consist of
access, transport, and termination costs. Such costs are recognized when
incurred in connection with the provision of telecommunications services.

Foreign Currency Translation--The assets and liabilities of the Company's
foreign subsidiaries are translated at the exchange rates in effect on the
reporting date, and income and expenses are translated at the average exchange
rate during the period. The net effect of such translation gains and losses
are accumulated as a separate component of stockholders' equity. Foreign
currency transaction gains and losses are included in Other Income (Expense)
in the consolidated statements of operations.

Cash and Cash Equivalents--The Company considers cash on hand, deposits in
banks, certificates of deposit, and overnight repurchase agreements with
original maturities of three months or less as cash and cash equivalents.

Property and Equipment--Property and equipment, which consists of furniture,
leasehold improvements, and telecommunications equipment, is stated at cost
less accumulated depreciation and amortization. Expenditures for maintenance
and repairs that do not materially extend the useful lives of the assets are
charged to expense. Depreciation and amortization are computed using the
straight-line method over estimated useful lives of the assets, less their net
salvage value, which range from three to eight years, or for leasehold
improvements and leased equipment, over the terms of the leases, whichever is
shorter.

Intangible Assets--At June 30, 1996, intangible assets consist of goodwill
of $17,733,000 (unaudited) and customer lists of $4,269,000 (unaudited).
Goodwill is being amortized over 30 years on a straight-line basis and
customer lists over the estimated run-off of the customer base not to exceed
five years. Accumulated amortization at June 30, 1996, was $199,248
(unaudited) and $304,920 (unaudited) related to the goodwill and customer
lists, respectively.

F-7

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

New Accounting Pronouncements--As of January 1, 1996, the Company adopted
Statement of Financial Accounting Standards (SFAS) No. 121, Accounting for
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.
The adoption had no effect on the financial position or results of operations
of the Company. SFAS No. 123, Accounting for Stock Based Compensation, becomes
effective and will be adopted by the Company as of December 31, 1996. The
Company does not plan to adopt the recognition and measurement provisions of
SFAS No. 123.

Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of net revenue
and expenses during the reporting period. Actual results could differ from
those estimates.

Concentration of Credit Risk--Financial instruments that potentially subject
the Company to concentration of credit risk principally consists of trade
accounts receivable. The Company's six largest customers account for
approximately 52% of gross accounts receivable as of December 31, 1995. At
June 30, 1996, no customer accounted for more than 10% (unaudited) of accounts
receivable. The Company performs ongoing credit evaluations of its customers
but generally does not require collateral to support customer receivables.
Losses on uncollectible accounts have consistently been within management's
expectations.

Income Taxes--The Company recognizes income tax expense for book purposes
following the asset and liability approach for computing deferred income
taxes. Under this method, the deferred tax asset and liability are determined
based on the difference between financial reporting and tax basis of assets
and liabilities. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized.

Deferred Costs--Legal, investment banking, and other incremental costs
associated with raising capital are recorded as deferred costs and are
included in Other Assets on the consolidated balance sheet. Such costs are
subsequently netted against the proceeds of the stock offerings to which they
relate. In the event that the offering is not successful, such costs would be
written off to operations in the period in which the related offering is
abandoned. Such amounts total $30,263 and $60,125 at December 31, 1994 and
1995, respectively. Subsequent to December 31, 1995, these costs have been
netted against the respective transactions. The Company has also capitalized
$92,609 related to the Axicorp acquisition at December 31, 1995 (see Note 12).
Such amounts were included in the purchase price accounting at acquisition.
There are no deferred costs included in the consolidated balance sheet at June
30, 1996 (unaudited).

Net Loss Per Share--Net loss per common and common share equivalents at the
effective date of the Registration Statement will be computed based upon the
weighted average number of common and common share equivalents, outstanding
during each period. Common share equivalents consist of stock options
calculated using the treasury stock method. Retroactive restatement will be
made to share and per share amounts for the stock split contemplated by the
Company as part of its initial public offering. Primary and fully diluted loss
per share are the same. Pursuant to Securities and Exchange Commission Staff
Accounting Bulletin No. 83, common stock and options to purchase common stock
issued subsequent to August , 1995 at prices below the assumed initial public
offering price will be included as outstanding for all periods presented,
using the treasury stock method at the assumed initial public offering price
even though the effect is to reduce the net loss per share.

Interim Financial Information--The interim financial data as of June 30,
1996 and for the six-month periods ended June 30, 1995 and 1996, is unaudited.
The information reflects all adjustments, consisting only of normal recurring
adjustments that, in the opinion of management, are necessary to present
fairly the financial position and results of operations of the Company for the
periods indicated. Results of operations for the interim periods are not
necessarily indicative of the results of operations for the full year.

F-8

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

3. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

DECEMBER 31,
-------------------- JUNE 30,
1994 1995 1996
-------- ---------- -----------
(UNAUDITED)

Network equipment........................ $ -- $ 849,062 $5,237,817
Furniture and equipment.................. 55,625 161,071 417,701
Billing system software.................. -- -- 153,398
Leasehold improvements................... 68,302 88,457 174,182
-------- ---------- ----------
123,927 1,098,590 5,983,098
Less: Accumulated depreciation and amor-
tization................................ (7,008) (149,714) (412,868)
-------- ---------- ----------
$116,919 $ 948,876 $5,570,230
======== ========== ==========

Equipment under capital leases totaled $578,382 and $746,685 (unaudited)
with accumulated depreciation of $75,501 and $130,956 (unaudited) at December
31, 1995 and June 30, 1996, respectively.

4. LONG-TERM OBLIGATIONS

Long-term obligations consist of the following:

DECEMBER 31,
------------------- JUNE 30,
1994 1995 1996
-------- --------- ------------
(UNAUDITED)

Obligations under capital leases........ $ 12,882 $ 527,670 $ 643,682
Equipment financing..................... -- -- 2,362,500
Note payable--related party............. -- -- 2,000,000
Notes payable relating to Axicorp acqui-
sition................................. -- -- 8,378,761
Settlement obligation................... -- -- 3,543,750
-------- --------- ------------
Subtotal.............................. 12,882 527,670 16,928,693
Less: Current portion of long-term obli-
gations................................ (12,882) (101,804) (10,626,541)
-------- --------- ------------
$ -- $ 425,866 $ 6,302,152
======== ========= ============

At June 30, 1996, the following describes the components of long-term
obligations (unaudited):

Equipment financing represents the purchase of network switching
equipment for use in its Australian network financed by the vendor.
Beginning in January 1997, 16 monthly payments of approximately $100,000
are due to the vendor. In addition, a payment of approximately $788,000
plus accrued interest is due in May 1998. Interest will accrue at the
Corporate Overdraft Reference Rate plus 1%. At June 30, 1996, the Corporate
Overdraft Reference Rate was 10.75%.

In connection with an investment agreement, in February 1996 the Company
issued a $2,000,000 note payable to Teleglobe, due February 9, 1998 which
bears interest at 6.9% per annum payable quarterly.

In connection with the acquisition of Axicorp on March 1, 1996, the
Company issued two notes to the sellers for a total of $8.4 million (see
Note 12).

In addition, in conjunction with the Axicorp acquisition, the Company
accrued approximately $3.5 million under a settlement obligation. This
amount is expected to be paid during the next year.

F-9

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5. INCOME TAXES

The tax expense (deferred) recorded for the six-month period ended June 30,
1996 results from foreign taxes on earnings at the Company's Australian
subsidiary.

The differences between the tax provision (benefit) calculated at the
statutory federal income tax rate and the actual tax provision (benefit) for
each period is shown in the table below.

PERIOD ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
---------------------- ----------------------
1994 1995 1995 1996
---------- ---------- ---------- ----------
(UNAUDITED)

Tax benefit at federal statu-
tory rate.................... $ (196,275) $ (824,581) $ (268,967) $ (941,801)
State income tax, net of fed-
eral benefit................. (22,860) (91,069) (30,852) (108,030)
Foreign taxes................. -- -- -- 462,423
Unrecognized benefit of net
operating loss............... 218,659 911,036 297,566 1,040,502
Other......................... 476 4,614 2,253 9,329
---------- ---------- ---------- ----------
Income taxes.................. $ -- $ -- $ -- $ 462,423
========== ========== ========== ==========

The significant components of the Company's deferred tax asset and liability
are as follows:

DECEMBER 31,
---------------------- JUNE 30,
1994 1995 1996
--------- ----------- -----------
(UNAUDITED)

Deferred tax asset (non-current):
Cash to accrual basis adjustments
(U.S.)............................. $ 93,012 $ 366,783 $ --
Accrued expenses.................... -- -- 824,006
Net operating loss carryforward..... 126,435 720,452 5,370,862
Valuation allowance................. (219,447) (1,087,235) (1,983,060)
--------- ----------- -----------
$ -- $ -- $ 4,211,808
========= =========== ===========
Deferred tax liability (current):
Accrued income...................... $ -- $ -- $ 4,158,040
Cash to accrual basis adjustments
(U.S.)............................. -- -- 454,677
Depreciation........................ -- -- 124,581
--------- ----------- -----------
$ -- $ -- $ 4,737,298
========= =========== ===========

At December 31, 1995, the Company had a U.S. Federal net operating loss
carryforward of approximately $2,000,000, ($6,000,000 (unaudited) at June 30,
1996) that may be applied against future U.S. taxable income until it expires
between the years 2009 and 2010. The Company also has an Australian Federal
net operating loss carryforward of approximately $8.5 million (unaudited) at
June 30, 1996.

Due to the "ownership change" of the Company in early 1996, pursuant to
Section 382 of the Internal Revenue Code, the utilization of the net operating
loss carryforward will be limited to approximately $1.3 million per year
during the carryforward period. A further "ownership change" resulting from
the Company's planned initial public offering (see Note 13) could cause
further limitations.

F-10

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

6. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:

Cash and Cash Equivalents--The carrying amount reported in the balance
sheets for cash and cash equivalents approximates fair value.

Accounts Receivable and Accounts Payable--The carrying amounts reported
in the balance sheets for accounts receivable and accounts payable
approximate fair value.

Guarantee Required Under Telecommunications Agreement--The carrying
amount reported in the balance sheets for the deposit held in the form of a
certificate of deposit (see Note 7) approximates fair value plus accrued
interest.

7. COMMITMENTS AND CONTINGENCIES

The Company has entered into an employment contract with its Chairman and
Chief Executive Officer through May 30, 1999. Minimum payments over the
remaining period approximate $632,000 as of December 31, 1995 and $540,000
(unaudited) as of June 30, 1996.

Future minimum lease payments under capital lease obligations and operating
leases as of December 31, 1995, are as follows:

CAPITAL OPERATING
YEAR ENDING DECEMBER 31, LEASES LEASES
------------------------ --------- ---------

1996................................................... $ 158,113 $ 246,089
1997................................................... 158,113 124,121
1998................................................... 158,113 --
1999................................................... 158,113 --
2000................................................... 39,533 --
--------- ---------
Total minimum lease payments........................... 671,985 $ 370,210
=========
Less: Amount representing interest..................... (144,315)
---------
$ 527,670
=========

Rent expense under operating leases was $37,709, $214,508, $72,111
(unaudited) and $223,347 (unaudited) for the periods ended December 31, 1994,
December 31, 1995, June 30, 1995, and June 30, 1996, respectively.

The Company began sending outbound traffic to India during 1995 and, in
connection with its international telecommunication services agreement with
Videsh Sanchar Nigan Limited of India, was required to provide a bank
guarantee of $400,000 in the form of a certificate of deposit that is included
in Other Assets at December 31, 1995.

8. STOCKHOLDERS' EQUITY

The Company was incorporated in February 1994 through the issuance of 52,817
shares of common stock issued to the founder of the Company.

In January 1995, the Company established an Employee Stock Option Plan (the
"Employee Plan"). The total number of shares of common stock authorized to be
issued under the Employee Plan was 250,000. Under the Employee Plan, awards
may be granted to key employees of the Company and its subsidiaries in the
form of Incentive Stock Options or Nonqualified Stock Options. The Employee
Plan allows the granting of options at an

F-11

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

exercise price of no less than 100% (110% in the case of Incentive Stock
Options granted to employees holding more than ten percent of the voting stock
of the Company at the date of grant) of the stock's fair value at the date of
grant. The options vest over a period of up to three years, and no option will
be exercisable more than ten years from the date it is granted. There were
96,450 shares of common stock that remain eligible for future issuance under
the Employee Plan at December 31, 1995. Subsequent to year end, an additional
250,000 shares of common stock were authorized to be issued under the Employee
Plan.

Effective March 13, 1995, the Company's Amended and Restated Certificate of
Incorporation were amended to increase the number of authorized shares of the
Company's common stock from 1,000,000 shares to 5,000,000 shares and to split
each share of common stock outstanding on March 13, 1995, into 2.1126709
shares of common stock. All share amounts have been restated to give effect to
the stock split.

In December 1995, $358,500 was committed to the Company in exchange for
35,850 shares of the Company's common stock in conjunction with a private
placement. The shares were paid for and issued in January 1996. This amount,
net of transaction costs, is recorded in Prepaid Expenses and Other Current
Assets at December 31, 1995.

During 1995, the Board of Directors authorized the Director Stock Option
Plan (the "Director Plan") for nonemployee directors. Under the Director Plan,
an option is automatically granted to each nonemployee director to purchase
15,000 shares of common stock, which vests over a two-year period. The option
price per share is the fair market value of a share of common stock on the
date the option is granted. No option will be exercisable more than ten years
from the date of grant. An aggregate of 100,000 shares of common stock were
reserved for issuance under the Director Plan.

A summary of stock option activity during the year ended December 31, 1995,
and the six months ended June 30, 1996, is as follows:

EMPLOYEE DIRECTOR
PLAN PLAN
-------- --------

Outstanding, January 1, 1995............................. -- --
Granted during 1995...................................... 153,550 60,000
------- ------
Outstanding, December 31, 1995........................... 153,550 60,000
Granted during the six-months ended June 30, 1996 (unau-
dited).................................................. 270,200 --
------- ------
Outstanding, June 30, 1996 (unaudited)................... 423,750 60,000
------- ------
Exercisable options at December 31, 1995................. 45,000 20,000
======= ======
Exercisable options at June 30, 1996 (unaudited)......... 55,000 20,000
======= ======

No shares have been exercised as of December 31, 1995. The price per share
under the Employee Plan ranges from $2.25 to $12.00 per share of common stock.
Under the Director Plan, the option price per share equals $10.00 per share.

9. EMPLOYEE BENEFIT PLAN

The Company has a 401(k) employee benefit plan (the "401(k) Plan") that
covers substantially all employees. The 401(k) Plan provides that employees
may contribute amounts not to exceed statutory limitations. No employer
contributions were made during 1995 or for the six months ended June 30, 1996
(unaudited).

F-12

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

10. RELATED PARTIES

In connection with capital raised by the Company, a director of the Company
received 21,127 shares of common stock during 1994 for services rendered.
During 1995, the director received commissions of 32,814 shares of common
stock and was paid $541,921 in connection with the Company's first private
placement. Commissions due to the director under the first private placement
equal $40,510 at December 31, 1995. Consulting fees earned under this
placement equal to $169,000 are due to the director, of which $145,000 was
owed at December 31, 1995. During early 1996, the same director received
24,482 shares of common stock and fees equal to $424,543 which relate to the
second private placement (see Note 12). Consulting fees earned in connection
with this second placement equal $157,160.

Debt owed to the Company's Chairman and Chief Executive Officer of $330,850
at December 31, 1994 was converted into 164,318 shares of the Company's common
stock at $2.13 per share in March 1995, for a balance due at the time of
conversion of $350,000.

At December 31, 1994 and 1995, deferred salary owed to the Company's
Chairman and Chief Executive Officer was $112,598 and $201,341, respectively.

Deferred salary of $40,000 owed to an officer of the Company for services
performed during 1995 were accrued at December 31, 1995. This balance was paid
in early 1996.

During 1995, the Company purchased consulting services and certain computer
network equipment from a firm whose president is a brother of the Company's
Chairman and Chief Executive Officer for approximately $40,000.

11. VALUATION AND QUALIFYING ACCOUNTS

Activity in the Company's allowance for doubtful accounts for the year ended
December 31, 1995 was as follows:

BALANCE AT CHARGED TO BALANCE AT
BEGINNING OF PERIOD COSTS AND EXPENSES DEDUCTIONS END OF PERIOD
------------------- ------------------ ---------- -------------

$ -- $132,353 $ -- $132,353

12. SUBSEQUENT EVENTS

Capital Stock--In February 1996, the Company's Amended and Restated
Certificate of Incorporation was amended to authorize 2,455,000 shares of
Preferred Stock (nonvoting) with a par value of $0.01 per share and to
increase the number of shares of Common Stock authorized to 10,455,000 shares
with a par value of $0.01 per share. On March 1, 1996, 455,000 shares of
Series A Convertible Preferred Stock were issued in connection with the
purchase of Axicorp; and are convertible into common shares at the option of
the Company and under certain defined events on a 1-to-1 basis.

Private Placement--In early 1996, the Company raised approximately
$4,700,000, net of transaction costs, in a private placement. This placement
included the sale of 523,867 shares of common stock to numerous investors. The
Company also issued 82,490 shares of common stock for services rendered in
conjunction with this offering.

Investment Agreement--In January 1996, the Company entered into an agreement
with Teleglobe, sold 121,505 shares of Common Stock for approximately
$1,400,000 and borrowed $2,000,000 (see Note 4).

F-13

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Acquisition of Axicorp--On March 1, 1996, the Company completed the
acquisition of the outstanding capital stock of Axicorp, the fourth largest
telecommunications carrier in Australia. The purchase price consisted of cash,
Company stock, and seller financing. The Company paid $5.7 million cash,
including transaction costs, and issued 455,000 shares of its Series A
Convertible Preferred Stock. The Company also issued two notes to the sellers.
One note is for $4.1 million payable to Fujitsu Australia Limited which is due
in February 1997, and the other note is for a total of $4.0 million payable to
the individual shareholder sellers, which are due in two equal installments in
February 1997, and February 1998. These notes have been recorded at their
discounted value at the date of acquisition at an interest rate of 10.18%. The
portion of the shareholder note due in February 1997 can be extended for an
additional year at the Company's option. If the option is exercised the note
will accrue interest at the prime rate plus 1%.

The sellers are holding as security approximately 25% of their shares in
Axicorp under a share mortgage for the unpaid notes. These shares will be
delivered to the Company when the notes are paid in full. In turn, the Company
is holding 248,334 shares of the Series A Convertible Preferred Stock issued
to the sellers as collateral for the Axicorp shares withheld. These shares
will be released to the sellers once the remaining Axicorp shares are
received.

For accounting purposes, the Company has treated the acquisition as a
purchase. Accordingly, the results of Axicorp's operations are included in the
consolidated results of operations of the Company beginning March 1, 1996.

Pro forma operating results for the year ended December 31, 1995, and the
six months ended June 30, 1996, as if Axicorp had been acquired as of January
1, 1995, are as follows (unaudited):

YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
1995 1996
------------ --------------

Net revenue..................................... $125,628,000 $ 91,783,000
Net loss........................................ $ (4,685,000) $ (3,299,000)
Earnings per share.............................. $ -- $ --

The pro forma financial information is presented for informational purposes
only and is not necessarily indicative of the operating results that would
have occurred had the acquisition been consummated as of the above dates, nor
are they necessarily indicative of future operations.

The following summarizes the allocation of the purchase price to the major
categories of assets acquired and liabilities assumed:

Current assets................................................. $ 20,136,000
Customer lists................................................. 4,574,000
Goodwill....................................................... 17,932,000
Other assets................................................... 1,506,000
------------
44,148,000
Liabilities assumed............................................ (24,863,000)
Notes payable.................................................. (8,110,000)
------------
Cash paid and preferred shares issued.......................... $ 11,175,000
============

F-14

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

13. SUBSEQUENT EVENTS--OTHER

Private Equity Placement--On July 31, 1996 four affiliated institutional
investors purchased 285,714 shares of the Company's common stock for $8
million, and for an additional $8 million received warrants to purchase an
additional $10 million of common stock (measured on the basis of fair market
value of the common stock on the date of exercise) and up to another 185,714
shares of Common Stock.

Conversion of Preferred Stock and Common Stock Split--In connection with the
Company's planned initial public offering the Company contemplates converting
all outstanding shares of Preferred Stock into shares of Common Stock on the
effective date of the Registration Statement. The Company additionally intends
to split all shares of Common Stock at a ratio to be determined as of the same
date.

F-15

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors andStockholders of Axicorp Pty., Ltd.

In our opinion, the accompanying balance sheets and the related statements
of operations, of cash flows and of stockholders' equity present fairly, in
all material respects, the financial position of Axicorp Pty., Ltd. at
March 31, 1995 and 1996, and the results of its operations and its cash flows
for the period from July 1, 1994 to March 31, 1995 and for the year ended
March 31, 1996, all expressed in United States Dollars, in conformity with
accounting principles generally accepted in the United States. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.

PRICE WATERHOUSE
Melbourne, Australia
July 31, 1996

F-16

AXICORP PTY., LTD.

BALANCE SHEETS
(IN US DOLLARS, EXCEPT SHARE INFORMATION)

MARCH 31,
------------------------
1995 1996
----------- -----------

ASSETS
Current assets:
Cash and cash equivalents........................... $ 1,435,723 $ 3,218,079
Accounts receivable--trade, net of allowances of
$1,171 and $377,699, respectively.................. 7,893,146 23,715,321
Other current assets................................ 299,126 300,928
----------- -----------
Total current assets.............................. 9,627,995 27,234,328
Plant, equipment and computer software, net........... 365,532 844,337
Deferred tax assets................................... 320,774 2,997,919
Other non-current assets.............................. 7,275 7,785
----------- -----------
Total assets...................................... $10,321,576 $31,084,369
=========== ===========
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable--trade creditors................... $ 8,633,069 $23,616,272
Accrued expenses and other liabilities.............. 677,156 1,229,173
Deferred tax liabilities............................ 324,380 3,517,062
Note payable to related party....................... 261,879 1,677,668
----------- -----------
Total current liabilities......................... 9,896,484 30,040,175
----------- -----------
Total liabilities................................. 9,896,484 30,040,175
----------- -----------
Commitments and Contingencies (Note 7)
Stockholder's equity:
Ordinary Shares, AUS$1 par value; 10,000,000 shares
authorized; 590,000 shares issued and outstanding
at March 31,1995, and
March 31, 1996..................................... 427,514 427,514
Special Cumulative Redeemable Preference Shares,
AUS$1 par value; 100,000 shares authorized; 1,180
shares issued at March 31, 1995 and March 31,
1996............................................... -- 855
Retained (loss) earnings.............................. (5,931) 560,751
Cumulative translation adjustment..................... 3,509 55,074
----------- -----------
Total stockholders' equity........................ 425,092 1,044,194
----------- -----------
Total liabilities and stockholders' equity........ $10,321,576 $31,084,369
=========== ===========

The accompanying notes are an integral part of these financial statements.

F-17

AXICORP PTY., LTD.

STATEMENTS OF OPERATIONS
(IN US DOLLARS)

NINE MONTHS TWELVE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
1995 1996
----------- -------------

Net Revenue........................................... $44,796,839 $144,344,739
Cost of Revenue....................................... 40,404,651 131,712,076
----------- ------------
Gross Margin.......................................... 4,392,188 12,632,663
----------- ------------
Operating Expenses
Selling, General and Administrative................. 4,276,902 11,558,216
Depreciation and Amortization....................... 42,955 234,610
----------- ------------
Total Operating Expenses.............................. 4,319,857 11,792,826
----------- ------------
Income from Operations................................ 72,331 839,837
Interest Income....................................... 29,654 219,300
----------- ------------
Income before Income Taxes............................ 101,985 1,059,137
Income Tax Provision.................................. 3,753 492,455
----------- ------------
Net Income............................................ $ 98,232 $ 566,682
=========== ============

The accompanying notes are an integral part of these financial statements.

F-18

AXICORP PTY,. LTD.

STATEMENTS OF STOCKHOLDERS' EQUITY
(IN US DOLLARS, EXCEPT SHARE INFORMATION)

REDEEMABLE SUBSCRIPTION
ORDINARY SHARES PREFERENCE RECEIVABLE RETAINED CUMULATIVE TOTAL
---------------- SHARE CAPITAL FROM EARNINGS TRANSLATION STOCKHOLDERS'
SHARES AMOUNT AMOUNT STOCKHOLDERS (DEFICIT) ADJUSTMENT EQUITY
------- -------- ------------- ------------ --------- ----------- -------------

BALANCE AT JULY 1,
1994................... 590,000 $427,514 $ -- $ -- $(104,163) $ -- $ 323,351
Issuance of Shares...... -- -- 855 (855) -- -- --
Foreign currency
translation
adjustment............. -- -- -- -- -- 3,509 3,509
Net income.............. -- -- -- -- 98,232 -- 98,232
------- -------- ----- ----- --------- ------- ----------
BALANCE AT MARCH 31,
1995................... 590,000 427,514 855 (855) (5,931) 3,509 425,092
Issuance of shares...... -- -- -- 855 -- -- 855
Foreign currency
translation
adjustment............. -- -- -- -- -- 51,565 51,565
Net income.............. -- -- -- -- 566,682 -- 566,682
------- -------- ----- ----- --------- ------- ----------
BALANCE AT MARCH 31,
1996................... 590,000 $427,514 $ 855 $ -- $ 560,751 $55,074 $1,044,194
======= ======== ===== ===== ========= ======= ==========

The accompanying notes are an integral part of these financial statements.

F-19

AXICORP PTY., LTD.

STATEMENTS OF CASH FLOWS
(IN US DOLLARS)

NINE MONTHS TWELVE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
1995 1996
----------- -------------

Cash flows from operating activities:
Net income......................................... $ 98,232 $ 566,682
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation....................................... 42,955 234,610
Allowance for bad and doubtful accounts............ 1,201 359,569
Deferred tax expense............................... 3,729 492,746
Changes in assets and liabilities:
Accounts receivable.............................. (7,688,030) (15,822,175)
Other current assets............................. (99,137) 36,895
Accounts payable................................. 9,066,970 14,983,203
---------- -----------
Net cash provided by operating activities.......... 1,425,920 851,530
---------- -----------
Cash flows from investing activities:
Purchase of plant, equipment and software.......... (342,030) (667,526)
Purchase of investments............................ (161,325) --
Proceeds from investments.......................... -- 150,355
---------- -----------
Net cash used in investing activities.............. (503,355) (517,171)
---------- -----------
Cash flows from financing activities:
Proceeds from issuance of shares................... 22,374 877
Proceeds from notes payable--due to related party.. 268,429 1,637,800
Payments on short-term debt--due to related party.. -- (267,637)
---------- -----------
Net cash provided by financing activities.......... 290,803 1,371,040
---------- -----------
Effect of exchange rate changes on cash.............. (26,687) 76,957
Increase in cash..................................... 1,213,368 1,705,399
Cash at the beginning of the period................ 249,042 1,435,723
---------- -----------
Cash at the end of the period........................ $1,435,723 $ 3,218,079
========== ===========
Supplemental disclosures:
Cash paid for interest............................. $ 2,008 $ --
Cash paid for income taxes......................... -- 139,726

The accompanying notes are an integral part of these financial statements.

F-20

The accompanying notes are an integral part of these statements.
AXICORP PTY., LTD.

NOTES TO FINANCIAL STATEMENTS

NOTE 1--THE COMPANY

The Company

Axicorp Pty., Ltd. ("Axicorp") was incorporated in Victoria, Australia in
1993. Axicorp's principal line of business is the provision of
telecommunication services.

On March 1, 1996 Primus Telecommunications International, Inc. ("PTII"), a
wholly owned subsidiary of Primus Telecommunications Group Incorporated
("Primus"), a United States based long-distance telephone company, acquired
beneficial ownership of all of the outstanding capital stock in Axicorp in
issue at that date.

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These financial statements have been prepared in accordance with generally
accepted accounting principles in the United States.

Revenue recognition

Axicorp's revenues are derived primarily from long-distance, mobile, local
and data telecommunication charges and are recognized when such services are
provided. Axicorp also derives revenue from sale of mobile equipment and sale
of valued added services. Revenue from such services are recognized when
delivered and provided.

Cost of revenue

Cost of revenue comprises telecommunications network usage charges and other
direct costs incurred in providing telecommunication services to customers,
and are recognized as services are provided.

Use of estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

Plant, Equipment and Computer Software

Plant, equipment and computer software are stated at cost less accumulated
depreciation and amortization. Depreciation and amortization is computed using
the straight line basis over the estimated useful lives of the assets.

Axicorp has capitalized external software costs in relation to the
development of certain computer software, including a billing system, used by
Axicorp in its operations. As of March 31, 1995 and 1996 the accumulated
amortization for computer software is $20,145 and $137,404, respectively.

Plant, equipment and computer software classes and their respective useful
lives are as follows:

YEARS
------

. Computer equipment............................................... 3
. Furniture, leasehold improvements and equipment.................. 5 to 7
. Computer software................................................ 2 to 3

F-21

AXICORP PTY., LTD.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The accompanying notes are an integral part of these statements.
Foreign currency translation

To date, Axicorp has conducted most of its business in Australian dollars.
The financial statements have been presented herein in U.S. dollars because
Primus's reporting currency is the U.S. dollar. All assets and liabilities are
translated into the U.S. dollar at the rate effective at the reporting date
and elements of the income statement are translated at average exchange rates
for the period. Translation differences are included in the foreign currency
translation adjustment (a component of stockholders' equity).

Income Taxes

Income taxes are computed using the asset and liability method. Under the
asset and liability method, deferred tax assets and liabilities are determined
based on the differences between the financial reporting and tax bases of
assets and liabilities and are measured using the currently enacted tax rates
and laws.

Concentration of credit risk

Financial instruments that potentially subject Axicorp to credit risk
consist principally of trade receivables from its customers in Australia.
Axicorp generally requires no collateral from its customers. However, Axicorp
maintains an allowance for bad and doubtful accounts receivable based on the
expected collectibility of all accounts receivable. At March 31, 1995 and 1996
no customer accounted for more than 10% of accounts receivable.

Accounting for impairment of long-lived assets

In March 1995, the Financial Accounting Standards Board issued SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of." SFAS 121 requires impairment losses to be recorded for
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the asset's carrying amount. SFAS 121 also addresses the accounting
for impairment losses associated with long-lived assets to be disposed of.
Axicorp adopted SFAS 121 in the first quarter of fiscal 1996. Adoption of SFAS
121 did not have a material impact on Axicorp's results of operations.

Dividends

Any dividend payments made by Axicorp would, under Australian Corporation
Law, be limited to Axicorp's retained earnings, which aggregated $560,751 at
March 31, 1996.

Cash Equivalents

Axicorp considers all liquid investments with a maturity of three months or
less to be cash equivalents.

NOTE 3--PLANT, EQUIPMENT AND COMPUTER SOFTWARE

MARCH 31, MARCH 31,
1995 1996
--------- ---------

Plant, equipment and computer software:
Computer software.................................... $157,028 $ 479,414
Computer hardware.................................... 143,372 429,057
Furniture, leasehold improvement and equipment....... 112,224 232,929
-------- ---------
412,624 1,141,400
Less: accumulated depreciation and amortization........ (47,092) (297,063)
-------- ---------
Net plant and equipment................................ $365,532 $ 844,337
======== =========

F-22

AXICORP PTY., LTD.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The accompanying notes are an integral part of these statements.

NOTE 4--INCOME TAXES

The provision for income taxes is attributable to:

NINE MONTHS TWELVE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
1995 1996
----------- -------------

Current............................................ $ -- $ --
Deferred........................................... 3,753 492,455
------ --------
$3,753 $492,455
====== ========

The provision for income taxes differs from the amount computed by applying
the Australian statutory federal income tax rate to income before provision
for income taxes. The sources and tax effect of the differences are as
follows:

NINE MONTHS TWELVE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
1995 1996
----------- -------------

Income tax at the Australian federal statutory
rate of 36%
(1995--33%)...................................... $33,655 $381,289
Nondeductible expenses............................ -- 86,764
Other............................................. (29,902) 24,402
------- --------
$ 3,753 $492,455
======= ========

Net deferred tax liabilities and assets reflect the net tax effects of
temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes.
Significant components of Axicorp's deferred tax liabilities and assets are as
follows:

MARCH 31, MARCH 31,
1995 1996
--------- ----------

Deferred tax liabilities:
Accrued income..................................... $541,325 $4,234,068
Capitalized software............................... 41,321 171,305
-------- ----------
Total deferred tax liabilities..................... 582,646 4,405,373
-------- ----------
Deferred tax assets:
Plant and equipment................................ -- 47,570
Accrued employee entitlement....................... 20,520 59,797
Other accruals..................................... 196,425 657,920
Net tax loss carry forward......................... 362,095 3,120,943
-------- ----------
Total deferred tax assets.......................... 579,040 3,886,230
-------- ----------
Net deferred tax liabilities......................... $ (3,606) $ (519,143)
======== ==========

Axicorp's carry forward tax losses of $8,669,286 are available to be offset
against future taxable income, without limitation, provided Axicorp continues
to maintain the same business in the year of loss recoupment which it carried
on prior to its acquisition by PTII. The losses arise principally because of
the treatment for

F-23

AXICORP PTY., LTD.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The accompanying notes are an integral part of these statements.
taxation purposes of amounts recorded as income receivable at year end which
are not taxable until their receipt in the following year of income.
Management believes that, based on the evidence of the performance of Axicorp
and other factors, the weight of available evidence indicates that it is more
likely than not that Axicorp will be able to utilize the carry forward tax
loss.

NOTE 5--RELATED PARTY TRANSACTIONS

During the period April 1, 1994 to March 31, 1995 and the twelve months
ended March 31, 1996 Axicorp paid management fees of $616,000 and $426,000,
respectively, to a company owned primarily by officers and directors of
Axicorp. At March 31, 1995, Axicorp owed management fees of $238,000.

At March 31, 1995 and 1996 Axicorp owed related parties $262,000 and
$1,678,000 respectively. The balance at March 31, 1996 is an unsecured loan,
interest at the prime rate of 12% and is repayable on demand.

NOTE 6--EMPLOYEE BENEFIT PLAN

Axicorp is currently required by law to contribute 6% of each employee's
salary to a pension fund for the employee's retirement. Axicorp's contribution
to the pension fund aggregated approximately $44,000 and $157,000 during the
period July 1, 1994 to March 31, 1995 and the twelve months ended March 31,
1996, respectively.

NOTE 7--COMMITMENTS AND CONTINGENCIES

Leases

Axicorp leases its office facility and certain equipment under cancellable
lease arrangements. The cancellable office facility lease expires in 1997.

Rental expense under all leases totalled $88,000 for the period from July 1,
1994 to March 31, 1995 and $238,000 during the twelve months ended March 31,
1996.

NOTE 8--SALES BY GEOGRAPHIC AREA

Substantially all of the sales of Axicorp have been to customers in
Australia.

F-24

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS PRO-
SPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO
BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION
WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE IN-
FORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.

-----------------

TABLE OF CONTENTS

Page
----

Additional Information................................................... 3
Summary.................................................................. 4
Risk Factors............................................................. 9
Use of Proceeds.......................................................... 18
Dilution................................................................. 19
Dividend Policy.......................................................... 19
Capitalization........................................................... 20
Selected Financial Data.................................................. 21
Unaudited Pro Forma Consolidated Statements of Operations................ 22
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 26
Business................................................................. 36
Management............................................................... 57
Certain Transactions..................................................... 64
Principal Stockholders................................................... 66
Description of Capital Stock............................................. 68
Shares Eligible for Future Sale.......................................... 71
Underwriting............................................................. 72
Legal Matters............................................................ 73
Experts.................................................................. 73
Index to Financial Statements............................................ F-1

-----------------

UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS EF-
FECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

[LOGO OF PRIMUS TELECOMMUNICATIONS GROUP APPEARS HERE]

COMMON STOCK

-----------------

PROSPECTUS
, 1996

-----------------

LEHMAN BROTHERS

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth an itemization of all estimated expenses, all
of which will be paid by the Company, in connection with the issuance and
distribution of the securities being registered:

NATURE OF EXPENSE AMOUNT
----------------- -------

SEC Registration Fee............................................. $29,742
NASD Fee......................................................... 9,125
Nasdaq National Market Fee....................................... 47,500
Printing and engraving fees...................................... *
Registrant's counsel fees and expenses........................... *
Accounting fees and expenses..................................... *
Blue Sky expenses and counsel fees............................... *
Transfer agent and registrar fees................................ *
Miscellaneous.................................................... *
-------
TOTAL.......................................................... $ *
=======

--------
* To be supplied by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law (the "DGCL") permits
each Delaware business corporation to indemnify its directors, officers,
employees and agents against liability for each such person's acts taken in
his or her capacity as a director, officer, employee or agent of the
corporation if such actions were taken in good faith and in a manner which he
or she reasonably believed to be in or not opposed to the best interests of
the corporation, and with respect to any criminal action, if he or she had no
reasonable cause to believe his or her conduct was unlawful. Article X of the
Company's Amended and Restated By-Laws provides that the Company, to the full
extent permitted by Section 145 of the DGCL, shall indemnify all past and
present directors or officers of the Company and may indemnify all past or
present employees or other agents of the Company. To the extent that a
director, officer, employee or agent of the Company has been successful on the
merits or otherwise in defense of any action, suit or proceeding referred to
in such Article X, or in defense of any claim, issue or matter therein, he or
she shall be indemnified by the Company against actually and reasonably
incurred expenses in connection therewith. Such expenses may be paid by the
Company in advance of the final disposition of the action upon receipt of an
undertaking to repay the advance if it is ultimately determined that such
person is not entitled to indemnification.

As permitted by Section 102(b)(7) of the DGCL, Article 11 of the Company's
Amended and Restated Certificate of Incorporation provides that no director of
the Company shall be liable to the Company for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for the unlawful payment of dividends on or
redemption of the Company's capital stock, or (iv) for any transaction from
which the director derived an improper personal benefit.

The Company expects to obtain a policy insuring it and its directors and
officers against certain liabilities, including liabilities under the
Securities Act.

The Underwriting Agreement filed as Exhibit 1.1 to this Registration
Statement provides for indemnification by the Underwriters of the Registrant
and its officers and directors for certain liabilities arising under the
Securities Act or otherwise.

II-1

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

The Company issued shares of Common Stock to John F. DePodesta, its
incorporator, on February 4, 1994 for consideration of $250. Additionally, Mr.
Singh purchased shares of Common Stock from the Company on June 1, 1994
for $250,000. A trust, the voting power of which is vested in Mr. Singh,
purchased shares of Common Stock from the Company on September 30, 1994
for $250,000. During the fourth quarter of 1994, the Company issued to Mr.
Krieger, a director of the Company, in recognition of the support he gave to
the Company, shares of Common Stock. No underwriter or placement agent
participated in any of the foregoing issuances of securities.

During the first quarter of 1995, the Company sold its Common Stock to a
group of private investors consisting of certain family members and colleagues
of Mr. Singh and Mr. DePodesta. The investors paid $300,000 for shares of
Common Stock in this transaction. On March 31, 1995, pursuant to an agreement
whereby Mr. Singh forgave certain indebtedness in the amount of $350,000 owed
him by the Company, the Company issued Mr. Singh shares of Common Stock.
No underwriter or placement agent participated in any of the foregoing
issuances of securities.

As of December 31, 1995, shares of the Company's Common Stock were sold
for an aggregate price of $5,198,500 to investors familiar with Mr. Singh and
the Company. This sale was placed by Northeast Securities, Inc. ("NSI"), which
used Andrew Krieger as a selling agent. Underwriting commissions and other
expenses in this transaction were $787,440 and shares of the Company's
Common Stock. On January 31, 1996, NSI and Mr. Krieger, both acting as
placement agents, privately placed shares of the Company's Common Stock
for an aggregate price of $6,286,404 to other investors familiar with Mr.
Singh and the Company. Underwriting commissions and other expenses in this
transaction totalled $613,167 and shares of the Company's Common Stock.

On February 15, 1996, Teleglobe USA, Inc. invested in the Company by
purchasing shares of the Company's Common Stock for $1,458,060. On March
1, 1996, in connection with the Company's purchase of Axicorp, certain vendors
of Axicorp received 455,000 shares of the Company's Series A Convertible
Preferred Stock, par value $.01 per share. In addition, on July 31, 1996, the
Soros/Chatterjee Group bought shares of the Company's Common Stock for
approximately $8,000,000 and for $8,000,000 was issued warrants to purchase
additional shares of Common Stock. No underwriter or placement agent
participated in any of the foregoing issuances of securities.

The Company believes that the foregoing described issuances of securities,
if they constitute sales, are exempt from registration under the Act by virtue
of the exemption provided by Section 4(2) thereof for transactions not
involving a public offering.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(A) EXHIBITS:

EXHIBIT NO. DESCRIPTION
----------- -----------

1.1 Form of Underwriting Agreement(/1/)
3.1 Amended and Restated Certificate of Incorporation.
3.2 Amended and Restated By-Laws.
4.1 Specimen Certificate of the Company's Common Stock, par value
$.01 per share.
5.1 Opinion of Pepper, Hamilton & Scheetz respecting the Common
Stock registered hereby.(/1/)
10.1 Share Acquisition Deed, dated March 1, 1996, between the Company
and the shareholders of Axicorp Pty., Ltd.
10.2 Switched Transit Agreement, dated June 5, 1995, between
Teleglobe USA, Inc. and the Company for the provision of
services to India.
10.3 Hardpatch Transit Agreement, dated February 29, 1996, between
Teleglobe USA, Inc. and the Company for the provision of
services to Iran.

II-2

EXHIBIT NO. DESCRIPTION
----------- -----------

10.4 Agreement for Billing and Related Services, dated February 23,
1995, between the Company and Electronic Data Systems Inc.
10.5 Employment Agreement, dated June 1, 1994, between the Company
and K. Paul Singh.
10.6 Primus Telecommunications Group, Incorporated 1995 Stock Option
Plan.
10.7 Primus Telecommunications Group, Incorporated 1995 Director
Stock Option Plan.
10.8 International Operating Agreement between the Honduras
Telecommunications Company and the Company dated November 30,
1995.
10.9 Shareholders Agreement, dated February 22, 1996, among Teleglobe
USA, Inc., K. Paul Singh and the Company.
10.10 Securityholders' Agreement, dated July 31, 1996, among the
Company, K. Paul Singh, Quantum Industrial Partners LDC, S-C
Phoenix Holdings, L.L.C., Winston Partners II LDC and Winston
Partners LLC.
10.11 Registration Rights Agreement, dated July 31, 1996, among the
Company, Quantum Industrial Partners LDC, S-C Phoenix Holdings,
L.L.C., Winston Partners II LDC and Winston Partners LLC.
11.1 Statement re: Computation of Per Share Earnings.
22.1 Subsidiaries of the Registrant.
23.1 Consent of Deloitte & Touche LLP (included on page II-5 of this
Registration Statement).
23.2 Consent of Price Waterhouse (included on page II-6 of this
Registration Statement).
23.3 Consent of Pepper, Hamilton & Scheetz (included in Exhibit
5.1).(/1/)
24.1 Powers of Attorney (included on page II-7 of this Registration
Statement).
27.1 Financial Data Schedule for the Company for the year ended
December 31, 1995.
27.2 Financial Data Schedule for the Company for the six months ended
June 30, 1996.
27.3 Financial Data Schedule for Axicorp Pty., Ltd. for the twelve
months ended March 31, 1996.

- --------
(1) To be filed by amendment.

(B) CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

All schedules have been omitted because they are not applicable, not
required, or the required information is included in the Financial Statements
or the notes thereto.

ITEM 17. UNDERTAKINGS

The undersigned registrant undertakes that insofar as indemnification for
liabilities arising under the Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.

II-3

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(2) For purposes of determining any liability under the Act, each post-
effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

The undersigned registrant hereby undertakes to provide to the Underwriters
at the closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

II-4

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Registration Statement of Primus
Telecommunications Group, Incorporated on Form S-1 of our report dated April
23, 1996, except for the first and second paragraphs of Note 13, as to which
the dates are July 31, 1996, and the effective date of the Registration
Statement, respectively, appearing in the Prospectus, which is part of this
Registration Statement, and to the reference to us under the headings
"Selected Financial Data" and "Experts" in such Prospectus.

Deloitte & Touche LLP

Washington, D.C.
, 1996

------------------

The foregoing consent is in the form that will be signed upon the completion
of the restatement of capital account to effect the conversion of all
outstanding shares of preferred stock into shares of common stock and the
split of all shares of common stock at or ratio to be determined.

Washington, D.C.
August 22, 1996

II-5

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of the
Registration Statement on Form S-1 (File No. 333- ) of our report dated July
31, 1996, relating to the financial statements of Axicorp Pty., Ltd., which
appears in such Prospectus. We also consent to the references to us under the
headings "Experts" and "Selected Financial Data" in such Prospectus. However,
it should be noted that Price Waterhouse has not prepared or certified such
"Selected Financial Data."

Price Waterhouse

Melbourne, Australia
August 26, 1996

II-6

SIGNATURES AND POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Philadelphia,
Commonwealth of Pennsylvania, on the 26 day of August, 1996.

Primus Telecommunications Group,
Incorporated

/s/ K. Paul Singh
By: _________________________________
K. Paul Singh
Chairman, President and Chief
Executive Officer

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints K. Paul Singh and Neil L. Hazard, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign any and all amendments (including, without
limitation, post-effective amendments) to this Registration Statement and any
registration statement filed under Rule 462 under the Securities Act of 1933,
as amended, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or either of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on August 26,
1996 in the capacities indicated:

SIGNATURES TITLE
/s/ K. Paul Singh Director, Chairman, President and
Chief Executive Officer (principal
executive officer)

- -------------------------------------
K. PAUL SINGH
/s/ Neil L. Hazard Executive Vice President and Chief
- ------------------------------------- Financial Officer (principal
financial officer and principal
accounting officer)

NEIL L. HAZARD
/s/ John F. DePodesta Executive Vice President, Law and
- ------------------------------------- Regulatory Affairs and Director

JOHN F. DEPODESTA
/s/ Herman Fialkov Director

- -------------------------------------
HERMAN FIALKOV
/s/ David E. Hershberg Director

- -------------------------------------
DAVID E. HERSHBERG
/s/ Andrew B. Krieger Director

- -------------------------------------
ANDREW B. KRIEGER

/s/ John Puente Director
- -------------------------------------
JOHN PUENTE

II-7

EXHIBIT INDEX

EXHIBIT NUMBER DESCRIPTION
-------------- -----------

3.1 Amended and Restated Certificate of Incorporation.
3.2 Amended and Restated By-Laws.
4.1 Specimen Certificate of the Company's Common Stock, par value
$.01 per share.
10.1 Share Acquisition Deed, dated March 1, 1996, among the Company
and the shareholders of Axicorp Pty., Ltd.
10.2 Switched Transit Agreement, dated June 5, 1995, between
Teleglobe USA, Inc. and the Company for the provision of
services to India.
10.3 Hardpatch Transit Agreement, dated February 29, 1996, between
Teleglobe USA, Inc. and the Company for the provision of
services to Iran.
10.4 Agreement for Billing and Related Services, dated February 23,
1995, between the Company and Electronic Data Systems Inc.
10.5 Employment Agreement, dated June 1, 1994, between the Company
and K. Paul Singh.
10.6 Primus Telecommunications Group, Incorporated 1995 Stock Option
Plan.
10.7 Primus Telecommunications Group, Incorporated 1995 Director
Stock Option Plan.
10.8 International Operating Agreement between the Honduras
Telecommunications Company and the Company dated November 30,
1995.
10.9 Shareholders Agreement, dated February 22, 1996, among
Teleglobe USA, Inc., K. Paul Singh and the Company.
10.10 Securityholders' Agreement, dated July 31, 1996, among the
Company, K. Paul Singh, Quantum Industrial Partners LDC, S-C
Phoenix Holdings, L.L.C., Winston Partners II LDC and Winston
Partners LLC.
10.11 Registration Rights Agreement, dated July 31, 1996, among the
Company, Quantum Industrial Partners LDC, S-C Phoenix
Holdings, L.L.C., Winston Partners II LDC and Winston Partners
LLC.
11.1 Statement re: Computation of Per Share Earnings.
22.1 Subsidiaries of the Registrant.
23.1 Consent of Deloitte & Touche LLP (included on page II-5 of this
Registration Statement).
23.2 Consent of Price Waterhouse (included on page II-6 of this
Registration Statement).
24.1 Powers of Attorney (included on page II-7 of this Registration
Statement).
27.1 Financial Data Schedule for the Company for the year ended
December 31, 1995.
27.2 Financial Data Schedule for the Company for the six months
ended June 30, 1996.
27.3 Financial Data Schedule for Axicorp Pty., Ltd. for the twelve
months ended March 31, 1996.


 
                                                                     EXHIBIT 3.1


                         CERTIFICATE OF INCORPORATION
                                      OF
                        GLOBAL TELECOMMUNICATIONS, INC.
          

          1.   The name of the corporation is Global Telecommunications, Inc.

          2.   The address of its registered office in the State of Delaware is
1209 Orange Street, in the City of Wilmington, County of New Castle.  The name
of its registered agent at such address is The Corporation Trust Company.

          3.   The nature of the business or purposes to be conducted or
promoted is:

          To engage in any lawful act or activity for which corporations may be
          organized under the General Corporation Law of Delaware and to possess
          and exercise all of the power and privileges granted by such law and
          other law of Delaware.

          4.   The total number of shares of capital stock which the corporation
shall have authority to issue is one million (1,000,000) shares of common stock,
par value $.01 per share.

          5.   The name and mailing address of the sole incorporator is as
follows:


          Name                           Address
          ----                           -------

     John F. DePodesta              224 North Royal Street
                                    Alexandria, VA  22314

          6.   The corporation is to have perpetual existence.

          7.   The by-laws of the corporation may be altered, amended or
repealed by a vote of a majority of the board of directors or by a vote of
holders of a majority of the stock entitled to vote.

 
          8.   Elections of directors need not be by written ballot unless the
by-laws of the corporation shall so provide.

               Meetings of stockholders may be held within or without the State
of Delaware, as the by-laws may provide. The books of the corporation may be
kept (subject to any provision contained in applicable statutes) outside the
State of Delaware at such place or places as may be designated from time to time
by the board of directors or in the by-laws of the corporation.

          9.   The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation and in any
certificate amendatory hereof, in the manner now or hereafter prescribed by
statute, and all rights conferred upon stockholders or others hereunder or
thereunder are granted subject to this reservation.

          10.1 Any transfer or attempted or purported transfer of any shares of
capital stock of the corporation to any alien, which would place the corporation
in violation of Section 310(b) of the Communication Act (47 USC Section 310(b)),
shall be void and shall be ineffective as against the corporation and the
corporation shall not recognize the purported transferee as a stockholder of the
corporation for any purpose whatsoever.

          10.2 The by-laws of the corporation shall contain provisions to
implement and enforce the provisions and intent of this Article.  In addition,
the board of directors shall make such rules and regulations as it deems
necessary and desirable to implement and enforce the provisions and intent of
this Article

                                      -2-

 
to ensure the corporation's compliance with 47 USC Section 310(b) and to
maintain accurate records of the shares of capital stock of the corporation.

          11.  No director of the corporation shall be personally liable to the
corporation or to any stockholder of the corporation for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for any breach
of the director's duty of loyalty to the corporation or its stockholders, (ii)
for acts of omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit.  If the Delaware General Corporation Law hereafter is
amended to authorize the further elimination or limitation of the liability of
directors, then the liability of a director of the corporation, in addition to
the limitation on personal liability provided herein, shall be limited to the
fullest extent permitted by the amended Delaware General Corporation Law, and
such elimination or limitation of liability shall be in addition to, and not in
lieu of, the limitation on the liability of a director provided by the foregoing
provision of this Eleventh Article.  Any repeal or modification of this
paragraph by the stockholders of the corporation shall be prospective only, and
shall not adversely affect any limitation on the personal liability of a
director of

                                      -3-

 
the corporation existing at the time of such repeal or modification.

          12.  The corporation shall, to the fullest extent permitted by Section
145 of the Delaware General Corporation Law, as amended from time to time,
indemnify each person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
is or was, or has agreed to become, a director or officer of the corporation, or
is or was serving, or has agreed to serve, at the request of the corporation, as
a director, officer or trustee of, or in a similar capacity with, another
corporation, partnership, joint venture, trust or other enterprise (including
any employee benefit plan), or by reason of any action alleged to have been
taken or omitted in such capacity, against all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person or on such person's behalf in connection with such
action, suit or proceeding any appeal therefrom.

          Indemnification may include payment by the corporation of expenses in
defending an action or proceeding in advance of the final disposition of such
action or proceeding upon receipt of an undertaking by the person indemnified to
repay such payment if it is ultimately determined that such person is not
entitled to indemnification under this Twelfth Article, which undertaking

                                      -4-

 
may be accepted without reference to the financial ability of such person to
make such repayment.

          The corporation shall not indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person unless the initiation thereof was approved by the board of directors
of the corporation.

          The indemnification rights provided in this Twelfth Article (i) shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled under any law, agreement or vote of stockholders or disinterested
directors or otherwise, and (ii) shall inure to the benefit of the heirs,
executors and administrators of such persons.  The corporation may, to the
extent authorized from time to time by its board of directors, grant
indemnification rights to other employees or agents of the corporation or other
persons serving the corporation and such rights may be equivalent to, or greater
or less than, those set forth in this Twelfth Article.

          I, THE UNDERSIGNED, being the sole incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of Delaware, do make this certificate, hereby declaring and
certifying that this is my act and deed and the facts herein stated are true,
and accordingly have hereunto set my hand this 4th day of February, 1994.

                              ________________________________

                              John F. DePodesta
                              --------------------------------

                                      -5-

 
                           CERTIFICATE OF AMENDMENT
                                      OF
                         CERTIFICATE OF INCORPORATION

          Global Telecommunications, Inc., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,

          DOES HEREBY CERTIFY:

          FIRST:  That the Board of Directors of said corporation, at a meeting
duly held adopted a resolution proposing and declaring advisable the following
amendment to this Certificate of Incorporation of said corporation:

          RESOLVED:  that the Certificate of Incorporation of Global
          Telecommunications, Inc. be amended by changing the Fourth Article
          thereof so that, as amended, said Article shall be and read as
          follows:

          "4.  The total number of shares of capital stock which the corporation
          shall have authority to issue is five million ($5,000,000) shares of
          common stock, par value $.01 per share."

          SECOND:  That in lieu of a meeting and vote of stockholders, the
stockholders have given written consent to said amendment in accordance with the
provisions of Section 228 of the General Corporation Law of the State of
Delaware and written notice of the adoption of the amendment has been given as
provided in Section 228 of the General Corporation Law of the State of Delaware
to every stockholder entitled to such notice.

 
          THIRD:  That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of Sections 242 and 228 of the General
Corporation Law of the State of Delaware.

                              ________________________________
                              John F. DePodesta, Secretary

                                      -2-

 
                           CERTIFICATE OF AMENDMENT
                                      OF
                         CERTIFICATE OF INCORPORATION
                                      OF
                        GLOBAL TELECOMMUNICATIONS, INC.

          GLOBAL TELECOMMUNICATIONS, INC., (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify:

          FIRST:  That the Board of Directors of the Corporation, duly adopted a
resolution declaring advisable the amendment of the certificate of incorporation
of the Corporation and submitting the same to the stockholders of the
Corporation for approval.  The resolution setting forth the proposed amendment
is as follows:

               RESOLVED, that the certificate of incorporation of the
               Corporation be amended by deleting the text of the FIRST ARTICLE
               thereof and substituting therefor the following:

               FIRST:    That the name of the Corporation is:  Primus
               Telecommunications Group, Incorporated.

          SECOND:   That the stockholders of the Corporation duly consented in
writing to the aforesaid amendments in accordance with the provisions of (S) 228
of the General Corporation Law of the State of Delaware.

          THIRD:    That the amendments were duly adopted in accordance with the
provisions of (S) 242 of the General Corporation Law of the State of Delaware.

          IN WITNESS WHEREOF, GLOBAL TELECOMMUNICATIONS, INC., has caused this
certificate to be signed by John F. DePodesta its Secretary effective as of
December 21, 1995.



                              By:   ________________________
                                    John F. DePodesta
                                    Secretary

 
                           CERTIFICATE OF AMENDMENT 

                                      OF 

                         CERTIFICATE OF INCORPORATION

          Primus Telecommunications Group, Incorporated, a corporation organized
and existing under and by virtue of the General Corporation Law of the State of
Delaware,

          DOES HEREBY CERTIFY:

          FIRST:  That the Board of Directors of said corporation, at a meeting
duly held, adopted a resolution proposing and declaring advisable the following
amendment to the Certificate of Incorporation of said corporation:

          RESOLVED:  that the Certificate of Incorporation of Primus
Telecommunications Group, Incorporated be amended by changing the Fourth Article
thereof so that, as amended, said Article shall be and read as follows:

     4.   Authorized Shares:  Powers, Preferences and Rights.
          --------------------------------------------------

          4.1.  Authorized Shares.  The aggregate number of shares that the
                -----------------                                          
Corporation shall have authority to issue shall be twelve million nine hundred
ten thousand (12,910,000), ten million four hundred fifty-five thousand
(10,455,000) of which shall be shares of common stock ("Common Stock"), par
value $.01 per share, four hundred fifty-five thousand (455,000) of which shall
be shares of convertible preferred stock ("Series A Preferred Stock"), par value
$.01 per share and having such rights, designations, preferences and limitations
as set forth in Section 4.2 hereof, and two million (2,000,000) of which shall
be shares of preferred stock, par value $.01 per share and having such rights,
designations, preferences and limitations and such series and such number as
designated by the board of directors of the corporation pursuant to the
authority expressly granted hereby to the board of directors to fix by
resolution or resolutions the designations, powers, preferences and rights, and
the qualifications, limitations or restrictions of certain series and number
thereof which are permitted by Section 151 of the General Corporation Laws of
the State of Delaware (or any successor provision thereto) in respect of any
class or classes of stock or any series of any class of stock of the
corporation.

 
     4.2  Rights, Designations, Preferences and Limitations.
          -------------------------------------------------

               a.   Dividends.  Holders of Series A Preferred Stock shall be
                    ---------
entitled, as may be determined by the board of directors of the corporation, to
receive dividends out of any funds legally available therefor when and as
declared and in the same amounts as paid on Common Stock on a per share Common
Stock equivalent basis based on the then effective conversion ratio of Series A
Preferred Stock to Common Stock.

               b.   Liquidation.  Upon any liquidation, dissolution or winding
                    -----------   
up of the corporation the holders of outstanding shares of Series A Preferred
Stock will be entitled to be paid out of the assets of the corporation before
any distribution or payment is made upon the Common Stock or any other equity
securities of the corporation ranking junior in liquidation to the Series A
Preferred Stock, and pari passu with any other preference stock of the
corporation, an amount in cash equal to the sum of $0.01 per share, plus the
amount of all accrued and unpaid dividends with respect to such share of Series
A Preferred Stock, plus the amount that would be paid on such liquidation to the
holders of Series A Preferred Stock if all such holders had, immediately prior
to such liquidation, converted their shares of Series A Preferred Stock to
shares of Common Stock (the "Liquidation Value"). If, upon any such liquidation,
dissolution or winding up of the corporation, the corporation's assets to be
distributed among the holders of the Series A Preferred Stock are insufficient
to permit payment to such holders of the aggregate amount which they are
entitled to be paid pursuant to the preceding sentence, then the entire assets
to be distributed will be distributed ratably among such holders based upon the
aggregate Liquidation Value of the shares of Series A Preferred Stock held by
each such holder. The corporation will mail written notice of such liquidation,
dissolution or winding up, not less than 60 days prior to the effective date
thereof to each record holder of Series A Preferred Stock.

               c.   Voting Rights.  Except as provided otherwise herein or
                    -------------
as required by the General Corporation Law of Delaware, holders of Series A
Preferred Stock shall not be entitled to vote either individually or as a single
class with the holders of Common Stock; provided, however, that in the event
                                        --------  -------
that the General Law of Delaware or any other applicable law should entitle the
holders of Series A Preferred Stock to vote, the holders of Series A Preferred
Stock shall be entitled to vote together with holders of Common Stock in a
single class with holders of Series A Preferred Stock entitled to cast the
number of votes that they would have were the Series A Preferred Stock to be
converted into Common Stock prior to such vote, unless, however, the applicable
law expressly requires a separate class vote.

                                      -2-

 
               d.   Class Voting Rights.  Holders of Series A Preferred Stock
                    -------------------
shall vote as a separate class on, and the affirmative vote of a majority of the
outstanding shares of Series A Preferred Stock shall be required to authorize,
any action which would:

                    (1)  in any manner authorize, create or issue any class or
series of capital stock ranking, as to distribution of assets on liquidation,
prior to the Series A Preferred Stock, or authorize, create or issue any shares
of any class or series or any bonds, debentures, notes or other obligations
convertible into or exchangeable for, or having optional rights to purchase, any
shares having any such priority over with the Series A Preferred Stock;

                    (2)  in any manner alter or change the designation or the
powers, preferences or rights, or the qualifications, limitations or
restrictions of the Series A Preferred Stock;

                    (3)  reclassify the shares of Common Stock, or any other
shares of any class or series of capital stock hereafter created junior to the
Series A Preferred Stock into shares of any class or series of capital stock
ranking, as to distribution of assets on liquidation, prior to the Series A
Preferred Stock.

                    (4)  increase the aggregate number of Shares of Series
A Preferred Stock which the corporation shall have the authority to issue.

               e.   Conversion into Common Stock.
                    ---------------------------- 

                    (1)  (i)  Subject in all cases to the limitations set
forth in this Section 4.2e, the holders of each share of Series A Preferred
Stock shall have the right at any time following the Nonconversion Period to
convert each such share of Series A Preferred Stock into one fully paid and
nonassessable share of Common Stock or such number of shares of Common Stock as
determined in accordance with clause (ii) of this Section 4.2e(1).

                         (ii)  In case of any capital reorganization,
reclassification, stock split, combination, or exchange of shares, or in the
case of a merger or consolidation of the corporation with another entity (in the
case of a merger, wherein the corporation is the surviving entity), each share
of Series A Preferred Stock, after such reorganization, reclassification, stock
split, combination, exchange of shares, merger or consolidation, shall be
convertible into that kind and number of shares of Common Stock of the
corporation or surviving corporation as to which such share of Series A
Preferred Stock

                                      -3-

 
would have been entitled if such share of Series A Preferred Stock had been
converted into Common Stock immediately prior to any of those events.

                    (2)  Upon the occurrence of a Mandatory Event of Conversion,
all shares of Series A Preferred Stock then outstanding shall, by virtue of, and
simultaneously with, the occurrence of the Mandatory Event of Conversion and
without any action on the part of the holder thereof, automatically become
shares of Common Stock; provided, however, that:
                        --------  -------  ----

                         (i)  upon the occurrence of a Mandatory Event of 
Conversion specified in clause (ii) or (iii) of the definition of "mandatory
Event of Conversion," shares of Series A Preferred Stock held by persons who are
then listed in the corporation's records as Aliens shall only be converted to
the extent there are Available Shares (as calculated as of the applicable
Mandatory Event of Conversion). For purposes of this clause (i), Available
Shares shall be divided among the Alien holders of Series A Preferred Stock
ratably according to their respective Alien Percentage Interests. Shares of
Series A Preferred Stock not converted due to insufficient Available Shares
shall continue as shares of Series A Preferred Stock with all the rights,
designations, preferences and limitations set forth herein and shall be
converted when and as Available Shares become available; and

                         (ii)  upon the occurrence of the Mandatory Event of
Conversion specified in clause (iv) of the definition thereof, only those shares
of Series A Preferred Stock held by stockholders who did not approve the
corporate action subject to vote (such non-assenting stockholders, the "Non-
Assenting Stockholders"; stockholders who failed to vote their shares shall not
be considered Non-Assenting Stockholders) shall be converted and, with respect
to Non-Assenting Stockholders who are then listed in the corporation's records
as Aliens ("Non-Assenting Aliens"), such shares shall only be converted to the
extent there are Available Shares (as calculated as of the applicable Mandatory
Event of Conversion). For purposes of this clause (ii), Available Shares shall
be divided among the Non-Assenting Aliens ratably in accordance with the
proportion that their individual Alien Percentage Interest bears to the
aggregate Alien Percentage Interests of all Non-Assenting Aliens. In the event
that the number of Available Shares (as calculated as of the applicable
Mandatory Event of Conversion) is less than the number of shares of Series A
Preferred Stock held by non-Assenting Aliens, the board of directors of the
corporation may, in its discretion, waive, for purposes of this clause (ii)
only, the Alien Percentage Limitation with respect to the shares held by the 
Non-Assenting Aliens. Should the board of directors of the corporation not waive
the Alien Percentage Limitation in accordance with the foregoing sentence within
thirty (30) days

                                      -4-

 
after the applicable Mandatory Event of Conversion, the corporation shall have
the right, for a period of one-hundred and twenty (120) days following the date
of the applicable Mandatory Event of Conversion, at its option and to the extent
there are funds of the corporation available therefor, to redeem the unconverted
shares of Series A Preferred Stock held by Non-Assenting Aliens at ninety-five
percent (95%) of the fair market value of such shares as determined by an
independent appraiser selected by the board of directors and the Non-Assenting
Aliens, which fair market value shall include the value of all accrued but
unpaid dividends with respect to such shares.  If the Board of Directors of the
corporation and the Non-Assenting Aliens cannot agree upon a person to act as
independent appraiser within thirty (30) days after the applicable Mandatory
Event of Conversion, the board of directors shall request Deloitte & Touche to
appoint an independent appraiser.  In the event that the funds of the
corporation are insufficient to redeem all the shares of Series A Preferred
Stock of the Non-Assenting Aliens at such time, funds then available shall be
distributed ratably among such Non-Assenting Aliens when and as they become
available, and such redemption right shall continue until such time as the
corporation's funds become available therefor; provided, however, that if the
                                               --------  -------  ----       
redemption right is not exercised within six (6) months after the determination
of the fair market value, then at any time after the expiration of the six (6)
month period either the corporation or the Non-Assenting Aliens shall be
entitled to require a new determination of the fair market value of the shares
of the Series A Preferred Stock.

                    (3)  The holder of any shares of Series A Preferred Stock
who is a Citizen may exercise the conversion right under Section 4.2e(1) hereof
with respect to all or any part of his shares of Series A Preferred Stock by
delivering to the office of any transfer agent of the corporation for the Series
A Preferred Stock, or to such other place as may be designated by the
corporation, his certificates for the shares to be converted, duly endorsed or
assigned in blank or to the corporation (if required by it), and a written
notice stating the Citizen name of names (with address) in which the
certificate(s) for the shares of Common Stock are to be issued.

                    (4)  The holder of any shares of Series A Preferred Stock
who is an Alien ("Alien Converting Stockholder") may exercise the conversion
right under Section 4.2e(1) hereof, subject to the Alien Percentage Limitation,
with respect to all or part of his shares of Series A Preferred Stock by
following the procedures set forth in this Section 4.2e(4). Each alien
Converting Stockholder shall be entitled to convert that number of shares
calculated by dividing the Available Shares, as calculated on the close of
business of the last day of the 30-Day Period (as defined in clause (i) below),
by the number resulting from the division of the Alien Percentage Interest of
the

                                      -5-

 
relevant Alien Converting Stockholder by the aggregate Alien Percentage
Interests of all Alien Converting Stockholders.

                         (i)  The Alien Converting Stockholder shall deliver to
the corporation written notice of such holder's intent to convert. Such notice
shall set forth the exact number of shares of Series A Preferred Stock which the
holder owns, the number of shares of Series A Preferred Stock the holder desires
to convert and the present citizenship of the holder. Upon receipt of such
notice, the corporation shall, in turn, send notice to all the record owners of
Series A Preferred Stock (the "Conversion Notice") which Conversion Notice shall
state (a) that the corporation has received notice of a stockholder's intent to
convert and (b) the number of Available Shares which the corporation anticipates
will be available for conversion. For a period of 30 days from the date of the
Conversion Notice (the "10-Day Period"), the corporation shall not convert any
shares of Series A Preferred Stock pursuant to this Section 4.2e(4).

                         (ii)  Any other Alien holder of Series A Preferred
Stock who also desires to have some or all of his shares of Series A Preferred
Stock converted shall provide written notice to the corporation prior to the
expiration of the 30-Day Period of his intent to convert, the exact number of
shares of Series A Preferred Stock which such holder owns, the number of shares
of Series A Preferred Stock such holder desires to convert and the present
citizenship of such holder.

                         (iii)  within five (5) days after the expiration of the
30-Day Period, the corporation shall provide notice to all Alien Converting
Stockholders who or which deliver notices to convert under clauses (i) or (ii)
of this Section 4.2e(4) during the applicable 30-Day Period of how many shares
within ten (10) days after the Alien Converting Stockholder's receipt of such
notice, the Alien Converting Stockholder must deliver to the office of any
transfer agent of the corporation for the Series A Preferred Stock, or to such
other place as may be designated by the corporation, the certificate or
certificates for the shares to be converted, duly endorsed or assigned in blank
or to the corporation (if required by it) and a written notice stating the name
or names (with address) in which the certificate or certificates for the shares
of Common Stock are to be issued.

                    (5)  Conversion shall be deemed to have been effected (i)
with respect to conversion effected pursuant to clause (3) or (4) above, on the
date when the delivery of certificates is made and (ii) with respect to
conversion effected pursuant to clause (2) above, on the date of occurrence of
the Mandatory Event of Conversion.

                                      -6-

 
                    (6)  As promptly as practicable after conversion, the 
corporation shall issue and deliver to or upon the written order of the holder,
to the place designated by such holder, a certificate or certificates for the
number of full shares of Common Stock to which such holder is entitled. The
person in whose names the certificate or certificates for Common Stock are to be
issued shall be deemed to have become a stockholder of record on the applicable
Conversion Date unless the transfer books of the corporation are closed on that
date, in which event he shall be deemed to have become a stockholder of record
on the next succeeding date on which the transfer books are open. Upon
conversion of only a portion of the number of shares covered by a certificate
representing shares of Series A Preferred Stock, surrendered for conversion, the
corporation shall issue and deliver to or upon the written order of the holder
of the certificate so surrendered for conversion, at the expense of the
corporation, a new certificate covering the number of shares of Series A
Preferred Stock, representing the unconverted portion of the certificate so
surrendered.

                    (7)  With respect to any conversion of Series A Preferred
Stock pursuant to Section 4.2e(1) hereof, the calculation of the Alien
Percentage Limitation shall be made by disregarding any Common Stock issuable
upon conversion of other convertible securities issued by the corporation and
outstanding at the time of the calculation.

               f.   Preemptive Rights
                    -----------------

                    (1)  Except with respect to Excluded Shares or as otherwise
provided herein, in the event that (i) the corporation shall issue, sell or
exchange, agree to issue, sell or exchange, or reserve or set aside for
issuance, sale or exchange, any shares of Common Stock or Convertible Securities
(any such issuance, sale or exchange, an "Issuance"), and (ii) the corporation
shall have granted preemptive rights in or to such Issuance to other holders of
individual percentage equity interests in the corporation equal to or less than
any of the individual equity percentage interests in the corporation of any of
the holders of the Series A Preferred Stock (calculated on a Fully Diluted
Basis), then the holders of Series A Preferred Stock with individual equity
percentage interests equal to or greater than those individual equity percentage
interests of holders of preemptive rights shall each be granted comparable
preemptive rights in or to the Issuance.

               g.   Legends.  Each share of Series A Preferred Stock shall bear
                    ------- 
a legend on the face or back of the certificate representing such share either
an accurate or complete summary of the powers, designations, preferences and
other special rights of the Series A Preferred Stock set forth herein, or a
statement that the corporation shall furnish without charge to each

                                      -7-

 
stockholder who so requests, a copy of the powers, designations, preferences and
other special rights of the Series A Preferred Stock set forth herein.

               h.   Definitions. For purposes of this Section 4.2, the following
                    -----------
terms shall have the following meanings:

          "Alien" means any person, corporation, joint venture, association or
           -----                                                              
other organization who or which is not a Citizen or Entity.

          "Alien Percentage Interest" means, as to any Alien holder of Series A
           -------------------------                                           
Preferred Stock, the percentage that the outstanding shares of Series A
Preferred Stock then owned by such Alien stockholder is of the aggregate
outstanding number of shares of Series A Preferred Stock then owned by all Alien
stockholders of Series A Preferred Stock.

          "Alien Percentage Limitation" means, at any given time, that number of
           ---------------------------                                          
shares of Common Stock equal to five percent (5%) of all the issued and
outstanding Common Stock of the corporation calculated on a Fully Diluted Basis.

          "Available Shares" means that number of shares of Common Stock
           ----------------                                             
available for issuance on a given date to holders of Series A Preferred Stock
who are Aliens calculated by subtracting from the Alien Percentage Limitation
that number of shares of Common Stock issued to Aliens on a Fully Diluted Basis
(excluding the dilution which may be effected by the Series A Preferred Stock).

          "Citizen" means any person (not controlled by or representing any (i)
           -------                                                             
alien, (ii) foreign government, or (iii) corporation organized under the laws of
a foreign country) who has obtained the status, whether through right of birth
or naturalization, of citizenship of the United States and continues to possess
such status as provided for under Title 8 United States Code Sections 1401 et
seq. and 1421 et seq.

          "Conversion Date" means with respect to a share of Series A Preferred
           ---------------                                                     
Stock the date on which conversion of the share into Common Stock is deemed to
occur pursuant to Section 4.2e(5).

          "Convertible Securities" means all debt instruments, securities or
           ----------------------                                           
other equity interests (including the Series A Preferred Stock) convertible into
or exchangeable for Common Stock other than Excluded Shares.

          "Entity" means any corporation, joint venture, partnership,
           ------                                                    
association or other organization organized under the laws of the United States,
a state of the United States or

                                      -8-

 
the District of Columbia, which corporation is not controlled, directly or
indirectly, by any other corporation of which any officer or more than one-
fourth of the directors are aliens or of which more than one-fourth of the
capital stock of such other corporation is owned of record or voted by aliens,
their representatives, or by a foreign government or representative thereof, or
by any corporation organized under the laws of a foreign country.

          "Excluded Shares" means, collectively:
           ---------------                      
               
               (i)  shares issued as a stock dividend;

               (ii)  shares of any class of the corporation's capital stock 
issued upon any subdivision, combination, stock split or reverse stock split of
the entire class of such capital stock of the corporation;

               (iii)  any shares issued by the corporation pursuant to the 
acquisition by the corporation of any Person by means of merger, stock purchase,
reorganization, purchase of substantially all the assets or otherwise in which
the corporation, or any of its stockholders of record immediately prior to the
effective date of such transaction, directly or indirectly, own at least a
majority of the voting power of the acquired or resulting entity after such
transaction;

               (iv)  any shares issued pursuant to an underwritten public 
offering of the type described in clause (iii) of the definition of Mandatory
Event of Conversion; and

               (v)  any shares issued or issuable upon the exercise of options,
warrants or other rights to acquire shares of Common Stock or on the conversion
or exchange of securities (including the Series A Preferred Stock) convertible
into or exchangeable for Common Stock.

          "Fully Diluted Basis" means, as of applicable time of calculation, the
           -------------------                                                  
number of shares of Common Stock that would be issued and outstanding if there
were added to the number of issued and outstanding shares of common stock the
number of shares of Common Stock then issuable upon the exercise of all
outstanding, vested or unvested, warrants, options or other rights to acquire
shares of Common Stock and on the conversion or exchange of all debt instruments
and securities (including the Series A Preferred Stock) convertible into or
exchangeable for Common Stock.

          "Mandatory Event of Conversion" means the occurrence of any of the
           -----------------------------           
following events:

                                      -9-

 
               (i)  both (A) the repeal or inapplicability to the corporation of
the restrictions on alien ownership set forth in Section 310(b) of the
Communications Act of 1934 (47 U.S.C. 310(b), as amended) and any succeeding or
comparable legislation, and (B) the expiration of the Nonconversion Period.

               (ii)  consummation of the sale (A) of more than fifty percent
(50%) of the capital stock of the corporation to a single purchaser or more than
one related purchasers, (B) by K. Paul Singh of all of the capital stock of the
corporation owned by him at the time of such sale, or (C) of substantially all
of the assets of the corporation; provided, however, that a merger of the
                                  --------  ------- 
corporation with another entity shall not be deemed a Mandatory Event of
Conversion if the corporation is the surviving entity;

               (iii)  consummation of an underwritten public offering of more
than twenty percent (20%) of the corporation's Common Stock registered under the
Securities Act of 1933; or

               (iv)  the failure of a majority of the holders of Series A 
Preferred Stock to approve, ratify or otherwise consent to the corporate actions
specified in Section 4.2d(1) or (3) hereof.

          "Nonconversion Period" means, as to each share of Series A Preferred
           --------------------                                               
Stock, the period of time ending March 1, 1998, during which period such share
may not be converted into Common Stock.

          SECOND:  That in lieu of a meeting and vote of stockholders, the
stockholders have given written consent to said amendment in accordance with the
provisions of Section 228 of the General Corporation Law of the State of
Delaware and written notice of the adoption of the amendment has been given as
provided in Section 228 of the General Corporation Law of the State of Delaware
to every stockholder entitled to such notice.

          THIRD:  That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of Sections 242 and 228 of the General
Corporation Law of the State of Delaware.

                                              ________________________________
                                                                   , Secretary

                                     -10-

 
                           CERTIFICATE OF AMENDMENT

                                      OF

                         CERTIFICATE OF INCORPORATION


          Primus Telecommunications Group, Incorporated, a corporation organized
and existing under and by virtue of the General Corporation Law of the State of
Delaware,

          DOES HEREBY CERTIFY:

          FIRST:  That the Board of Directors of said corporation adopted a
resolution declaring advisable the following amendment to the Certificate of
Incorporation of said corporation:

          RESOLVED:  that the Certificate of Incorporation of Primus
     Telecommunications Group, Incorporated be amended by adding an Article
     Thirteenth which shall read:

          Thirteenth:  Any action required by the Delaware General Corporation
     Law to be taken at any annual or special meeting of the stockholders of the
     corporation or any action which may be taken at any annual or special
     meeting of the stockholders of the corporation shall not be taken without a
     meeting, notwithstanding (S)228 of the Delaware General Corporation Law.

          SECOND:  That in lieu of a meeting and vote of stockholders, the
stockholders have given written consent to said amendment in accordance with the
provisions of Section 228 of the General Corporation Law of the State of
Delaware and written notice of the adoption of the amendment has been given as
provided in Section 228 of the General Corporation Law of the State of Delaware
to every stockholder entitled to such notice.

 
          THIRD:  That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of Section 242 and 228 of the General Corporation
Law of the State of Delaware.
          IN WITNESS WHEREOF, the undersigned has caused this Certificate of
Amendment to be duly executed as of the ___ day of August, 1996.


                              PRIMUS TELECOMMUNICATIONS GROUP,
                              INCORPORATED


                           By:________________________________
                              K. Paul Singh,
                              Chairman and Chief
                               Executive Officer


ATTEST:



- ------------------------
Secretary

[Corporate Seal]



                                                                     Exhibit 3.2

 
                                    BY-LAWS

                                      OF

                 PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED

                  (As Amended and Restated, August __, 1996)
                          
                                
                                   ARTICLE I

                             Stockholders Meetings
                             ---------------------

          Section 1.  Place of Meetings.  The meetings of the stockholders shall
                      -----------------                                         
be held at such time and at such place within or without the State of Delaware
as shall be designated by the Board of Directors.

          Section 2.  Annual Meeting.  The annual meeting of stockholders shall
                      --------------                                           
be held on such date as may be fixed by the Board of Directors, or if no such
date is fixed, then on the first Monday in June in each year, or if such day is
a legal holiday, then on the first day following that is not a legal holiday.

          Section 3.  Special Meetings.  Special meetings of the stockholders
                      ----------------                                       
may be called at any time by the Chairman, the Chief Executive Officer, the
President or the Board of Directors.

          Section 4.  Notice of Meetings.  Written notice stating the place, day
                      ------------------                                        
and hour of the meeting, and in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be mailed or personally
delivered not less than ten (10) nor more then sixty (60) days prior to the date
of the meeting, by the Secretary, to each stockholder of record entitled

 
to vote at such meeting. Waiver by a stockholder of notice of a stockholders
meeting, signed by him or her, whether before or after the time of such meeting,
or attendance at such meeting, shall be equivalent to the giving of such notice.

          Section 5.  Voting Rights.  Subject to Article VII, every holder of
                      -------------                                          
record, as provided below, of common stock shall be entitled to vote, in person
or by proxy executed in writing and delivered to the Secretary, at or before the
meeting, and shall be entitled to one vote for each share of stock standing in
his or her name; provided that no revocable proxy shall be voted if executed
more than three years prior to the date of such meeting.  Except as may
otherwise be provided by the Board of Directors from time to time, only
stockholders of record at the close of business on a day twenty (20) days prior
to the date of a meeting shall be entitled to vote at such meeting.

          Section 6.  Quorum.  Subject to Article VII, and except as otherwise
                      ------                                                  
provided by statute or the Certificate of Incorporation, the presence, in person
or by proxy, of the holders of a majority of the shares entitled to vote at a
meeting shall constitute a quorum for the transaction of business.  In the
absence of a quorum, any meeting may be adjourned from time to time.  When a
quorum is present at a meeting, the vote of the holders of a majority of the
shares present in person or by proxy shall decide any matter brought before such
meeting unless statute or the Certificate of Incorporation requires a different
vote.

                                      -2-

 
                                  ARTICLE II

                                  Directors
                                  ---------

          Section 1.  Number of Directors.  The business of the Corporation
                      -------------------                                  
shall be managed by or under the direction of a Board of Directors consisting of
_______ directors, or such number of directors as the directors may from time to
time by resolution direct.  Each and every Director shall be a Citizen so long
as there is a prohibition in the Communications Act against a corporation that
holds Title 3 licenses having a non-Citizen director.  Directors need not be
stockholders.

          Section 2.  Tenure and Classification.  Directors shall be classified,
                      -------------------------                                 
with respect to the duration of the term for which they severally hold office,
into three classes as nearly equal in number as possible.  Such classes shall
originally consist of one class of _____ directors who shall be elected for a
term expiring at the annual meeting of stockholders to be held in 1997, the
members of which class shall be _______; a second class of _____ directors who
shall be elected for a term expiring at the annual meeting of stockholders to be
held in 1998, the members of which class shall be _______; and a third class of
_____ directors who shall be elected for a term expiring at the annual meeting
of stockholders to be held in 1999, the members of which class shall be
________.  The Board of Directors shall increase or decrease the number of
directors pursuant to this Article II, Section 2 in order to ensure that the
three classes shall be as nearly equal in number as possible.  At each annual
meeting of stockholders

                                      -3-

 
beginning in 1997, the successors of the class of directors whose term expires
at that meeting shall be elected to hold office for a term expiring at the
annual meeting of stockholders held in the third year following the year of
their election.

          Section  3. Resignations.  Any director of the Corporation may resign
                      ------------                                             
at any time by giving written notice to the Board of Directors or to the
President or to the Secretary of the Corporation.  The resignation of any
director shall take effect at the time specified therein; and unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.

          Section 4.  Removal of Directors.  A director may be removed only for
                      --------------------                                     
cause, at any time by the affirmative vote of a majority in voting power at a
special meeting of the stockholders called for the purpose.  The vacancy in the
Board of Directors caused by any such removal shall be filled by the directors
in accordance with the provisions of Article II, Section 5 hereof.  Cause for
purposes of this Article II, Section 4 is limited to (i) a judicial
determination that a director is of unsound mind, (ii) a conviction of a
director of an offense punishable by imprisonment for a term of more than one
year, (iii) a breach or failure by a director to perform the statutory duties of
said director's office if the breach or failure constitutes self-dealing,
willful misconduct or recklessness, or (iv) a failure of a director, within 60
days after notice of his or her election, to accept such office either in
writing or by attending a meeting

                                      -4-

 
of the Board of Directors and fulfilling such other requirements of
qualification as the By-Laws or Certificate of Incorporation may provide.

          Section 5.  Vacancies.  Any vacancy occurring in the Board of
                      ---------                                        
Directors, including vacancies resulting from an increase in the number of
directors, shall be filled by the affirmative vote of a majority of the
remaining directors, though less than a quorum, provided that at the annual
meeting of the stockholders following the election of such director, the
stockholders confirm such election by vote.  A director so elected shall hold
office for a term expiring at the annual meeting of stockholders at which the
term of the class to which he or she has been elected expires, and until such
director's successor shall have been duly elected and qualifies or until his or
her earlier death, resignation or removal.

          Section 6.  Meetings of the Board; Notice.  Meetings of the Board of
                      -----------------------------                           
Directors may be held upon the call of the Chief Executive Officer or a majority
of the directors then in office by mailing a written notice of the same to each
director at his or her last known post office address at least two (2) days
before the meeting or by causing the same to be delivered personally or to be
transmitted by telegraph, cable, wireless, telephone or verbally at least
twenty-four (24) hours before the meeting to each director.  Notice may be
waived in writing before or after the time of such meeting, and attendance of a
director at a meeting shall constitute a waiver of notice thereof.

                                      -5-

 
Neither the business to be transacted at, nor the purpose of, any meeting need
be specified in the notice of such meeting.

          Section 7.  Quorum and Manner of Action.  Except as otherwise provided
                      ---------------------------                               
by statute, the Certificate of Incorporation or these By-laws, a majority of the
whole Board of Directors shall be required to constitute a quorum for the
transaction of business at any meeting, and the act of a majority of the
directors present and voting at any meeting at which a quorum is present shall
be the act of the Board of Directors.  In the absence of a quorum, a majority of
the directors present may adjourn any meeting from time to time until a quorum
be had.  Notice of any adjourned meeting need not be given.

          Section 8.  Written Consent in Lieu of a Meeting.  Unless otherwise
                      ------------------------------------                   
restricted by the Certificate of Incorporation or these By-Laws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting, if all members of the
Board of Directors or of such committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board of Directors or such committee.

          Section 9.  Compensation of Directors.  The Board of Directors shall
                      -------------------------                               
have the authority to fix the compensation of directors, except that in no event
shall the compensation of a director who is not employed by or who is not a
party to an agreement with the Corporation to perform services for the

                                      -6-

 
Corporation consist of other than $500 for each meeting in which such director
participates, such $500 to be paid in cash.  For purposes of the preceding
sentence, a meeting in which a director participates does not include any
meeting of directors or any meeting of a committee of directors held as the
result of adjournment of a prior meeting.

          Section 10.  Participation in Meeting by Telephone.  Members of the
                       -------------------------------------                 
Board of Directors or any committee designated by such Board may participate in
a meeting of the Board or of a committee of the Board by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this subsection shall constitute presence in person at such meeting.


                                  ARTICLE III

                                  Committees
                                  ----------

          Section 1.  Committees of Directors.  The Board of Directors may, by
                      -----------------------                                 
resolution passed by a majority of the whole board, designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation.  In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he, she or they constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in the
place of any such absent or disqualified member.  Any such committee, to the

                                      -7-

 
extent provided in the resolution of the Board of Directors, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, and may authorize the
seal of the Corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to amending the
Certificate of Incorporation of the Corporation, adopting an agreement of merger
or consolidation, recommending to the stockholders the sale, lease or exchange
of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution or amending the By-laws of the Corporation; and,
unless the resolution expressly so provides, no such committee shall have the
power or authority to declare a dividend or to authorize the issuance of stock.
Each committee shall keep regular minutes of its meetings and report the same to
the Board of Directors when required.  The Board of Directors shall establish
and maintain a Compensation Committee, an Audit Committee and a Stock Option
Committee, whose duties and powers shall be as described herein.

          Section 2.  Compensation Committee.  The Compensation Committee will
                      ----------------------                                  
establish remuneration levels for officers of the Corporation, review management
organization and development, review significant employee benefit programs and
establish and administer executive compensation programs, including bonus plans,
deferred compensation plans and any other cash incentive

                                      -8-

 
programs, but not including stock option and other equity-based programs or
stock incentive programs.

          Section 3.  Audit Committee.  The Audit Committee will recommend to
                      ---------------                                        
the Board of Directors the independent public accountants to be selected to
audit the Corporation's annual financial statements and will approve any special
assignments given to such accountants.  The Audit Committee will also review the
planned scope of the annual audit and the independent accountants' letter of
comments and management's responses thereto, possible violations of the
Corporation's business ethics and conflicts of interest policies, any major
accounting changes made or contemplated and the effectiveness and efficiency of
the Corporation's internal audit staff.

          Section 4.  Stock Option Committee.  The Stock Option Committee will
                      ----------------------                                  
administer the operation of the Corporation's Stock Option Plan and Director
Stock Option Plan, as amended, as well as any other stock option or other
equity-based program(s) or stock incentive program(s) subsequently adopted by
the Corporation, and shall have the authority to grant awards under such plans
to the full extent permitted by such plans.


                                  ARTICLE IV

                                   Officers
                                   --------

          Section 1.  Number of Officers.  The Board may elect a Chairman, a
                      ------------------                                    
Chief Executive Officer, a President, a Chief Operating Officer, one or more
Vice Presidents, a Secretary, a Chief Accounting Officer, a Treasurer and such
other officers and

                                      -9-

 
assistant officers and agents as may be chosen by the Board from time to time.
Any two offices may be held by one person unless statute or the Certificate of
Incorporation provides otherwise.  One of the officers shall have the duty to
record the proceedings of the meetings of the stockholders and directors in a
book to be kept for that purpose.

          Section 2.  Tenure.  Officers shall serve at the pleasure of the 
                      ------
Board of Directors.

          Section 3.  Chairman.  The Chairman of the Board of Directors shall
                      --------                                               
preside at all meetings of stockholders and directors.  The Chairman shall
represent the Corporation in all matters involving the Corporation's
stockholders.  He or she shall have the authority to execute bonds, mortgages
and other contracts requiring a seal, under the seal of the Corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the Board of Directors to some other officer or agent of the Corporation.  The
Chairman shall also perform such other duties as the Board of Directors may from
time to time assign to him or her.

          Section 4.  Chief Executive Officer.  The Chief Executive officer
                      -----------------------                              
shall have general supervision of the affairs of the Corporation, subject to the
policies and direction of the Board of Directors, and shall supervise and direct
all of the officers and employees of the Corporation but may delegate in his or
her discretion any of his or her powers to any officer or such

                                     -10-

 
other executives as he or she may designate.  He or she shall have the authority
to execute bonds, mortgages and other contracts requiring a seal, under the seal
of the Corporation, except where required or permitted by law to be otherwise
signed and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation.  In the absence of the Chairman of the Board of Directors, or
during any disability on the part of the Chairman to act, the Chief Executive
Officer shall preside at all meetings of stockholders and directors, and shall
perform such other duties as the Board of Directors may bestow upon him or her.

          Section 5.  President.  The President shall see that all orders and
                      ---------                                              
resolutions of the Board of Directors are carried into effect and shall have
general and active management of the business of the Corporation.  He or she
shall have the authority to execute bonds, mortgages and other contracts
requiring a seal, under the seal of the Corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the Corporation.  If, for any
reason, the Corporation does not have a Chairman or Chief Executive Officer, or
such officers are unable to act, the President shall assume the duties of those
officers as well.

                                     -11-

 
          Section 6.  Chief Operating Officer.  The Chief Operating Officer
                      -----------------------                              
shall have supervision of the operation of the Corporation, subject to the
policies and directions of the Board of Directors.  He or she shall provide for
the proper operation of the Corporation and oversee the internal
interrelationship amongst any and all departments of the Corporation.  He or she
shall submit to the Chief Executive Officer, President and the Board of
Directors timely reports on the operations of the Corporation.

          Section 7.  Vice President.  Each Vice President shall, in the absence
                      --------------                                            
or disability of the President, perform the duties and exercise the powers of
the President and shall perform such other duties as may be prescribed from time
to time by these ByLaws or by the Board of Directors.

          Section 8.  Secretary.  Unless otherwise provided by the Board of
                      ---------                                            
Directors, the Secretary shall attend all meetings of the stockholders and Board
of Directors and shall record all the proceedings of such meetings in the minute
book of the Corporation.  He or she shall give proper notice of meetings of the
stockholders and the Board of Directors and other notices required by law or by
these By-Laws.  He or she shall perform such other duties as these By-Laws or
the Board of Directors may from time to time prescribe.

          Section 9.  Chief Accounting Officer.  The Chief Accounting Officer
                      ------------------------                               
shall be the chief accounting officer of the Corporation and shall arrange for
the keeping of adequate records

                                     -12-

 
of all assets, liabilities and transactions of the Corporation.  He or she shall
provide for the establishment of internal controls and see that adequate audits
are currently and regularly made.  He or she shall submit to the Chief Executive
Officer, President and the Board of Directors timely statements of the accounts
of the corporation and the financial results of the operations thereof.

          Section 10.  Treasurer.  Unless otherwise provided by the Board of
                       ---------                                            
Directors, the Treasurer shall keep correct and complete financial records of
the Corporation and shall have custody of the corporate funds, securities, and
other valuable effects of the Corporation.  He or she shall deposit all monies
and other valuable effects, in the name of the Corporation, in such depositories
as may be designated by the Board of Directors. He or she shall furnish at
meetings of the Board of Directors, or whenever requested, a statement of the
financial condition of the Corporation, and shall perform all such other duties
as these By-Laws or the Board of Directors may from time to time prescribe.


                                   ARTICLE V

                                Indemnification
                                ---------------

          Section 1.  Indemnification by Corporation.  The Corporation shall
                      ------------------------------                        
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Corporation) by reason of the fact that he or

                                     -13-

 
she is or was a director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a director, officer,
employee or agent of another Corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding, if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his or her conduct was
unlawful.  The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contenders or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his or her
conduct was unlawful.

          Section 2.  Suit by or in the Right of the Corporation.  The
                      ------------------------------------------      
Corporation shall indemnify any person who was or is a party, or is threatened
to be made a party to any threatened, pending or completed action or suit by or
in the right of the Corporation to procure a judgment in its favor by reason of
the fact that he or she is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the

                                     -14-

 
Corporation as a director, officer, employee or agent of another Corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him or her in
connection with the defense or settlement of such action or suit, if he or she
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the Corporation, and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.

          Section 3.  Success on the Merits.  To the extent that a director,
                      ---------------------                                 
officer, employee or agent of the Corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in
Sections 1 or 2 of this Article, or in defense of any claim, issue or matter
therein, he or she shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection therewith.

          Section 4.  Determination That Indemnification is Proper.  Any
                      --------------------------------------------      
indemnification under Sections 1 or 2 of this

                                     -15-

 
Article (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances because he
or she has met the applicable standard of conduct set forth in such section.
Such determination shall be made:

               (a) By the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or proceeding,
or
               (b) If such a quorum is not obtainable, or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or

               (c)  By the stockholders.

          Section 5.  Expenses.  Expenses (including attorneys' fees) incurred
                      --------                                                
by an officer or director in defending a civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he or she is not entitled to be
indemnified by the Corporation as authorized in this Section.  Such expenses
(including attorneys' fees) incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the board of directors deems
appropriate.

                                     -16-

 
          Section 6.  Personal Liability of Director or Officer.  No director or
                      -----------------------------------------                 
officer of the Corporation shall be personally liable to the Corporation or to
any stockholder of the Corporation for monetary damages for breach of fiduciary
duty as a director or officer, provided that this provision shall not limit the
liability of a director or officer (i) for any breach of the director's or the
officer's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General Corporation Law
of Delaware, or (iv) for any transaction from which the director or officer
derived an improper personal benefit.

          Section 7.  Non-Exclusivity of Indemnification Rights.  The
                      -----------------------------------------      
indemnification and advancement of expenses provided by or granted pursuant to
the other sections of this Article V shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be
entitled under any by-law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his or her official capacity and as
to action in another capacity while holding such office.

          Section 8.  Insurance.  The Corporation shall have the power to
                      ---------                                          
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the

                                     -17-

 
Corporation as a director, officer, employee or agent of another Corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him or her and incurred by him or her in any such capacity, or
arising out of his or her status as such, whether or not the Corporation would
have the power to indemnify him or her against such liability under the
provisions of this Article V.

          Section 9.  Continuance of Indemnification.  The indemnification and
                      ------------------------------                          
advancement of expenses provided by or granted pursuant to this Article V shall,
unless otherwise provided when authorized or ratified, continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person. The
rights to indemnification and advancement of expenses provided by or granted
pursuant to this Article V shall constitute a contract between the Corporation
and each director, officer, employee or agent of the Corporation in each
circumstance, and each such person shall have all rights available in law or
equity to enforce such contract rights against the Corporation. Any repeal or
modification of any provision of this Article V shall not adversely affect or
deprive any director, officer, employee or agent of any right or protection
offered by such provision prior to such repeal or modification.

          Section 10.  Definition of "the Corporation".  For purposes of this
                       -------------------------------                       
Article V, references to "the Corporation" shall

                                     -18-

 
include, in addition to the Corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any person
who is or was a director, officer employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
this Article V with respect to the resulting or surviving corporation as he or
she would have with respect to such constituent corporation of its separate
existence had continued.

          Section 11.  Definition of "Other Enterprises".  For purposes of this
                       ---------------------------------                       
Article V, references to "other enterprises" shall include employee benefit
plans; references to "fines" shall include any excise taxes assessed on a person
with respect to any employee benefit plan; and references to "serving at the
request of the Corporation" shall include any service as a director, officer,
employee or agent of the Corporation which imposes duties on, or involves
services by, such director, officer, employee, or agent with respect to an
employee benefit plan, its participants or beneficiaries; and a person who acted
in good faith and in a manner he or she reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan shall
be deemed to have acted in a manner "not

                                     -19-

 
opposed to the best interests of the Corporation" as referred to in this 
Article V.


                                   ARTICLE VI

                                 Capital Stock
                                 -------------

          Section 1.  Certificate of Stock.  Subject to Article VII, every
                      --------------------                                
holder of stock in the Corporation shall be entitled to have a Domestic Share
Certificate or Unrestricted Share Certificate signed by, or in the name of the
Corporation by, the Chairman or Vice Chairman of the Board of Directors, or
President or a Vice President and the Treasurer or an Assistant Treasurer, or
the Secretary or an Assistant Secretary of the Corporation, certifying the
number of shares owned by him in the Corporation.

          Section 2.  Transfer of Shares.  Subject to Article VII, the shares of
                      ------------------                                        
the Corporation shall be transferable on the books of the Corporation only upon
the surrender of each certificate representing the same, properly endorsed by
the registered holder or by his or her duly authorized attorney, or with
separate written assignment accompanying the certificates.

          Section 3.  Lost, Destroyed and Mutilated Certificates.  The holder of
                      ------------------------------------------                
any stock issued by the Corporation shall immediately notify the Corporation of
any loss, destruction or mutilation of the certificate therefor, or failure to
receive a certificate of stock issued by the Corporation, and the Board of
Directors or the Secretary of the Corporation, may, in its or his or her
discretion, cause to be issued to him or her a new certificate or certificates
of stock, in accordance with Article

                                     -20-

 
VII of these By-Laws and upon compliance with such rules and regulations and/or
procedures as may be prescribed or have been prescribed by the Board of
Directors with respect to the issuance of new certificates in lieu of such lost,
destroyed or mutilated certificate or certificates of stock issued by the
Corporation which are not received.


                                  ARTICLE VII

                  Domestic and Unrestricted Share Certificates
                  --------------------------------------------

          Section 1.  Capitalized terms herein shall have the following
meanings:

          "Alien":  Means any person, corporation, joint venture, association or
           -----                                                                
other organization who or which is not a Citizen or Entity.

          "Citizen":  Means any person (not controlled by or representing any
           -------                                                           
(i) alien, (ii) foreign government, or (iii) corporation organized under the
laws of a foreign country) who has obtained the status, whether through right of
birth or naturalization, of citizenship of the United States and continues to
possess such status as provided for under Title 8 United States Code Sections
1401 et seq. and 1421 et seq.

          "Domestic Share Certificates":  Means capital stock of the corporation
           ---------------------------                                          
that may be transferred to only Citizens or Entities.

          "Entity":  Means any corporation, joint venture, partnership,
           ------                                                      
association or other organization organized under the laws of the United States,
a state of the United States or

                                     -21-

 
the District of Columbia, which corporation is not controlled, directly or
indirectly, by any other corporation of which any officer or more than one-
fourth of the directors are aliens or of which more than one-fourth of the
capital stock of such other corporation is owned of record or voted by aliens,
their representatives, or by a foreign government or representative thereof, or
by any corporation organized under the laws of a foreign country.

          "Permanently Unrestricted Share Certificate":  Means capital stock of
           ------------------------------------------                          
the corporation that may be transferred to any person, corporation, partnership,
association or other organization."

          "Unrestricted Share Certificates":  Means capital stock of the
           -------------------------------                              
corporation that may be transferred to any person, corporation, partnership,
association or other organization subject to Article VII of the By-laws
concerning transfer to Citizens or Entities.

          Section 2.  No Alien shall be a stockholder of record, own or hold on
behalf of any Citizen, Entity or Alien, or vote or vote on behalf of any
Citizen, Entity or Alien, capital stock of the corporation evidenced by Domestic
Share Certificates.

          Section 3.  Any transfer or attempted or purported transfer of any
shares of the capital stock of the corporation evidenced by Domestic Share
Certificates or any interest therein or right thereof to any Alien shall be void
and shall be ineffective as against the corporation and the corporation shall

                                     -22-

 
not recognize the purported transferee as a stockholder of the corporation for
any purpose whatsoever.

          Section 4.  No director or officer of the corporation may be an Alien
or be controlled by an Alien.

          Section 5.  Capital stock represented by Domestic Share Certificates
shall have the following legend noted conspicuously on its face:

                          "DOMESTIC SHARE CERTIFICATE"

          "The transfer of the capital stock represented by this 
          Domestic Share Certificate is restricted by the Certi-
          ficate of Incorporation and By-laws of this Corporation.  
          Such documents are available from the Corporation, without 
          charge, for inspection.  Any transfer to any person or 
          entity other than (i) a Citizen of the United States who 
          is free from any direct or indirect foreign control or 
          (ii) a corporation or other entity free from any direct 
          or indirect foreign control, organized or existing under 
          the laws of the United States or a state of the United 
          States, is in contravention of the Certificate of Incor-
          poration and the By-laws and is void."

          Capital stock represented by an Unrestricted Share Certificate shall 
have the following legend noted conspicuously on its face:

                        "UNRESTRICTED SHARE CERTIFICATE"

          "The transfer of capital stock represented by this 
          Unrestricted Share Certificate is subject to certain 
          provisions of the Certificate of Incorporation and 
          By-laws of this Corporation.  Such documents are 
          available from the Corporation, without charge, for 
          inspection.  Such documents do not restrict the 
          transfer of the capital stock of the Corporation 
          evidenced by Unrestricted Share Certificates.  
          However, upon transfer of the capital stock of the

                                     -23-

 
          corporation evidenced by this Certificate to an 
          individual or entity, who or which is not an Alien 
          and who or which does not hold such capital stock 
          on behalf of Aliens, the Corporation shall issue 
          such transferee capital stock of the Corporation 
          evidenced by Domestic Share Certificates, the sub-
          sequent transfer of which will be restricted by the 
          Certificate of Incorporation and the By-laws of the
          Corporation."

          Section 6.  At any special or annual meeting of the stockholders of
the corporation, any director or officer of the corporation may by notice in
writing filed at the meeting challenge the right of any holder of record of the
capital stock of the corporation evidenced by Domestic Share Certificates or
person voting on behalf of such recordholder to vote such shares on the ground
that the shares of capital stock of the corporation evidenced by such
certificates are not owned by a Citizen or Entity.  In the event that said
shares, the vote of which is thus challenged, together with other shares
challenged at the same meeting and for the same cause, together with the total
amount of shares represented by share certificates other than "Domestic Share
Certificates" then issued and outstanding, amount in the aggregate to be more
than twenty percent (20%) of the total shares of the corporation at the time
outstanding, the meeting shall proceed to record the votes of the other
stockholders not challenged and provisionally to record the votes of the
challenged shares.  If the result of the voting would not be changed or altered
by the receipt of all the challenged votes, then such challenge shall be
disregarded.  If the contrary appears, the meeting shall not proceed further,
but shall adjourn

                                     -24-

 
for a period fixed by the Chairman.  The Board of Directors shall thereafter
meet and promptly investigate the challenges by such method and insofar as they
deem expedient, with or without according an opportunity for cross-examination,
but according to the person or persons who represented the challenged shares at
such stockholders' meeting an opportunity to make a statement in regard to the
challenge.  At the adjourned date of such meeting, the Board of Directors shall
report their opinion.  If they then report that the majority of those directors
present taking part in their deliberation as to the challenge or challenges are
of opinion that such challenges or any of them were well founded, such
challenged votes as to which their opinion in favor of the challenge applies
shall be rejected.  Otherwise the challenges shall be deemed ineffective and the
votes received.  No director shall be personally liable to any stockholder for
any action taken by him in the course of such investigation or because of the
rejection of any challenged vote or the failure to support any challenge.

          Section 7.  At any special or annual meeting of the stockholder of the
corporation, any director or officer of the corporation may, by notice in
writing filed at the meeting, challenge the vote of any holder of record of the
capital stock of the corporation evidenced by Domestic Share Certificates or
person voting on behalf of such holder of record (whether or not a Citizen and
whether or not it be an Entity) on the ground that such recordholder of such
person voting on the behalf of such

                                     -25-

 
recordholder holds or votes such shares (other than shares represented by
Unrestricted Share Certificates) wholly or partly in the interest of any Alien;
such challenge shall be acted on and decided by the Board of Directors in the
same manner as provided in Section 6 of this Article for other challenges, and
the Board may decline to receive the vote of shares so challenged.

          Section 8.  The Board of Directors shall provide separate and distinct
forms of proxy to be distributed in connection with each and every annual or
special meeting of stockholders.  Proxies delivered to the recordholder of the
capital stock of the corporation evidenced by Domestic Share Certificates shall
contain a representation and certification to the effect that such recordholder
or the person or entity voting such capital stock is a Citizen or Entity and
that such shares are not held on behalf of persons who are not Citizens or
Entities and the votes cast thereby are not voted at the direction of any Alien
or representative or any foreign government or representative thereof or any
corporation organized under the laws of a foreign country.

          Section 9.  In the event that a holder of record of the capital stock
of the corporation evidenced by Domestic Share Certificates (a) does not furnish
the corporation with the identity of each person or entity on whose behalf he or
it holds such shares of the capital stock of the corporation and any interest
therein or right thereof or (b) does not furnish the

                                     -26-

 
corporation with a representation, satisfactory to the Board of Directors of the
corporation, (i) that such recordholder is not an Alien and (ii) that such
recordholder does not hold such shares of the capital stock of the corporation,
any interest therein or right thereof on behalf of any Alien, the Board of
Directors of the corporation may presume conclusively that such shares of the
capital stock of the corporation are held in contravention of the Certificate of
Incorporation and the By-laws of the corporation.

          Section 10.  In the event that the Board of Directors of the
corporation (i) concludes, pursuant to Section 9 of the By-laws that shares of
the capital stock of the corporation evidenced by Domestic Share Certificates
are held in contravention of the Certificate of Incorporation and the By-laws of
the corporation or (ii) otherwise determine that such shares of capital stock of
the corporation are held in contravention of the Certificate of Incorporation
and By-laws of the corporation, the Board of Directors shall so notify the
recordholder of such shares in writing and the Board of Directors shall take the
following actions, which shall be binding upon the recordholder of such shares:

               (a)  The Board of Directors may demand that, within sixty (60)
days of the date of such notice, such recordholder shall sell such shares of the
capital stock of the corporation to a Citizen or Entity, who or which has
provided satisfactory identification and satisfactory representation to

                                     -27-

 
the Board of Directors of the corporation.  Solely for purposes of this Section
10(a), such transfer shall be effected as if such transferor had been a valid
recordholder of such shares of capital stock of the corporation and the
transferee Citizen or Entity shall be entitled to be listed on the stock ledger
books of the corporation as a recordholder of shares of the capital stock of the
corporation evidenced by Domestic Share Certificates.

               (b)  If, upon the demand of the Board of Directors of the
corporation, the recordholder holding shares of the capital stock of the
corporation evidenced by Domestic Share Certificates in contravention of the
Certificate of Incorporation and the By-Laws of the corporation has not sold
such shares within sixty (60) days of such notice, the Board of Directors shall
have the following options:

                    (i)  The Board of Directors may, but shall not be obligated
to, require the exchange of Domestic Share Certificates for Unrestricted Share
Certificates (on a share-for-share basis) only to the extent that, as a result
of such exchange, the percentage of issued and outstanding capital stock of the
corporation evidenced by Unrestricted Share Certificates does not exceed twenty
percent (20%) of all of the issued and outstanding capital stock of the
corporation. For purposes of computing such percentage, it shall be assumed that
all outstanding options, warrants or rights to receive or require the issuance
of capital stock of the corporation evidenced by

                                     -28-

 
Unrestricted Share Certificates had been exercised and such shares had been
issued prior to such exchange.

                    (ii)  The Board of Directors may, but shall not be obligated
to, repurchase all of the shares of capital stock of the corporation evidenced
by Domestic Share Certificates from such holder at a price per share equal to
the average (unweighted) closing price for such shares on the New York Stock
Exchange for each of the 45 trading days on which such shares of stock shall
have been traded preceding the day on which notice of repurchase shall be then
deemed to have been given pursuant to this section that some or all of the
Domestic Share Certificates held by Aliens shall be purchased by the
corporation; provided, however, that if such capital stock shall not be traded
on the New York Stock Exchange, then such closing prices shall be those on any
other national security exchange on which the Common Stock is listed, and, if
not listed on any such exchange, the closing prices (or, if closing prices are
not reported, then the average of reported bid and asked quotations) shall be
those reported by any recognized national securities reporting service, and, if
not traded, the repurchase price shall be determined by the Board of Directors
on such basis as it shall deem reasonable.

          In the event the corporation chooses, in its absolute discretion, to
exercise its right to purchase the shares of capital stock represented by
Domestic Share Certificates held by an Alien pursuant to this Section 10 the
corporation shall pay one-fifth of the purchase price determined in accordance
with

                                     -29-

 
this subsection (b) of this Section 10 in cash on the date on which such shares
of capital stock are to be delivered to the corporation ("Closing Date") and
deliver a promissory note to evidence its obligation to pay one-fifth of the
purchase price together with interest at a rate of six percent per annum (6%) on
the outstanding balance on each of the next four succeeding anniversary dates of
the Closing Date.

                    (iii)  If and to the extent that (A) such recordholder 
fails to comply with the requirements of the Board of Directors pursuant to
subsections (a) and (b) of this Section 7.10 or (B) the Board of Directors
determines, in its absolute discretion, not to exercise its options to exchange
such share certificates or repurchase such shares, any shares of the capital
stock of the corporation evidenced by Domestic Share Certificates which continue
to be held by or on behalf of Aliens shall be deemed void, the corporation shall
not recognize the purported recordholder as a stockholder of the corporation for
any purpose whatsoever and the corporation shall take all necessary and
appropriate action, to the extent permitted by law, to remove such shares of
capital stock from the stock records of the corporation.

          Section 11.  The corporation may, to the full extent permitted by law,
so long as Domestic Share Certificates are held in contravention of the
Certificate of Incorporation and the By-laws of the corporation, exclude from,
or withhold, the payment

                                     -30-

 
of dividends and/or other distributions of assets in respect of such shares.

          Section 12.  Notwithstanding anything contained in these By-laws to
the contrary, the affirmative vote of at least 80 percent of the Directors valid
in office or at least 80 percent of the outstanding shares of stock of the
corporation entitled to vote generally in the election of Directors, voting
together as a single class, shall be required to alter, amend, or repeal this
Article or to adopt any provision inconsistent herewith.

          Section 13.  The Board of Directors of the corporation is hereby
authorized and directed to make such rules and regulations and to delegate such
power and authority to the Officers of the corporation as are necessary or
appropriate to implement and enforce the intent of this Article and maintain
accurate records of compliance herewith.

          Section 14.  Any share of capital stock of the Corporation evidenced
by Unrestricted Share Certificates shall be automatically converted into and
exchangeable for Domestic Share Certificates when such shares of stock are
transferred to Citizens or Entities.

          Section 15.  Any shares of capital stock of the corporation issued to
Teleglobe USA, Inc. or any of its affiliates shall be Permanently Unrestricted
Share Certificates and no such shares shall at any time (whether or not owned by
Teleglobe USA, Inc. or any of its affiliates) be required to bear

                                     -31-

 
any legend contained in this Article VII or be subject to any restriction
contained in this Article VII or any similar restriction.


                                  ARTICLE VIII

                                 Miscellaneous
                                 -------------

          Section 1.  Seal.  The corporate seal shall have inscribed thereon 
                      ----                                                      
the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be imposed or affixed or in any manner reproduced.

          Section 2.  Fiscal Year.  The fiscal year of the Corporation shall be
                      -----------                                              
the calendar year.
                                   

                                   ARTICLE IX

                                   Amendments
                                   ----------

          Subject to Article VII, these By-laws may be altered or repealed at
any regular meeting of the stockholders or of the Board of Directors or at any
special meeting of the stockholders or of the Board of Directors, if notice of
such alteration or repeal be contained in the notice of such special meeting.



                                                                     EXHIBIT 4.1
 
NUMBER         [LOGO OF PRIMUS TELECOMMUNICATIONS APPEARS HERE]        SHARES

                 PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
             INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
                            TOTAL AUTHORIZED ISSUE
                     5,000,000 SHARES PAR VALUE $.01 EACH
                          DOMESTIC SHARE CERTIFICATE
         THE TRANSFER OF CAPITAL STOCK REPRESENTED BY THIS CERTIFICATE
         IS SUBJECT TO CERTAIN RESTRICTION LISTED ON THE REVERSE SIDE.


THIS CERTIFIES THAT_____________________________________________________ is the 
owner of _________________________________ shares of the Capital Stock of PRIMUS
TELECOMMUNICATIONS GROUP, INCORPORATED, fully paid and non-assessable, 
transferable only on the books of the Corporation in person or by Attorney upon 
surrender this Certificate properly endorsed.

     IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be 
signed by its duly authorized officers and its Corporate Seal to be hereunto 
affixed this ___________________________________________________________________
day of ________________________________________A.D. 19______.


________________________________                           _____________________
         SECRETARY TREASURER                                          PRESIDENT 

                                    [SEAL]

 
        THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE 
SECURITIES ACT OF 1933 (THE "ACT") OR QUALIFIED UNDER APPLICABLE STATE 
SECURITIES LAWS (THE "LAWS") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE 
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE 
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE ACT OR QUALIFICATION UNDER 
THE LAWS UNLESS THE COMPANY AND ITS COUNSEL ARE SATISFIED THAT SUCH REGISTRATION
AND QUALIFICATION IS NOT THEN REQUIRED UNDER THE CIRCUMSTANCES OF SUCH OFFER, 
SALE, TRANSFER, PLEDGE OR HYPOTHECATION.

        THE TRANSFER OF THE CAPITAL STOCK REPRESENTED BY THIS DOMESTIC SHARE 
CERTIFICATE IS RESTRICTED BY THE CERTIFICATE OF INCORPORATION, AND BY-LAWS OF 
THIS CORPORATION.  SUCH DOCUMENTS ARE AVAILABLE FROM THE CORPORATION, WITHOUT 
CHARGE, FOR INSPECTION.  ANY TRANSFER TO ANY PERSON OR ENTITY OTHER THAN (I) A 
CITIZEN OF THE UNITED STATES WHO IS FREE FROM ANY DIRECT OR INDIRECT FOREIGN 
CONTROL OR (II) A CORPORATION OR OTHER ENTITY FREE FROM ANY DIRECT OR INDIRECT
FOREIGN CONTROL, ORGANIZED OR EXISTING UNDER THE LAWS OF THE UNITED STATES OR A 
STATE OF THE UNITED STATES IS IN CONTRAVENTION OF THE CERTIFICATE OF 
INCORPORATION AND THE BY-LAWS AND IS VOID.



        The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full 
according to applicable laws or regulations:

        TEN COM - as tenants in           UNIF GIFT MIN ACT - ....Custodian
                       common                                      ....under
        TEN ENT - as tenants by                      (Cust)         (Minor)
                       entireties
        JT TEN - as joint tenants with               Uniform Gifts to Minors 
                      right of surviorship                Act........
                      and not as tenants in                          (State)
                      common
    Additional abbreviations may also be used though not in the above list.


        For Value Received, _________ hereby sell, assign and transfer unto

        PLEASE INSERT SOCIAL SECURITY OR OTHER 
        IDENTIFYING NUMBER OF ASSIGNEE
        
        --------------------------------------

        -------------------------------------- --------------------------------

        -----------------------------------------------------------------------

                      Shares represented by the within Certificate and do hereby
                      irrevocably constitute and appoint ______________ 
                      Attorney to transfer the said Shares on the books of the
                      within named Corporation with full power of substitution
                      in the premises.

                      Dated ___________ 19__

                               In presence of _____________________

                      _______________________

        NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME
        AS WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR,
        WITHOUT ALTERATION OR ENLAREMENT, OR ANY CHANGE WHATEVER.


 
                                                          CONFORMED COPY

                                1st March 1996

                 PRIMUS TELECOMMUNICATIONS INTERNATIONAL, INC

                                      and

                   ASPECT COMPUTING PTY LTD ACN 005 083 670


       ALTA TELECOMMUNICATIONS PTY LTD as trustee of the Caravias Family
                             Trust ACN 067 270 375

   CCT AUSTRALIA PTY LTD as trustee of the Burns Family Trust ACN 006 955 111

  CT CORPORATION PTY LTD as trustee of the Lucas Family Trust ACN 062 380 803

    WILLOWARE PTY LTD as trustee of the Keenan Family Trust ACN 065 497 458

    INCO PTY LTD as trustee of the Damn Slaney Family Trust ACN 066 926 403

         LPS INVESTMENTS PTY LTD as trustee of the Peter Slaney Family
                             Trust ACN 066 926 494

  SMNR CONSULTING PTY LTD as trustee of the SMNR Family Trust ACN 062 871 381

                   FUJITSU AUSTRALIA LIMITED ACN 001 Oll 427

                                      and

                           GEORGE DIOMEDEES CARAVIAS
                              PAUL JEFFREY KEENAN
                                 THIAM SOON SIM
                          DARREN PETER NEVILLE SLANEY
                          PETER EDWARD RUSSELL SLANEY
                              CAMPBELL COLIN BURNS
                             CHRISTOPHER CON LUCAS

                 ----------------------------------------------
                             SHARE ACQUISITION DEED

                 ----------------------------------------------

                              BLAKE DAWSON WALDRON
                                   Solicitors
                               101 Collins Street
                               MELBOURNE VIC 3000
                              Tel: (03) 9679 3000
                              Fax: (03) 9679 3111
                                    DX: 187
                             File Ref: JWLA:337889

 
                             SHARE ACQUISITION DEED

                               TABLE OF CONTENTS


     Clause                                                        Page No.

                                      -i-

 
SHARE ACQUISITION DEED made 1st March 1996.

BETWEEN:

(1)  PRIMUS TELECOMMUNICATIONS INTERNATIONAL, INC. a company incorporated in
     Delaware (the "Purchaser");

(2)  The Shareholders of AXICORP PTY LIMITED ACN 061 754 943 as set out in
     schedule 1 in the capacities there set out (who are collectively referred
     to in this Deed as the "Vendors" and individually as a "Vendor"); and

(3)  The persons set out in schedule 1 (who are collectively referred to in this
     Deed as the "Principals and individually as a "Principal").

RECITALS

A.   The Original Vendors are the registered holders of the numbers of ordinary
     shares ("Ordinary Shares") and Special Cumulative Redeemable Preference
     Shares ("SRPs") in the capital of Axicorp Pty Limited (the "Company") set
     out in schedule 1 opposite their respective names.

B.   Fujitsu is the registered holder and sole and absolute beneficial owner of
     the number of Ordinary Shares in the capital of the Company set out in
     Schedule I opposite its name.

C.   The Ordinary Shares and SRPs held by the Original Vendors and Fujitsu
     (collectively the "Shares") together constitute the whole of the issued
     share capital of the Company.

D.   The Company is in the business of providing local, domestic and
     international long distance, mobile, voice, data, facsimile, enhanced
     facsimile, calling card, debit card and prepaid card, and ISDN carriage
     telecommunications services to business and residential customers through
     direct sales force, dealerships, agents, reservers, associations, affinity
     groups, direct marketing and others and providing voicemail equipment to
     carriers, in Australia (the "Business").

E.   Fujitsu has agreed to sell and the Purchaser has agreed to purchase 354,000
     Ordinary Shares (the "Fujitsu Ordinary Shares") on the terms and conditions
     set out below.

F.   The Original Vendors have agreed to sell and the Purchaser has agreed to
     purchase 78,667 Ordinary Shares ("Original Vendors Sale Shares").

 
G.   The Purchaser has agreed to grant put options and the Original Vendors have
     agreed to grant call options in respect of 157,333 Ordinary Shares on the
     terms and conditions set out below ("Original Vendors Optioned Shares").


THE PARTIES AGREE AND DECLARE AS FOLLOWS:

1.   INTERPRETATION

1.1  Definitions

     In this Deed, unless the context otherwise requires:

     "Auscorp" means Auscorp Telecommunications Pty Ltd (formerly named Ultimate
     Communications (Australia) Pty Ltd) ACN 072 365 747;

     "Auscorp Management Agreement" means the agreement set out in schedule 12;

     "Balance Date" means 31 December 1995;

     "Balance Sheet" means the balance sheet and profit and loss statement of
     the Company as at the Balance Date, being Annexure 4;

     "Business Day" means a day on which banks are open in Melbourne for general
     banking business;

     "Charge" means the charge created by the agreement dated 22 December 1994
     between Fujitsu and the Company and registered at the Australian Securities
     Commission (No 477739);

     "Completion" means completion of the sale and purchase of the Fujitsu
     Ordinary Shares and the Original Vendors' Sale shares pursuant to clause 5;

     "Completion Date" means 2 Business Days (or such sooner time as the parties
     may agree) after the date of this Deed and it is acknowledged that
     Completion may occur on the same day as the signing of this Deed;

     "Convertible Preferred Stock" means Series A Convertible Preferred Stock in
     the capital of PTGI to be issued on the terms specified in schedule 4;

     "Directors" in relation to the Company means the persons so specified in
     schedule 2;

     "Disclosure Book" means Annexure 3

                                      -2-

 
     "Encumbrance" means any mortgage, lien, charge, pledge, claim, covenant,
     encumbrance or other interest including any right of any person to purchase
     any of the Shares whether under an option, agreement to purchase or
     otherwise and, in relation to the assets of the Company, including any
     retention of title or any right of any person to purchase, occupy or use
     any of those assets whether under an option, agreement to purchase,
     license, lease, hire-purchase or otherwise; "First Call Option" has the
     meaning set out in clause 7.1(a);

     "First Call Option" has the meaning set out in clause 7.1(a);

     "First Option Completion Date" means the day of exercise of the First Call
     Option or First Put Option;

     "First Put Option" has the meaning set out in clause 7.2(a);

     "First Tranche" has the meaning set out in clause 7.1(a);

     "Fujitsu" means Fujitsu Australia Limited ACN 001 Oll 427;

     "Fujitsu Final Payment" has the meaning set out in clause 8.11(g);

     "Fujitsu Loan" means moneys advanced by Fujitsu to the Company pursuant to
     an Agreement dated 22 December 1994 of not more than $2,155,000 or such
     higher amount as may be advanced to the Company by Fujitsu with the prior
     consent of the Purchaser;

     "Fujitsu Ordinary Shares" has the meaning set out in recital E;

     "Fujitsu Purchase Price" has the meaning set out in clause 3;

     "Globenet Claim " means any threat, claim or action brought or made against
     the Company or its directors and officers by Globenet Pty Ltd ACN 063 576
     953 related to any events which have occurred prior to the date of this
     Deed;

     "Management Agreement" means the Management Agreement dated 22 December
     1994 between the Company and Ultrasys;

     "Original Vendors" means the Vendors other than Fujitsu;

     "Original Vendors Final Payment" has the meaning set out in clause 8.11(h);

     "Original Vendors Optioned Shares" has the meaning set out in Recital G;

     "Original Vendors Sale Shares" has the meaning set out in Recital F;

                                      -3-

 
     "PTGI" means Primus Telecommunications Group, Incorporated of 8180
     Greensboro Drive, McLean, Virginia, USA;

     "Prime Rate" means the ANZ Bank Index Rate last published in The Australian
     Financial Review immediately prior to execution of this Deed or, in the
     case of a default, immediately prior to the default or in the case of
     payment of interest pursuant to clause 6.2 or 7.6, immediately prior to the
     due date for payment of the interest;

     "Related Corporation" means a body corporate which is related to another
     body corporate under section 50 of the Corporations Law.

     "Second Call Option" has the meaning set out in clause 7.1(b);

     "Second Option Completion Date" means the day of exercise of the Second
     Call Option or Second Put Option;

     "Second Put Option" has the meaning set out in clause 7.2(b);

     "Second Tranche" has the meaning set out in clause 7.1(b);

     "Secretary" and "Public Officer" in relation to the Company means the
     person(s) so specified in schedule 2;

     "Shareholders Agreement" means the Shareholders Agreement dated 22 December
     1994 between the Vendors and the Company;

     "Telstra" means Telstra Corporation Ltd ACN 051 775 556 or, as the case
     requires, any of its Related Corporations;

     "Ultrasys" means Ultrasys Pty Ltd ACN 067 581 613; and

     "Warranties" means the representations and warranties referred to in 
     clause 8.

1.2  General

     In this Deed unless the context otherwise requires:

     (a)  a reference to any legislation or legislative provision includes any
          statutory modification or re-enactment of, or legislative provision
          substituted for, and any subordinate legislation issued under, that
          legislation or legislative provision;

     (b)  the singular includes the plural and vice versa;

     (c)  a reference to an individual or person includes a corporation,
          partnership, joint venture, association, authority, trust, state or
          government and vice versa;

                                      -4-

 
     (d)  a reference to any gender includes all genders;

     (e)  a reference to a recital, clause, schedule, annexure or exhibit is to
          a recital, clause, schedule, annexure or exhibit of or to this Deed;

     (f)  a recital, schedule, annexure or a description of the parties forms
          part of this Deed;

     (g)  a reference to any agreement or document is to that agreement or
          document (and, where applicable, any of its provisions) as amended,
          novated, supplemented or replaced from time to time;

     (h)  a reference to any party to this Deed or any other document or
          arrangement includes that party's executors, administrators,
          substitutes, successors and permitted assigns;

     (i)  where an expression is defined, another part of speech or grammatical
          form of that expression has a corresponding meaning;

     (j)  "notice" or "consent" means a written communication;

     (k)  a reference to "dollars" or "$" is to Australian currency;

     (l)  a reference to a matter being "to the knowledge" of a person means
          that the matter is to the best of the knowledge and belief of that
          person after making reasonable enquiries in the circumstances;

     (m)  where any party to @ Deed is contracting in its capacity as trustee,
          any reference to that party shall include any person from time to time
          appointed as trustee of the relevant trust in addition to or in
          substitution for that party;

     (n)  any reference to a breach of any of the Warranties includes any of the
          Warranties not being complete, true or correct;

     (o)  words and phrases defined in the recitals or elsewhere in this Deed
          shall have the meaning there ascribed to them;

     (p)  where any obligation under this Deed falls to be performed on a day
          other than a Business Day, this Deed shall be construed as requiring
          that obligation to be performed on the next Business Day;

     (q)  a reference to a "subsidiary" of a body corporate is to a subsidiary
          of that body corporate within the meaning of Part 1.2, Division 6 of
          the Corporations Law;

                                      -5-

 
     (r)  a reference to a "relevant interest" has the meaning set out in
          Division 5 of Part 1.2 of the Corporations Law;

     (s)  where any time period is required to be calculated from a specified
          date, that date shall be excluded from the calculation-(t) any
          reference to dates and times are to Australian Eastern Standard or
          Summer Time as is appropriate;

     (u)  all moneys payable under this Deed shall be by bank cheque drawn on a
          bank registered under the Banking Act.

1.3  Headings

     In this Deed, headings are for convenience of reference only and do not
     affect interpretation.

2.   ACQUISITION OF ORDINARY SHARES

2.1  Fujitsu agrees to sell the Fujitsu Ordinary Shares to the Purchaser and the
     Purchaser agrees to purchase the Fujitsu Ordinary Shares from Fujitsu free
     from all Encumbrances and with all rights attaching to them upon and
     subject to the terms and conditions of this Deed.

2.2  The Original Vendors agree to sell the Original Vendors Sale Shares to the
     Purchaser and the Purchaser agrees to purchase the Original Vendors' Sale
     Shares from the Original Vendors free from all Encumbrances and with all
     rights attaching them upon and subject to the terms and conditions of this
     Deed.

3.   PURCHASE PRICE

3.1  The purchase price for the Fujitsu Ordinary Shares ("Fujitsu Purchase
     Price") is $10,222,043 which shall be satisfied as set out in clause 6.

3.2  The purchase price for the Original Vendors Sale Shares ("Original Vendors
     Purchase Price") is $3,333,065 which shall be satisfied as set out in
     clause 6.

4.   CONDITIONS PRECEDENT TO COMPLETION

4.1  The Purchaser shall have no obligation in respect of Completion unless and
     until each of the following conditions is satisfied (or waived in writing
     by the Purchaser, in its absolute discretion and subject to such conditions
     (if any) as the Purchaser thinks fit):

     (a)  the Original Vendors have delivered to the Purchaser:

                                      -6-

 
          (i)  a certificate signed by each of them, dated the Completion Date,
               which certifies that each of the Warranties given by each of them
               is, by reference to the facts subsisting on the Completion Date,
               complete, true and accurate as if made and given on that date and
               that there has been no breach by them of their obligations under
               this Deed; and

          (ii) evidence satisfactory to the Purchaser that all of the SRPs have
               been redeemed in accordance with the Corporations Law and any
               other applicable legal requirements,

     (b)  Fujitsu has delivered to the Purchaser a certificate signed by it,
          dated the Completion Date, which certifies that each of the Warranties
          given by Fujitsu is, by reference to the facts subsisting on the
          Completion  Date, complete, true and accurate as if made and given on
          that date and that there has been no breach by Fujitsu of its
          obligations under this Deed.

4.2  Where any of the conditions in clause 4.1 contemplates action by a Vendor,
     that party shall be contractually obliged to take that action in accordance
     with that condition.

5.   COMPLETION

5.1  Subject to clause 4 , completion of the sale and purchase of the Fujitsu
     Ordinary Shares and the Original Vendors Sale Shares shall take place at
     11:OO AM on the Completion  Date at the offices of Baker & McKenzie, 39th
     Floor, 525 Collins Street, Melbourne.

5.2  At Completion:


     (a)  Fujitsu shall deliver to the Purchaser instruments of transfer of the
          Fujitsu Ordinary Shares in favour of the Purchaser which have been
          duly executed by Fujitsu and are in registrable form and any other
          documents which the Purchaser reasonably requests in order to vest
          full legal and beneficial ownership in the Fujitsu Ordinary Shares in
          the Purchaser other than the share certificates for the Fujitsu
          Ordinary Shares;

     (b)  the Original Vendors shall deliver to the Purchaser instruments of
          transfer of the Original Vendors' Sale Shares in favour of the
          Purchaser which have been duly executed by the Original Vendors and
          are in registrable form and any other documents which the Purchaser
          reasonably requests in order to vest full legal and

                                      -7-

 
          beneficial ownership in the Original Vendors' Sale Shares in the
          Purchaser other than the share certificates for the Original Vendors'
          Sale Shares;

     (c)  the Original Vendors shall procure delivery to the Purchaser of all of
          the following items and Fujitsu shall procure delivery of the items
          referred to in paragraphs (i), (ii), (iii), (iv), (v), (vi), (viii)
          and (ix) below:

          (i)    the certificate of incorporation of the Company (and any
                 certificate of incorporation on change of name of the Company)
                 and certificate for any registered business name;

          (ii)   the common seal (and any duplicate council seal or official
                 seal) of the Company;

          (iii)  one copy of the memorandum and articles of association of the
                 Company and any other undistributed copies of such documents;

          (iv)   the balance sheets, profit and loss statements and cash flow
                 statements (all with accompanying supplementary notes) of the
                 Company as at, and for the period ended on, the Balance Date;

          (v)    the minute books and other records of meetings or resolutions
                 of shareholders or directors of the Company and any registers
                 and other statutory records, books of account, trading and
                 financial records, copies of taxation returns and notices of
                 assessment and all other documents, papers and records of the
                 Company relating to its business activities, property or
                 financial affairs (in au cases in good order and fully and
                 accurately maintained up to Completion and in accordance with
                 any applicable legal requirements);

          (vi)   the written resignations of each Director, Secretary and Public
                 Officer of the Company in accordance with clause 5.3(c);

          (vii)  a Deed between the Company and Ultrasys in the form of schedule
                 9 duly executed by the Company and Ultrasys;

          (viii) a Deed in the form of schedule 8 between the Vendors and the
                 Company terminating the Shareholders Agreement duly executed by
                 the Vendors and the Company;

                                      -8-

 
          (ix)   an irrevocable waiver in the form of schedule 10 duly executed
                 by each Vendor;

          (x)    proxies in respect of the Original Vendor Optioned Shares in
                 the form of schedule 7;

          (xi)   an agreement between the Company and Alta Telecommunications
                 Pty Limited terminating the Services Agreement dated 1 June
                 1995 and releasing the Company from any claims in relation to
                 that Services Agreement or its termination;

          (xii)  an agreement between the Company and C.T. Corporation Pty
                 Limited terminating  the  Services  Agreement  dated  24
                 November 1995 and releasing the Company from any claims in
                 relation to that Service Agreement or its termination;

          (xiii) releases and discharges of charge, and Corporations Forms 312,
                 in relation to shares in the Company which are the subject of a
                 charge by CCT Australia Pty Limited in favour of National
                 Australia Bank dated 13 June 1995 (ASC Charge No. 498571) and a
                 charge by Aspect Computing Pty Limited in favour of Westpac
                 Banking Corporation dated 27 March 1986 (ASC Charge No 80589);
                 and

          (xiv)  the Auscorp Management Agreement.

5.3  At Completion , the Vendors shall also procure that  a  duly  convened
     meeting of the Directors of the Company is held at which it is resolved:

     (a)  that each of the transfers of the Fujitsu Ordinary Shares and the
          Original Vendors Sale Shares be approved for registration (subject
          only to the payment of stamp duty) and that upon registration, the
          appropriate share certificate be issued in the name of the Purchaser;

     (b)  to a point the persons nominated in writing by the Purchaser as
          Directors, Secretary and Public Officer of the Company with effect
          from the end of the meeting of the Directors of the Company;

     (c)  to accept the resignation of the existing Directors, Secretary and
          Public Officer of the Company with effect from the end of the meeting
          which resignation shall acknowledge that it takes effect without any

                                      -9-

 
          compensation or entitlement (whether damages for loss of office or
          otherwise) as a result;

     (d)  to revoke all existing authorities to operate bank accounts and to
          procure new authorities in favour of the persons nominated by the
          Purchaser; and

     (e)  to transact such other business as the Purchaser may reasonably
          require.

5.4  At Completion the Purchaser shall:

     (a)  deliver to Fujitsu a share mortgage in the form of Annexure 1 duly
          executed by the Purchaser, together with relevant share transfers
          signed in blank;

     (b)  deliver to the Original Vendors a share mortgage in the form of
          Annexure 2 duly executed by the Purchaser, together with relevant
          share transfers signed in blank;

5.5  At Completion:

     (a)  the Purchaser shall procure that the Company repays the Fujitsu Loan;
          and

     (b)  Fujitsu shall deliver to the Purchaser a release and discharge of the
          Charge in the form of schedule 11 and a Corporations Form 312 to the
          Company.

5.6  Fujitsu, the Original Vendors and the Purchaser agree that the sale and
     purchase of the Fujitsu Ordinary Shares and the sale and purchase of the
     Original Vendors Sale Shares are interdependent and no party shall complete
     the sale and purchase of any such shares unless the sale and purchase of
     all other such shares is completed.

5.7  Fujitsu, the Original Vendors and the Purchaser agree that the Purchaser
     shall not pay and Fujitsu shall not accept payment of the payment due to
     Fujitsu under clause 6.1 (d) until the later of February 17, 1997 or the
     date upon which the aggregate number of Ordinary Shares in respect of which
     the First Put Option or First Call Option have been exercised equals or
     exceeds 39,333. This clause 5.7 will cease to have any effect on February
     16, 1998 and is without prejudice to the rights of the Purchaser to defer
     payment to Fujitsu pursuant to clause 6.2 and to defer the first date for
     exercise of the First Put Option pursuant to clause 7.6.

5.8  Immediately after Completion, the Purchaser shall submit the transfers of
     the Fujitsu Ordinary Shares referred to in clause 5.2(a), to the Victorian
     Stamps Office for assessment

                                     -10-

 
     and stamping and after those transfers have been stamped the Purchaser
     shall procure the Company to issue new share certificates for 354,000
     ordinary shares in the name of the Purchaser and shall then deliver those
     share certificates to Baker & McKenzie, in exchange for the share
     certificates for the Fujitsu Ordinary Shares, which the Purchaser will then
     procure the Company to cancel.

5.9  Immediately after Completion, the Purchaser shall submit the transfers of
     the Original Vendors Sale Shares referred to in clause 5.2(b), to the
     Victorian Stamps Office for assessment and stamping and after those
     transfers have been stamped the Purchaser shall procure the Company to
     issue new share certificates for 78,667 ordinary shares in the name of the
     Purchaser and shall then deliver those share certificates to Rawling & Co.,
     in exchange for the share certificates for the Original Vendors Sale
     Shares, which the Purchaser will then procure the Company to cancel.

6.   PAYMENT OF PURCHASE PRICE

6.1  Subject to clause 5, the Purchaser shall satisfy the Fujitsu Purchase Price
     by paying to Fujitsu or procuring the delivery to Fujitsu of the following:

     (a)  the sum of $1 million on the date of execution of this Deed to be held
          in the trust account of Baker & McKenzie until the irrevocable bank
          guarantee is delivered to Blake Dawson Waldron in accordance with
          clause 6.3(a);

     (b)  the sum of $3 million on Completion;

     (c)  certificates registered in the name of Fujitsu for 82,500 Convertible
          Preferred Stock issued at US$2.00 per share within seven days of
          Completion; and

     (d)  subject to clause 6.2, the sum of $6 million on or before 12 noon 17
          February 1997.

6.2  The Purchaser may from time to time defer payment of the sum of $6 million
     referred to in clause 6.1(d) for a period of up to one year by giving
     written notice to Fujitsu prior to 17 February 1997 of its intention to do
     so. Such notice or notices must specify the date (being not later than 16
     February 1998) upon which the said sum of $6 million will be paid by the
     Purchaser. The Purchaser must pay to Fujitsu interest at the Prime Rate,
     plus an additional 1% per annum, calculated and payable monthly in advance
     in respect of that sum of $6 million on and from 17 February 1997 until the
     date of payment of that sum.

                                     -11-

 
6.3  If Fujitsu fails to deliver the certificate referred to in clause 4.1(b) or
     fails to meet its obligations for Completion (and such failure continues
     for 10 Business Days) or ff any of the Original Vendors fails to deliver
     the certificate or provide the evidence referred to in clause 4.1(a) or
     fails to meet its obligations at Completion (and such failure continues for
     10 Business Days) then:

     (a)  Fujitsu shall repay the sum of $1 million referred to in clause 6.1(a)
          (together with interest at the Prime Rate calculated from the date of
          execution of this Deed until the date of repayment) to the Purchaser
          on 1 April 1996. Repayment of this sum is to be secured by an
          irrevocable bank guarantee in terms reasonably acceptable to the
          Purchaser to be delivered by Fujitsu to Blake Dawson Waldron on the
          date of execution of this Deed or as soon thereafter as is practicable
          which shall be held in escrow by Blake Dawson Waldron and returned to
          Fujitsu at Completion or delivered to the Purchaser if the payment
          contemplated in the first sentence of this paragraph is not made when
          it should have been made and the Purchaser has provided a certificate
          to that effect to Blake Dawson Waldron; and

     (b)  the Original Vendors shall repay the sum of $1 million referred to in
          clause 6.6(a) (together with interest at the Prime Rate calculated
          from the date of execution of this Deed until the date of repayment)
          to the Purchaser on 1 April 1996. Repayment of this sum is to be
          secured by an irrevocable bank guarantee in terms reasonably
          acceptable to the Purchaser to be delivered by  the  Original Vendors
          to Blake Dawson Waldron on the date of execution of this Deed or as
          soon thereafter as is practicable which shall be held in escrow by
          Blake Dawson Waldron and returned to the Original Vendors at
          Completion or delivered to the Purchaser if the payment contemplated
          in the first sentence of this paragraph is not made when it should
          have been made and the Purchaser has provided a certificate to that
          effect to Blake Dawson Waldron.

6.4  If the Purchaser fails to meet its obligations for Completion and that
     failure is not remedied for 10 Business Days after the Completion Date then
     the sum of $1 million shall be forfeited to Fujitsu and the bank guarantee
     referred to in clause 6.3 shall be returned to Fujitsu for cancellation.
     Blake Dawson Waldron shall be entitled to deliver the bank guarantee to
     Fujitsu upon receipt of  a certificate from Fujitsu to the effect that the
     Purchaser has failed to meet its obligations for Completion and that the
     failure has not been remedied for 10 Business Days after the Completion
     Date. The Purchaser shall then have no

                                     -12-

 
     further liability to Fujitsu in connection with its failure to complete.

6.5  Provided that the provisions of clause 6.1(a), (b) and (c) have been
     complied with by the Purchaser, Fujitsu shall deliver to the Purchaser a
     release  and discharge of the share mortgage and the signed blank transfers
     referred to in clause 5.4(a) and the share certificates in the name of the
     Purchaser referred to in clause 5.10 immediately upon payment of the  sum
     referred  to  in  clause 6.1(d). Fujitsu agrees to release and discharge
     the share mortgage either wholly or partially at ny time prior to payment
     of the sum referred to in clause 6.1(d), subject to satisfactory
     alternative security arrangements being provided by the Purchaser which are
     acceptable in all respects to Fujitsu.

6.6  Subject to clause 5, the Purchaser shall satisfy the Original Vendors
     Purchase Price by paying to the Original Vendors:

     (a)  the sum of $1 million on the date of execution of this Deed to be held
          in the trust account of Rawling & Co until the irrevocable bank
          guarantee is delivered to Blake Dawson Waldron in accordance with
          clause 6.3(b);

     (b)  the sum of $2 million on Completion; and

     (c)  certificates registered in the name of the Original Vendors for
          124,166 Convertible Preferred Stock issued at US$2.00 per share within
          seven days of Completion.

6.7  If the Purchaser fails to meet its obligations for Completion and that
     failure is not remedied for 10 Business Days after the Completion  Date
     then the sum of $1 million shall be forfeited to the Original Vendors and
     the bank guarantee referred to in clause 6.3 shall be returned to the
     Original Vendors for cancellation. Blake Dawson Waldron shall be entitled
     to deliver the bank guarantee to the Original Vendors upon receipt of a
     certificate from the Original Vendors to the effect that the Purchaser has
     failed to meet its obligations for Completion and  that the failure has not
     been remedied for 10 Business Days after the  Completion Date.  The
     Purchaser shall then have no further liability to the Original Vendors in
     connection with its failure to complete.

6.8  Provided that the provisions of clause 6.6 and, if the First Put Option or
     First Call Option have been exercised, clauses 7.5 and (if applicable) 7.6,
     have been complied with by the Purchaser, the Original Vendors shall
     deliver to the Purchaser a release and discharge of the share mortgage and

                                     -13-

 
     the signed blank transfers referred to in clauses 5.4(b) and 7.5(c) and the
     share certificates in the name of the  Purchaser referred to in clauses
     5.11 and 7.5(A) immediately upon payment of the sum referred to in clause
     7.7(b).  The Original Vendors  agree to release and discharge the share
     mortgage either wholly or  partially at any time prior to payment of the
     sum referred to in clause  7.7(b), subject to satisfactory alternative
     security arrangements being  provided by the Purchaser which are acceptable
     in all respects to the Original Vendors.

6.9  Termination

     If the Purchaser fails to complete the sale and purchase of the Fujitsu
     Ordinary Shares and the Original Vendors Sale Shares in accordance with
     clause 5.1 and fails to remedy such failure within 10 Business Days  of
     receiving notice to do so, then provided that the Vendors have complied
     with their obligations hereunder, the Vendors shall have the right to
     terminate this Deed forthwith by serving notice signed by or on behalf of
     the Vendors on the Purchaser.

6.10 All payments of consideration to the Original Vendors (whether in cash or
     Convertible Preferred Stock and whether under clause 6 or clause 7 or
     otherwise) shall be allocated among the Original Vendors in proportion to
     their respective holdings of Ordinary Shares set out in schedule 1.

6.11 The Purchaser will procure that PTGI permits conversion of the Convertible
     Preferred Stock on the basis that:

     (a)  stock which is issued first in time may be converted first in  time;
          and

     (b)  any stock which is issued contemporaneously may be converted at the
          same time, provided that if all stock issued at the same time cannot
          be converted at the same time, the holders of such stock shall be
          permitted to convert the same proportions of their stock.

7.   PUT AND CALL OPTIONS

7.1  The Original Vendors grant to the Purchaser:

     (a)  an option to require the Original Vendors to sell 78,666 Ordinary
          Shares (the "First Tranche") to the Purchaser for a price of
          $3,333,064 (the "First Call Option"); and

                                     -14-

 
     (b)  an option to require the Original Vendors to sell 78,667 Ordinary
          Shares (the "Second Tranche") to the Purchaser for a price of
          $3,333,064 (the "Second Call Option").

7.2  The Purchaser grants to the Original Vendors:

     (a)  an option to require the Purchaser to purchase the First Tranche for
          the price referred to in clause 7.1(a) (the "First Put Option"); and

     (b)  an option to require the Purchaser to purchase the Second Tranche  for
          the price referred to in clause 7.1(b) (the "Second Put Option").

7.3  (a)  The First Call Option may be exercised at any time between 1 July
          1996 and 30 June 2001 and subject to clause 7.6 the First Put Option
          may be exercised at any time between 17 February 1997 and 30 June
          2001.

     (b)  The Second Call Option may be exercised at any time between 1 July
          1996 and 30 June 2001 and the Second Put Option may be exercised at
          any time between 16 February 1998 and 30 June 2001

     (c)  If the Purchaser or the Original Vendors  propose to exercise  an
          option referred to above, the Purchaser or the Original Vendors (as
          the case may be) shall give at least 10 Business Days notice to the
          other of such intention.

     (d)  The Original Vendors shall have the right to terminate any unexercised
          Call Option in the event of default by the Purchaser in payment of
          moneys owing under any exercised option, which default remains
          unremedied after ten (10) Business Days notice to so remedy.

     (e)  The First Call Option and the Second Call Option shall be immediately
          exercisable by the Purchaser ff any of the  Original  Vendors threaten
          or take any action to enforce any statutory or common law rights they
          may have as members of the Company except in the case of default by
          the Purchaser hereunder ff such default is not remedied within ten
          (10) Business Days after notice to do so.

7.4  (a)  Each of the First Call Option, Second Call Option,  First  Put  Option
          and Second Put Option may be exercised by the grantee of the option
          giving notice in writing to the grantor of the relevant option.  The
          Can Options may be exercised in respect of the whole or part of the
          shares to which they relate provided that a

                                     -15-

 
          partial exercise is made pro-rata to the Original Vendors and for not
          less than 1% of the issued capital of the Company.  In the case of any
          partial exercise of a Call Option, the provisions of clauses 7.5 and
          7.7 (as applicable) shall operate proportionally according to the
          number of shares over which the option is exercised.  The Put Options
          may only be exercised in respect of the whole of the shares to which
          they relate.

     (b)  The First Call Option will terminate on completion of the exercise of
          the First Put Option and vice versa.

     (c)  The Second Call Option will terminate on completion of the exercise of
          the Second Put Option and vice versa.

7.5  On the First Option Completion Date:

     (a)  the Original Vendors shall deliver to the Purchaser instruments of
          transfer of the First Tranche in favour of the Purchaser which have
          been duly executed by the respective holders of those shares and are
          in registrable form,  and  any  other  documents  which  the
          Purchaser reasonably requests in order to vest full legal and
          beneficial ownership in the First Tranche in the Purchaser other than
          the share certificates for the First Tranche; and

     (b)  in satisfaction of the price, the Purchaser shall:

          (i)    pay to the Original Vendors the sum of $3 million; and

          (ii)   deliver to the Original Vendors certificates registered in the
                 name of the Original Vendors for 124,167 Convertible Preferred
                 Stock issued at US$2.00 per share.

     (c)  the Purchaser shall deliver to the Original Vendors relevant share
          transfers signed in blank, to be held by the Original Vendors as
          mortgagees pursuant to the Share Mortgage  referred  to  in  5.4(b).

7.5A Immediately after the First Option Completion Date, the Purchaser shall
     submit the transfers provided by the Original Vendors under clause 7.5(a),
     to the Victorian Stamps Office for assessment and stamping and after those
     transfers have been stamped shall procure the Company to issue new share
     certificates for the shares transferred, in the name of the Purchaser and
     shall then deliver those share certificates to the Original Vendors in
     exchange for the share certificates for the First Tranche, to be held by
     the

                                     -16-

 
     Original Vendors as mortgagees pursuant to the share mortgage referred to
     in clause 5.4(b).

7.6  At any time prior to 17 February 1997, the Purchaser may from time to time
     give notice to the Original Vendors delaying the first date for exercise of
     the First Put Option from 17 February 1997 to a date on or prior to 16
     February 1998.

     Such notice or notices must specify the date (being not later than 16
     February 1998) which shall be the delayed first date for exercise of the
     First Put Option.  If the Purchaser gives such notice, interest at the
     Prime Rate, plus an additional 1% per annum, shall be payable on the sum of
     $3 million referred to in clause 7.5(b)(i) from 17 February 1997 to the
     First Option Completion Date or 16 February 1998 whichever is earlier.
     Such interest shall be payable monthly in advance.

7.7  On the Second Option Completion Date:

     (a)  the Original Vendors shall deliver to the Purchaser instruments of
          transfer of the Second Tranche in favour of the Purchaser which have
          been duly executed by the respective holders of those shares and are
          in registrable form, together with the share certificates for the
          Second Tranche, and any other documents which the Purchaser reasonably
          requests in order to vest full legal and beneficial ownership in the
          Second Tranche in the Purchaser; and

     (b)  in satisfaction of the price the Purchaser shall:

          (i)    pay to the Original Vendors the sum of $3 million; and

          (ii)   deliver certificates registered in the name of the Original
                 Vendors for 124,167 Convertible Preferred Stock issued at
                 US$2.00 per share.

7.8  Fujitsu, the Original Vendors and the Purchaser agree that the Second Call
     Option shall not be exercised in respect of the whole or part of the shares
     to which it relates unless and until the First Call Option has been
     completely exercised in respect of the whole of the shares to which it
     relates.

8.   WARRANTIES BY THE VENDORS

8.1  In consideration of the Purchaser agreeing to buy the Ordinary Shares and
     entering into the Options, each of the Vendors represent and warrant to the
     Purchaser in the terms

                                     -17-

 
     set out in schedule 3 ("Warranties") as at the date hereof and the
     Completion Date and acknowledge that the Purchaser has entered into this
     Deed in reliance on the Warranties; provided however that Fujitsu makes no
     representation or warranty in respect of paragraph numbers 12, 18, 19, 42,
     49, 52, 53, 69, 70, 71, 72, 73, 74 and 75 of schedule 3 and the Original
     Vendors make no representation or warranty in respect of paragraph numbers
     12A, 18A, 19A, 49A, 52A and 53A of schedule 3.  The Warranties are
     continuing warranties and shall not merge on Completion but shall remain in
     full force and effect.

8.2  The Warranties are subject to any matters particulars of which are fully
     disclosed in schedule 5 or the Disclosure Book.

8.3  Each of the Original Vendors hereby acknowledges, agrees and declares that
     the giving of a certificate by it pursuant to clause 4 shall constitute the
     representation and warranty by that Original Vendor that each of the
     Warranties given by it is, by reference to the facts subsisting on the
     Completion Date, complete, true and correct as if made and given on that
     date and that there has been no breach by that Original Vendor of its
     respective obligations under this Deed.

8.4  Fujitsu hereby acknowledges, agrees and declares that the giving of a
     certificate by it pursuant to clause 4 shall constitute a warranty by it
     that each of the Warranties given by it is, by reference to the facts
     subsisting on the Completion Date, complete, true and correct as if made
     and given on that date and that there has been no breach by Fujitsu of its
     obligations under this Deed.

8.5  The Vendors shall not be liable for any claim for breach of any warranty
     contained in clauses 8 or 10 unless and until that claim when aggregated
     with all other claims (if any) for breach of warranties in clauses 8 or 10
     against any of the Vendors exceeds $50,000 provided that once the aggregate
     of such claims, whenever arising, exceeds $50,000 the Vendors (except
     Fujitsu in the case of a claim for breach by the Original Vendors of a
     warranty contained in clause 10) shall be liable, subject to clause 8.8,
     for all losses suffered by the Purchaser (whether before or after that
     threshold is reached) and not only the amount in excess of $50,000.

8.6  The Purchaser shall not be entitled to make any claim under any provisions
     of this Deed including a claim for breach of the Warranties to the extent:

     (a)  that the facts, matters or circumstances giving rise to the claim have
          been adequately disclosed in writing to

                                     -18-

 
          the Purchaser in this Deed or in schedule 5 to this Deed or the
          Disclosure Book;

     (b)  that the claim arises as a result of any act or omission by the
          Purchaser or the Company on or after Completion or as a result of or
          in respect of any legislation not in force as at the date of this
          Deed;

     (c)  that provision has been made in the Balance Sheet for any fact, matter
          or circumstance on which the claim is based;

     (d)  to which the claim is recoverable under the Company's insurance (or
          would have been recoverable under such insurance if notified to the
          Vendors or the insurers in a timely manner after the Chief Executive
          Officer of the Purchaser becomes aware of it); or

     (e)  that the claim is based on any forecasts or projections as to the
          future revenue or profits in respect of the Company or the Business
          given by or on behalf of the Vendors.

8.7  No Reliance

     The Purchaser acknowledges and warrants that, except for the Warranties, it
     enters into this document solely as a result of its own due diligence
     investigations, enquiries, advice and knowledge.

8.8  Limitation on Claims

     The Vendors and the Purchaser acknowledge that the Purchaser's right to
     claim and the Vendors' liability to pay under the Warranties and the
     indemnities in clauses 8, 9, 10 and 12 is limited as follows:

     (a)  the Purchaser must give written notice to the Vendors of the general
          nature of the claim as soon as is reasonable after it becomes aware of
          the facts, matters or circumstances on which the claim is based (and
          where the claim is recoverable under the Company's insurance the time
          limits imposed by the relevant insurer shall be taken into account in
          determining what is reasonable) and in any event within two years
          after the Completion Date except for claims which relate to Taxation
          Liabilities;

     (b)  subject to (c), (d), (e) and (f) below, Fujitsu shall be liable for
          40% of the amounts payable by the Vendors and the Original Vendors
          shall be jointly and severally

                                     -19-

 
          liable for 60% of such payments in respect of any claim under clauses
          8, 9 and 12;

     (c)  subject to (e) below, the Original Vendors shall be jointly and
          severally liable for 100% of the amounts payable in respect of any
          claim under clause 10 and any claim for any breach of a Warranty which
          has been excluded by Fujitsu, under the proviso to clause 8.1;

     (d)  subject to (f) below, Fujitsu shall be liable for 100% of the amounts
          payable in respect of any claim for any breach of a Warranty which has
          been excluded by the Original Vendors under the proviso to clause 8.1;

     (e)  the maximum aggregate  amount  which  the  Purchaser  may  recover
          from the Original Vendors is the total amount paid to the Original
          Vendors under this Deed; and

     (f)  the maximum aggregate  amount  which  the  Purchaser  may  recover
          from Fujitsu is the total amount of the Fujitsu Purchase Price
          (excluding repayment of the Fujitsu Loan).

8.9  If the Purchaser bona fide believes that a breach of a Warranty referred to
     in clauses 8 or 10 has occurred or that it is entitled to claim the benefit
     of any of the indemnities in clauses 9, 10 or 12, it may deduct from any
     payments due to the Original Vendors under this Deed the amount it
     reasonably believes necessary to compensate it in relation to the same. The
     deducted amount  shall be paid into a Victorian solicitors trust account
     and invested at 30 day call with an institution agreed between the parties
     to the dispute. The Purchaser shall be entitled to any interest earned on
     the deducted amount. Upon final determination of the dispute, the deducted
     amount shall be paid within 5 Business Days in accordance with the
     determination or as otherwise agreed between the parties. If any portion of
     the deducted amount is paid to an Original Vendor, the Purchaser shall pay
     a corresponding portion of the interest earned to that Original Vendor.

8.10 Right to Control Proceedings

     (a)  The Vendors will not be liable to the Purchaser as a result of, or in
          connection with any of the following matters (collectively "Claims"):

          (i)    any threat, claim or action brought or made against the
                 Company; or

                                     -20-

 
          (ii)   any dispute or disagreement between the Company and any third
                 party;

          unless:

          (iii)  the Purchaser gives to the Vendors written notice (setting out
                 reasonable details) of the Claim promptly after it becomes
                 aware of the existence of the Claim ("the Notice"); and

          (iv)   by written notice to the Purchaser given within 10 Business
                 Days after receipt by it of the Notice, the Vendors have the
                 right to take such actions as the Vendors may deem fit in
                 relation to the Claim, acting reasonably, and without harming
                 the continuing business (including its ability to defend or
                 settle similar claims in respect of conduct of the Company's
                 business after the Completion Date) and reputation of the
                 Purchaser and the Company including the right to negotiate,
                 defend and/or settle the claim and to recover the costs
                 incurred in relation to the claim from any person on the
                 condition that the Vendors indemnify the Purchaser and the
                 Company to the Purchaser's reasonable satisfaction against the
                 claim and against any costs, expenses, liabilities, penalties
                 and fines which may be incurred by the Purchaser or the Company
                 in conducting the claim.

     (b)  Where the Vendors take over the conduct and/or defence of any claim
          pursuant to this clause:

          (i)    the costs of the claim shall be borne by the Vendors, except
                 that the Purchaser must pay to the Vendors or must procure the
                 payment by the Company to the Vendors of any specific costs
                 recovered by the Purchaser or by the Company in connection with
                 the claim, immediately upon receipt of those monies by the
                 Purchaser or by the Company; and

          (ii)   the Purchaser must, and must procure the Company and its
                 directors to, give to the Vendors all such assistance as may be
                 reasonably requested by the Vendors (but having due regard to
                 and without harming the continuing business and reputation of
                 the Purchaser and the Company) in connection with any Claims,
                 including the execution by the Company and its directors of
                 documents and including the supply by the Company and its
                 directors of relevant

                                     -21-

 
                 information, books and records of the Company promptly upon
                 request.

8.11 Right to Control Globenet Claim

     (a)  Notwithstanding the other provisions of clause 8 and in particular
          clause 8.10, but subject to sub-clauses (b) through (i) below, the
          Vendors will indemnify the Purchaser and keep it indemnified against
          all damages finally awarded against the Company or other amounts
          ordered to be paid by the Company, or amounts which the Company
          agrees, with the consent of the Vendors, to pay in final settlement,
          in respect of the Globenet Claim, including all legal costs and
          expenses on a full indemnity basis awarded against or incurred by the
          Company in connection with the Globenet Claim.

     (b)  The Vendors shall have no liability to the Company under sub-clause
          (a) above unless at all times the Vendors control the Globenet Claim
          and any matters directly or indirectly related to the Globenet Claim
          in all respects, and for the purposes of this paragraph "control"
          includes negotiating, initiating, defending, counterclaiming and/or
          settling the Globenet Claim and recovering the costs incurred in
          relation to the Globenet Claim from any person. In the course of
          controlling the Globenet Claim, the Vendors shall act reasonably and
          without harming the continuing business and reputation of the
          Purchaser and the Company and will keep the Company and the Purchaser
          advised on a continuing basis of progress. Any final settlement of the
          Globenet Claim by the Vendors must take into account the cash flow
          needs of the Company and must be approved in advance by the Company,
          which approval must not be unreasonably withheld or delayed.  If the
          Company refuses to approve a settlement which is otherwise obtainable
          by the Vendors, then the Vendors shall have no liability to the
          Company under clause (a) in excess of the amount of such  settlement.

     (c)  The Purchaser must pay to the Vendors or must procure the payment  by
          the Company to the Vendors of any specific costs recovered by the
          Purchaser or by the Company in connection with the Globenet Claim,
          immediately upon receipt of those monies by the Purchaser or by the
          Company.

     (d)  The Purchaser must give, and must procure the Company and the
          Company's directors and employees to give the Vendors all such
          assistance as may be reasonably requested by the Vendors (but having
          due regard to and without harming the continuing business and
          reputation

                                     -22-

 
          of the Purchaser and the Company) in connection with the Globenet
          Claim, including the execution by the Company and its directors of
          documents and including the supply by the Company and its directors
          and employees of relevant information,  books and records of the
          Company promptly upon request.

     (e)  Fujitsu shall be liable to the Purchaser for fifty percent (50%) of
          any amounts due and payable by the Vendors to the Purchaser under
          this clause 8.11 and such amounts shall be treated as a  reduction of
          the balance of the Fujitsu Purchase Price owing under clause 6.1(d)
          and shall be deducted from that balance.

     (f)  The  Original Vendors other than Aspect Computing Pty Ltd "Aspect")
          shall be jointly and severally liable to the Purchaser for forty-three
          percent (43%) and Aspect shall be liable for seven  percent (7%) of
          any amounts due and payable by the Vendors to the Purchaser under this
          clause 8.11 and such amounts shall be treated as a reduction of the
          price of any options referred to in clause 7 and shall be deducted
          from that price or those prices.

     (g)  If the Globenet Claim has not been finally resolved prior to any
          final payment to Fujitsu of amounts owing under clause 6.1(d) (the
          "Fujitsu Final Payment"), representatives of the Company and  Fujitsu
          shall meet to assess the likelihood that any amount will be required
          to be paid in respect of the Globenet Claim and what that amount may
          be, taking into account all the facts and circumstances then existing.
          If Fujitsu provides adequate assurances to the Company as to Fujitsu's
          ability to pay any amounts owing under this clause 8.11, the adequacy
          thereof being within the sole discretion of the Company, then the
          Fujitsu Final Payment shall be paid. In the event the Company does not
          agree that Fujitsu's assurances are adequate, the Company shall have
          the  right to withhold and place in an interest bearing escrow account
          (with interest accruing to the benefit of Fujitsu) up to $1,000,000
          from the Fujitsu Final Payment until such time as the Globenet Claim
          is finally resolved.

     (h)  If the Globenet Claim has not been finally resolved prior to any final
          payment to the Original Vendors of amounts owing under clause 7.7
          (b)(i) (the "Original Vendors Final Payment"), representatives of the
          Company and the Original Vendors shall meet to assess the likelihood
          that any amount will be required to be paid in respect of the Globenet
          Claim and what that amount may be, taking into account all the facts
          and

                                     -23-

 
          circumstances then existing.  If the  Original Vendors provide
          adequate assurances to the Company as to the Original Vendors' ability
          to pay any amounts owing under this clause 8.11, the adequacy thereof
          being within the sole discretion of the Company, then the Original
          Vendors Final Payment shall be paid.  In the event the Company does
          not agree that the Original Vendors' assurances are adequate, the
          Company shall have the right to withhold and place in an interest
          bearing escrow account (with interest accruing to the benefit of the
          Original Vendors) up to $1,000,000 from the Original Vendors Final
          Payment until such time as the Globenet Claim is finally resolved.

     (i)  The Purchaser acknowledges that the Company may be required to
          terminate its business relationship or dealings with certain customers
          of the Company as a result of the Globenet Claim.  The Company and the
          Purchaser shall not be entitled to make any  claim  against the
          Vendors in respect of the Globenet Claim or any thing or matter
          related to the Globenet Claim, including but not limited  to  the loss
          of customers of the Company as a result of the Globenet Claim, except
          for any claim in respect of the liability referred to in paragraph (a)
          above.

9.   INDEMNITY FOR BREACH OF WARRANTY

     Subject to clause 8 and in particular clause 8.8, the Vendors indemnify and
     hold the Purchaser harmless from and against all liabilities, losses,
     damages, costs or expenses directly or indirectly incurred or suffered by
     the Purchaser as a result of the breach of any of the Warranties and from
     and against all actions, proceedings, claims or demands made against the
     Purchaser as a result of any such breach.

10.  WARRANTIES BY THE ORIGINAL VENDORS

10.1 The Original Vendors represent and warrant to the Purchaser that as at
     Completion , the First Option Completion Date and the Second Option
     Completion Date:

     (a)  they are and will be the registered holders and the Original Vendors
          or the beneficiaries of the Family Trust referred to after clause 69
          of schedule 3, are and will be the sole and absolute  beneficial
          owners of the Original Vendors Sale Shares, the First  Tranche and the
          Second Tranche respectively free and dear of any Encumbrance; and

                                     -24-

 
     (b)  each of them has full power and authority to transfer the full legal
          and beneficial ownership to the Original Vendors Sale Shares, the
          First Tranche and Second Tranche to the Purchaser at Completion, the
          First Option Completion Date and Second Option Completion Date
          respectively; and

     (c)  there will not be any agreement between the Company and any of the
          Original Vendors except for those previously approved in writing by
          the Purchaser.

10.2 The Original Vendors indemnify and hold the Purchaser harmless from and
     against all liabilities, losses, damages, costs or expenses directly or
     indirectly incurred by the Purchaser as a result of a breach of any of the
     warranties in clause 10.1 and from and against all actions, proceedings,
     claims or demands made against the Purchaser as a result of any such
     breach.

11.  OBLIGATIONS OF THE VENDORS PENDING COMPLETION

     The Vendors covenant that from the date of this Deed until Completion they
     will procure that the Company carries on the Business in the ordinary and
     normal course and that the Company does not.

     (a)  allot or issue or agree to allot or issue any shares, or options or
          securities convertible into shares in the Company;

     (b)  alter or agree to alter its memorandum or articles of association
          (apart from any amendments necessary to redeem the SRPS), or any
          material contract of the Company;

     (c)  enter into or terminate (i) any contract otherwise than in the
          ordinary course of business or (ii) any agreement with Telstra
          regarding any dealership or other services without the prior consent
          of the Purchaser;

     (d)  make any investment including the purchase or lease of plant,
          equipment or machinery without the prior consent of the Purchaser;

     (e)  except in the ordinary course of business, employ any new person or
          except as required by law, terminate or alter the terms of employment
          or superannuation of or any other benefits payable to any of its
          employees;

                                     -25-

 
     (f)  dispose of, or agree to dispose of, or grant an option to purchase any
          interest in any material assets of the Company;

     (g)  grant or agree to grant any security over any interest in any of the
          assets of the Company;

     (h)  incur any expenditure or liability in excess of $20,000 or commitment
          which has a duration of more than 12 months or any other commitment or
          liability otherwise than in the ordinary course of business without
          the prior written consent of the Purchaser; or

     (i)  declare any dividend except for the purpose of redemption of the SRPS.

12.  TAX INDEMNITY

12.1 The Vendors covenant that upon written notice by the Purchaser to do so,
     they shall pay to the Company (or as the Company directs) an amount equal
     to an and any liability of the Company to tax however arising under the
     Income Tax Assessment Act 1936 (the "Act") (including liability to make
     income tax instalment deductions or to pay withholding tax or tax arising
     from undistributed profits under Division 7 of Part HI or arising from
     capital gains under Part II-EIA of the Act), or to pay withholding tax or
     fringe benefits tax, land tax, sales tax, payroll tax, bank accounts debits
     tax, license fees, import duties, rates, royalties, stamp duty, financial
     institutions duty, superannuation guarantee charge or any other taxes,
     duties or charges which has been or is hereafter assessed or imposed by any
     government or statutory body (including fines, additional tax, interest or
     penalties) (collectively, "Taxation Liabilities" and individually,
     "Taxation Liability") in respect of any year of income up to and including
     the year ending 31 March 1995 or arising from the conduct of the Business
     or any other activities or transactions of the Company until Completion,
     which Tax Liability is not shown separately, referred to in the notes or
     adequately provided for in the Balance Sheet, subject to the notes and
     assumptions accompanying the Balance Sheet.

12.2 The receipt of a notice of assessment or what reasonably purports to be a
     notice of assessment (or notice of amended assessment) in writing and made
     or issued by or on behalf of the Commissioner of Taxation or other relevant
     revenue authority or body for the payment by the Company of any Taxation
     Liabilities shall be conclusive evidence for the

                                     -26-

 
     purposes of this Deed that the Company has those Taxation Liabilities.

12.3 The indemnity given by the Vendors pursuant to clause 12.1 shall extend to
     the reasonable costs and expenses incurred by the Company or the Purchaser
     in connection with any Taxation Liabilities including reasonable costs and
     expenses incurred as a result of any action taken at the request of any of
     the Vendors to appeal, compromise or dispute those Taxation Liabilities.

12.4 Subject to the Vendors complying with clause 12.1 and also to clause 12.3,
     if the Vendors wish to appeal, compromise or dispute any Taxation Liability
     in relation to the Company, the Purchaser shall procure that the Company
     takes all reasonable action and shall provide to the Vendors such
     information as they may reasonably require in connection with the action.
     The Purchaser shall procure that any  reimbursement  of  any  tax,  duty,
     interest,  additional  tax, fine or penalty resulting from any such appeal,
     compromise or dispute or otherwise relating to any period prior to
     Completion is, upon receipt by the Company, paid to the person nominated by
     the Vendors.

12.5 Fujitsu shall be liable for 40% of the amounts payable by the Vendors
     pursuant to this clause 12 and the Original Vendors shall be liable for 60%
     of such payments and such amounts shall be treated as a reduction
     respectively of the Fujitsu Purchase Price and the price of the Original
     Vendor Sale Shares and (to the extent necessary) of the price of any
     Options referred to in Clause 7.  The Original Vendors' liability to make
     payments pursuant to this clause 12 shall (in relation to one third of
     amounts payable by the Original Vendors pursuant to this clause 12)  be
     suspended until the First Option Completion Date and be suspended to the
     Second Option Completion Date in relation to the remaining one third of
     amounts payable by the Original Vendors pursuant to this clause.

13.  NON-COMPETITION

13.1 For the purposes of this clause:

     (a)  "Restrained Business" means the business of providing local, domestic
          and international long distance, mobile, voice, data, facsimile,
          enhanced facsimile, calling card, prepaid card and debit card and ISDN
          carriage telecommunications services to business and residential
          customers through direct sales force, dealerships, agents, reservers,
          associations, affinity groups, direct marketing

                                     -27-

 
          and others and providing voicemail equipment to carriers, in
          Australia.

     (b)  a "Restraint Period" means any of the following periods
          commencing on the Completion Date:

          (i)     one year;

          (ii)    two years; and

          (iii)   three years; and

     (c)  a "Restraint Area" means any one of the following States or
          Territories:

          (i)     Victoria;

          (ii)    New South Wales;

          (iii)   Queensland;

          (iv)    Western Australia;

          (v)     South Australia;

          (vi)    Northern Territory;

          (vii)   Australian Capital Territory; and

          (viii)  Tasmania.

13.2 Without the prior written consent of the Purchaser, in consideration of the
     Purchaser agreeing to buy the Fujitsu Ordinary Shares and the Original
     Vendors Sale Shares and entering into the Options referred to in clause 7,
     each of the Vendors except Aspect Computing Pty Ltd and each of the
     Principals except Darren Peter Neville Slaney severally covenants that it
     shall not, and shall procure that any corporation which is a subsidiary of
     or controlled by it or in which it has relevant interest of 5% or more
     shall not, during any of the Restraint Periods conduct, carry on or promote
     on its own account, in partnership, joint venture or otherwise be engaged,
     concerned or interested in directly or through any interposed company,
     trust or partnership and whether as employee, trustee, principal, agent,
     shareholder, unitholder, independent contractor, consultant, adviser or in
     any other capacity, any Restrained Business operating in the Restraint
     Areas (other than (i) as an employee of the Company or (ii) as a
     shareholder or unitholder holding less than five per cent of the issued
     capital or units of a company or trust listed on the Australian Stock
     Exchange Limited or (iii) in the case of Fujitsu, as a supplier of

                                     -28-

 
     equipment or provider of services (other than as a reseller of
     telecommunications services) in the ordinary course of business, on an
     "arms length" basis).

13.3 On and from the Completion Date, each of the Vendors and each of the
     Principals severally covenants that during any of the Restraint Periods it:

     (a)  shall not solicit, canvass or secure the custom of any person who is
          at the Completion Date, or was in the previous twelve months a
          customer of the Company in relation to the supply of services or
          equipment that form part of a Restrained Business save and except that
          in the case of Fujitsu, it is permitted to undertake the activities
          permitted in paragraph (iii) of clause 13.2;

     (b)  other than as authorized in writing by the Company, shall not
          represent itself as being in any way connected with or interested in
          the Business or any business carried on from time to time by the
          Company and shall not use any of the trade marks or business names
          used or owned by the Company;

     (c)  shall not, and shall ensure that its respective servants and agents do
          not, disclose to any person or persons, nor use to its or their
          advantage, or to the detriment of the Purchaser or the Company or
          Business, or cause to be so used or disclosed, the name of any
          customer or employee of or supplier to the Company, nor any of the
          trade secrets, operations, processes or dealings or any confidential
          information relating to the Company, its Organization, finances,
          transactions or affairs and shall, at all times, keep any such
          information confidential and shall ensure that its servants and agents
          do likewise;

     (d)  shall not solicit, or attempt to solicit or entice away from the
          Company any of the employees of the Company or any other person who
          becomes an employee of the Company after the Completion Date; and

     (e)  shall not employ any of the Principals or Senior Executives of the
          Company as set out in schedule 6.

13.4 Each of the restraints contained in clause 13 (resulting from the various
     combinations of the Restraint Periods and the Restraint Areas) constitutes
     and shall be construed as a separate, severable and independent provision
     from the other restraints (but cumulative in overall effect) as regards
     each of the Vendors and Principals severally and clause 19.4 shall apply to
     each of those restraints.

                                     -29-

 
13.5 The Vendors and the Principals severally acknowledge, agree and declare
     that each of the restraints contained in clause 13.1 is reasonable in its
     scope and duration having regard to the interests of each party of this
     Deed and goes no further than is reasonably necessary to protect the
     Purchaser's interests as purchaser of the Shares.

13.6 The provisions of clauses 13.1 to 13.5 shall cease to apply to any Vendor
     upon any default by the Purchaser under this Deed in relation to that
     Vendor if such default has not been remedied within 20 Business Days of
     notice to do so.

14.  PUBLIC ANNOUNCEMENT AND CONFIDENTIALITY

14.1 Subject to clause 14.2, no party to this Deed shall make or cause to be
     made any public announcement of, or in relation to, the sale and purchase
     of the Ordinary Shares including in relation to price without the prior
     written consent of each of the other parties except as required by law.

14.2 The Purchaser shall be entitled to disclose that Fujitsu is a shareholder
     in PTGI and that Fujitsu is an authorized dealer of the Company for such
     period as those circumstances exist.

14.3 The Purchaser will, to the extent reasonably practicable, maintain the
     confidentiality of any of the Company's information until Completion.

15.  ACCESS

     Until the Completion Date, the Vendors shall give the Purchaser or its
     representatives full and free access, during normal business hours, to the
     premises at which the Business is conducted and the Vendors shall make
     available to the Purchaser and its accountants and lawyers (free of
     charge), all relevant books, books of account, records, contracts,
     registers, and any other documents relating to the Company and the Business
     (including computerized information) as the Purchaser, its accountants or
     lawyers may reasonably request and the Purchaser its accountants or lawyers
     may take copies thereof.

16.  STAMP DUTY AND EXPENSES

16.1 The Purchaser shall bear and be responsible for the payment of all and any
     stamp duty payable on or in respect of this Deed, the sale, purchase or
     transfer of the Ordinary Shares and the share mortgages referred to in
     clause 5.4.

                                     -30-

 
16.2 Each party (and not the Company) shall bear and be responsible for its
     own legal and accounting costs and expenses in connection with the
     preparation, completion and carrying into effect of this Deed.

17.  NO ASSIGNMENT

     No party to this Deed shall assign or purport to assign its rights or
     obligations under this Deed, without the prior written consent of the other
     parties, which shall not be withheld in the case of an assignment of the
     Purchaser's rights and obligations to a wholly owned (directly or
     indirectly) subsidiary of PTGI, provided that the rights of the Vendors are
     not adversely affected.

18.  NOTICES

18.1 Method of Giving Notices

     A notice under this Deed must be signed, in the case of the Original
     Vendors, by Paul Keenan or Peter Rawling or such other person nominated in
     writing by the Original Vendors and in other cases by or on behalf of the
     person giving it and it must be addressed to the person to whom it is to be
     given and be:

     (a)  delivered to that person's address; or

     (b)  sent by pre-paid mail to that person's address; or

     (c)  transmitted by facsimile to that person's address.

18.2 Time of Receipt

     A notice given to a party in accordance with this clause is treated as
     having been given and received:

     (a)  if delivered to a party's address, on the day of delivery if a
          business day in the place of receipt, otherwise on the next business
          day in that place;

     (b)  if sent by pre-paid mail, on the tenth Business Day after posting; and

     (c)  if transmitted by facsimile to a party's address and a correct and
          complete transmission report is received, on the next Business Day
          following the day of transmission.

                                     -31-

 
18.3 Address of Parties

     For the purpose of this clause the address of a party is the address set
     out below or another address of which that party may from time to time give
     notice to each other party:

               In respect of Primus Telecommunications International, Inc.

          Attention:     Paul Singh
          Address:       C/-Primus Telecommunications Group, 
                         Incorporated
                         8180 Greensboro Drive, Suite 1100
                         McLean, VA 22102
                         USA

          Facsimile:     (1) (703) 848-4641

          With copy to:  Julia Corelli
                         Pepper Hamilton & Scheetz
                         3000 Two Logan Square
                         18th and Arch Streets
                         Philadelphia Pennsylvania 19103-2799
                         USA

          Facsimile:     (1) (215) 981-4750


               In respect of Fujitsu Australia Limited

          Attention:     The Company Secretary
          Address:       475 Victoria Avenue
                         Chatswood 2067
                         New South Wales
                         Australia

          Facsimile:     (61) (2) 413-2871


               In respect of the Original Vendors (other than Aspect Computing
               Pty Ltd) and the Principals

          Attention:     Paul Keenan
          Address:       C/-Axicorp Pty Limited
                         Level 4
                         468 St Kilda Road
                         Melbourne
                         Australia

          Facsimile:     (61) (3) 9866-3878

                                     -32-

 
               In respect of Aspect Computing Pty Ltd

          Attention:     The Company Secretary

          Address:       551 Glenferrie Road
                         Hawthorn 3122
                         Victoria
                         Australia

          Facsimile:     (61) (3) 9818 1320

19.  GENERAL

19.1 Waiver

     The non-exercise of or delay in exercising any power or right of a party
     does not operate as a waiver of that power or right nor does any single
     exercise of a power or right preclude any other or further exercise of it
     or the exercise of any other power or right. A power or right may only be
     waived in writing signed by the party to be bound by the waiver.

19.2 Amendment

     This Deed may only be amended or supplemented in writing, signed by the
     parties.

19.3 Attorneys

     Each attorney who executes this Deed on behalf of a party declares that the
     attorney has no notice of the revocation or suspension of the power of
     attorney under the authority of which the attorney executes this Deed, and
     has no notice of the death of the grantor.

19.4 Severability

     Any provision in this Deed which is invalid or unenforceable in any
     jurisdiction is to be read down for the purposes of that jurisdiction, if
     possible, so as to be valid and enforceable, and is otherwise capable of
     being severed to the extent of the invalidity or unenforceability, without
     affecting the remaining provisions of this Deed or affecting the validity
     or enforceability of that provision in any other jurisdiction.

19.5 Counterparts

     This Deed may be executed in any number of counterparts and all of those
     counterparts taken together constitute one and the same instrument.

                                     -33-

 
19.6 Liability of Parties

     (a)  If two or more parties are included within the same defined term in
          this Deed a right given to those parties under this Deed is a right
          given severally to each of them; and

     (b)  a representation, warranty, obligation or undertaking given or entered
          into by more than one party binds each of them jointly and severally.

19.7 Further Assurances

     Each party shall do, sign, execute and deliver and shall procure that each
     of its employees and agents does, signs, executes and delivers, all deeds,
     documents, instruments and acts reasonably required of it or them by notice
     from another party to effectively carry out and give full effect to this
     Deed and the rights and obligations of the parties under it.

19.8 Time of the Essence

     Time shall be of the essence of this Deed.

19.9 Default Interest

     If a party fails to pay when due any moneys due under this Deed, the party
     shall pay interest on those moneys from and including the due date to the
     date of actual payment at the Prime Rate (calculated from time to time with
     reference to such successive periods and on such dates as the Vendors
     consider appropriate). Interest at that rate shall accrue from day to day,
     be calculated on the basis of the actual number of days elapsed and a 365
     day year (including the first day of the period during which it accrues but
     excluding the last), be payable from time to time upon demand and be
     compounded at such intervals as the Vendors consider appropriate.

20.  LAW AND JURISDICTION

20.1 Governing Law

     This Deed is governed by the law in force in Victoria.

20.2 Submission to jurisdiction

     The parties submit to the non-exclusive jurisdiction of the courts of
     Victoria and any courts which may hear appeals from those courts in respect
     of any proceedings in connection with this Deed.

                                     -34-

 
21.  WARRANTIES BY THE PURCHASER

21.1 In consideration of the Vendors agreeing to sell their shares, the
     Purchaser represents and warrants to the Vendors in the terms set out in
     clause 21.2 (the "Purchaser's Warranties"). The Purchaser's Warranties are
     continuing warranties and shall not merge on Completion but shall remain in
     full force and effect.

21.2 The Purchaser

     (a)  The Purchaser is duly incorporated and validly existing under the laws
          of the State of Delaware and the Purchaser has full power and
          authority to own its property and assets and conduct its business.

     (b)  The execution, delivery and performance of this Deed by the Purchaser
          which is a corporation has been duly and validly authorized by all
          necessary corporate action on its part and this Deed is a valid and
          binding Deed of the Purchaser enforceable in accordance with its
          terms.

     (c)  The entering into this Deed by the Purchaser does not, and the
          transactions contemplated by it will not result in a breach of the
          memorandum or articles of association of the Purchaser or any Deed to
          which the Purchaser is party or by which the Purchaser or its business
          may be affected in any way.

22.  MISCELLANEOUS

22.1 The Original Vendors acknowledge that following Completion the Purchaser
     may conduct the affairs of the Company in  its  own  interests  to  the
     exclusion  of the Original Vendors' interests and further acknowledge that
     no dividends may be paid on the Original Vendor Optioned Shares. The
     Original Vendors waive all statutory and common law remedies to which they
     may be entitled as members of the Company.  The provisions of this clause
     shall cease to apply upon the default of the Purchaser if such default is
     not remedied within 20 Business Days after notice to do so.

22.2 The Purchaser  shall  procure  the  Company  to  employ  the  Principals
     (except  for Darren Peter Neville Slaney, Christopher Con Lucas and George
     Diomedes Caravias) and the Principals shall accept employment with the
     Company as employees for a fixed period of 60 days after Completion on the
     basis that:

     (a)  the  current  terms  and  conditions  under  which  the  personal
          services of those persons are made available to the Company shall
          apply to their employment, except

                                     -35-

 
          any term relating to the termination of employment on notice; and

     (b)  if the Company does not offer a further contract of employment to any
          Principal before the determination of the fixed period of employment,
          that Principal shall cease to be employed by the Company and shall
          have no claim against the Company in respect of the cessation of his
          employment, expect in respect of the balance (if any) of the 60 day
          period if the Purchaser terminates the employment prior to the end of
          the 60 day period.

22.3 The Purchaser shall procure the Company to engage Alta Telecommunications
     Pty Ltd and Alta Telecommunications Pty Ltd shall accept the engagement to
     provide the services of George Diomedes Caravias and Caravias shall provide
     his services as consultant for a fixed period of 60 days after Completion
     on the basis that:

     (a)  the current terms and conditions under which the services of Caravias
          are made available to the Company shall apply to the engagement,
          except any term relating to the termination of the agreement on
          notice; and

     (b)  Alta Telecommunications Pty Ltd and Caravias acknowledge that if the
          Company does not offer a contract of employment to Caravias within the
          fixed period of the agreement, the agreement for the provision of the
          consultancy services of Caravias shall cease and Alta
          Telecommunications Pty Ltd and Caravias shall have no claim against
          the Company in respect of the engagement under the agreement, except
          in respect of the balance (if any) of the 60 day period ff the
          Purchaser terminates the engagement prior to the end of the 60 day
          period.

22.4 To the extent that any of the Principals shall have statutory rights
     against the Company in respect of the termination of employment which may
     not be excluded by agreement, each Original Vendor shall in respect of its
     Principal (if applicable) indemnify and hold the Purchaser harmless from
     and against all actions, proceedings, claims or demands made against the
     Company by that Principal.

                                     -36-

 
EXECUTED as a deed.
 
SIGNED, SEALED and DELIVERED          )  
by NEIL HAZARD                        )
as duly appointed attorney for        )      (signed)
and on behalf of PRIMUS               )      
TELECOMMUNICATIONS                    )      --------------------------
INTERNATIONAL, INC in the             )      Attorney                   
presence of:                          )      Name (printed): Neil Hazard 
 
(signed)

- ----------------------------------            
Witness
Name (printed): Andrew Neilson
 
 
SIGNED, SEALED and DELIVERED          )
by George Diomedes Caravias as        )
duly appointed attorney for and on    )
behalf of ALTA                        )   (signed)
TELECOMMUNICATIONS PTY                )   
LTD in the presence of:               )   -------------------------- 
                                          Attorney                   
                                          Name (printed): George D    
(signed)                                  Caravias

- ----------------------------------
Witness
Name (printed): Andrew Neilson
 
 
SIGNED, SEALED and DELIVERED          )
by George Diomedes Caravias as        )
duly appointed attorney for and on    )
behalf of ASPECT COMPUTING            )   (signed)
PTY LTD in the                        )   
presence of:                          )   --------------------------
                                          Attorney                  
                                          Name (printed): Ian D      
(signed)                                  Farrington

- ----------------------------------
Witness
Name (printed): Andrew Neilson
 
 
SIGNED, SEALED and DELIVERED          )
by George Peter Kapiniaris as         )
duly appointed attorney for and on    )
behalf of CCT AUSTRALIA               )   (signed)
PTY LTD in the                        )   
presence of:                          )   ---------------------------
                                          Attorney                   
                                          Name (printed): George P    
(signed)                                  Kapiniaris

- ----------------------------------
Witness
Name (printed): Andrew Neilson

                                     -37-

 
SIGNED, SEALED and DELIVERED          )
by Christopher Con Lucas as           )
duly appointed attorney for and on    )
behalf of CT CORPORATION              )   (signed)
PTY LTD in the                        )   
presence of:                          )   -------------------------- 
                                          Attorney                   
                                          Name (printed): Christopher 
(signed)                                  C. Lucas
- --------------------------------------
Witness
Name (printed): Andrew Neilson
 
 
SIGNED, SEALED and DELIVERED          )
by Paul Jeffrey Keenan as             )
duly appointed attorney for and on    )
behalf of WILLOWARE                   )   
PTY LTD in the                        )   (signed)                   
presence of:                          )   -------------------------- 
                                          Attorney                   
                                          Name (printed): Paul        
(signed)                                  Jeffrey Keenan

- --------------------------------------
Witness
Name (printed): Andrew Neilson
 
 
SIGNED, SEALED and DELIVERED          )
by Peter Lloyd Rawling as             )
duly appointed attorney for and on    )
behalf of INCO                        )   (signed)
PTY LTD in the                        )   
presence of:                          )   --------------------------
                                          Attorney                  
                                          Name (printed): P. Rawling 
(signed)

- --------------------------------------
Witness
Name (printed): Andrew Neilson
 
 
SIGNED, SEALED and DELIVERED          )
by Peter Edward Russell Slaney as     )
duly appointed attorney for and on    )
behalf of LPS INVESTMENTS             )   (signed)
PTY LTD in the                        )   
presence of:                          )   -------------------------- 
                                          Attorney                   
                                          Name (printed): Peter E.R.  
(signed)                                  Slaney

- --------------------------------------
Witness
Name (printed): Andrew Neilson
 
 
SIGNED, SEALED and DELIVERED          )
by Thiam Soon Sim as                  )
duly appointed attorney for and on    )
behalf of SMNR CONSULTING             )   (signed)
PTY LTD in the                        )   
presence of:                          )   --------------------------
                                          Attorney                  
                                          Name (printed): Thiam Soon 
(signed)                                  Sim

- --------------------------------------
Witness
Name (printed): Andrew Neilson

                                     -38-

 
SIGNED, SEALED and DELIVERED          )
by Terence John Robertson as          )
duly appointed attorney for and on    )
behalf of FUJITSU AUSTRALIA           )   (signed)
LIMITED in the                        )   
presence of:                          )   -------------------------- 
                                          Attorney                   
                                          Name (printed): Terence     
(signed)                                  John Robertson

- ---------------------------------
Witness
Name (printed): Andrew Neilson


SIGNED, SEALED and DELIVERED          )   (signed)
by GEORGE DIOMEDES CARAVIAS           )   
in the presence of:                   )   --------------------------
                                          
(signed)                                  

- ---------------------------------
Witness
Name (printed): Andrew Neilson


SIGNED, SEALED and DELIVERED          )   (signed)
by PAUL JEFFREY KEENAN                )   
in the presence of:                   )   --------------------------
 
(signed)

- ---------------------------------
Witness
Name (printed): Andrew Neilson


SIGNED, SEALED and DELIVERED          )   (signed)
by THIAM SOON SIM                     )   
in the presence of:                   )   --------------------------
 
(signed)

- ---------------------------------
Witness
Name (printed): Andrew Neilson


SIGNED, SEALED and DELIVERED          )   (signed)
by PETER LLOYD RAWLING AS DULY        ) 
APPOINTED ATTORNEY FOR AND ON         )   --------------------------
BEHALF OF DARREN PETER NEVILLE        )
SLANEY in the presence of:            )
 
(signed)

- ---------------------------------
Witness
Name (printed): Andrew Neilson


SIGNED, SEALED and DELIVERED          )   (signed)
by PETER EDWARD RUSSELL SLANEY        ) 
in the presence of:                   )   --------------------------
 
(signed)

- ---------------------------------
Witness
Name (printed): Andrew Neilson

                                     -39-

 
SIGNED, SEALED and DELIVERED          )   (signed)
by CAMPBELL COLIN BURNS               ) 
in the presence of:                   )   --------------------------
 
(signed)

- ---------------------------------
Witness
Name (printed): Andrew Neilson


SIGNED, SEALED and DELIVERED          )   (signed)
by CHRISTOPHER CON LUCAS              )  
in the presence of:                   )   --------------------------
 
(signed)

- ---------------------------------
Witness
Name (printed): Andrew Neilson

                                     -40-

 
                                   SCHEDULE 1

                                  (Recital A)

                        Shareholders of Axicorp Pty Ltd.


================================================================================
Shareholder/Vendor      Address       No. and Class of Shares Held     Principal
- --------------------------------------------------------------------------------
                                                          
                                      Fully Paid      Special
                                      Ordinary        Cumulative
                                      Shares of       Redeemable
                                      $1.00 each      Preference
                                                      Shares (fully
                                                      paid) of $1.00 
                                                      each
- --------------------------------------------------------------------------------
ALTA                 6 Union Street,         12,000             60  George 
TELECOMMUNICATIONS   Armdale,                                       Diomedes
PTY LTD as trustee   Victoria,                                      Caravias
of the Caravias      3143                                    
Family Trust       
- --------------------------------------------------------------------------------
WILLOWWARE PTY LTD   5 Dinsdale Court,       12,000            60   Paul Jeffrey
as trustee of the    Mooroolbark,                                   Keenan
Keenan Family        Victoria, 3138                                
Trust                             
- --------------------------------------------------------------------------------
SMNR CONSULTING      16 Highgate Grove,      12,000            60   Thiam Soon
PTY LTD as trustee   Ashburton,                                     Sim
of the SMNR Family   Victoria, 3147
Trust                             
- --------------------------------------------------------------------------------
LPS INVESTMENTS PTY  15 Killara Court,       40,000           200   Peter Edward
LTD as trustee       Werribee,                                      Russell
of the Peter         Victoria, 3030                                 Slaney
Slaney Family                                  
Trust
- --------------------------------------------------------------------------------
CCT AUSTRALIA PTY    C/_ Hershan             40,000           200   Campbell
LTD as trustee of    Serebro, Ground                                Colin Burns
the Burns Family     Floor, 377
Trust                Lonsdale Street,
                     Melbourne,
                     Victoria, 3001
- --------------------------------------------------------------------------------
CT CORPORATION PTY   10 Powlett Street,      40,000           200  Christopher 
LTD as Trustee of    East Melbourne,                               Con Lucas
the Lucas Family     Victoria, 3002
Trust                             
- --------------------------------------------------------------------------------
ASPECT COMPUTING     551 Glenferrie          40,000           200  Nil
PTY LTD              Road, Hawthorn,
                     Victoria, 3122
- --------------------------------------------------------------------------------
INCO PTY LTD as      3 Stanley Street,       40,000           200  Darren Peter
trustee of the       Williamstown,                                 Neville
Darren Slaney        Victoria, 3016                                Slaney 
Family Trust                                                      
- --------------------------------------------------------------------------------
FUJITSU AUSTRALIA    475 Victoria           354,000           Nil  Nil
LIMITED              Avenue, Chatswood,
                     New South Wales, 
                     2067
================================================================================


                                     -41-

 
                                   SCHEDULE 2

                           Axicorp Corporate Profile


Axicorp Pty Ltd

Incorporated in Victoria ACN 061 754 943

Authorized Capital:

$10,000,000 divided into 10,000,000 Shares of $1.00 each.

Issued Capital:

590,000 fully paid ordinary shares of $1.00 each and 1,180 fully paid Special
Cumulative Redeemable Preference Shares of $1.00 each.

Directors:

P. Slaney
C. Burns
P. Robinson
S. Broad
N. Karasuda
N. Roach

Secretary:

P. Keenan

Public Officer:

P. Keenan

General Managers:

G.D. Caravias - General Manager Enhanced Services
P.J. Keenan   - General Manager Finance and Administration
T.S. Sim    - General Manager Operations
P.C. Burns    - General Manager Sales and Marketing
C.C. Lucas    - General Manager Mobile Services

Shares held in other companies:

                                     -42-

 
10,000 fully paid ordinary shares of $1.00 each in National Purchasing
Corporation Limited.

                                     -43-

 
                                   SCHEDULE 3

                                   Warranties


The Company

1.   The Company is duly incorporated and validly existing under the laws of the
     State of Victoria and the Company has full power and authority to own  its
     property and assets and conduct the Business.

2.   The copy of the memorandum and articles of  association  of  the  Company,
     certified by its Secretary on the date of execution of this Deed, is and
     remains a true copy of the memorandum and articles of association  of  the
     Company.

3.   To the knowledge of the Vendors, the minute books and other records of
     meetings or resolutions of shareholders or directors of the Company and any
     registers and other statutory records, books of account, trading and
     financial records, copies of taxation returns and all other documents,
     papers and records of the Company relating to its business activities,
     property or financial affairs are complete, true and accurate in all
     respects and have been prepared in accordance with applicable legal
     requirements.

4.   Since incorporation of the Company, all returns, particulars, resolutions
     and other documents required to be delivered by the Company, under the
     Corporations Law or otherwise to the Australian Securities Commission, have
     been duly delivered.

5.   Since the Balance Date, no dividend in respect of any issued shares in the
     Company has been declared or paid and since that date there has been no
     other distribution of property or assets to shareholders of the Company.

6.   The Company has not granted any power of attorney otherwise than as is
     usual in the ordinary course of its business.

7.   The Company is not a member of any partnership, joint venture or
     unincorporated association.

8.   The Directors, Secretary, Public Officer and General Managers of the
     Company are as set out in schedule 2.

9.   The authorized and issued share capital of the Company are as set out in
     schedule 2.

                                     -44-

 
10.  The Company does not hold or have any legal or beneficial interest in any
     shares in any other company (except for 10,000 fully paid ordinary shares
     of $1.00 each in National Purchasing Corporation Limited) and has not
     contracted to take up or acquire any shares in any other company.

11.  There is no agreement, arrangement or understanding to which the Company or
     any of the Vendors is a party which gives a right to any person upon a
     change in the management or control of or ownership of shares in the
     Company.

The Shares

12.  The Original Vendors are the registered holders and the Original Vendors or
     the beneficiaries of the Family Trusts referred to after clause 69 are the
     sole and absolute beneficial owners of the number and class of shares in
     the capital of the Company set out in schedule 1 opposite their respective
     names, free and clear of any Encumbrance (except that all the SRPs will be
     redeemed on Completion).

12A. Fujitsu has full power and authority to transfer the fun legal and
     beneficial ownership to the Fujitsu Ordinary Shares to the Purchaser at
     Completion.

13.  Each of the Shares has been duly issued and allotted and in the case of an
     Ordinary share, is fully paid, and in the case of a SRP, is fully paid.

14.  The Shares comprise the whole of the issued share capital of the Company
     (except that all the SRPs will be redeemed on Completion) and there are no
     securities on issue which are convertible into or exchangeable for shares
     in the Company.

15.  There are no agreements in force pursuant to which any person is or may be
     entitled to or has the right to call for the issue of any shares in the
     Company or securities convertible into or exchangeable for shares in the
     Company nor has the Company given, granted or agreed to grant any option or
     right (whether contingent or not) in respect of its unissued shares.

16.  There are no restrictions on transfer of the Shares under the articles of
     association of the Company which will not be complied with or waived at or
     prior to Completion.

17.  No person is entitled to recover from the Company any fee, brokerage or
     commission in connection with the purchase or sale of the Shares.

This Deed

                                     -45-

 
18.  The execution, delivery and performance of this Deed by any  Original
     Vendor which is a corporation has been duly and validly authorized by all
     necessary corporate action on its part and this Deed is a valid and binding
     agreement of the Original Vendors and each of them enforceable in
     accordance with its terms.

18A. The execution, delivery and performance of this Deed by Fujitsu has been
     duly and validly authorized by all necessary corporate action on its part
     and this Deed is a valid and binding Deed of Fujitsu enforceable in
     accordance with its terms.

19.  The entering into this Deed by the Original Vendors does not, and the
     transactions contemplated by it will not:

     .    result in a breach of the memorandum or articles of association of the
          Company or any of the Original Vendors, or any agreement to which the
          Company or any of the Original Vendors is party or by which the
          Company or the Business may be affected in any way;

     .    entitle any other party to an agreement or arrangement with the
          Company to terminate that agreement or arrangement earlier than it
          would otherwise have been terminable had this Deed not been entered
          into or the transactions not occurred; or

     .    entitle any person to require the adoption by the Company of terms
          less favorable to it than those subsisting prior to this Deed being
          entered into or the transactions occurring.

19A. The entering into this Deed by Fujitsu does not, and the transaction
     contemplated by it will not:

     .    result in a breach of the memorandum or articles of association of the
          Company or Fujitsu, or any agreement to which the Company or Fujitsu
          is party or by which the Company or the Business may be affected in
          any way;

     .    entitle any other party to an agreement or arrangement with the
          Company to terminate that agreement or arrangement earlier than it
          would otherwise have been terminable had this Deed not been entered
          into or the transactions not occurred; or

     .    entitle any person to require the adoption by the Company of terms
          less favorable to it than those subsisting prior to this Deed being
          entered into or the transactions occurring.

                                     -46-

 
19B  Prior to Completion, the Vendors and their employees and agents have not
     engaged in any course of conduct or dealing which may have a material
     adverse effect on the contractual and other arrangements between the
     Company and Telstra or any parties to other material contracts with the
     Company.

Business and Assets

20.  Since the Balance Date, the Business has been conducted  in  the  ordinary
     and normal course and the Company conducts no business other than the
     Business.

21.  The Company has good and marketable title to all its property and  assets
     free from any Encumbrance and there is no agreement to give or create any
     Encumbrance and no claim has been made by any person to be entitled to any
     Encumbrance.

22.  The property and assets of the Company comprise all the assets used in
     connection with or necessary for the continuing conduct of the Business
     (including the benefit of any contracts which are used by the Company in
     the Business).

23.  All plant and equipment used in the conduct of the Business is in good
     repair and condition (normal wear and tear excepted) and the Company
     maintains a complete and accurate inventory of all assets having a purchase
     cost of more than $1,000.

24.  So far as the Vendors are aware, the Company has adequate product liability
     and public risk insurance and all of the property and assets of the Company
     which are tangible assets are insured for their full replacement value
     against fire and other risks normally insured against having regard to the
     customary practices applicable to the industry in which the respective
     business is conducted and nothing has been done or omitted to be done which
     would make any policy of insurance in respect of such property or assets or
     any of them, void or voidable.

25.  To the best of the Vendor's knowledge, all receivables and debtors of the
     Company are good and collectable in the ordinary course of business except
     as provided for in the Balance Sheet.

26.  Since the Balance Date, the Company has not disposed of, agreed to dispose
     of or granted any option to purchase any of its property or assets
     otherwise than in the ordinary course of its business.

                                     -47-

 
27.  To the knowledge of the Vendors, in respect of all inventions the subject
     of a registered patent or patent application, all trademarks and designs
     whether registered or unregistered, all business names and brands and au
     other trade secrets, know-how and confidential information used in
     connection with or required for the conduct of the Business, the Company
     has taken steps reasonably necessary to fully protect those industrial and
     intellectual property rights.

28.  To the knowledge of the Vendors there are no users, licensees or parties
     with any other rights with respect to any patents or trade marks or
     business names of the Company.

29.  To the knowledge of the Vendors the Company has not disclosed any of its
     trade secrets to any person other than the Purchaser except as required by
     law and except as disclosed in schedule 5 or the Disclosure Book.

30.  AU documents which are necessary to establish the title of the Company to
     its property and assets are in the possession or under the control of the
     Company and all so far as the Vendors are aware have been duly stamped.

31.  The Company has not entered into  any  long  term,  onerous  or  unusual
     contract nor any contract which is not on an arm's length basis and the
     Company has not given any guarantee.

32.  Other than in the usual course of business, there are no  outstanding
     offers, tenders or quotations given or made by the Company which are
     capable of giving rise to a contract by the unilateral act of a third
     party.

33.  The Company has not entered  into  any  off-set  or  other  arrangement
     which requires, as a term or condition of the supply of goods or services
     by the Company, that the Company  acquire  goods  or  services  from  any
     other  person (including a purchaser of goods or services from the
     Company).

34.  Save as previously disclosed in writing to the Purchaser, the Company is
     not a lessee, licensee or tenant of any real property or party to any hire
     purchase, hiring, leasing or credit sale agreement and the Company has not
     entered into any factoring agreement.

35.  Since 1 November 1995 to the date of this Deed there has been no change to
     the Company's arrangements with suppliers of goods or services to the
     Company, being a change which is materially adverse to the Company nor are
     the Vendors aware of a proposed change.

36.  Since 1 November 1995 to the date of this Deed, no customer of the Company
     who acquires telecommunication services having a value in excess of $25,000

                                     -48-

 
     per annum has terminated  its arrangement with the Company or varied those
     arrangements in a manner which is materially adverse to the  Company, nor
     are the Vendors aware of any proposed termination or variation.

37.  Neither the Company nor any of the Company's officers,  directors, agents
     or employees acting on the Company's  behalf has unlawfully given, paid,
     offered to give or pay, promised to give or pay or authorized the gift or
     payment  of  any money or anything of material value to any supplier of
     goods or services to the Company (including Telstra and Optus Networks Pty
     Limited) or any purchaser of goods or services from the Company for the
     purpose of influencing that officer, director, agent or employee in respect
     of any  decision concerning the Company or the Business or for the  purpose
     of inducing such officer, director, agent or employee to assist the Company
     to obtain or retain any business.

38.  There are no Agreements between the Company and any of the Vendors or
     Principals, except for those specified in schedule 5 or the Disclosure
     Book.

39.  The Company is not party to any contract which entitles it to receive
     $100,000 or more in any 12 month period or expose it to a liability to make
     payments of $10,000 or more in any 12 month period, except for those
     specified in schedule 5 or the Disclosure Book.

40.  There is no agreement, arrangement or understanding between the Company and
     National Purchasing Corporation Limited except as contained in the
     agreement dated 8 June 1994.

40A. The Company has reserved the right to cancel, change, add to or modify part
     or all of sales compensation provisions at any time. In cases where strict
     implementation of changes in sales compensation plan results in unfair or
     inequitable treatment for any individual, the Company at its discretion,
     may authorize an exception.

40B. The Company's in-house billing system is capable of directly billing all of
     the Company's Mobile, Telstra BCS and Optus customers, subject to the
     limitations disclosed in the Disclosure Book.

Accounts & Financial Position

41.  The balance sheet and profit and loss statement of the Company as at
     Balance Date disclose a true and fair view of the state of affairs and the
     financial position of the Company as at that date and for the period ending
     on it (including full and adequate provision for all Taxation Liabilities)
     in accordance with all applicable laws and regulations, and the accounting
     policies and practices previously applied by the Company's external
     accountants are consistent with generally accepted accounting principles
     under the  Australian

                                     -49-

 
     Accounting Standards, the Corporations Law and Corporations Regulations and
     other applicable legislation, subject only to the assumptions made in
     preparing them which assumptions are disclosed in schedule 5 or the
     Disclosure Book and which are consistent with assumptions applied to
     previous management accounts, except where stated.

42.  The results disclosed in the profit and loss statements of the Company for
     the period from incorporation up to and including 20 December 1994 have not
     been affected (except as disclosed in those statements) by anything which
     renders any of those results unusually high or low.

42A  The results disclosed in the profit and loss statements of the Company for
     the period from 21 December 1994 up to Balance Date have not been affected
     (except as disclosed in those statements) by anything which renders any of
     those results unusually high or low.

43.  To the knowledge of the Vendors, since Balance Date there has been no
     occurrence which has or will (either itself or together with any other
     occurrence) materially and adversely affect the value of the Shares, the
     financial position, profitability or prospects of the Company, the Business
     or any of its property or assets.

44.  The Balance Sheet states all actual or contingent liabilities of or
     asserted against the Company (in its own right) which are required to be
     included  in  the Balance Sheet under generally accepted accounting
     principles  under  the Australian Accounting Standards, the Corporations
     Law and the Corporations Regulations and other applicable legislation.  The
     Disclosure Book contains a list of all material contracts under which the
     Company may be liable.  There are no actual or contingent liabilities of
     the Company which individually exceed $10,000 or in aggregate exceed
     $50,000 that are not either disclosed in the Balance Sheet or in schedule
     5. Since the Balance Date, the Company has not incurred any actual or
     contingent liability (including contractual commitments) otherwise than in
     the ordinary course of business.  The Company has no liability to Telstra
     in respect of any debts owed by customers to Telstra except as specifically
     disclosed in the Balance Sheet.

44A. As at Completion, the principal, interest and any other moneys owing to
     Fujitsu pursuant to the Fujitsu Loan will not exceed $2,155,000 or such
     higher amount as maybe advanced to the Company by Fujitsu with the prior
     consent of the Purchaser.

45.  The Company is not insolvent and no receiver or administrator has been
     appointed over any part of its property or assets and no such appointment
     has been threatened.

                                     -50-

 
46.  The Company is not in liquidation or official management and no proceedings
     have been brought or notice served for the purpose of liquidating the
     Company or placing it in official management.

47.  All Taxation Liabilities of the Company will have been paid by the Company
     at Completion or adequately provided for by the Company and all returns in
     relation to all Taxation Liabilities have been duly lodged and filed and no
     dispute exists between the Company and any relevant authority with respect
     to any Taxation Liabilities.

48.  All accumulated losses disclosed in the accounts of the Company at Balance
     Date are (subject only to the Purchaser satisfying the requirements of
     section 80E of the Act) allowable as deductions to the Company under the
     Act.

49.  All assessable income derived by the Company in each year of income has
     been disclosed in the income tax returns filed by the Company and all
     deductions claimed in each of those returns were allowable deductions in
     the relevant year of income.

49A  All assessable income derived on or after 21 December 1994 has been
     disclosed in the tax returns filed by the Company and all deductions
     claimed in respect of expenses incurred on or since 21 December 1994 were
     allowable deductions in the relevant year of income.

50.  The books of account and other trading and financial records of the Company
     and the Business have been prepared and maintained in accordance with all
     applicable laws and regulations, and the accounting policies and practices
     previously applied by the Company's external accountants and consistent
     with generally accepted accounting principles under the Australian
     Accounting Standards, the Corporations Law and Corporations Regulations and
     other applicable legislation.

51.  As at the Completion Date there will  be  no  loan  outstanding  from  the
     Company to any of its employees or shareholders (or vice versa).

Information

52.  The Original Vendors have disclosed in writing (or caused  to be disclosed
     in writing) to the Purchaser all information  relating to the Shares, the
     Company and the Business and its property and assets which would be
     material for disclosure to an intending purchaser of the Shares. All such
     information (including information or documents provided under the "Access"
     clause of this Deed and the information appearing as Annexure  4) is
     complete, true and accurate in all material aspects and does not omit any
     material  information.

                                     -51-

 
52A  So far as it is aware, Fujitsu has disclosed in writing (or caused to be
     disclosed in writing) to the Purchaser all information relating to the
     Shares,  the Company and the Business and its property and assets which
     would be material for disclosure to an intending Purchaser of the  Shares
     and  all  such information (including information or documents provided
     under the "Access" clause of this Deed and  the  information appearing as
     Annexure  4) is complete, true and accurate in all material aspects and
     does not omit any material information.

53.  The information contained in the schedules (excluding schedule 1 in respect
     of the information relating to Fujitsu Australia Ltd and schedule  4) and
     recitals A, C, D, E, F and G to this Deed is complete, true and accurate in
     all respects.

53A  The information contained in the schedules (excluding schedule 1 in respect
     of the information relating to the Original Vendors and schedule 4) and
     recitals B, C, D, E, F and G to this Deed is complete, true and accurate in
     all respects.

Litigation, compliance with laws, etc.

54.  There is no unsatisfied judgment, order, arbitral award or decision of any
     Court, tribunal or arbitrator against the Company or any of its property or
     assets and there is no outstanding claim, demand, dispute, litigation,
     arbitration or prosecution to which the Company is party pending nor  to
     the best of the knowledge and belief of the Vendors threatened against any
     of them.

55.  The Company is  not  in  default  under  its  memorandum  or  articles  of
     association or any statute or under any decree, order, rule, by-law or
     regulation of any government, statutory, municipal body or Organization
     having jurisdiction over any of them and the entering into this Deed win
     not result in a contravention of any of them.

56.  The Company holds all licenses, permits, authorizations and consents
     required for the conduct of all aspects of the Business (including without
     limitation any class license issued under the Telecommunications Act) and
     all such licenses, permits, authorizations and consents are in full force
     and effect and are not liable to be revoked or not renewed and there are no
     circumstances or facts involving the Company or its affairs which are
     likely to result in the revocation of or variation in any material respect
     of such licenses, permits, authorizations and consents.

57.  No license, permit, authorization or consent held by the Company will be
     liable to be terminated or varied in any material respect by reason of a
     change in the ownership of the Company.

                                     -52-

 
58.  The Vendors have no knowledge of any breach or unenforceability or
     invalidity of or grounds for rescission, avoidance or repudiation of any of
     the contracts, deeds or instruments to which the Company is a party.

59.  To the best of the knowledge and belief of the Vendors there are no
     statutory or other notices restricting or prohibiting the carrying on of
     the Business in any way.

Employees

60.  Full disclosure has been made to the Purchaser  of  the  remuneration  of
     each employee, director and consultant of the Company and the basis of that
     remuneration has not changed since the Balance  Date  except  in  the
     ordinary course of business.

61.  There is not in existence any contract of employment with any employee of
     the Company (or any contract for the services of any person) which cannot
     be terminated by one month's notice or less or (where such a contract has
     not been reduced to writing) by reasonable notice, and in each case without
     giving rise to a claim for damage or compensation against the Company other
     than as provided for by statute. There are no written contracts of
     employment  or  for services, other than those whose terms have been
     included in writing in the Disclosure Book.

62.  To the best of the knowledge and belief of the Vendors there is no
     threatened or pending dispute between the Company and any trade union or
     other similar Organization.

63.  The entitlements of employees of the Company as disclosed in its accounts
     for long service leave, annual leave and sick leave  are  adequate  and
     have  been determined in accordance with prudent accounting  practice  and
     are  not  less than the employees' legal entitlements.

64.  Since the Balance Date, no payment has been  made  or  agreed to be made in
     respect of and the Company has no actual or contingent liability for the
     payment of any retiring allowance, superannuation, redundancy or
     termination benefit nor any other payment for loss of office or employment
     to any of the Directors or officers of the Company or to any employees or
     consultants of the Company except as required by statute.

65.  The Company has made superannuation contributions as required by the
     Superannuation Guarantee Act 1992 and the Superannuation Guarantee
     (Administration) Act 1992 and has no liability under any superannuation
     trust deed or to any superannuation fund whether for contributions, lump
     sum or pension benefits or for any retiring or other allowance or deferred
     compensation

                                     -53-

 
     that it is not meeting in the ordinary course of business and there is no
     agreement between the Company and any person in relation to any such fund,
     contribution, benefit or allowance.

66.  There are no actual, threatened or pending disputes relating to
     superannuation contributions made by the Company or the superannuation
     benefits to be provided to employees of the Company.

67.  The Company has not been notified of any claim under workers
     compensation, WorkCare or equivalent legislation which is not fully covered
     by insurance or the WorkCare Compensation Scheme.

68.  The Company does not have any employee share or option plan or profit
     sharing arrangements with employees and no loans have been made to any
     employee of the Company.

The Vendors

69.  Each of Aspect Computing Pty Ltd and Fujitsu Australia Limited has entered
     into this Deed in its own right and not as trustee of any trust.

     In the following Warranties, a reference to "Trustee" means Alta
     Telecommunications Pty Limited, Willoware Pty Limited, LPS Investments Pty
     Limited, CCT Australia Pty Limited, CT Corporation Pty Ltd, S@ Consulting
     Pty Ltd and Inco Pty Limited and a reference to "Fan-&y Trust" means the
     Caravias Family Trust (in relation to Alta Telecommunications Pty Limited),
     the Keenan Family Trust (in relation to Willoware Pty Limited), the Peter
     Slaney Family Trust (in relation to LPS Investments Pty Limited), the Burns
     Family Trust (in relation to CCT Australia Pty Limited), the Lucas Family
     Trust (in relation to CT Corporation Pty Ltd), the S@ Family Trust (in
     relation to SMNR Consulting Pty Ltd) and the Darren Slaney Family Trust (in
     relation to Inco Pty Limited).

70.  The Trustee, in its capacity as trustee of the Family Trust, has the power
     under the trust deed which established the Family Trust (the "Trust Deed")
     to enter into this Deed and is duly authorized to do so.

71.  The Trustee was duly appointed trustee of the Family Trust pursuant to the
     Trust Deed and the Family Trust was duly established on the date the Trust
     Deed bears.

72.  The Trust Deed was duly executed and duly stamped and any amendment since
     its execution in no way affects the other representations and warranties
     made or given in this Deed nor the ability of the Trustee to perform its
     obligations under this Deed;

                                     -54-

 
73.  The Trustee is not in default under the terms of the Trust Deed and
     circumstances have not arisen which may lead to the removal of the Trustee
     as trustee of the Family Trust.

74.  The Trustee has not been removed from the office of trustee or ceased to
     act and no additional trustee has been appointed.

75.  The Trustee has the right to be indemnified out of the assets of the Trust
     Fund of the Family Trust in respect of all and any of its obligations and
     liabilities under this Deed.

                                     -55-

 
                                   SCHEDULE 4

              Terms of the PTGI Convertible Preferred Stock Issue


                                     -56-

 
                            CERTIFICATE OF AMENDMENT

                                       OF

                          CERTIFICATE OF INCORPORATION

          Primus Telecommunications Group, Incorporated, a corporation organized
and existing under and by virtue of the General Corporation Law of the State of
Delaware.

          DOES HEREBY CERTIFY:

          FIRST:  That the Board of Directors of said corporation, at a meeting
duly held adopted a resolution proposing and declaring advisable the following
amendment to the Certificate of Incorporation of said corporation.

     RESOLVED:  that the Certificate of Incorporation of Primus
Telecommunications Group, Incorporated be amended by changing the Fourth Article
thereof so that, as amended, said Article shall be and read as follows:

     4.   Authorized Shares; Powers, Preferences and Rights.
          ------------------------------------------------- 

          4.1.  Authorized Shares.  The aggregate number of shares that the
                -----------------                                          
Corporation shall have authority to issue shall be twelve million nine hundred
ten thousand (12,910,000), ten million four hundred fifty-five thousand
(10,455,000) of which shall be shares of common stock ("Common Stock"), par
value $.01 per share, four hundred fifty-five thousand (455,000) of which shall
be shares of convertible preferred stock ("Series A Preferred Stock"), par value
$.01 per share and having such rights, designations, preferences and limitations
as set forth in Section 4.2 hereof, and two million (2,000,000) of which shall
be shares of preferred stock, par value $.01 per share and having such rights,
designations, preferences and limitations and such series and such number as
designated by the board of directors of the corporation pursuant to the
authority expressly granted hereby to the board of directors to fix by
resolution or resolutions the designations, powers, preferences and rights, and
the qualifications; limitations or restrictions of certain series and number
thereof which are permitted by Section 151 of the General Corporation Laws of
the State of Delaware (or any successor provision thereto) in respect of any
class or classes of stock or any series of any class of stock of the
corporation.

 
          4.2  Rights, Designations, Preferences and Limitations.
               ------------------------------------------------- 

               a.  Dividends. Holders of Series A Preferred Stock shall be
                   ---------
entitled, as may be determined by the board of directors of the corporation, to
receive dividends out of any funds legally available therefor when and as
declared and in the same amounts as paid on Common Stock on a per share Common
Stock equivalent basis based on the then effective conversion ratio of Series A
Preferred Stock to Common Stock.

               b.  Liquidation.  Upon any liquidation, dissolution or winding 
                   -----------
up of the corporation the holders of outstanding shares of Series A Preferred
Stock will be entitled to be paid out of the assets of the corporation before
any distribution or payment is made upon the Common Stock or any other equity
securities of the corporation ranking junior in liquidation to the Series A
Preferred Stock, and pari passu with any other preference stock of the
corporation, an amount in cash equal to the sum of $0.01 per share, plus the
amount of all accrued and unpaid dividends with respect to such share of Series
A Preferred Stock, plus the amount that would be paid on such liquidation to the
holders of Series A Preferred Stock if all such holders had, immediately prior
to such liquidation, converted their shares of Series A Preferred Stock to
shares of Common Stock (the "Liquidation Value"). If, upon any such liquidation,
dissolution or winding up of the corporation, the corporation's assets to be
distributed among the holders of the Series A Preferred Stock are insufficient
to permit payment to such holders of the aggregate amount which they are
entitled to be paid pursuant to the preceding sentence, then the entire assets
to be distributed will be distributed ratably among such holders based upon the
aggregate Liquidation Value of the shares of Series A Preferred Stock held by
each such holder. The corporation will mail written notice of such liquidation,
dissolution or winding up, not less than 60 days prior to the effective date
thereof to each record holder of Series A Preferred Stock.

               c.  Voting Rights.  Except as provided otherwise herein or as 
                   -------------
required by the General Corporation Law of Delaware, holders of Series A
Preferred Stock shall not be entitled to vote either individually or as a single
class with the holders of Common Stock; provided, however, that in the event
                                        --------  -------
that the General Corporation Law of Delaware or any other applicable law should
entitle the holders of Series A Preferred Stock to vote, the holders of Series
Preferred Stock in a single class with holders of Series A Preferred Stock
entitled to cast the number of votes that they would have were the Series A
Preferred Stock to be converted into Common Stock prior to such vote, unless,
however, the applicable law expressly requires a separate class vote.

                                      -2-

 
               d.   Class Voting Rights.  Holders of Series A Preferred Stock 
                    -------------------
shall vote as a separate class on, and the affirmative vote of a majority of the
outstanding shares of Series A Preferred Stock shall be required to authorize,
any action which would:

                    (1) in any manner authorize, create or issue any class or
series of capital stock ranking, as to distribution of assets on liquidation,
prior to the Series A Preferred Stock, or authorize, create or issue any shares
of any class or series or any bonds, debentures, notes or other obligations
convertible into or exchangeable for, or having optional rights to purchase, any
shares having any such priority over with the Series A Preferred Stock;

                    (2) in any manner alter or change the designation or the
powers, preferences or rights, or the qualifications, limitations or
restrictions of the Series A Preferred Stock;

                    (3) reclassify the shares of Common Stock, or any other
shares of any class or series of capital stock hereafter created junior to the
Series A Preferred Stock into shares of any class or series of capital stock
ranking, s to distribution of assets on liquidation, prior to the Series A
Preferred Stock.

                    (4) increase the aggregate number of Shares of Series A
Preferred Stock which the corporation shall have the authority to issue.

               e.   Conversion into Common Stock.
                    ---------------------------- 

                    (1) (i) Subject in all cases to the limitations set forth in
this Section 4.2e., the holders of each share of Series A Preferred Stock shall
have the right at any time following the Nonconversion Period to convert each
such share of Series A Preferred Stock into one fully paid and nonassessable
share of Common Stock or such number of shares of Common Stock as determined in
accordance with clause (ii) of this Section 4.2e(1).

                        (ii) In case of any capital reorganization,
reclassification, stock split, combination, or exchange of shares, or in the
case of a merger or consolidation of the corporation with another entity (in the
case of a merger, wherein the corporation is the surviving entity), each share
of Series A Preferred Stock, after such reorganization, reclassification, stock
split, combination, exchange of shares, merger or consolidation, shall be
convertible into that kind and number of shares of Common Stock of the
corporation or surviving corporation as to which such share of Series A
Preferred Stock

                                      -3-

 
had been converted into Common Stock immediately prior to any of those events.

                    (2) Upon the occurrence of a Mandatory Event of Conversion,
all shares of Series A Preferred Stock then outstanding shall, by virtue of, and
simultaneously with, the occurrence of the Mandatory Event of Conversion and
without any action on the part of the holder thereof, automatically become
shares of Common Stock; provided, however, that:
                        --------  -------  ---- 

                        (i) upon the occurrence of a Mandatory Event of
Conversion specified in clause (ii) or (iii) of the definition of "Mandatory
Event of Conversion," shares of Series A Preferred Stock held by persons who are
then listed in the corporation's records as Aliens shall only be converted to
the extent there are Available Shares (as calculated as of the applicable
Mandatory Event of Conversion). For purposes of this clause (i), Available
Shares shall e divided among the Alien holders of Series A Preferred Stock
ratably according to their respective Alien Percentage Interests. Shares of
Series A Preferred Stock not converted due to insufficient Available Shares
shall continue as shares of Series A Preferred Stock with all the rights,
designations, preferences and limitations set forth herein and shall be
converted when and as Available Shares become available; and

                        (ii) Upon the occurrence of the Mandatory Event of
Conversion specified in clause (iv) of the definition thereof, only those shares
of Series A Preferred Stock held by stockholders who did not approve the
corporate action subject to vote (such non-assenting stockholders, the "Non-
Assenting Stockholders"; stockholders who failed to vote their shares shall not
be considered Non-Assenting Stockholders; shall be converted and, with respect
to Non-Assenting Stockholders who are then listed in the corporation's records
as Aliens ("Non-Assenting Aliens"), such shares shall only be converted to the
extent there are Available Shares (as calculated as of the applicable Mandatory
Event of Conversion). For purposes of this clause (ii), Available Shares shall
be divided amount the Non-Assenting Aliens ratably in accordance with the
proportion that their individual Alien Percentage Interest bears to the
aggregate Alien Percentage Interests of all Non-Assenting Aliens. In the event
that the number of Available Shares (as calculated as of the applicable
Mandatory Event of Conversion) is less than the number of shares of Series A
Preferred Stock held by Non-Assenting Aliens, the board of directors of the
corporation may, in its discretion, waive, for purposes of this clause (ii)
only, the Alien Percentage Limitation with respect to the shares held by the 
Non-Assenting Aliens. Should the board of directors of the corporation not 
waive the Alien Percentage Limitation in accordance with the foregoing sentence
within thirty (30) days after the applicable Mandatory Event of Conversion, the

                                      -4-

 
corporation shall have the right, for a period of one-hundred and twenty (120)
days following the date of the applicable Mandatory Event of Conversion, at its
option and to the extent there are funds of the corporation available therefor,
to redeem the unconverted shares of Series A Preferred Stock held by Non-
Assenting Aliens at ninety-five percent (95%) of the fair market value of such
shares as determined by an independent appraiser selected by the board of
directors and the Non-Assenting Aliens, which fair market value shall include
the value of all accrued but unpaid dividends with respect to such shares.  If
the Board of Directors of the corporation and the Non-Assenting Aliens cannot
agree upon a person to act as independent appraiser within thirty (30) days
after the applicable Mandatory Event of Conversion, the board of directors shall
request Deloitte & Touche to appoint an independent appraiser.  In the event
that the funds of the corporation are insufficient to redeem all the shares of
Series A Preferred Stock of the Non-Assenting Aliens at such time, funds then
available shall be distributed ratably among such Non-Assenting Aliens when and
as they become available, and such redemption right shall continue until such
time as the corporation's funds become available therefor; provided, however,
                                                           --------  -------
that if the redemption right is not exercised within six (6) months after the
- ----                                                                         
determination of the fair market value, then at any time after the expiration of
the six (6) month period either the corporation or the Non-Assenting Aliens
shall be entitled to require a new determination of the fair market value of the
shares of the Series A Preferred Stock.

                    (3) The holder of any shares of Series A Preferred Stock who
is a Citizen may exercise the conversion right under Section 4.23(1) hereof with
respect to all or any part of his shares of Series A Preferred Stock be
delivering to the office of any transfer agent of the corporation for the Series
A Preferred Stock, or to such other place as may be designated by the
corporation, his certificates for the shares to be converted, duly endorsed or
assigned in blank or to the corporation (if required by it), and a written
notice stating the Citizen name or names (with address) in which the
certificate(s) for the shares of Common Stock are to be issued.

                    (4) The holder of any shares of Series A Preferred Stock who
is an Alien ("Alien Converting Stockholder") may exercise the conversion right
under Section 4.2e(1) hereof, subject to the Alien Percentage Limitation, with
respect to all or part of his shares of Series A Preferred Stock by following
the procedures set forth in this Section 4.2e(4). Each Alien Converting
Stockholder shall be entitled to convert that number of shares calculated by
dividing the Available Shares, as calculated on the close of business of the
last day of the 30-Day Period (as defined in clause (i) below), by the number
resulting from the division of the Alien Percentage Interest of the

                                      -5-

 
relevant Alien Converting Stockholder by the aggregate Alien Percentage
Interests of all Alien Converting Stockholders.

                         (i) The Alien Converting Stockholder shall deliver to
the corporation written notice of such holder's intent to convert. Such notice
shall set forth the exact number of shares of Series A Preferred Stock which the
holder owns, the number of shares of Series Preferred Stock the holder desires
to convert and the present citizenship of the holder. Upon receipt of such
notice, the corporation shall, in turn, send notice to al the record owners of
Series A Preferred Stock (the "Conversion Notice") which Conversion Notice shall
state (a) that the corporation has received notice of a stockholder's intent to
convert and (b) the number of Available Shares which the corporation anticipates
will be available for conversion. For a period of 30 days from the date of the
Conversion Notice (the "30-Day Period"), the corporation shall not convert any
shares of Series A Preferred Stock pursuant to this Section 4.2e(4).

                         (ii) Any other Alien holder of Series A Preferred Stock
who also desires to have some or all of his shares of Series A Preferred Stock
converted shall provide written notice to the corporation prior to the
expiration of the 30-day Period of his intent to convert, the exact number of
shares of Series A Preferred Stock which such holders owns, the number of shares
of Series A Preferred Stock such holder desires to convert and the present
citizenship of such holder.

                         (iii) Within five (5) days after the expiration of the
30-Day Period, the corporation shall provide notice to all Alien Converting
Stockholders who or which deliver notices to convert under clauses (i) or (ii)
of this Section 4.2e(4) during the applicable 30-Day Period of how many shares
each such Alien Converting Stockholder is entitled to convert. Within ten (10)
days after the Alien Converting Stockholder's receipt of such notice, the Alien
Converting Stockholder must deliver to the office of any transfer agent of the
corporation for the Series A Preferred Stock, or to such other place as may be
designated by the corporation, the certificate or certificates for the shares to
be converted, duly endorsed or assigned in blank or to the corporation (if
required by it) and a written notice stating the name or names (with address) in
which the certificate or certificates for the shares of Common Stock are to be
issued.

                    (5) Conversion shall be deemed to have been effected (i)
with respect to conversion effected pursuant to clause (3) or (4) above, on the
date when the delivery of certificates is made and (ii) with respect to
conversion effected pursuant to clause (2) above, on the date of occurrence of
the Mandatory Event of Conversion.

                                      -6-

 
                    (6) As promptly as practicable after conversion, the
corporation shall issue and deliver to or upon the written order of the holder,
to the place designated by such holder, a certificate or certificates for the
number of full shares of Common Stock to which such holder is entitled. The
person in whose names the certificate or certificates for Common Stock are to be
issued shall be deemed to have become a stockholder of record on the applicable
Conversion Date unless the transfer books of the corporation are closed on that
date, in which event he shall be deemed to have become a stockholder of record
on the next succeeding date on which the transfer books are open. Upon
conversion of only a portion of the number of shares covered by a certificate
representing shares of Series A Preferred Stock, surrendered for conversion, the
corporation shall issue and deliver to or upon the written order of the holder
of the certificate so surrendered for conversion, at the expense of the
corporation, a new certificate covering the number of shares of Series A
Preferred Stock, representing the unconverted portion of the certificate so
surrendered.

                    (7) With respect to any conversion of Series A Preferred
Stock pursuant to Section 4.2e(1) hereof, the calculation of the Alien
Percentage Limitation shall be made by disregarding the Common Stock issuable
upon conversion of other convertible securities issued by the corporation and
outstanding at the time of the calculation.

                f.  Preemptive Rights
                    -----------------

                    (1) Except with respect to Excluded Shares or as otherwise
provided herein, in the event that (i) the corporation shall issue, sell or
exchange, agree to issue, sell or exchange, or reserve or set aside for
issuance, sale or exchange, any shares of Common Stock or Convertible Securities
(any such issuance, sale or exchange, an "Issuance"), and (ii) the corporation
shall have granted preemptive rights in or to such Issuance to other holders of
individual percentage equity interests in the corporation equal to or less than
any of the individual equity percentage interests in the corporation of any of
the holders of the Series A Preferred Stock (calculated on a Fully Diluted
Basis), then the holders of Series A Preferred Stock with individual equity
percentage interests equal to or greater than those individual equity percentage
interests of holders of preemptive rights shall each be granted comparable
preemptive rights in or to the Issuance.

                g.  Legends. Each share of Series A Preferred Stock shall bear a
                    -------
legend on the face or back of the certificate representing such share either an
accurate or complete summary of the powers, designations, preferences and other
special rights of the Series A Preferred Stock set forth herein, or a statement
that the corporation shall furnish without charge to each

                                      -7-

 
stockholder who so requests, a copy of the powers, designations, preferences and
other special rights of the Series Preferred Stock set forth herein.

                h.  Definitions.  For purposes of this Section 4.2, the 
                    -----------
following terms shall have the following meanings:

          "Alien" means any person, corporation, joint venture, association or
           -----                                                              
other organization who or which is not a Citizen or Entity.

          "Alien Percentage Interest" means, as to any Alien holder of Series A
           -------------------------                                           
Preferred Stock, the percentage that the outstanding shares of Series A
Preferred Stock then owned by such Alien stockholder is of the aggregate
outstanding number of shares of Series A Preferred Stock then owned by all Alien
Stockholders of Series A Preferred Stock.

          "Alien Percentage Limitation" means, at any given time, that number of
           ---------------------------                                          
shares of Common Stock equal to five percent (5%) of all the issued and
outstanding Common Stock of the corporation calculated on a Fully Diluted Basis.

          "Available Shares" means that number of shares of Common Stock
           ----------------                                             
available for issuance on a given date to holders of Series Preferred Stock who
are Aliens calculated by subtracting from the Alien Percentage Limitation that
number of shares of Common to Stock issued to Aliens on a Fully Diluted Basis
(excluding the dilution which may be effected by the Series A Preferred Stock).

          "Citizen" means any person (not controlled by or representing any (i)
           -------                                                             
alien, (ii) foreign government, or (iii) corporation organized under the laws of
a foreign country) who has obtained the status, whether through right of birth
or naturalization, of citizenship of the United States and continues to possess
such status as provided for under Title 8 United States Code Sections 1401 et
seq. and 1421 et seq.

          "Conversion Date" means with respect to a shares of Series A Preferred
           ---------------                                                      
Stock the date on which conversion of the share into Common Stock is deemed to
occur pursuant to Section 4.2e(5).

          "Convertible Securities" means all debt instruments, securities or
           ----------------------                                           
other equity interests (including the Series A Preferred Stock) convertible into
or exchangeable for Common Stock other than Excluded Shares.

          "Entity" means any corporation, joint venture, partnership,
           ------                                                    
association or other organization organized under the laws of the United States,
a state of the United States or

                                      -8-

 
the District of Columbia, which corporation is not controlled directly or
indirectly, by any other corporation of which any officer of more than one-
fourth of the directors are aliens or of which more than one-fourth of the
capital stock of such other corporation is owned of record or voted by aliens,
their representatives, or by a foreign government or representative thereof, or
by any corporation organized under the laws of a foreign country.

          "Excluded Shares" means, collectively:
           ---------------                      

                                 (i) shares issued as a stock dividend;

                                 (ii) shares of any class of the corporation's
capital stock issued upon any subdivision, combination, stock split or reverse
stock split of the entire class of such capital stock of the corporation;

                                 (iii) any shares issued by the corporation
pursuant to the acquisition by the corporation of any Person by means of merger,
stock purchase, reorganization, purchase of substantially all the assets or
otherwise in which the corporation, or its stockholders of record immediately
prior to the effective date of such transaction, directly or indirectly, own at
least a majority of the voting power of the acquired or resulting entity after
such transaction;

                                 (iv) any shares issued pursuant to underwritten
public offering of the type described in clause (iii) of the definition of
Mandatory Event of Conversion; and

                                 (v) any shares issued or issuable upon the
exercise of options, warrants or other rights to acquire shares of Common Stock
or on the conversion or exchange of securities (including the Series A Preferred
Stock) convertible into or exchangeable for Common Stock.

          "Fully Diluted Basis" means, as of applicable time of calculation, the
           -------------------                                                  
number of shares of Common Stock that would be issued and outstanding if there
were added to the number of issued and outstanding shares of Common Stock the
number of shares of Common Stock then issuable upon the exercise of all
outstanding, vested or unvested, warrants, options or other rights to acquire
shares of Common Stock and on the conversion or exchange of all debt instruments
and securities (including the Series A Preferred Stock) convertible into or
exchangeable for Common Stock.

          "Mandatory Event of Conversion" means the occurrence of any of the
           -----------------------------                                    
following events:

                                      -9-

 
                                 (i) Both (A) the repeal or inapplicability to
the corporation of the restrictions on alien Ownership set forth in Section
310(b) of the Communications Act of 1934 (47 U.S.C. 310(b), as amended) and any
succeeding or comparable legislation and (B) the expiration of the Nonconversion
Period.

                                 (ii) consummation of the sale (A) of more than
fifty percent (50%) of the capital stock of the corporation to a single
purchaser or more than one related purchasers, (B) by K. Paul Singh of all of
the capital stock of the corporation owned by him at the time of such sale, or
(C) of substantially all of the assets of the corporation; provided, however, 
                                                           --------  ------- 
that a merger of the corporation with another entity shall not be deemed a
Mandatory Event of Conversion if the corporation is the surviving entity;

                                 (iii) consummation of an underwritten public
offering of more than twenty percent (20%) of the corporation's Common Stock
registered under the Securities Act of 1933; or

                                 (iv) the failure of a majority of the holders
of Series A Preferred Stock to approve, ratify or otherwise consent to the
corporate actions specified in Section 4.2d(1) or (3) hereof.

          "Nonconversion Period" means, as to each share of Series A Preferred
           --------------------                                               
Stock, the period of time ending March 1, 1998, during which period such share
may not be converted into Common Stock.

          SECOND:  That in lieu of a meeting and vote of stockholders, the
stockholders have given written consent to said amendment in accordance with the
provisions of Section 228 of the General Corporation Law of the State of
Delaware and written notice of the adoption of the amendment has been given as
provided in Section 228 of the General Corporation Law of the State of Delaware
to every stockholder entitled to such notice.

                                     -10-

 
          THIRD:  That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of Section 242 and 228 of the General Corporation
Law of the State of Delaware.

                                             -----------------------------------
                                                                       Secretary


                                     -11-

 
                                   SCHEDULE 5

                              Warranty Disclosures

                                     -60-

 
                                   SCHEDULE 5
                              WARRANTY DISCLOSURES


For the purposes of this Schedule, the 'Disclosure Book' comprises 8 arch lever
files of disclosed material, the table of contents of which have been initialled
by the parties upon signing this Deed for the purposes of identification.

SPECIFIC DISCLOSURES
No.  Item
1.   Nil.
2.   Nil.
3.   Nil.
4.   Nil.
5.   Nil.
6.   Nil.

7.   Memberships

     (a)  Unincorporated Associations
     ---  ---------------------------

          The Company is a member of the following trade associations:

     SPAN    Service Providers Action Network
     ATUG    Australian Telecommunications User Group
     AIIA    Australian Information Industry Association
     SA Great
     CEDA    Committee for the Economic Development of Australia

     (b)  Joint Ventures
     ---  --------------

     (i)  The Company:

               has responded to Requests for Expression of interest and been
               short-listed by Queensland Transmission and Supply Corporation
               for the provision of telecommunications services to the people of
               Queensland including possible joint venture;
               has entered into discussions with Eastern Energy  Ltd for, in the
               short term, a joint marketing arrangement and, in the long term,
               a potential joint venture for the resale of telecommunications
               services, power and other associated services,
               but has not at the date of this Agreement entered into any such
               joint venture, and

                                     -61-

 
        (ii) The Company has entered into a Marketing Representative Agreement
             dated 13/12/95 with Boston Technology, Inc. which is initially an
             agency agreement but in later phases may be regarded as a joint
             venture - see General Disclosure 7.

8.   Nil.
9.   Nil.
10.  Nil.
11.  See disclosures for Warranty 19 - second point of warranty 19 covers same
     issue as warranty 11.
     See General Disclosure 11 - the loan arrangement could terminate upon sale
     of shares by Fujitsu but is not expected to do so, as long as supply
     arrangements remain in place for the Hewlett Packard K Class computer.
12.  Encumbrances
     The Encumbrances referred to in Clause 6.2(xii) in respect of charges
     given:
     (a)     by CCT Australia Pty Ltd to National Australia Bank Ltd and
     (b)     by Aspect Computing Pty Ltd to Westpac Banking Corporation.
12A. Nil.
13.  Nil.
14.  Nil.
15.  Nil.
16.  Nil.
17.  Nil.
18.  Nil.
18A. Nil.
19.  (a)     Optus - Reseller Agreement (Long Distance) dated 12 October 1994
             between Optus
     Networks Pty Ltd and the Company
     (b)     Telstra - Service Provider Agreement commencing 3 May 1995 between
             the Company and Telstra - Clause 16.2(m).
     (c)     Premises Leases
             (i)  Lease dated 4/5/94 between the Company and Local Authorities
                  Superannuation Board in respect of part premises at Level 4,
                  468 St. Kilda Road, Melbourne.
        (ii) Draft Lease between the Company and Local Authorities
             Superannuation Board in respect of premises at Level 4, 468 St.
             Kilda Road, Melbourne (no executed or stamped).
       (iii) Lease dated 29/5/95 between the Company and Local Authorities
             Superannuation Board in respect of premises at Level 5, 468 St.
             Kilda Road, Melbourne.
        (iv)      Lease dated 2/2/95 between the Company and Local Authorities
                  Superannuation Board in respect of premises at Level 5, 468
                  St. Kilda Road, Melbourne.

                                     -62-

 
          (v)  Lease between the Company and Showa Shoji Aust.  P/L in respect
               of premises at Level 4, Tower 32, Walker Street, North Sydney NSW
       (vi)    Lease between the Company and TKC Services Pty Ltd in respect of
               premises at Level 13, 10 Eagle Street, Brisbane, Qld.
      (vii)  Deed of Covenant dated 2/4/95 between the Company, TKC Services Pty
             Ltd and Australian Mutual Provident Society in respect of premises
             at Level 13, 10 Eagle Street, Brisbane, Qld.
     (viii)  Sub-Lease between the Company, MSJ Services Pty Ltd and Australian
             City Properties Pty Ltd in respect of premises at Level 5, 225 St.
             Georges Terrace, Perth, WA.
     (d)     Boston Technology, Inc - Marketing Representative Agreement dated
             13/12/95 with BTI - see General Disclosure 7
     (e)     Bank Guarantees issued by ANZ Bank, copies of which are contained
             in the Disclosure Book, resulting from normal review of banking
             arrangements following sale.
19A. See disclosure for warranty 19.
19B. See General Disclosure 4.
20.  See General Disclosure 4.
21.  (a)  The Charge
     (b)  Deposits of $58,083.60 lodged with Australia & New Zealand banking
          Group Ltd in relation to 4 bank guarantees, subject to irrevocable
          waivers to the ANZ Bank to appropriate and set-off the deposit funds
          to secure any amounts provided under the guarantees.
     (c)  Hire-purchase agreements and finance leases as set out in the
          Disclosure Book.
22.  (a)  Property and assets contemplated by capital expenditure provisions and
          provisions for new hire-purchase and leasing costs in the Company's
          financial projections and business cases, in the ordinary course of
          the Company's business.
     (b)  See General Disclosure 1 1.
23.  Nil.
24.  The Company does not have any product liability insurance.
     The Company's insurance includes replacement provisions on the basis set
     out in the policy details contained in the Disclosure Book.
     All the Company's policies include excess clauses that provide for the
     Company to pay part of any claim, usually $500.
     The Vendors are not aware of any "other risks normally insured against
     having regard to the normal practices applicable to the industry."
25.  See General Disclosure 3.  The Company has made provision of $256,937 for
     doubtful debts in the Balance Sheet.  This provision is a general provision
     by the Company, the level of which is regarded as fair and reasonable, and
     includes accounts where the Company has been advised by Telstra as being
     doubtful or requiring action.  These accounts total $160,271 and a schedule
     of them appears in the Disclosure Book.

                                     -63-

 
26.  See General Disclosure 1.
27.  (a)  Trademarks
     The Company has applied to register as separate trade marks:
     -  its name;
     -  its name and logo; and
     -  its logo.
     The Company has no advice and no opinion as to whether these applications
     will be successful.
     (b)  Trade Secrets, Know-how and Information
     Except to the extent that the Company has included a confidentiality
     obligation in its standard Agency Agreement and Contract of Employment, the
     Company has not taken formal steps to protect trade secrets, know-how and
     confidential information.
28.  Nil.
29.  Trade Secrets
     (a)  The Company conducted negotiations for a sale with AAP
          Telecommunications Ltd ('AAPT') from August to early November 1995,
          during which time AAPT undertook a formal due diligence investigation
          of the affairs of the Company.
     (b)  The Company provided information regarding its business to Australian
          Mezzanine Investments Pty Ltd and to its associate Ferris Skrzynski &
          Associates Pty Ltd ("FSA') for the purpose of preparation of a
          valuation report on the Company for Fujitsu in October 1995.
     (c)  The Company provided a set of financial projections to Telepacific Pty
          Ltd in about late October 1995 as part of initial discussions
          regarding a possible sale or
          investment in the Company.
30.  Nil.
31.  Long Term, Onerous or Unusual Contracts
     (a)  The contracts disclosed in sections 1, 2, 3, 8, 11, 12.4 to 12.7
          (inclusive), 19, 20, 24, 25 and 28 of the Disclosure Book including
          the commission structures of the Company.
     (b)  The arrangements with Globenet - see General Disclosure 4.
32.  Outstanding Offers
     See General Disclosure 1.
     See paragraph (b) of the Disclosure for Warranty 7 in relation to
     outstanding offers, although the Company considers these positions not to
     be capable of unilateral acceptance by a third party.
33.  All agreements with Telstra provide Telstra with the right to off -set any
     debts due by the company to Telstra against outstanding payments to the
     Company.
34.  Hire, Hire Purchase & Leasing of Equipment
     The Company has hire, hire purchase & leasing agreements for equipment as
     disclosed in section 19 of the Disclosure Book.
35.  Supplier/Customer Changes
     See General Disclosure 1.

                                     -64-

 
     See General Disclosure 4.
36.  See List of cancellations contained in Disclosure Book.
37.  Nil.
38.  (a)  See General Disclosure 5.
     (b)  See General Disclosure 1 1.
     (c)  Dealership arrangement between Fujitsu and the Company, not reduced to
          writing See Disclosure Book.
39.  Contracts entitling the Company to receive $100,000 or more or liability of
     $10,000 or more in 12 month period
     (a)  The contracts disclosed in sections 1 to 6 (inclusive), 8, 11, 12.4 to
          12.7 (inclusive), 19, 20, 22, 24, 25 and 28 of the Disclosure Book
          including the commission structures of the Company.
     (b)  Any other contracts disclosed in the Disclosure Book, breach of which
          could expose the Company to damages exceeding $10,000 or more.
     (c)  Dealership arrangement between Fujitsu and the Company, not reduced to
          writing.
     See also General Disclosure 4.
40.  The Company is currently renegotiating the agreement with NPC but agreement
     has not been reached.
40A. (a)  See Section 10 of Disclosure Book as to current commissions, etc.
     (b)  No specific provision is made in the Company's Employment Contract
          regarding right to vary commission, however the Company has in the
          past varied commissions unilaterally without incurring liability.
     (c)  The standard Agency Agreement provides in clause 10.1:
          "The commission rates and method of payment may be varied by Axicorp,
          in its sole discretion, upon giving the Agent 30 days' notice in
          writing."
     (d)  The Company's standard Distributor Agreement does not contain the
          right to vary commission.
     (e)  The Company's standard Telephone Saving Plan Agreement does not
          contain the right to vary commission.
40B.      See Disclosure Book.
41.       See General Disclosure 6 & disclosure for warranty 47
42.       Nil
42.A      Nil
43.       See General Disclosures 1, 2 & 4
44.  (a)  The material contracts of the Company are those contracts disclosed in
          the
          Disclosure Book
     (b)  See General Disclosure 3 & 6 & disclosure for warranty 47.
44A. Nil
45.  Nil.
46.  Nil.
47.  (a)  The Company's income tax return for the year ended 31/3/95 has not
          been lodged.  It is expected to be lodged by 1/3/96.  The Company paid

                                     -65-

 
          $126,864.54 estimated tax on 4/9/95.  Price Waterhouse has recommended
          a treatment of certain receipts of the Company that would reduce the
          initial estimate of assessable income of the Company, which if adopted
          would result in a refund of part or all of the estimated tax paid by
          the Company for the relevant year.
     (b)  The Company's fringe benefits tax returns for the years ended 31/3/94
          and 31/3/95 have not been lodged.  They are expected to be lodged by
          1/3/96.  The Company has liability for fringe benefits tax for both
          years, of an estimated amount of $90,000, which is provided in the
          Balance Sheet.  The Company has not provided for interest and
          penalties for late lodgement.
48.  See Price Waterhouse letter dated 23/2/96 in Disclosure Book.
49.  Nil
49A. Nil
50.  See disclosure for warranty 41.
51.  Nil.
52.  Material disclosed in this Schedule and in Disclosure Book, including
     Section 26
52A. Material disclosed in this Schedule and in Disclosure Book, including
     Section 26
53.  In the case of Schedule 5:
     (a)  Schedule 5 incorporates the Disclosure Book by reference so the
          Schedule is not complete to that extent;
     (b)  Schedule 5 summarizes and interprets certain facts, matters and
          circumstances and is not complete to the extent that it does not
          contain the original data from which the summaries and interpretations
          were made.
53A. Same disclosure as for 53.
54.  (a)  Globenet - See General Disclosure 4.
     (b)  Claim by Ms.  Chrisant, an ex-employee of the Company, for wrongful
          change in earnings ability, made in August 1995.  The Company's legal
          advisors have advised that a formal claim is now unlikely.  Relevant
          correspondence is contained in the Disclosure Book.
     (c)  Claim by members of the Greek Community for the Elderly disclosed in
          the Disclosure Book
55.  Nil.
56.  Nil.
57.  Nil.
58.  Except for General Disclosure 4, nil.
59.  Nil, apart from standard notices issued from time to time by Austel
     affecting companies competing in the telecommunications industry generally.
60.  (a)  Subject to (b), the extent of disclosure is as contained in Personnel
          Details schedule contained in the Disclosure Book.
     (b)  The employment contract of David Miller contains a bonus/incentive
          arrangement different to all other contracts - see details in
          Disclosure Book.
61.  Employee Termination

                                     -66-

 
     The employment contracts of:
     - David Miller
     - Rod Morgan
     - Laverne Turner
     do not contain a provision for termination on notice - see Disclosure Book.
     The engagement of contractor Robert Curtis does not contain a provision for
     termination on notice but he is not considered by the Company to be an
     employee.
62.  Nil.
63.  The Company having been only incorporated since 17 September 1993, no
     provision has been made for long service leave.
64.  Payment of 3 months redundancy to Tim McNamara in or about August 1995.
65.  On 11/4/94, the Company agreed to be bound by the provisions of the Trust
     Deed (as amended) which constitutes the Bankers Trust Life Superannuation
     Trust for the BT Master Superannuation Fund, which has been varied by a
     Deed of Variation dated 1/5/95.
66.  Nil.
67.  No claim has been notified.  However, the Company does not have any cover
     in excess of the relevant statutory schemes in the applicable States where
     such schemes apply or in excess of its existing cover, as set out in the
     Disclosure Book.  Those schemes and insurances do not provide full cover
     against a claim.
68.  Nil.  There are no loans out to staff or agents of the Company, however
     there are commission advances due to timing differences in processing of
     payments and receipt of data from Telstra.  The total advanced as at 31
     December 1995 is $72,794, with $48,794 being created by the timing of
     processing through the Company's ledgers, and the remaining $23,462 is due
     to data flow from Telstra.
69.  Nil.
70.  Nil.
71.  Nil.
72.  Nil.
73.  Nil.
74.  Nil.
75.  Nil.

GENERAL DISCLOSURES
These disclosures potentially apply to more than one warranty and are disclosed
on a general basis.  Failure by a disclosure for a specific warranty to cross-
refer to these General Disclosures does not prevent the disclosure in the
General Disclosures from operating as a disclosure in respect of a specific
warranty.

1.   Telstra - Dealership
     (a)  In about December 1995, Telstra informed the Company that it was
          prepared to deal with an associated company of the Company in a
          dealership arrangement.  On 8 January 1996, Auscorp was acquired by

                                     -67-

 
          shareholders Peter Slaney, Campbell Burns and Ravi Bhatia and was
          appointed as a dealer by Telstra.  The Company and Auscorp have
          entered into the Auscorp Management Agreement.
     (b)  On 8 January 1996, Auscorp and Telstra entered into the Telstra
          Solution Plus Dealer Agreement Fixed Network ("Dealer Agreement")
     (c)  The Dealer Agreement requires that a dealer cannot be connected with a
          service provider after 31 July 1996 ("Resale Supply Cutoff Date").
     (d)  As part of the dealership activities, Auscorp has procured that some
          of the Company's customers have been transferred to Telstra and that
          further customers of the Company will be transferred to Telstra.
          Auscorp will continue in the future to seek to procure further
          transfers.  In consideration of procuring these transfers, Auscorp has
          received and will receive consideration from Telstra comprising a flat
          rate commission fee and a percentage commission for each transfer.
     (e)  Outside the normal course of business, discussions are taking place
          with agents, associations and third party service providers with whom
          the Company currently conducts business regarding those parties
          conducting business with Auscorp.
     (f)  Fees were paid to the Company by Auscorp in anticipation of execution
          of the Auscorp Management Agreement.
     (g)  Auscorp can potentially trade under any tariff except SP 1 and perhaps
          other wholesale products.
     In addition to this disclosure, the Company's relationship with Auscorp and
     Auscorp's obligations to Telstra have been fully discussed with the
     Purchaser to the Purchaser's satisfaction and the Auscorp Management
     Agreement was executed after its terms were fully discussed with the
     Purchaser.

2.  Telstra - Tariff Changes
     (a)  Telstra has advised of proposed tariff changes to take place early in
          1996, which are currently being reviewed, and opposed by some industry
          groups.
     (b)  Telstra has agreed to pay compensation to the Company for 2 months on
          loss of MSP 1 tariff based on January 1 996 revenue, payable in
          February and March.

3.   Bad & Doubtful Debts
     (a)  Telstra
     The Company is the customer of Telstra and is liable pursuant to the BCS
     Tariffs for debts of the Company's customers to Telstra.  Neither the
     Company nor Telstra has any system to recognize and quantify this
     contingent liability until it becomes actual.  As a matter of practice,
     Telstra rarely calls upon the Company (or other service providers) to pay
     this liability.  The Balance Sheet accordingly contains no provision for
     this unknown item.  The Company has not expensed any bad debt provision to
     date in the profit & loss account of the Company.

                                     -68-

 
     Since January, the Company has been discussing debt management issues with
     Telstra, for the purpose of obtaining timely information (i.e., daily) to
     enable effective debt management.  As of signing this Agreement, Telstra is
     unable to provide debtor information on a timely basis.  Telstra has
     requested the Company to agree to a proposal of payment of an advance of
     funds to Telstra by the Company on behalf of the Company's clients, to
     lessen the financial exposure of Telstra to the Company's customers.
     Telstra has not quantified its request and the Company has rejected that
     request.  Telstra and the Company are working on a joint debtor management
     plan on late payers and are continuing discussions on the issue of late
     payments.

     (b)  General
     The Company assumes a doubtful debt provision rate of 0.25% of overall
     billings to cover any bad debts which may be incurred.  This policy was
     determined as appropriate at a Board meeting on 24/8/95 and is currently
     scheduled to be reviewed on a regular basis.  The doubtful debt provision
     in the Balance Sheet includes actual doubtful debts of $148,000 identified
     by Telstra.  The Vendors shall be liable for warranty claims in respect of
     any excess over this provision on claims by Telstra in respect of the
     Company's customers.  The Company shall not be liable for any actual bad
     debts of other customers of the Company in excess of the doubtful debt
     provision of 0.25% on the basis that the provision is fair & reasonable and
     that there has not been a charge to the provision to date.

4.   Globenet Pty Ltd ('Globenet')/AAP Telecommunications Pty Ltd ('AAPT")
     The Company was informed by Globenet in late December 1995 that AAPT (a
     competitor of the Company) had acquired all the share capital of Globenet
     so that Globenet had become a fully owned subsidiary of AAPT.  Letters
     dated 30/l/96 from Clayton Utz have alleged breach of agreement and given
     notice of termination.  Inter alia, the Company denies the existence of the
     alleged agreement and, if the agreement exists, denies breaching it.  The
     Company, AAPT and Globenet representatives have held meetings and are
     continuing discussions to attempt to settle upon the basis of an ongoing
     relationship and to avoid litigation.

     The Company's relationship with Globenet is unstable and the future course
     of the relationship is uncertain.  The Vendors do not make any
     representation that:
     -  the Company's relationship with Globenet will continue,
     -  Globenet will not purport to terminate the alleged agreement, there will
          not be a loss of customers introduced to the Company by Globenet, or
          Globenet will introduce further customers to the Company, litigation
          will not occur between the Company and Globenet and/or AAPT or that if
          it does occur, that it can be successfully defended.

                                     -69-

 
     The above disclosure is made for the purpose of clarification only.  The
     Company, the Vendors and the Purchaser acknowledge that in relationship to
     the Globenet Claim, their respective positions are fully dealt with by
     Clause 8.11 of this Deed and the Purchaser acknowledges that it has no
     claim for breach of or any of the warranties in relation to the Globenet
     Claim.

5.   Related Party Transactions
     (a)  Slaney Software Pty Ltd (of which Darren Slaney is principal) has from
          time to time provided consulting services for the development of
          billing systems.  No present arrangement exists for the provision of
          these services.
     (b)  Services Agreement between the Company and CT Corporation Pty. Ltd.
          dated 24 November 1995
     (c)  Services Agreement between the Company and Alta Telecommunications
          Pty. Ltd. dated 1 June 1995
     (d)  Loan Agreement with Fujitsu Australia United dated 22 December 1994
     (e)  Management Agreement with Ultrasys dated 22 December 1994
     (f)  Supply of products and services by Fujitsu and its subsidiaries from
          time to time in the ordinary course of business

     NB.  Contracts in points (b) to (e) are to be terminated at or prior to
     Completion so warranty does not apply to them as at Completion.

6.   The Balance Sheet is prepared upon the basis of assumptions and best
     estimates as to revenue and operating costs available at the last date of
     review, 9 February 1996.  Revenue information is not received from Telstra
     until approx.  6 weeks after the end of each month and had not been
     received at the date of preparation of the Balance Sheet.  The assumptions
     made in making these estimates have been applied consistently with previous
     management accounts of the Company.  The Balance Sheet discloses a true and
     fair view of the state of affairs and the financial position of the Company
     to the extent possible having regard to this limitation.

     The financial statements of the Company as at 31 March 1995 contained in
     the Disclosure Book are made out fully in accordance with applicable
     Australian Accounting Standards, the Corporations Law and Corporations
     Regulations so they contain disclosures and other financial information
     (such as total lease expenditure contracted for at balance date but not
     provided for in the accounts) that have not been included in the Balance
     Sheet.  The Balance Sheet consists of only information that has been
     consistently included in the general ledger of the Company in interim
     monthly statements.  As the Balance Sheet and other Accounts as at 31
     December 1995 have been based on estimates, they have not been made out in
     full accordance with those standards and laws.

7.   Boston Technology, Inc ("BTI")

                                     -70-

 
     Under a Marketing Representative Agreement dated 13/12/95, BTI and the
     Company have agreed for the Company to become marketing representative of
     BTI and thereby obtain certain marketing rights to certain of BTI's voice
     messaging and information processing equipment and related software.
     Liability to BTI under this agreement is as set out or contemplated
     therein.  Under the agreement, BTI can terminate if there is a change in
     ownership.  A letter from BTI confirming their approval of change in
     ownership has been requested.

8.   Pulse Communications Pty Ltd (Nikki Penny)
     Nikki Penny ceased employment with the Company on 1 October 1995 and became
     an Agent for the Company trading through her company Pulse Communications
     Pty Ltd.('Pulse').  At the time of her resignation, she owed $1,754.40 to
     the Company for commission advances.  In addition, it was agreed that a
     guarantee of $7,500 income to Pulse for the first six months, which ceases
     in March 1996.

9.   Southtel Communications
     Southtel Communications is a regional Distributor operating in country New
     South Wales.  Payment arrangements with Southtel are non-standard and
     exceed $10,000 per annum.  The principal of Southtel was a former
     consultant of the Sydney branch of the Company.  These payments effectively
     amount to a retainer for one year.  Subsequent nonperformance by the
     Distributor is likely to lead to termination after the 1 year retainer
     expires.

10.  Loxley Public Company Ltd (a Thai corporation)
     There have been discussions with Loxley regarding payphones in Australia,
     in which Loxley require a non compete period of 18 months.  No commitment
     or agreement has been made and negotiations are continuing.

11.  Billing System - Computer
     The Company has on loan from Co-Cam Computer Systems (a subsidiary of
     Fujitsu Australia Ltd) a Hewlett Packard G Class computer, while awaiting
     delivery of a Hewlett Packard K Class computer which is expected for
     delivery in February 1996.  The computer is necessary to the billing system
     of the Company.  Purchase cost of approx $1 00,000 is included in the
     Company's capital expenditure budget.

12.  There are arrangements in place for organizations which act as agents for
     the Company, however formal contracts are not currently place.  These are:

          JR Allied Communications
          R. Burns
          The Kingstone Group
          Newhurst Management.

                                     -71-

 
                                      53.


                                   SCHEDULE 6

                         Executives of Axicorp Pty Ltd

                                (clause 13.3(e))


David Jenkins
Graham O'Shanessy
Peter Jaffe
Mark Smedley
Tim Tovey
Sue Cornelissen
Lorraine Sebastian
Rod Morgan
Gary Redmond
Rob Usenich

                                     -72-

 
                                      54.

                                   SCHEDULE 7

                                     Proxy
                               (clause 5.2(c)(x))

                                AXICORP PTY LTD

                               A.C.N. 005 083 670
                                (the "Company")


[Vendor Company] [ACN] of                            (the "Vendor
Company") being a member of the Company hereby (subject to paragraphs 1 and 2)
irrevocably appoints the Chairman of the meeting or, in his absence, any partner
of Blake Dawson Waldron as proxy to vote on behalf of the Vendor Company at any
general meeting of the Company and at any adjourm-nent of that meeting.

1.   This proxy will terminate on the earlier to occur of:

     (a) the Vendor Company ceasing to be the registered owner of all of its
     Ordinary Shares in the Company; or

     (b) 30 June 2001.

2.   If Primus Telecommunications International Inc. defaults in payment of the
     price payable to the Vendor Company in respect of any of the Options
     referred to in clause 7 of the Share Acquisition Deed dated [  ] March
     1996, and Primus Telecommunications International Inc. has failed to remedy
     the default within one month of notice in writing by the Vendor Company,
     then this proxy will be revocable by the Vendor Company after that one
     month.

Dated this             day of  March  1996


SIGNED, SEALED and DELIVERED by      )
)
as duly appointed attorney for and on    )....................................
behalf of [the Vendor Company] in        ) Attorney
the presence of:                          ) Name (printed):

 .............................................
Witness
Name (printed):

                                     -73-

 
                                                                  CONFORMED COPY


                    ASPECT COMPUTING PTY LTD ACN 005 083 670

ALTA TELECOMMUNICATIONS PTY LTD as trustee of the Caravias Family Trust ACN 067
                                    270 375

   CCT AUSTRALIA PTY LTD as trustee of the Bums Family Trust ACN 006 955 111

  CT CORPORATION PTY LTD as trustee of the Lucas Family Trust ACN 062 380 803

    WILLOWARE PTY LTD as trustee of the Keenan Family Trust ACN 065 497 458

   INCO PTY LTD as trustee of the Darren Slaney Family Trust ACN 066 926 403

LPS INVESTMENTS PTY LTD as trustee of the Peter Slaney Family Trust ACN 066 926
                                      494

      SMNR CONSULTING PTY LTD as trustee of the SMNR Trust ACN 062 871 381

                   FUJITSU AUSTRALIA LIMITED ACN 001 Oll 427

                                      and

                         AXICORP MY LTD ACN 061 754 943



                 ----------------------------------------------
                    DEED TERMINATING SHAREHOLDERS AGREEMENT
                 ----------------------------------------------



                              BLAKE DAWSON WALDRON
                                   Solicitors
                               101 Collins Street
                               MELBOURNE VIC 3000
                              Tel: (03) 9679 3000
                              Fax: (03) 9679 3111
                                    DX: 187
                             File Ref: JWLA:337889

                                     -74-

 
DEED made 1 March 1996.

BETWEEN:

(1)  The Shareholders of AXICORP PTY LIMITED ACN 061 754 943 as set out in
     schedule I (who are collectively referred to in this Deed as the
     "Shareholders" and individually as a "Shareholder"); and

(2)  AXICORP PTY LIMITED ACN 061 754 943 (the "Company").

RECITALS

A.   The Shareholders and the Company are parties to a Shareholders Agreement
     dated 22 December 1994 (the "Shareholders Agreement").

B.   The Shareholders and the Company wish to terminate that Shareholders
     Agreement in the manner set out in this Deed.

THE PARTIES AGREE AND DECLARE AS FOLLOWS:

1.   INTERPRETATION

     Clause I of the Share Acquisition Deed between Primus Telecommunications
     International, Inc and the Shareholders and the persons listed in schedule
     2 to this Deed executed on or about I March 1996 (the "Share Acquisition
     Deed"), shall apply to this Deed, unless the context otherwise requires.

2.   TERMINATION OF SHAREHOLDERS AGREEMENT

2.1  The Shareholders and the Company agree to terminate the Shareholders
     Agreement as from Completion as defined in the Share Acquisition Deed.

2.2  The Shareholders release the Company, with effect from Completion, from any
     obligations or liabilities which may have accrued prior to Completion.

3.   GENERAL

     Clause 19 of the Share Acquisition Deed shall apply to this Deed, unless
     the context otherwise requires.

4.   LAW AND JURISDICTION

4.1  Governing Law

     This Deed is governed by the law in force in Victoria.

 
4.2  Submission to Jurisdiction

     The parties submit to the non-exclusive jurisdiction of the courts of
     Victoria and any courts which may hear appeals from those courts in respect
     of any proceedings in connection with this Deed.
 
EXECUTED as a deed.
 
SIGNED, SEALED and DELIVERED        )
by PAUL JEFFREY KEENAN              )       
                                    )       (Signed)
as duly appointed attorney for and  )       .......................... 
on behalf of AXICORP PTY LTD in     )       Attorney
the presence of:                    )       Name (printed):PAUL J. KEENAN
                                    )       
(Signed)                            )
 .................................
Witness
Name (printed):PETER RAWLING


SIGNED, SEALED and DELIVERED        )
by George Diomedes Caravias as      )
duly appointed attorney for and     )
on behalf of ALTA                   )       (Signed)
TELECOMMUNICATIONS PTY              )       .......................... 
LTD in the presence of:                     Attorney
                                            Name (printed):  GEORGE D
(Signed)                                    CARAVIAS
 .................................
Witness
Name (printed):PETER RAWLING


SIGNED, SEALED and DELIVERED        )
by George Diomedes Caravias as      )
duly appointed attorney for and     )
on behalf of ASPECT COMPUTING       )       (Signed)
PTY LTD in the presence of:         )       ..........................
                                            Attorney
(Signed)                                    Name (printed):  IAN D
 .................................           FARRINGTON
Witness
Name (printed):PETER RAWLING

                                     -76-

 
SIGNED, SEALED AND DELIVERED        )  
by George Peter Kapiniaris          )
as duly appointed                   )
attorney for and on behalf of CCT   )       (Signed)
AUSTRALIA PTY LTD in the            )       ..........................
presence of:                                Attorney
(Signed)                                    Name (printed):  GEORGE
 .................................           KAPINIARIS
Witness
Name (printed):PETER RAWLING


SIGNED, SEALED and DELIVERED        )
by Christopher Con Lucas as duly    )
appointed attorney for and on       )
behalf of CT CORPORATION PTY        )       (Signed)
LTD in the presence of:             )       ..........................
                                            Attorney
(Signed)                                    Name (printed):  CHRISTOPHER
 .................................           LUCAS
Witness
Name (printed):PETER RAWLING


SIGNED, SEALED and DELIVERED        )
by Paul Jeffrey Keenan as duly      )
appointed attorney for and on       )
on behalf of WILLOWARE PTY LTD      )       (Signed)
in the presence of:                 )       ..........................
                                            Attorney
(Signed)                                    Name (printed):  PAUL J KEENAN
 .................................
Witness
Name (printed):PETER RAWLING


SIGNED, SEALED and DELIVERED        )
by Darren Peter Neville Slaney      )
Peter Lloyd Rawling as duly         )
appointed attorney for and on       )       (Signed)
on behalf of INCO PTY LTD in the    )       ..........................
presence of:                                Attorney
                                            Name (printed):  PETER LLOYD
(Signed)                                    RAWLING
 .................................
Witness
Name (printed): GEORGE D
CARIVIAS

                                     -77-

 
SIGNED, SEALED and DELIVERED        )
by Darren Peter Neville Slaney as   )
duly appointed attorney for and     )
on behalf of LPS INVESTMENTS PTY    )       (Signed)
LTD in the presence of:             )       ..........................
                                            Attorney
(Signed)                                    Name (printed):  PETER E R
 .................................           SLANEY
Witness
Name (printed):PETER L
RAWLING


SIGNED, SEALED and DELIVERED        )
by Thiam Soon Sim as duly           )
appointed attorney for and on       )
behalf of SMNR CONSULTING           )
PTY LTD in the presence of:         )       (Signed)
(Signed)                            )       ..........................
 .................................           Name (printed):  THIAM SOON
Witness                                     SIM
Name (printed):PETER L
RAWLING


SIGNED, SEALED and DELIVERED        )
by Terence John Robertson as duly   )
appointed attorney for and on       )
behalf of FUJITSU AUSTRALIA         )       (Signed)
LIMITED in the presence of:         )       ..........................
                                            Attorney
(Signed)                                    Name (printed):  Terence John
 .................................           Robertson
Witness
Name (printed):  G DALAL

                                     -78-

 
                                   SCHEDULE 1

                                                         
Aspect Computing Pty Ltd                             ACN  005  083  670

Alta Telecommunications Pty Ltd
as trustee of the Caravias Family Trust              ACN  067  270  375

CCT Australia Pty Ltd
as trustee of the Burns Family Trust                 ACN  006  955  111

CT Corporation Pty Ltd
as trustee of the Lucas Family Trust                 ACN  062  380  803

Willoware Pty Ltd
as trustee of the Keenan Family Trust                ACN  065  497  458

Inco Pty Ltd
as trustee of the Darren Slaney Family Trust         ACN  066  926  403

LPS Investments Pty Ltd
as trustee of the Peter Slaney Family Trust          ACN  066  926  494

SMNR Consulting Pty Ltd
as trustee of the SMNR Trust                         ACN  062  871  381

Fujitsu Australia Limited                            ACN  001  Oll  427
 

 

                                   SCHEDULE 2


George Diomedes Caravias
Paul Jeffrey Keenan
Thiam Soon Sim
Darren Peter Neville Slaney
Peter Edward Russell Slaney
Campbell Colin Burns
Christopher Con Lucas

                                     -79-

 
                                                                  CONFORMED COPY


                                  1 March 1996



                                AXICORP PTY LTD
                                ACN 061 754 943

                                      and

                                ULTRASYS PTY LTD
                                ACN 067 581 613



                 ----------------------------------------------
                     DEED TERMINATING MANAGEMENT AGREEMENT
                 ----------------------------------------------



                              BLAKE DAWSON WALDRON
                                   Solicitors
                               101 Collins Street
                               MELBOURNE VIC 3000
                              Tel: (03) 9679 3000
                              Fax: (03) 9679 3111
                                    DX: 187
                             File Ref: JWLA:337889

 
DEED made 1 March 1996.

BETWEEN:

(1)  AXICORP PTY LIMITED ACN 061 754 943 ("Axicorp"); and

(2)  ULTRASYS PTY LIMITED ACN 067 581 613 ("Ultrasys").

RECITALS

A.   Axicorp and Ultrasys are parties to a Management Agreement dated 22
     December 1994 (the "Management Agreement").

B.   Axicorp and Ultrasys wish to terminate the Management Agreement in the
     manner set out in this Deed.

THE PARTIES AGREE AND DECLARE AS FOLLOWS:

1.   INTERPRETATION

     Clause 1 of the Share Acquisition Deed between Primus Telecommunications
     International, Inc. and the shareholders of Axicorp listed in schedule 1 to
     this Deed and the persons listed in schedule 2 to this Deed executed on or
     about 1 March 1996 (the "Share Acquisition Deed") shall apply to this Deed,
     unless the context otherwise requires.

2.   TERMINATION OF MANAGEMENT AGREEMENT

     Axicorp and Ultrasys agree to terminate the Management Agreement with
     effect from Completion as defined in the Share Acquisition Deed.

3.   RELEASE OF AXICORP BY ULTRASYS

3.1  Ultrasys releases and forever discharges Axicorp, with effect from
     Completion, from any obligations or liabilities in connection with the
     Management Agreement which may have accrued prior to Completion.

3.2  Without limiting the generality of clause 3.1, Ultrasys irrevocably waives
     any rights it may have had under clause 5.4 of the Management Agreement.

4.   INDEMNITY OF AXICORP BY ULTRASYS

     Ultrasys will indemnify and keep indemnified Axicorp, its directors,
     employees and agents from any cause of action, cost, claim or demand
     whatsoever present or future which any person claiming to have an interest
     in, or claiming on behalf of, Ultrasys, may now have or at any time
     hereafter may have or but for the execution of this Deed might have had
     against Axicorp,

 
     its directors, employees and agents arising out of or in any way connected
     with the operation of the Management Agreement.

5.   GENERAL

     Clause 19 of the Share Acquisition Deed shall apply to this Deed, unless
     the context otherwise requires.

6.   LAW AND JURISDICTION

6.1  Governing Law

     This Deed is governed by the law in force in Victoria.

6.2  Submission to Jurisdiction

     The parties submit to the non-exclusive jurisdiction of the courts of
     Victoria and any courts which may hear appeals from those courts in respect
     of any proceedings in connection with this Deed.

EXECUTED as a Deed.


SIGNED, SEALED AND DELIVERED        )
by PAUL JEFFREY KEENAN              )
as duly appointed attorney for and  )
on behalf of AXICORP PTY LTD in     )       (Signed)
the presence of:                            ..............................

(Signed)                                    Name (printed): PAUL JEFFREY
 ................................            KEENAN
Witness
Name (printed):PETER L RAWLING


SIGNED, SEALED AND DELIVERED        )
by CHRISTOPHER CON LUCAS            )
as duly appointed attorney for and  )
on behalf of ULTRASYS PTY LTD in    )       (Signed)
the presence of:                            ..............................

(Signed)
 ................................            Name (printed):CHRISTOPHER
                                            CON LUCAS
Name (prinited):PETER L RAWLING

                                      -2-

 
                                   SCHEDULE 1
                                                        
Aspect Computing Pty Ltd                             ACN 005  083  670
                                                                      
Alta Telecommunications Pty Ltd                                       
as trustee of the Caravias Family Trust              ACN 067  270  375
                                                                      
CCT Australia Pty Ltd                                                 
as trustee of the Burns Family Trust                 ACN 006  955  111
                                                                      
CT Corporation Pty Ltd                                                
as trustee of the Lucas Family Trust                 ACN 062  380  803
                                                                      
Willoware Pty Ltd                                                     
as trustee of the Keenan Family Trust                ACN 065  497  458
                                                                      
Inco Pty Ltd                                                          
as trustee of the Darren Slaney Family Trust         ACN 066  926  403
                                                                      
LPS Investments Pty Ltd                                               
as trustee of the Peter Slaney Family Trust          ACN 066  926  494
                                                                      
SMNR Consulting Pty Ltd                                               
as trustee of the SMNR Trust                         ACN 062  871  381
                                                                      
Fujitsu Australia Limited                            ACN 001  Oll  427 
 

 


                                   SCHEDULE 2


George Diomedes Caravias
Paul Jeffrey Keenan
Thiam Soon Sim
Peter Edward Russell Slaney
Darren Peter Neville Blaney
Campbell Colin Burns
Christopher Con Lucas

                                      -3-

 
                                  SCHEDULE 10

                               Irrevocable Waiver

                              (Clause 5.2(c)(ix))

For the purposes of clause 5.2(c)(ix) of the Share Acquisition Deed dated on or
about the date hereof, [Insert name of Vendor] being a Vendor under the Share
Acquisition Deed hereby irrevocably waives any rights of pre-emption it may have
under the articles of association of Axicorp Pty Ltd and the Shareholders
Agreement dated 22 December 1994 in respect of any sale of shares provided for
in clause 2 and in respect of any sale of shares following exercise of any of
the Options granted pursuant to clause 7 of the Share Acquisition Deed.



DATED this     day of March 1996.



SIGNED, SEALED and DELIVERED by        )
                                       )
as duly appointed attorney for and on  )      ........................
behalf of [the Vendor Company] in      )      Attorney
the presence of:                       )      Name (printed):

 ..................................
Witness
Name (printed):

                                      -4-

 
                                                                  CONFORMED COPY



                                  1 March 1996



                           FUJITSU AUSTRALIA LIMITED
                                      and
                              AXICORP PTY LIMITED



                   -----------------------------------------
                          DEED OF RELEASE OF SECURITY
                   -----------------------------------------



                              BLAKE DAWSON WALDRON
                                   Solicitors
                                    Level 39
                               101 Collins Street
                               Melbourne Vic 3000
                              Tel: (03) 9679 3000
                              Fax: (03) 9679 3111
                                Ref: JWLA 337889

 
                          DEED OF RELEASE OF SECURITY

                               TABLE OF CONTENTS




Clause                                                Page
                                                   

1. INTERPRETATION....................................  1

   1.1  Definitions..................................  1
   1.2  General......................................  1
   1.3  Headings.....................................  2

2. RELEASE...........................................  2

3. LAW AND JURISDICTION..............................  2

   3.1  Governing Law................................  2
   3.2  Submission to Jurisdiction...................  2

4. GENERAL...........................................  3

   4.1  Counterparts.................................  3
   4.2  Execution by Chargee Only....................  3
   4.3  Attorneys....................................  3


 
DEED OF RELEASE made 1 March 1996

BETWEEN:

(1)  FUJITSU AUSTRALIA LIMITED A.C.N. 001 011 427 (the "Chargee"); and

(2)  AXICORP PTY LIMITED A.C.N. 061 754 943 (the "Chargor").

RECITALS:

A.   The Chargor has given in favour of the Chargee the Charge.

B.   The Chargee has agreed to release the Charge in accordance with this deed.

THE PARTIES AGREE AND DECLARE AS FOLLOWS:

1.   INTERPRETATION

1.1  Definitions

In this deed, unless the context otherwise requires:

"Charge" means the fixed and floating charge dated 22 December 1994 between the
Chargor and the Chargee;

"Charged Property" means all the property charged by the Charge;

"Government Agency" means a government or government department, a governmental,
semi-governmental or judicial person or a person (whether autonomous or not)
charged with the administration of any applicable law;

"Secured Moneys" means all money secured to the Chargee under the Charge; and

"Tax" means any present or future tax, levy, impost, deduction, charge, duty,
compulsory loan or withholding (together with any related interest, penalty,
fine or expense in connection with any of them) levied or imposed by any
Government Agency, other than any imposed on overall net income.

1.2    General

In this deed, unless the context otherwise requires:

     (a)  the singular includes the plural and vice versa;

     (b)  a reference to an individual or person includes a corporation,
          partnership, joint venture, association, authority, trust, state or
          government and vice versa;

 
     (c)  a reference to any gender includes all genders;

     (d)  a reference to a recital, clause or schedule is to a recital,
          clause or schedule of or to this deed;

     (e)  a schedule forms part of this deed;

     (f)  a reference to any agreement or document is to that agreement or
          document (and, where applicable, any of its provisions) as amended,
          novated, restated or replaced from time to time;

     (g)  a reference to any party to this deed or any other document or
          arrangement includes that party's executors, administrators,
          substitutes, successors and permitted assigns; and

     (h)  where an expression is defined, another part of speech or grammatical
          form of that expression has a corresponding meaning.

1.3  Headings

     In this deed, headings are for convenience of reference only and do not
     affect interpretation.

2.   RELEASE

     The Chargee:

     (a)  acknowledges that it has received payment in full of all the Secured
          Moneys;

     (b)  discharges the Charge and releases all the Charged Property; and

     (c)  releases the Chargor from all claims which the Chargee may otherwise
          have against the Chargor under or in relation to the Charge.

3.   LAW AND JURISDICTION

3.1  Governing Law

     This deed is governed by the law in force in Victoria.

3.2  Submission to Jurisdiction

     The parties submit to the non-exclusive jurisdiction of the courts of
     Victoria and any courts that may hear appeals from those courts in respect
     of any proceedings in connection with this deed.

                                      -2-

 
4.   GENERAL

4.1  Counterparts

     This deed may be executed in any number of counterparts and all of those
     counterparts taken together constitute one and the same instrument.

4.2  Execution by Chargee Only

     This deed is binding on the Chargee whether or not it is executed by the
     Chargor.

4.3  Attorneys

     Each attorney who executes this deed on behalf of a party declares that the
     attorney has no notice of the revocation or suspension by the grantor or in
     any manner of the power of attorney under the authority of which the
     attorney executes this deed.

EXECUTED as a deed.


SIGNED, SEALED AND DELIVERED        )       Witness
for and on behalf of FUJITSU                Name (printed):
)
AUSTRALIA LIMITED by its duly       )
appointed attorney under a power 
of )
attorney in the presence of:

(Signed)
 ................................... 
 ..............
Witness
Name (printed):


SIGNED, SEALED AND DELIVERED       )
for and on behalf of AXICORP PTY           
)
LIMITED by its duly appointed                  
)
attorney under a power of attorney in             
)
the presence of:

(Signed)

 ................................... 
 ..............

                                      -3-

 
(Signed)
- ---------------------------------------
- ------------------------------------
Attorney
Name (printed): TERENCE JOHN
ROBERTSON
Date of Power of Attorney:



(Signed)
- ---------------------------------------
- ------------------------------------
Attorney
Name (printed): PAUL J KEENAN
Date of Power of Attorney:

                                      -4-

 
                                  SCHEDULE 12

                          Auscorp Management Agreement

                                      -5-

 
                             DATED:



                                 BETWEEN:



                               AXICORP PTY. LTD.


                                      AND


                 ULTIMATE COMMUNICATIONS (AUSTRALIA) PTY. LTD.
             (to be renamed AUSCORP TELECOMMUNICATIONS PTY. LTD.),



                              MANAGEMENT AGREEMENT

                                      -6-

 
                              MANAGEMENT AGREEMENT
                               TABLE OF CONTENTS

Clause                                                               Page


RECITALS.............................................................   3

1.   DEFINITIONS AND INTERPRETATIONS.................................   3
     1.1  Definitions................................................   3
     1.2  Interpretation.............................................   4

2.   DUTIES OF THE MANAGEMENT COMPANY................................   4
     2.1  Appointment................................................   4
     2.2  Functions of the Management Company........................   4
     2.3  Standard of Conduct........................................   5
     2.4  Books and Records..........................................   6
     2.5  Executives.................................................   6
     2.6  Review of Executives.......................................   6
     2.7  Ownership of Business Property.............................   6
     2.8  No Authority to Enter Contracts............................   6
     2.9  Requirements of Dealer Agreement...........................   7
 
3.   FEES AND REIMBURSEMENT OF COSTS TO THE MANAGEMENT
     COMPANY.........................................................   7
     3.1  Management Fees............................................   7
     3.2  Payment of Management Fee..................................   7

4.   TERM AND TERMINATION............................................   8
     4.1  Term.......................................................   8
     4.2  Termination................................................   8
     4.3  Preservation of Rights.....................................   8

5.   NOTICES.........................................................   8

6.   NO ASSIGNMENT...................................................   9

7.   MISCELLANEOUS...................................................   9
     7.1  Further Assurances.........................................   9
     7.2  Governing Law..............................................   9  
     7.3  No Revocation of Power of Attorney.........................   9
     7.4  Counterparts...............................................   9
     7.5  Amendment..................................................   9
     7.6  Waiver.....................................................  10
     7.7  Severance..................................................  10
     7.8  Enurement..................................................  10
     7.9  Stamp Duty and Legal Costs.................................  10 

                                      -7-

 
                              MANAGEMENT AGREEMENT

THIS AGREEMENT is made

BETWEEN
     AXICORP PTY. LTD. A.C.N. 061 754 943, a company incorporated in Victoria
     and having its registered office at Level 4, 468 St Kilda Road, Melbourne,
     Victoria ("Management Company")

AND  ULTIMATE COMMUNICATIONS (AUSTRALIA) PTY. LTD. (to be renamed AUSCORP
     TELECOMMUNICATIONS PTY. LTD.), A.C.N. 072 365 747, a company incorporated
     in Victoria and having its registered office therein at c/o Price
     Waterhouse, 125 Spring Street, Melbourne, Victoria ("Auscorp")

RECITALS:
A.   Auscorp has entered into a Dealer Agreement with Telstra.

B.   Auscorp has agreed to appoint the Management Company to provide it with the
     majority of facilities and services it requires and in consideration pay a
     Management Fee to that company.

C.   The Management Company has agreed to provide services in return for the
     fees set out in this Agreement.

THIS AGREEMENT WITNESSES:

1.   DEFINITIONS AND INTERPRETATIONS
1.1  Definitions
     In this Agreement, unless the context otherwise requires:-
     "Board" means the Board of Directors of Auscorp;

     "Business" means the business of Auscorp from time to time and includes the
     business of operating as a Telstra Solution Plus Dealer;

     "Business Property" means all plant and equipment, confidential
     information, proprietary software, and all other property now owned or
     leased or hereinafter developed or acquired by Auscorp and in respect of
     leased property means the interest of Auscorp as lessee therein;

     "Dealer Agreement" means the Fixed Network Solution Plus Dealer Agreement
     dated on or about 8 January 1996 between Auscorp and Telstra Corporation
     Limited (A.C.N.051 775 556);

     "Executives" means the senior executives whose services are to be procured
     by the Management Company and provided to Auscorp pursuant to this
     Agreement;

 
     "Management Fee" means the fee payable by Auscorp to Management Company for
     management services to be provided by the Management Company to Auscorp;

     "Operations" means all Business operations and activities of Auscorp;

     "Parties" means the parties to this Agreement and "Party" means any one of
     them.

1.2  Interpretation
     (a)  The singular number shall include the plural and vice versa, and the
          neuter gender shall include the masculine and feminine genders and
          vice versa and a reference to a person includes a company, corporation
          and unincorporated association.
     (b)  References to currency herein are references to the currencies of
          Australia unless otherwise expressly stated.
     (c)  The headings have been inserted for convenience only and should not be
          used to construe the meaning of any provision, and do not form part of
          this Agreement.
     (d)  Unless otherwise stated, references to Clauses, sub-clauses,
          paragraphs, sub-paragraphs, Schedules and Annexures herein are
          references to Clauses, sub-clauses, paragraphs, sub-paragraphs,
          Schedules and Annexures to, this Agreement.
     (e)  If any time period referred to in this Agreement expires on a day
          other than a Business Day, then such period shall be deemed to be
          extended to the first Business Day after such day.
     (f)  Reference to any statute herein shall include a reference to that
          statute as amended, modified or replaced and include all orders,
          ordinances, regulations, rules and by-laws made under or pursuant
          thereto.

2.   DUTIES OF THE MANAGEMENT COMPANY
2.1  Appointment

     The Management Company shall procure and shall provide to Auscorp the
     services of the Executives in roles to be agreed from time to time to
     manage, supervise and conduct the Operations under the control of and in
     accordance with the instructions that the Executives may from time to time
     receive from the Board.

2.2  Functions of the Management Company

     Subject to the directions at all times of the Board, the Management Company
     shall be responsible for ensuring that Auscorp, or where appropriate the
     Management Company, undertakes, does and carries out directly or through
     such agents, consultants or other independent contractors all

                                      -9-

 
     acts and things it may deem necessary or advisable for the carrying out of
     the Operations.  In particular but without limiting the foregoing, the
     Management Company shall manage the following on behalf of Auscorp:-

     (a)  the expansion of the revenue of Auscorp
     (b)  the conduct of the Operations;
     (c)  the maintenance, operation and protection of the Business Property and
          any other property or assets of Auscorp from time to time in
          connection with the Operations;
     (d)  the acquisition of any necessary materials, supplies, machinery,
          equipment and services in connection with the Operations;
     (e)  the application for, obtaining and maintenance of any necessary
          governmental approvals, licenses, leases or consents in relation to
          the Business;
     (f)  the management of labour and supervision of the obtaining of such
          management, technical, craft and labour personnel including without
          limitation such sales and marketing personnel, engineers, financial
          and accounting personnel and other employees as the Executives may
          deem necessary or advisable;
     (g)  the procuring for the purposes of the Business of such experts and
          consultants as may be necessary;
     (h)  the preparation and filing of reports, statements or returns with
          respect to the operations required by the Board or required by law to
          be filed;
     (i)  the securing and maintaining of such insurances in connection with the
          Operations, the Business Property or any property or assets of Auscorp
          for such amounts as the Board may determine as adequate and
          reasonable, including the recovery of risk of personal injury or death
          of employees and the risk of fire and as to other risks as the Board
          may determine;
     (j)  the complying with all laws applicable to the Operations including
          particularly but without limitation all laws relating to workers'
          compensation;
     (k)  the maintenance of full and accurate accounts of all business
          transactions entered into by Auscorp in connection with the
          Operations;
     (l)  the establishment and maintenance of asset registers in such form as
          may be required by the Board;
     (m)  the payment of rentals, expenses, payments, charges, rates and taxes
          (apart from income tax), payable in connection with the Operations or
          the Business Property;

                                     -10-

 
2.3  Standard of Conduct
     The Management Company shall carry out their responsibilities described
     hereunder in a good, workmanlike and commercially reasonable manner and in
     accordance with prudent sales and marketing, processing, procurement and
     purchasing methods, procedures and practices and with the standard of
     diligence and care normally exercised by adequately qualified and
     experienced persons in the performance of comparable work and in accordance
     with generally accepted practices appropriate to the activities undertaken.

2.4  Books and Records
     The Management Company shall keep and maintain proper records relating to
     and ensure that Auscorp and its activities hereunder.  Adequate books of
     account and accounting records shall be maintained in accordance with
     accounting procedures required by the Board

2.5  Executives
     The Management Company shall provide to Auscorp the services of Executives
     from time to time requested of it by the Board as desirable to be employed
     in Business activities.

     Any proposed appointee to positions with Auscorp shall be selected by the
     Management Company.

2.6  Review of Executives
     Any appointee to positions with Auscorp may be reviewed from time to time
     by the Board in the context of their performance in relation to Business
     activities.  If the Board after considering its review decides that the
     performance of any Executive has not been satisfactory, the Board shall
     inform the Management Company of the specific areas of dissatisfaction with
     performance and the Management Company shall cause the Executive to comply
     with the specific performance expectations of the Board within a further
     period of 1 month failing which that Executive shall not be engaged further
     in executive activities in relation to the Operations and, if the Board so
     requests, shall be replaced by another appointee as soon thereafter as is
     practicable but not later than 3 months.

2.7  Ownership of Business Property
     The Management Company agrees with Auscorp that the Management Company does
     not have and shall not at any future time have any legal or beneficial
     ownership or other interest in any Business Property.

                                     -11-

 
2.8  No Authority to Enter Contracts
     Other than as specified under this Agreement, the Management Company shall
     not have authority to act for or assume any obligation or liability on
     behalf of Auscorp and the Management Company shall indemnify and hold
     Auscorp and its respective successors and assigns, directors, officers and
     employees, except the Executives, harmless from and indemnified against all
     claims, demands, costs, charges, damages and expenses arising out of any
     act or assumption of any obligation or liability of the Management Company
     purported to be done or undertaken on behalf of Auscorp.  In particular,
     without limiting the foregoing, the Management Company shall ensure that :-
          (a)  The Executives shall not allow any contracts or obligations in
               the conduct of the Operations to be entered into the name of the
               Management Company or of any company other than Auscorp.
          (b)  The Executives shall ensure that in all material dealings
               involving any Business Property, all third parties are informed
               that such Business Property is not the property of the Management
               Company but is the property of Auscorp and shall ensure that all
               public registers on which Business Property is recorded and all
               transfer or other documentation relating to Business Property
               includes a notation about the ownership of Auscorp.
          (c)  The Management Company shall keep any Business Property that may
               come into its custody from time to time separate from any
               property owned legally or beneficially by the Management Company.

2.9  Requirements of Dealer Agreement
     (a)  Both parties will use their best endeavours to ensure that no breach
          of paragraphs 1.3 or 1.5(a) of Schedule 1 of the Dealer Agreement will
          arise on or after the Resale Supply Cut Off Date (as defined in the
          Dealer Agreement) as a result of either the composition of the board
          of directors or shareholding of the Management Company and Auscorp, or
          any other matter.
     (b)  If in the reasonable opinion of the parties it is desirable to obtain
          the written approval of Telstra Corporation Ltd referred to in
          paragraph 1.5 of Schedule 1 of the Dealer Agreement prior to the
          Resale Supply Cut-off Date, Auscorp shall use its best endeavours to
          do so.

                                     -12-

 
3.   FEES AND REIMBURSEMENT OF COSTS TO THE MANAGEMENT COMPANY
3.1  Management Fees
     In consideration of the services to be rendered by the Management Company
     pursuant to this Agreement, Auscorp shall pay the Management Company the
     Management Fee as set out in Schedule 1.

3.2  Payment of Management Fee
     Subject to any express agreement to the contrary, the fee shall be payable
     monthly in arrears.

4.   TERM AND TERMINATION
4.1  Term
     Subject to the provisions of this Clause 4 (particularly 4.2), the
     Management Company is engaged to provide the management services for the
     period from 8 January 1996 to the termination of the Dealer Agreement.

4.2  Termination
     The continuing engagement of the Management Company shall be subject to
     termination by the Board upon the happening of any of the following, unless
     the Board otherwise decides:
          (a)  if the Management Company is wound up involuntarily or
               compulsorily (except for the purpose of reconstruction or
               amalgamation);
          (b)  if the Dealer Agreement is terminated.

4.3  Preservation of Rights
     Any termination of this Agreement or of the engagement of the Management
     Company shall be without prejudice to any Party's other rights and remedies
     which may otherwise be available for breach of any of the provisions of
     this Agreement.

5.   NOTICES
5.1  Any notice, consent, offer, demand, request or other instrument or
     communication required or permitted to be given under or pursuant to this
     Agreement is to be in writing and may be delivered or sent by facsimile or
     prepaid registered mail as follows:-

     If to the Management Company to:
     Axicorp Pty Limited
     Level 4, 468 St Kilda Road
     Melbourne VIC 3004
     Attention : Managing Director
     Facsimile No. 613 9804 5067

                                     -13-

 
     If to Auscorp to:
     Ultimate Communication (Australia) Pty Ltd
     (to be renamed Auscorp Telecommunications Pty Ltd),
     c/o Price Waterhouse 1 25 Spring Street
     Melbourne Victoria
     Attention :Ken Warburton
     Facsimile No. 613 9666 6444

     or to such other address as the recipient will have previously notified to
     the sender.  Any communication sent by post is deemed to have been received
     on the 2nd Business Day following the date of posting and any communication
     sent by facsimile is deemed to have been received at 10:00 am (recipient's
     local time) on the next Business Day following the date of despatch
     provided that in the case of a facsimile transmission if:
     (a)  the transmission has not been completed;
     (b)  the sender's machine indicates a malfunction in transmission; or
     (c)  the recipient notifies the sender of an incomplete transmission by
          10:00 a.m. (recipent's local time) on the next Business Day following
          the date of despatch,
          the facsimile transmission is deemed not to have been given or made.

5.2  Any Party may change the address to which such notices, requests, demands
     or communications are to be directed to it by giving written notice to the
     other Parties in the manner specified in this Clause.

6.   NO ASSIGNMENT
     The Management Company shall not be entitled to assign its rights or
     obligations hereunder without the prior approval of the Board.

7.   MISCELLANEOUS
7.1  Further Assurances
     Each of the Parties agrees that it will make, execute and do all such acts,
     assurances, agreements and things as may be reasonably required of it for
     the purposes of giving effect to this Agreement.

7.2  Governing Law
     This Agreement shall be governed by and construed in accordance with the
     laws of Victoria and each Party hereby submits to the non-exclusive
     jurisdiction of the Courts of or exercising jurisdiction in that State.

7.3  No Revocation of Power of Attorney
     Each attorney who has signed, sealed and delivered this instrument on
     behalf of a Party hereby states he has no

                                     -14-

 
     notice of revocation of the Power of Attorney by authority of which he has
     signed sealed and delivered this instrument.

7.4  Counterparts
     This Agreement may be executed in any number of counterparts. All of such
     Counterparts taken together are deemed to constitute one instrument.

7.5  Amendment
     This Agreement may only be amended or varied by agreement in writing
     between the Parties.

7.6  Waiver
     No waiver of any provisions of this Agreement nor consent to any departure
     therefrom by any of the Parties shall be effective unless the same shall be
     in writing and then such waiver or consent shall be effective only in the
     specific instance and for the purpose for which it was given.  No  failure
     or delay on the part of any of the Parties in exercising any rights, powers
     or privileges hereunder shall operate as a waiver thereof nor of any other
     right hereunder nor shall the single exercise thereof preclude any other or
     further exercise thereof or the exercise of any other right, power or
     privilege.

7.7  Severance
     If any term, clause or provision of this Agreement shall be deemed or
     judged to be invalid for any reason whatsoever, such invalidity shall not
     affect the validity or operation of any other term, clause or provision of
     this Agreement and this Agreement shall be constituted as if such invalid
     term, clause or provision had never been contained herein provided that
     this clause shall not apply where it could be reasonably expected that a
     Party would not have entered into this Agreement if the invalid clause,
     term or provision was not originally included in this Agreement.

7.8  Enurement
     This Agreement shall be binding upon and inure to the benefit of the
     Parties and (unless such interpretation shall be repugnant to the sense or
     context hereof) their respective successors, representatives and permitted
     assigns.

7.9  Stamp Duty and Legal Costs
     The legal costs and disbursements incurred in the preparation and execution
     of this Agreement and any stamp duty properly payable in respect of this
     Agreement or the transactions contemplated hereby shall be treated as an
     expense of the Business.

EXECUTED as an agreement

                                     -15-

 
THE COMMON SEAL of
AXICORP PTY LTD
was hereunto affixed in
accordance with its Articles
of Association in the
presence of:


_____________________________     _____________________________ 
Director                          Director/Secretary



_____________________________     _____________________________
[Name - block letters]            [Name - block letters]


THE COMMON SEAL of
ULTIMATE COMMUNICATIONS
(AUSTRALIA) PTY LTD
was hereunto
affixed in accordance
with its Articles
of Association in the
presence of:


_____________________________     _____________________________
Director                          Director/Secretary



_____________________________     _____________________________
[Name - block letters]            [Name - block letters]


                                     -16-

 
                                   SCHEDULE 1

                                 Management Fee


The Management Fee payable will be 95% of the Net Profit Before Tax of Auscorp
calculated in accordance with Australian Accounting Standards (exclusive of the
Management Fee) provided that Auscorp:

- -         will incur no operating or direct expense nor any capital expenditure
          without the prior written agreement of the Management Company

- -         will make no distribution or payment of monies without the prior
          written consent of the Management Company

- -         will make no distribution of dividend without the prior written
          consent of the Management Company.

                                     -17-

 
                                   ANNEXURE 1

                           Share Mortgage to Fujitsu

                                     -18-

 
                          EQUITABLE MORTGAGE OF SHARES
                          ----------------------------



                                    between



                  PRIMUS TELECOMMUNICATIONS INTERNATIONAL, INC
                  --------------------------------------------



                                      and



                           FUJITSU AUSTRALIA LIMITED
                           -------------------------
                               (ACN 001 Oll 427)



                                BAKER & McKENZIE
                                   Solicitors
 
 
AMP Centre                                                Rialto                
50 Bridge Street                                          525 Collins Street    
SYDNEY  NSW  2000                                         MELBOURNE  VIC  3000  
                                                                                
Tel:  (02) 255-0200                                       Tel:  (03)9617-4200   
Fax:  (02) 223-7711                                       Fax:  (03)9614-2103

                                     -19-

 
                                    CONTENTS
                                    --------


CLAUSE
- ------
NUMBER                              HEADING                             PAGE
- ------                              -------                             ----



1.   INTERPRETATION....................................................    1

2.   COVENANTS TO PAY..................................................    5

3.   MORTGAGE OF SECURED PROPERTY......................................    5

4.   RELEASE OF MORTGAGE...............................................    6

5.   DISTRIBUTIONS AND VOTING..........................................    6

6.   REPRESENTATIONS AND WARRANTIES....................................    8

7.   UNDERTAKINGS......................................................    9

8.   EVENTS OF DEFAULT.................................................   11

9.   POWERS OF MORTGAGEE ON DEFAULT....................................   13

10.  TRANSFER OF SECURED PROPERTY.......................................  16
 
11.  APPOINTMENT OF RECEIVER............................................  16
 
12.  RECEIPT AND APPLICATION OF MONEYS..................................  17
 
13.  GENERAL SECURITY PROVISIONS........................................  20
 
14.  WITHHOLDINGS.......................................................  22
 
15.  EXPENSES...........................................................  23
 
16.  PAYMENTS AND EVIDENCE OF DEBT......................................  24
 
17.  INDEMNITIES........................................................  24
 
18.  SET-OFF............................................................  25
 
19.  NOTICES............................................................  26
 
20.  ASSIGNMENT.........................................................  27
 
21.  MISCELLANEOUS......................................................  27

                                     -20-

 
THIS DEED is made the      day of               , 1996
- ---------                                             
BETWEEN
- -------
PRIMUS TELECOMMUNICATIONS INTERNATIONAL, INC, a company incorporated in the
- --------------------------------------------                               
State of Delaware, in the United States of America with its office at 8180
Greensboro Drive, McLean, Virginia, USA ("the Mortgagor");
AND
- ---
FUJITSU AUSTRALIA LIMITED (ACN 001 Oll 427) of 475 Victoria Avenue, Chatswood,
- -------------------------                                                     
New South Wales ("the Mortgagee").

THIS DEED WITNESSES AS FOLLOWS:
- ------------------------------ 

1.     INTERPRETATION

1.1  Definitions

     In this Deed, unless the context  otherwise  requires:

     "Agreement" means the Share Acquisition Deed;

     "Authorisation" includes any authorisation, approval, consent, licence,
     permit, franchise, permission, filing, registration, resolution, direction,
     declaration  and exemption;

     "Authorised Officer" means:

     (a)  in relation to the Mortgagor, each director  and secretary of the
          Mortgagor and each person  from time to time notified in writing by
          the Mortgagor to the Mortgagee to be an  Authorised Officer; and

     (b)  in relation to the Mortgagee, each director  and secretary of the
          Mortgagee and each employee  of the Mortgagee whose title includes the
          word "Manager", "President" or "Vice-President"  and includes any
          person acting in any such capacity;

     "Bank" means a bank authorised under the Banking Act 1959 (Cth), or under
     the laws of a state, to carry on banking business in Australia or in that
     state;

     "Business Day" means a day on which Banks are open for business in
     Melbourne;

     "Certificates" means certificates or other instruments evidencing shares or
     other property forming part of the Secured Property;

     "Cleared Funds" means moneys that are immediately available to, and freely
     transferable by, the recipient;

     "Company" means Axicorp Pty Ltd (A.C.N. 061 754 943);

 
     "Event of Default" means any event specified as such in Clause 8.1;

     "Governmental Agency" includes any government, whether federal, state,
     territorial or local, and any minister, department, office, commission,
     delegate, instrumentality, agency, board, authority or organ thereof,
     whether statutory or otherwise;

     "Insolvency Event" means in respect of the  Mortgagor:

     (a)  if a receiver, receiver and manager,  liquidator provisional
          liquidator, administrator, a  trustee in bankruptcy, or any similar
          official is appointed in respect of or over all of the assets of the
          Mortgagor or in respect of or  over the Mortgagor's interest in the
          Shares  (except where such appointment is made with the  prior written
          consent of the Mortgagee); or

     (b)  if a person pursuant to a Security Interest takes possession, or
          assumes control, whether  by an agent or howsoever otherwise of all or
          any  of the assets of the Mortgagor or the  Mortgagor's interest in
          the Shares;

     "Mortgage" means the mortgage over the Secured Property created by this
     Deed;

     "Permitted Securities" means:

     (a)  the Mortgage; and

     (b)  liens or charges arising by operation of law  in the ordinary course
          of business (other than those not discharged when due);

     "Potential Event of Default" means any event which, with the giving of
     notice, the passage of time or the fulfillment of any other condition
     stipulated in this Deed or the Agreement, would become an Event of Default;

     "Priority Amount" means $9 million;

     "Receiver" means the person or persons appointed in accordance with Clause
     11;

     "Related Body Corporate" has the same meaning as in the Corporations Law;

     "Required Currency" means the lawful currency for the time being of the
     Commonwealth of Australia;

                                      -2-

 
     "Rights" means all of the Mortgagor's right, title and interest in and to
     all dividends, distributions, bonus shares, rights, issues, options,
     warrants, notes, convertible instruments, securities and other instruments
     of any kind whatsoever, and all allotments, accretions, offers, benefits
     and advantages whatsoever, now or hereafter made, granted, issued or
     otherwise distributed in respect of, in substitution for, in addition to,
     or in exchange for, the Shares, whether or not upon or by reason of a
     winding up, conversion, redemption, bonus, cancellation, re-classification,
     option, rights issue or otherwise;

     "Secured Moneys" means all moneys, obligations and liabilities of any
     nature whatsoever that may now be, or might at any time in the future
     become or remain,, due, owing or payable, whether actually or contingently,
     by the Mortgagor to the Mortgagee under the Agreement and this Deed and
     whether on account of or by way of unpaid purchase price, interest, fees,
     commissions, charges, , costs, expenses, indemnity payments, losses,
     damages or otherwise and irrespective of:

     (a)  the capacity (whether as principal,  agent, trustee, beneficiary,
          partner or  otherwise)  of the Mortgagor or Mortgagee;

     (b)  whether the Mortgagor is liable as principal debtor or as surety; and

     (c)  whether the Mortgagor is liable alone  or  jointly and/or severally
          with any other person

     but shall not include any moneys due, owing or payable under a covenant or
     stipulation rendered void by section 261 of the Income Tax Assessment Act
     1936 (Cth);

     "Secured Property" means the Shares and the Rights;

     "Security Interest" includes any mortgage, charge, bill of sale, pledge,
     deposit, lien, encumbrance, hypothecation, arrangement for the retention of
     title And any other right, interest, power or arrangement of any nature
     whatsoever having the purpose or effect of providing security for, or
     otherwise protecting against default in respect of, the obligations of any
     person;

     "Share Acquisition Deed" means the Share Acquisition Deed between the
     Mortgagor, Mortgagee and others dated on or about the date of this Deed
     pursuant to which the Mortgagee agreed to sell 354,000 shares in the
     capital of the Company to the Mortgagor;

                                      -3-

 
     "Shareholders" means those persons who from time to time hold shares in the
     Company;

     "Shares" means 354,000 ordinary shares in the capital of the Company, owned
     by the Mortgagor;

     "Tax" includes any tax, levy, charge, impost, rate, fee, deduction, stamp
     duty, financial institutions duty, bank account debit tax or other tax,
     withholding or remittance of any nature, now or hereafter payable or
     required to be remitted to, or imposed, levied, collected or assessed by,
     any Governmental Agency and includes any interest, expense, fine, penalty
     or other charge payable or claimed in respect thereof but does not include
     any tax on overall net income of the Mortgagee; and

     "Transfer" means a transfer in registrable form executed by the Mortgagor
     (or if the Mortgagor is not the registered holder of the Secured Property,
     by such registered holder) as transferor, but otherwise blank.

1.2    Interpretation
       --------------

     In this Deed, unless the context otherwise requires:

     (a)  words importing the singular include the plural and vice versa;

     (b)  words importing a gender include every gender;

     (c)  references to any document (including this Deed) are references to
          that document as amended, consolidated, supplemented, novated or
          replaced from time to time;

     (d)  references to this Deed are references to this Deed and the Annexures;

     (e)  references to Clauses, paragraphs and Annexures are references to
          clauses and paragraphs of, and annexures to, this Deed;

     (f)  headings are for convenience only and shall be ignored in construing
          this Deed;

     (g)  references to any party to this Deed include references to its
          respective successors and permitted assigns;

     (h)  references to law include references to any constitutional provision,
          treaty, decree, convention, statute, act, regulation, rule, ordinance,
          subordinate legislation, rule of

                                      -4-

 
          common law and of equity and judgment;

     (i)  references to any law are references to that law as amended,
          consolidated, supplemented or replaced from time to time;

     (j)  references to judgment include references to any order, injunction,
          decree, determination or award of any court or tribunal;

     (k)  references to any person include references to any individual,
          company, body corporate, association, partnership, firm, joint
          venture, trust and Governmental Agency; and

     (l) references to time are to Melbourne time.

2.   COVENANTS TO PAY
     ----------------

2.1  Agreement
     ---------

     The Mortgagor shall pay or satisfy the Secured Moneys  as and when due in
     accordance with the Agreement or this Deed but if an Event of Default
     occurs and has not  been remedied or waived the Mortgagor shall,
     notwithstanding any delay or waiver of any previous default, pay  those
     Secured Moneys upon demand by the Mortgagee.

2.2  Demands by Mortgagee
     --------------------

     Any demand by the Mortgagee under Clause 2.1 shall be  by written notice to
     the Mortgagor and may be made from time to time.

3.   MORTGAGE OF SECURED PROPERTY
     ----------------------------

3.1  Mortgage of Secured Property
     ----------------------------

     The Mortgagor as beneficial owner mortgages to the Mortgagee all of the
     Mortgagor's right, title and interest in and to the Secured Property by way
     of  first ranking equitable mortgage as security for the due  and punctual
     payment and satisfaction of the Secured  Moneys.

3.2    Deposit of Certificates and Transfers
       -------------------------------------

     The Mortgagor shall deposit with the Mortgagee:

     (a)  on the date of this Deed, three (3) Transfers in respect of the
          Shares; and

                                      -5-

 
     (b)  on the date on which the Mortgagor receives the Certificates
          in respect of the Shares, all Certificates in respect of the Shares.

     (c)  on the date the Mortgagor beneficially  acquires any Secured Property
          which becomes subject to this Deed after the date of this Deed, all
          Certificates evidencing that Secured Property and such number of
          Transfers in respect of  that Secured Property as the Mortgagee may
          reasonably require.

3.3  Priority Amount
     ---------------

     For the purpose only of Division 3 of Part 3.5 of the Corporations Law and
     without limiting the Secured Moneys, the maximum prospective liability
     (within the meaning of the Corporations Law) secured by this Deed  is the
     Priority Amount.

4.   RELEASE OF MORTGAGE
     -------------------

4.1  Release of Mortgage
     -------------------

     The Mortgagee shall not be obliged to discharge  the Mortgage unless
     either:

     (i)       all of the Secured Moneys have been paid  or satisfied in full;
               or

     (ii)      the Mortgagor has provided alternative  security to the Mortgagee
               in accordance with Clause 6.5 of the Agreement.

5.     DISTRIBUTIONS AND VOTING
       ------------------------

5.1  Acquisition of Rights by Mortgagor
     ----------------------------------

     The Mortgagor shall:

     (a)  upon the earlier of the acquisition by the Mortgagor of any Rights or
          receipt by the Mortgagor of notification of any entitlement  to any
          Rights, provide the Mortgagee with full particulars of those Rights;

     (b)  acquire Rights upon the request of the Mortgagee if failure to take up
          such Rights might, in the Mortgagee's discretion, result in this Deed
          being materially lessened in value; and

     (c)  subject to Clause 5.2(a), pay to the Mortgagee any moneys received by
          the Mortgagor in  respect of any Rights.

                                      -6-

 
5.2  Prior to Event of Default
     -------------------------

     Until the Secured Property is registered in the name  of the Mortgagee (or
     its nominee) or the Mortgagee gives written notice to the Mortgagor
     following the  occurrence of an Event of Default that has not been remedied
     or waived (whichever is the sooner):

     (a)  the Mortgagor may retain and apply for its own use any money
          (including without limitation  any cash dividend) or property payable
          in respect  of the Secured Property;


     (b)  the Mortgagor may, subject to Clause 5.4, exercise the right
          to vote in respect of the Secured Property and exercise the right to
          acquire any further shares in the  Company;  and

     (c)  the Mortgagee shall not exercise any  voting  or other rights in
          respect of the  Secured  Property other than those rights which it may
          have  under this Deed.

5.3  After Event of Default
     ----------------------

     Immediately after the earlier of the  Secured  Property becoming registered
     in the name of the Mortgagee (or  its nominee) or the Mortgagor receiving
     written notice under Clause 5.2, all the rights of the Mortgagor  under
     Clause 5.2 shall cease and the Mortgagee alone shall be entitled to
     exercise those rights and the Mortgagor shall, at its own expense, promptly
     execute such proxies and other instruments as the Mortgagee may require to
     enable the Mortgagee to exercise the right to vote in respect of the
     Secured Property and to become the registered holder of the Secured
     Property.  If the Mortgagor receives any cash dividend or any other
     property which forms part of the Secured Property after the Secured
     Property is registered in the name of the Mortgagee (or its nominee) or
     after receipt of any such notice, the Mortgagor shall promptly pay the
     amount of any such cash dividend and deliver any such other property
     received by it to the Mortgagee and the Mortgagee may retain and apply any
     such amount or other property received by it in reduction of the Secured
     Moneys in accordance with Clause 12.

5.4    Voting and Other Restrictions
       -----------------------------

     The Mortgagor shall not vote or agree to vote in favour of any resolution
     the effect of which will be to vary the Memorandum or Articles of
     Association of the Company or vote,, agree to vote, vary, agree to vary,
     terminate or

                                      -7-

 
     agree to terminate any agreements relating to the Secured Property without
     the prior written consent of the Mortgagee which consent shall not be
     unreasonably withheld.

6.     REPRESENTATIONS AND WARRANTIES
       ------------------------------

6.1  Representations and Warranties Relating to Secured Property
     -----------------------------------------------------------

     The Mortgagor represents and warrants to  the  Mortgagee by reference to
     facts and circumstances existing  at  the time, that as long as any Secured
     Moneys are  owing  to the Mortgagee:

     (a)  ownership: the Mortgagor is, or is entitled to be, and at the
          ---------                                                    
          time of delivery of any Certificates or Transfers pursuant to Clause
          3, will be, the sole registered and  beneficial owner of the Secured
          Property;

     (b)  priority: the Mortgage is a first ranking mortgage over the Secured
          --------                                                           
          Property and the obligations of the Mortgagor under this Deed rank
          ahead of all other obligations of the Mortgagor (other than those
          which may be mandatorily preferred by law);

     (c)  no Security Interests: the Secured Property is free from all Security
          ---------------------                                                
          Interests except Permitted Securities;

     (d)  no options: there are no existing options, warrants, conversion
          ----------                                                     
          privileges, rights to  call or commitments of any kind relating to the
          Secured Property created by the  Mortgagor;

     (e)  compliance with laws: the Secured Property complies with all laws and
          --------------------                                                 
          no Governmental Agency has issued any notice or otherwise directed or
          requested the Mortgagor or any other person to do any act, matter or
          thing in relation to any Secured Property, which  notice, direction or
          request has not been complied  with to the satisfaction of the
          relevant Governmental Agency; and

     (f)  no litigation: no litigation, arbitration, administrative proceeding
          -------------                                                       
          or other procedure for the resolution of disputes is currently taking
          place, pending or, to the knowledge of the Mortgagor, threatened,
          which involves the Secured Property.

     (g)  non-contravention: this Mortgage does not contravene any of the
          -----------------                                              
          provisions of the Mortgagor's constituent documents.

                                      -8-

 
6.2  Acknowledgment of Reliance
     --------------------------

     The Mortgagor acknowledges that the Mortgagee has entered into this Deed in
     reliance upon the representations and warranties contained in this Deed.

6.3  Additional Representations and Warranties
     -----------------------------------------

     The representations and warranties contained in Clause
     6.1  are in addition to any other representations and warranties contained
     in the Agreement.

7.     UNDERTAKINGS
       ------------

7.1  Undertakings Relating to Secured Property
     -----------------------------------------

     Unless the Mortgagee otherwise agrees in writing,  which agreement shall
     not be unreasonably withheld, the Mortgagor shall:

     (a)  no Security Interests:  not create, agree or attempt to create or
          ---------------------                                            
          allow to exist, any Security Interest (other than Permitted
          Securities) over or in respect of any  Secured Property;

     (b)  Permitted Securities: promptly comply with all the terms of any
          --------------------                                           
          Permitted Security and not do, omit to do or allow to occur any act,
          thing or omission whereby the obligations of any  other person in
          respect of the Permitted Security would be in any way lessened;

     (c)  no sales: not sell, redeem, dispose of, part with possession of or
          --------                                                          
          otherwise deal with, any Secured Property other than in  accordance
          with this Deed;

     (d)  calls: pay all calls, instalments or other moneys which are payable in
          -----                                                                 
          respect of the Secured Property;

     (e)  transfer requirements: if the  requirements  for the transfer of any
          ---------------------                                               
          Secured Property alter  as  to the form or content of transfer
          approved by  the Company, the information required by  the  Company in
          connection with a transfer or in any  other respect, immediately upon
          such  alteration  notify the Mortgagee and lodge with or provide  to
          the Mortgagee all instruments and information as may, in the
          reasonable opinion of  the  Mortgagee, be necessary to enable the
          Secured  Property  to be transferred to the Mortgagee in  accordance
          with the terms of this Deed;

     (f)  notices to Shareholders: at the same time as notices are, by the
          -----------------------                                         
          Corporations Law or by the Memorandum or

                                      -9-

 
          Articles of Association of the Company, required to be given to
          Shareholders, give to the Mortgagee a copy of each such notice
          (together with copies of all reports, accounts, circulars or other
          information distributed with such a notice) and, upon request, give to
          the Mortgagee any reports, accounts, circulars or other information or
          documents which may be given to members from time to time;

     (g)  Protect:  institute or defend any legal proceedings which the
     ---  -------                                                      
          Mortgagee may require to protect any of the Secured Property;

     (h)  not prejudice: not do, omit to do or allow to occur, any act, omission
          -------------                                                         
          or thing which would or might result in any Secured Property being
          surrendered, forfeited, cancelled or materially prejudiced in any
          manner whatsoever or reduced in value, or this Deed or any rights,
          powers or remedies of the Mortgagee under this Deed being materially
          prejudiced or adversely affected;

     (i)  pay Taxes: whether or not the Mortgagee has taken possession, duly and
          ---------                                                             
          punctually pay all Taxes in respect of any Secured Property and upon
          demand provide the Mortgagee with copies of all notices received in
          respect of such Taxes and copies of receipts for all payments;

     (j)  comply with laws: duly and punctually comply with and observe all
          ----------------                                                   
          laws and all guidelines, directions, requests or requirements of any
          Governmental Agency applicable to or affecting any Secured Property or
          the enjoyment of the Secured Property by the Mortgagor;

     (k)  other obligations: duly and punctually comply with and observe all
          -----------------                                                  
          Security Interests affecting any Secured Property;

     (l)  consents: duly and punctually comply with the terms attaching to any
          --------                                                             
          consent given by the Mortgagee in connection with this Deed; and

     (m)  issue of Certificates:  procure that the Company issues Certificates
          ---------------------                                               
          in respect of the Shares in the name of the Mortgagor immediately
          after payment of stamp duty on the transfers relating to the Shares
          and shall then comply with clause 3.2(b);

     (n)  merger: procure that the Company shall not merge or consolidate with
          ------                                                            
          any other entity or take any step

                                     -10-

 
          with a view to dissolution, liquidation or winding-up, such consent
          not to be unreasonably withheld;

     (o)  capital reorganisation:  procure that the Company shall not purchase
          ----------------------                                              
          or redeem any of its issued shares, reduce its capital, pass any
          resolution under section 188(2) of the Corporations Law, issue any
          shares other than for cash or by way of bonus issue or make a
          distribution of assets or other capital to its shareholders;

     (p)  dividends: procure that the Company shall not declare or pay any
          ---------                                                   
          dividend or make any other income distribution to its shareholders if
          an Event of Default or Potential Event of Default has occurred and has
          not been remedied or waived in writing; and

     (q)  representations:  notify the Mortgagee immediately upon any of the
          ---------------                                                   
          representations contained in Clause 6.1 hereof failing to continue to
          be true and correct with reference to the facts and circumstances then
          subsisting; and

     (r)  control: ensure that the Secured Property comprises at least 60% of
          -------                                                            
          all the issued share capital of the Company.

7.2  Other Undertakinqs
     ------------------

     The undertakings contained in Clause 7.1 are in addition to any other
     undertakings of the Mortgagor contained in any Agreement.
 
7.3  Costs
     -----
 
     All costs and expenses incurred in doing or refraining from doing any act,
     matter or thing in accordance with Clause 7.1 shall be paid by the
     Mortgagor.

8.   EVENTS OF DEFAULT
     -----------------

8.1  Events of Default
     -----------------
 
     Each of the following events shall be an Event of Default:


     (a)  default under Agreement:  an event of default (however described)
          -----------------------
          occurs under the Agreement and has not been remedied or waived;

     (b)  default under this Deed: the Mortgagor fails to perform or observe any
          -----------------------
          provision of this Deed and if that failure can be remedied that
          failure
   
                                     -11-
       

 
          is not remedied within 30 Business Days after the Mortgagor receives
          notice from the Mortgagee requiring the failure to be remedied;

     (c)  ownership: the Mortgagor ceases for any reason to be the registered
          and beneficial owner of any part of the Secured Property (other than
          as permitted by Clause 5.2(a));

     (d)  other Security Interests: any Security Interest over any or all
          property, assets or revenues of the Mortgagor becomes capable of being
          enforced or is enforced;

     (e)  resumption: any Governmental Agency seizes, confiscates, requisitions,
          ----------                                              
          resumes or compulsorily acquires (whether permanently or temporarily
          and whether with payment of compensation or not) any Secured Property;

     (f)  litigation: a Judgment or award is  obtained, against the Mortgagor,
          ----------                                                          
          in which the title of the Mortgagor to any Secured Property is
          impeached;

     (g)  Priority: the Mortgage ceases for any  reason whatsoever to be a first
          --------                                                              
          ranking mortgage or any obligation of the Mortgagor (other than
          obligations which may be mandatorily preferred by law) ranks ahead of
          or pari passu with the Secured Moneys;

     (h)  failure to Pay: the Mortgagor shall fail to  pay any part of the
          --------------                                                  
          Secured Moneys on the due date (including any agreed grace period);

     (i)  Insolvency Events: an Insolvency Event  occurs to the Mortgagor; and
          -----------------                                                   

     (j)  representations: any representation or  warranty made by the Mortgagor
          ---------------                                                       
          in this Deed or in the Agreement proves to have been incorrect or
          misleading when made in any material respect or if at any time any of
          the events described in Clause 6.1 hereof prove to be incorrect or
          misleading in any material respect.

8.2  Mortgagee's Right to Remedy Default
     -----------------------------------

     If an Event of Default occurs the Mortgagee may (without being obliged to
     do so) do or procure the doing of all things and pay or procure the payment
     of all moneys necessary to remedy that Event of Default. Any  moneys which
     the Mortgagee pays or expenses which the Mortgagee incurs in

                                     -12-

 
     remedying or attempting to remedy any Event of Default shall form part of
     the Secured Moneys.

9.   POWERS OF MORTGAGEE ON DEFAULT
     ------------------------------

9.1  Powers of Mortgagee
     -------------------

     Immediately upon or at any time after the occurrence of an Event of
     Default, in addition to any rights, powers or remedies conferred by this
     Deed or by law, and notwithstanding any delay or waiver of any previous
     default, the Mortgagee shall have the power to do all acts and things and
     exercise all rights, powers and remedies that the Mortgagor could do or
     exercise in relation to the Secured Property including, without
     limitation, the power to:

     (a)  take possession:  take possession and assume control of the Secured
          ---------------                                                    
          Property;

     (b)  receive distributions: receive all dividends or other distributions
          ---------------------                                                
          (whether monetary or otherwise) made or to be made in respect of the
          Secured Property;

     (c)  sell: sell or agree to sell the Secured Property (whether or not the
          ----                                                                 
          Mortgagee has taken possession) on such terms as the Mortgagee thinks
          fit and:

          (i)       whether by public auction, private treaty or by tender;

          (ii)      for cash or on terms that payment of all or any part of the
                    purchase price is deferred (whether at interest or not and
                    whether with or without security);

          (iii)     in one lot or in parcels;

          (iv)      whether or not in conjunction with the sale of other
                    property by the Mortgagee or any other person; and

          (v)       whether with or without special provisions as to title or
                    time or mode of payment of the purchase money or otherwise;

     (d)  grant options: grant to any person an  option  to purchase any Secured
          -------------                                                         
          Property upon such terms as the Mortgagee thinks fit;

     (e)  transfer Property: surrender or  transfer the Secured Property to any
          -----------------                                                     
          Governmental Agency (whether or not for fair compensation);

                                     -13-

 
     (f)  exchange Property: exchange (whether or not for fair value) with any
          -----------------                                                     
          person any Secured Property for an interest in property of any tenure
          and the property so acquired may be dealt with by the Mortgagee as if
          it were part of the Secured Property and, for that purpose, the
          Mortgagee may create a Security Interest over that property in favour
          of the Mortgagee;

     (g)  employ: employ managers, solicitors, officers, agents, accountants,
          ------                                                             
          auctioneers, consultants, workmen and servants on such terms as the
          Mortgagee thinks fit;

     (h)  delegate: delegate to any person for such time as the Mortgagee
          --------                                                         
          approves any or all of the powers of the Mortgagee on such terms as
          the Mortgagee thinks fit;

     (i)  give receipts: give receipts for all moneys and other assets that may
          -------------                                                        
          come into the hands of the Mortgagee, which receipts shall exonerate
          any person paying or handing over such moneys or other assets from all
          liability to see to the application thereof and from all liability to
          enquire whether the Secured Moneys have become due or payable or
          otherwise as to the propriety or regularity of the appointment of any
          Receiver or other person appointed by the Mortgagee;

     (j)  perform and enforce: carry out and enforce, or refrain from carrying
          -------------------                                                 
          out or enforcing, rights and obligations of the Mortgagor which may
          arise in connection with the Secured Property or obtained or incurred
          in the exercise of the rights, powers and remedies of the Mortgagee;

     (k)  take proceedings: institute, conduct, defend, settle, arrange,
          ----------------                                                
          compromise and submit to arbitration any claims, questions or disputes
          whatsoever which may arise in connection with the business of the
          Mortgagor or in respect of the Secured Property or in any way relating
          to this Deed, and to execute releases or other discharges in relation
          thereto;

     (l)  borrow: advance moneys or otherwise provide financial accommodation
          ------                                                               
          for the account of the Mortgagor or borrow any money or obtain other
          financial accommodation from any person which may be required for any
          of the purposes mentioned in this Clause 9.1 and in the name of the
          Mortgagor or otherwise and secure any borrowings or other financial
          accommodation by a Security Interest over the Secured Property ranking
          in priority to, pari passu with or after the Mortgage, in each case on
          such terms as the Mortgagee thinks fit; and

                                     -14-

 
     (m)  execute documents: execute documents on behalf of the Mortgagor under
          -----------------                                                
          seal or under hand to effect any of the foregoing

     and any moneys which the Mortgagee pays or becomes liable to pay by reason
     of doing any of the above shall form part of the Secured Moneys.

9.2    Exclusion of Notice
       -------------------

     Any notice, period of time or other condition precedent prescribed by law
     to the exercise of any rights, powers or remedies of the Mortgagee is
     dispensed with except to the extent (if any) that the relevant law does not
     afford the opportunity to dispense by agreement with its requirements, in
     which event the relevant right, power or remedy may be exercised by the
     Mortgagee at the time and in the circumstances prescribed by law.

9.3  Not Mortgagee in Possession
     ---------------------------

     If the Mortgagee, an attorney of the Mortgagee or Receiver takes possession
     of any Secured Property none of the Mortgagee, any such attorney or the
     Receiver shall be liable as a mortgagee in possession.

9.4  Give up Possession
     ------------------

     The Mortgagee may give up possession of any Secured Property at any time
     and may discontinue any receivership.

9.5  Exclusion of Liability
     ----------------------

     The Mortgagee shall not be responsible for a ny losses of any kind
     whatsoever (including, without limitation, the negligence, default or
     dishonesty of any servant, agent or auctioneer employed by the Mortgagee,
     any attorney of the Mortgagee or the Receiver) which may occur in or about
     the exercise, attempted exercise or non-exercise of any of the rights,
     powers or remedies of the Mortgagee.

9.6  Protection of Third Parties
     ---------------------------

     No person dealing with the Mortgagee, any attorney of the Mortgagee or the
     Receiver in connection with the exercise of any of the rights, power or
     remedies of the Mortgagee shall be bound to inquire whether any Event of
     Default has occurred, as to the due appointment of any Receiver or
     otherwise as to the propriety or regularity of any such dealing and shall
     not be affected by express notice that any such dealing is unnecessary or
     improper, and

                                      -15-

 
     notwithstanding any irregularity or impropriety in any such dealing the
     same shall as regards the protection of that person be deemed to be valid
     and effective.


10.  TRANSFER OF SECURED PROPERTY
     ----------------------------

10.1 Transfer of Secured Property
     ----------------------------

     Without limiting any rights, powers or remedies conferred upon the
     Mortgagee by this Deed or by law, at any time after the occurrence of an
     Event of Default that has not been remedied or waived:

     (a)     the Mortgagee may:

          (i)  insert the name of the Mortgagee or its nominee (or the name of
               any purchaser pursuant to a power of sale conferred by law or the
               power of sale referred to in Clause 9-1) in all or any of the
               Transfers (and other relevant documents, if any) deposited with
               the Mortgagee in respect of the Secured Property;

          (ii) in the name of the Mortgagor sign, seal and deliver all or any of
               those Transfers (and those other relevant documents);

         (iii) cause all or any of those Transfers to be registered; and

          (iv) deliver the Certificates deposited with the Mortgagee in respect
               of the Secured Property (and/or any certificates issued
               consequent upon any such registration of the Transfers) to any
               such nominee (or any such purchaser); and

     (b)  the Mortgagor shall forthwith on the request of the Mortgagee procure
          the approval of the Company and/or the board of directors of the
          Company or any other relevant person (if necessary) to the
          registration of the Transfers (and, if applicable, the delivery to the
          Mortgagee or its nominee (or any such purchaser of any certificates
          issued upon any such registration of the Transfers).

11.      APPOINTMENT OF RECEIVER
         -----------------------

11.1      Appointment
          -----------

          Immediately upon or at any time after the occurrence of an Event of
          Default that has not been remedied or

                                     -16-

 
          waived and notwithstanding that an order may have been made or a
          resolution passed for the winding up of the Mortgagor, the Mortgagee
          may appoint in writing any person to be a receiver or receiver and
          manager of any Secured Property and:

     (a)  the Receiver may be appointed by the Mortgagee on such terms as the
          Mortgagee thinks fit;

     (b)  the Mortgagee may remove a Receiver and, in the case of removal,
          retirement or death of the Receiver, may appoint another in his place;

     (c)  the Mortgagee may from time to time fix the remuneration of the
          Receiver at an amount or rate of commission agreed between the
          Mortgagee and the Receiver and, in the absence of such agreement, at
          the rate determined by the Mortgagee; and

     (d)  if 2 or more persons are appointed as Receiver they may be appointed
          jointly and/or severally and may be appointed in respect of different
          parts of the Secured Property.

11.2      Agent of Mortgagor
          ------------------

          Unless and until the Mortgagee by notice in writing to the Mortgagor
          and to the Receiver requires that the Receiver act as agent of the
          Mortgagee, or until an order is made or resolution is passed for the
          winding up of the Mortgagor, the Receiver shall be the agent of the
          Mortgagor, and the Mortgagor alone shall be responsible for the acts
          and defaults of the Receiver, but in exercising any powers of the
          Mortgagee, the Receiver shall have the authority of both the Mortgagor
          and the Mortgagee.

11.3      Powers of Receiver
          ------------------

          Subject to any specific limitations placed upon him by the terms of
          his appointment, the Receiver may, in addition to any right, power or
          remedy conferred upon him by law, do any act, matter or thing and
          exercise any right, power or remedy that may be done or exercised by
          the Mortgagee in relation to the Secured Property.

12.     RECEIPT AND APPLICATION OF MONEYS
        ---------------------------------

12.1      Order of Application
          --------------------

                                     -17-

 
          All moneys received by the Mortgagee, any attorney of the Mortgagee or
          the Receiver on account of the Secured Moneys shall be applied in the
          following order, unless the Mortgagee elects otherwise:

     (a)  firstly, in payment of the costs, charges, expenses and other moneys
          payable by the Mortgagor under Clause 15 and Clause 17 or otherwise
          incurred in the exercise or attempted exercise of the rights, powers
          or remedies of the Mortgagee;

     (b)  secondly, in payment of the Receiver's remuneration;

     (c)  thirdly, in payment or satisfaction of Security interests of which the
          Mortgagee has notice having priority over the Mortgage, in order of,
          and to the extent of, their priorities;

     (d)  fourthly, in payment of the Secured Moneys;

     (e)  fifthly, in payment of subsequent Security Interests of which the
          Mortgagee has notice, in the order of their priorities; and

     (f)  sixthly, in payment to the Mortgagor.

12.2      Credit Actual Receipts
          ----------------------

          In applying any moneys toward satisfaction of the Secured Moneys, the
          Mortgagee shall credit the Mortgagor with only those moneys actually
          received by the Mortgagee in cash, and such credit shall date from the
          time of actual receipts.

12.3      Amounts Contingently Due
          ------------------------

          If any moneys are available for distribution to the Mortgagee in
          respect of Secured Moneys contingently due to the Mortgagee, those
          moneys shall be placed in a interest bearing deposit account with a
          person (including the Mortgagee or a Related Body Corporate of the
          Mortgagee) selected by the Mortgagee on terms selected by the
          Mortgagee until those Secured Moneys become actually due and payable
          or the Mortgagee determines they are unlikely ever to become actually
          due and payable. At that time the amount actually owing may be paid to
          the Mortgagee and the balance distributed in accordance with Clause
          12.1.

                                     -18-

 
 12.4     Surplus Moneys
          --------------

          If at any time after satisfaction of the Secured Moneys the Mortgagee
          holds any surplus money payable to the Mortgagor, those moneys shall
          carry interest and may be placed to the credit of an account in the
          name of the Mortgagor with a bank and the Mortgagee shall thereupon be
          under no further liability in respect thereof.

12.5      Appropriation
          -------------

          The Mortgagor irrevocably authorises the Mortgagee to appropriate any
          money received by the Mortgagee, any attorney of the Mortgagee or any
          Receiver in and toward such of the Secured Moneys as the Mortgagee
          thinks fit.

12.6      Reinstatement of Mortgage
          -------------------------

          If any claim is made that any moneys received by the Mortgagee in
          payment or satisfaction of the Secured Moneys must be repaid or
          refunded, or that any settlement, obligation, transaction, conveyance
          or transfer affecting or relating to the Secured Moneys is void or
          voidable, under any law (including, without limitation, under any law
          relating to preferences, bankruptcy, insolvency or the winding up of
          companies):

          (a)  the Mortgagor shall, at its own expense, promptly do, execute and
               deliver, and use its best endeavours to cause any relevant third
               person to do, execute and deliver, all such acts and instruments
               as the Mortgagee may require to reinstate the Mortgage upon the
               terms of this Deed and to restore to the Mortgagee any Security
               Interest, guarantee, indemnity or other security held by it
               immediately prior to such payment, satisfaction, obligation,
               transaction, conveyance or transfer; and

          (b)  if the claim is upheld, compromised or admitted, the Mortgagee
               shall be entitled to the same rights, powers and remedies against
               the Mortgagor and the Secured Property as it would have had if
               the relevant moneys had never been applied in payment or
               satisfaction of the Secured Moneys or if such settlement,
               obligation, transaction, conveyance or transfer had not been
               incurred or taken place,

          and this Clause 12.6 shall survive the discharge of the Mortgage
          unless the Mortgagee expressly agrees otherwise in writing.

                                     -19-

 
 13.     GENERAL SECURITY PROVISIONS
         ---------------------------

13.1      Further Assurances
          ------------------

          If requested by the Mortgagee, acting reasonably, from time to time to
          do so, the Mortgagor shall at its own expense promptly do, execute and
          deliver, and cause any relevant third person to do, execute and
          deliver, all such other and further acts and instruments as are
          necessary for more satisfactorily giving effect to this Deed and for
          more fully vesting in the Mortgagee all rights, powers and remedies
          conferred or intended to be conferred by this Deed.

13.2      Power of Attorney
          -----------------

          The Mortgagor irrevocably appoints the Mortgagee, each Authorised
          officer of the Mortgagee and each Receiver for the time being,
          severally, the attorneys of the Mortgagor for such time as an Event of
          Default continues unremedied and unwaived to do (either in the name of
          the Mortgagor or the attorney) all acts and things that the Mortgagor
          is obliged to do under this Deed or which, in the opinion of the
          Mortgagee, are necessary or desirable in connection with the Secured
          Property or the protection or perfection of the Mortgagee's interest
          in the Secured Property or the exercise of the rights, powers and
          remedies of the Mortgagee and, without limiting the generality of the
          foregoing, to execute all documents of whatever nature, but without
          rendering the Mortgagee liable as a mortgagee in possession and with
          full power for all or any of such purposes from time to time to
          appoint a substitute or sub-attorney and to revoke any such
          appointment.

13.3      Other Security Interests
          ------------------------

          This Deed is in addition to, and not in substitution for any other
          Security Interest which the Mortgagee now has, or may hereafter take,
          in respect of the Secured Moneys. This Deed does not merge with,
          discharge, postpone or otherwise affect prejudicially any other
          Security Interest held by the Mortgagee.

13.4      Priority of Future Advances
          ---------------------------

          Notwithstanding any rule of law or equity to the contrary, all moneys
          which are expressed to be secured by this Deed and which are advanced,
          paid or otherwise provided after the receipt of notice by the
          Mortgagee

                                     -20-

 
          of the creation of any other Security Interest shall nevertheless be
          secured by this Deed in priority to any moneys secured by that other
          Security Interest, unless the Mortgagee specifically agrees otherwise
          in  writing.

13.5      Rights Regarding Prior Security Interests
          -----------------------------------------

          The Mortgagee may (but without being obliged to do so) pay any moneys,
          obligations or liabilities secured by any Security Interest having
          priority over this Deed and, at the expense of the Mortgagor, take a
          transfer thereof for the benefit of the Mortgagee and:

          (a)  the Mortgagee shall not be bound to enquire whether the moneys
               claimed to be owing under that prior Security Interest are
               actually owing;

          (b)  the person having the benefit of the prior Security Interest
               shall not be bound to enquire whether any moneys remain due under
               this Deed;

          (c)  the Mortgagor authorises, directs and consents to person having
               the benefit of the prior Security Interest providing the
               Mortgagee from time to time with all information it may require
               in relation to the prior Security Interest, including the state
               of accounts thereunder; and

          (d)  any moneys paid by the Mortgagor to the Mortgagee after the date
               of transfer shall be available to be applied by the Mortgagee in
               its absolute discretion to either the Secured Moneys or to the
               moneys secured by the prior Security Interest.

13.6      Judgments
          ---------

          Notwithstanding any judgment which the Mortgagee may recover against
          the Mortgagor in respect of any Secured Moneys, the Mortgagee shall
          hold the judgment collaterally with this Deed as security for the due
          payment and satisfaction of Secured Moneys and this Deed shall not
          merge in any judgment.

13.7      Notice of Deed
          --------------

          The Mortgagee need not give any notice of this Deed to any person,
          enforce payment of any Secured Moneys, enforce or realise any
          Collateral Securities or take any steps or proceedings for any purpose
          unless the Mortgagee thinks fit.

                                     -21-

 
13.8      Release
          -------

          The Mortgagee may release any Secured Property from the mortgage
          granted in accordance with this Deed at any time and any such release
          shall not in any way affect, prejudice or invalidate the Mortgage over
          any other Secured Property or the obligations of the Mortgagor under
          this Deed or any Agreement and the Mortgagor shall not be obliged to
          resort to the Agreement in priority to this Deed.

13.9      Acceptance of Payments
          ----------------------

          This Deed may be enforced notwithstanding that the Mortgagee may have
          accepted payment of any Secured Moneys after the occurrence of an
          Event of Default.

13.10     Continuing Security
          -------------------

          This Deed shall be a continuing security notwithstanding any
          settlement of account or other matter or thing whatsoever until a
          final discharge shall have been given to the Mortgagor.

14.     WITHHOLDINGS
        ------------

14.1      Payments in Gross
          -----------------

          All moneys payable by the Mortgagor under this Deed shall be paid in
          full without set-off (subject to any contrary term in the Agreement)
          or counterclaim of any kind and free and clear of any Tax, deduction
          or withholding of any kind.

14.2      Deductions and Withholdings
          ---------------------------

          If the Mortgagor or any other person required by law to make any
          deduction or withholding from any payment to the Mortgagee under this
          Deed, the Mortgagor shall, together with such payment, pay an
          additional amount so that, after all deductions or withholdings, the
          Mortgagee actually receives for its own benefit the full amount which
          it would have received if no such deductions or withholdings had been
          required but the obligations of the Mortgagor under this Clause shall
          not include obligations of the nature rendered void by Section 261 of
          the Income Tax Assessment Act 1936 (Cth).

                                     -22-

 
14.3      Receipts
          --------

          The Mortgagor shall pay the full amount of any deduction or
          withholding referred to in Clause 14.2 to the appropriate Governmental
          Agency within the time required by applicable law and promptly forward
          to the Mortgagee the originals of all official receipts.

15.       EXPENSES
          --------

15.1      Expenses
          --------

          The Mortgagor shall forthwith upon demand pay or reimburse the
          Mortgagee for all reasonable costs, charges and expenses (including
          legal fees and disbursements on a full indemnity basis) incurred or
          payable by the Mortgagee in connection with or arising out of:

          (a)  any approval, consent, valuation or waiver to be made or given by
               the Mortgagee under this Deed, provided those costs, charges and
               expenses do not exceed $500 or the Mortgagee has obtained the
               prior written consent of the Mortgagor for any costs, charges and
               expenses which exceed $500; and

          (b)  any variation, release or discharge to be made or given by the
               Mortgagee under this Deed; and

          (c)  any enforcement of or preservation of rights, powers and remedies
               under this Deed or otherwise in respect of the Secured Property.

15.2      Stamp Duty and Registration Fees
          --------------------------------

          The Mortgagor shall pay when due all present and future stamp duties
          and other like levies, charges and imposts (including financial
          institutions duty and bank account debit taxes) and any interest,
          fines or penalties in relation thereto (other than as may be incurred
          by reason of the wilful default or negligence of the Mortgagee), and
          all registration, recording and other like fees which may be payable
          in respect of this Deed, and any documents executed pursuant to Clause
          12.6 or Clause 13.1 and the Mortgagor indemnities the Mortgagee from
          and against all actions, suits, claims, demands, losses, liabilities,
          damages, costs and expenses which may be made or brought against or
          suffered or incurred by the Mortgagee arising out of or in connection
          with any default in the payment thereof.

                                     -23-

 
15.3      Mortgagee May Debit Account of Mortgagor
          ----------------------------------------

          The Mortgagee may without prejudice to any other right, power or
          remedy of the Mortgagee, at any time and from time to time, without
          further authority than this Clause 15.3, debit and charge any account
          of the Mortgagor with the Mortgagee with any of the following moneys:

          (a)  any costs, expenses or other moneys referred to in Clause 15.1;

          (b)  any stamp duties or other moneys referred to in Clause 15.2; and

          (c)  any moneys referred to in Clause 17.

16.  PAYMENTS AND EVIDENCE OF DEBT
     -----------------------------

16.1      Payments by Mortgagor
          ---------------------

          All payments by the Mortgagor under this Deed shall be made in the
          Required Currency (which shall be the currency of account and of
          payment) and shall be made to the Mortgagee not later than 11:00 am on
          the due date for payment in Cleared Funds as the Mortgagee may from
          time to time notify in writing.

16.2      Business Days
          -------------

          If any amount would otherwise become due for payment on a day which is
          not a Business Day, that amount shall become due on the next following
          Business Day or, if that Business Day is in another calendar month, on
          the immediately preceding Business Day.

16.3      Certificate Conclusive and Binding
          ----------------------------------

          A certificate signed by an Authorised Officer of the Mortgagee stating
          any  amount  or  rate  for  the  purpose  of this Deed shall, be prima
          facie evidence of its contents.

17.      INDEMNITIES
         -----------

17.1      General Indemnity
          -----------------

          The Mortgagor indemnities the Mortgagee from and against all actions,
          suits, claims, demands, losses, liabilities, damages, reasonable costs
          and expenses which may be made or brought against or suffered or

                                     -24-

 
          incurred by the Mortgagee arising out of or in connection with:

          (a)  any Event of Default or Potential Event of Default;

          (b)  any failure by the Mortgagor to make a payment or perform an
               obligation in accordance with this Deed;

          (c) the holding of the Secured Property; or

          (d) the exercise or non-exercise of any right, power or remedy
              contained, referred to or implied in this Deed.

17.2      Currency Indemnity
          ------------------

          If any amount is received by the Mortgagee in a currency other than
          the Required Currency (whether pursuant to a judgment, in the winding
          up of the Mortgagor or otherwise), the Mortgagor's obligations under
          this  Deed shall be discharged only to the extent that the Mortgagee
          may, upon receipt of such amount, purchase the Required Currency with
          such other currency in accordance with the usual banking procedures of
          the Mortgagee.  if the amount in the Required Currency which may be so
          purchased is, after deducting any costs of exchange and any other
          related costs, less than the relevant sum payable under this Deed, the
          Mortgagor shall, as a separate and independent  obligation  and
          notwithstanding any time or other indulgence granted to the Mortgagor
          or any other act, matter or thing, forthwith pay to the Mortgagee the
          amount of the shortfall.

18.      SET-OFF
         -------

18.1      Set-Off
          -------

          If an Event of Default occurs and has not been remedied or waived, the
          Mortgagee may (in addition to any general or banker's lien, right of
          set-off, right to combine accounts or any other right to which it may
          be entitled), without notice to the Mortgagor or any other person,
          set-off and apply any credit balance (or any part thereof in such
          amounts as the Mortgagee may elect) on any account (whether subject to
          notice or not and whether matured or not and in whatever currency) of
          the Mortgagor with the Mortgagee and any other moneys owing by the
          Mortgagee or any Lender to the Mortgagor against the liabilities
          (whether actual or contingent)

                                     -25-

 
          of the Mortgagor under this Mortgage, and the Mortgagee may purchase
          with the moneys standing to the credit of any such account such other
          currencies as may be  necessary for this purpose.

19.     NOTICES
        -------

19.1      Notices and Other Written Communications
          ----------------------------------------

          All notices and other communications required by this Deed to be in
          writing shall be given by an Authorised Officer of  the  relevant
          party  and  shall  be  sent  to  the recipient  by  hand,  telegram,
          pre-paid  post  (airmail if outside Australia), telex or facsimile.

19.2      Time of Receipt
          ---------------

          Without limiting any other means by which a party may be able to prove
          that a notice has been received by another party, a notice or other
          communication shall be deemed to be duly received:

          (a)  if sent by hand or telegram, when left at the address of the
               recipient;

          (b)  if sent by pre-paid post, on actual delivery;

          (c)  if sent by telex, upon receipt by the sender of the recipient's
               answerback code at the end of transmission; or

          (d)  if sent by facsimile, upon receipt by the sender of an
               acknowledgement or transmission report generated by the machine
               from which the facsimile was sent indicating that the facsimile
               was sent in its entirety to the recipient's facsimile   number.

19.3      Address for Notices
          -------------------

          All notices and other communications shall be sent to the recipient at
          the address, telex or facsimile number set out below or to such other
          address, telex or facsimile number as a party may from time to time
          notify to the other in writing:

          (a)  to the Mortgagor:

               Address:       8180 Greensboro Drive, Suite 1100 
                              McLean, Virginia
                              USA

                                     -26-

 
               Attention:     Mr Paul Singh/Ms Julie Correlli
               Facsimile No:  00111 703 848 4641
 
               with copy to:  Julia Corelli
                              Pepper Hamilton & Scheetz
                              3000 Two Logan Square
                              18th and Arch Streets
                              PHILADELPHIA  PENNSYLVANIA
                              19103-2799
               Facsimile No:  0015 1 215 981 4750
 
          (b)  to the Mortgagee:
 
               Address:       475 Victoria Avenue
                              CHATSWOOD  NSW  2067
 
               Attention:     The Company Secretary
               Facsimile No:  02 413 4139

20.  ASSIGNMENT
     ----------

20.1      Assignment by Mortgagor
          -----------------------

          The Mortgagor shall not assign or otherwise transfer the benefit of
          this Deed or any of its rights, duties or obligations under this Deed
          without the prior written consent of the Mortgagee such consent not to
          be unreasonably withheld.

20.2      Assignment by Mortgagee
          -----------------------

          The Mortgagee may assign, transfer and otherwise grant participations
          or sub-participations in all or any part of the benefit of this Deed
          and any of its rights, duties and obligations under this Deed without
          the consent of the Mortgagor.

20.3      Disclosure
          ----------

          The Mortgagee may only disclose to a potential assignee, transferee,
          participant or sub-participant information about the Mortgagor with
          the Mortgagor's consent which shall not be unreasonably withheld.

21.     MISCELLANEOUS
        -------------

21.1      Waiver
          ------

          No waiver by the Mortgagee of any provision of, or any right, power or
          remedy under this Deed shall be effective unless it is in writing
          signed by an Authorised Officer of the Mortgagee and such waiver

                                     -27-

 
          shall be effective  only  in  the  specific  instance  and  for the
          specific  purpose  for  which  it  was  given.  No  failure or delay
          by the Mortgagee to exercise any right, power or remedy under this
          Deed or to insist on strict compliance by the Mortgagor with any
          obligation under this Deed, and no custom or practice of the parties
          at variance with the  terms  of  this  Deed,  shall  constitute  a
          waiver of the Mortgagee's right to demand exact compliance with this
          Deed.

21.2      Invalidity
          ----------

          Any provision of this Deed which is or becomes prohibited or
          unenforceable in any jurisdiction shall, as to such jurisdiction, be
          ineffective to the extent thereof  without  invalidating  any  other
          provision  of  this Deed,  and  any  such  prohibition  or
          unenforceability  shall not  invalidate  such  provision  in  any
          other  jurisdiction.

21.3      Amendments
          ----------

          This Deed may be only amended by an instrument in writing signed by
          the parties.

21.4      Counterparts
          ------------

          This Deed may be signed in any number of counterparts and all such
          counterparts taken together shall be deemed to constitute one and the
          same instrument.

21.5      Mortgagee's Rights Cumulative
          -----------------------------

          The rights, powers and remedies of the Mortgagee contained in this
          Deed are cumulative and not exclusive of any rights, powers or
          remedies provided to the Mortgagee by law.  No single or partial
          exercise by the Mortgagee of any right, power or remedy under this
          Deed shall preclude any other or further exercise thereof or the
          exercise of any other right, power remedy.

21.6      Survival of Indemnities
          -----------------------

          The indemnities contained in this Deed are continuing obligations of
          the Mortgagor, separate and independent from the other obligations of
          the Mortgagor and shall survive the termination of this Deed.

                                     -28-

 
21.7      Successors and Assigns
          ----------------------

          This Deed shall be binding upon and inure to the benefit of the
          parties to this Deed and their respective successors and permitted
          assigns.  The Mortgagor shall at its own expense, within 5 Business
          Days of written demand by the Mortgagee, execute and cause its
          successors and permitted assigns to execute any instrument and do
          everything necessary, to bind its successors and permitted assigns to
          this Deed.

21.8      Moratorium Legislation
          ----------------------

          To the fullest extent permitted by law, the provisions of all existing
          or future laws which operate or may operate directly or indirectly to
          lessen or otherwise vary the Mortgagor's obligations under this Deed
          or to delay, curtail or otherwise prevent or prejudicially affect the
          exercise by the Mortgagee of all or any of its rights, powers and
          remedies under this Deed are expressly negatived and excluded.

21.9      Consent by Mortgagee
          --------------------

          Any consent required of the Mortgagee under this Deed may, unless this
          Deed specifically provides otherwise, be given or withheld by the
          Mortgagee in its absolute discretion and either conditionally or
          unconditionally.

21.10     Governing Law
          -------------

          This Deed shall be governed by and construed in accordance with
          the laws of the State of Victoria.

21.11     Jurisdiction
          ------------

          The Mortgagor irrevocably and unconditionally:

          (a)  submits to the non-exclusive jurisdiction of the courts of the
               State of Victoria;

          (b)  waives any objection it may now or in the future have to the
               bringing of proceedings in those courts and any claim that any
               proceedings have been brought in an inconvenient forum; and

          (c)  agrees, without preventing any other mode of service permitted by
               law, that any document required to be served in any proceedings
               may be served in the manner in which notices and other written
               communications may be given under Clause 19.

                                     -29-

 
21.12     Confidentiality

          The Mortgagee undertakes that it, its employees, agents or
          representatives will not disclose any provision of this Deed and all
          information flowing from it to a third person without the prior
          consent of the Mortgagor unless the disclosure is related to
          information already within the public domain, required by law or any
          competent governmental authority, necessary for the purpose of
          protecting the interests of the Mortgagee in relation to the Secured
          Property or made to the Mortgagee's professional advisers.

EXECUTED as a deed on the date first appearing.

THE MORTGAGOR
- -------------

SIGNED SEALED AND DELIVERED by
- ---------------------------   
PRIMUS TELECOMMUNICATIONS,
- --------------------------
INTERNATIONAL INC
- -----------------
by its 
      --------------------------
- --------------------------------
in the presence of:                    
                                        ------------------------

- --------------------------------


THE MORTGAGEE
- -------------

SIGNED SEALED AND DELIVERED by
- ---------------------------   
FUJITSU AUSTRALIA LIMITED
- -------------------------
by its Attorney TERENCE JOHN ROBERTSON
                ----------------------
in the presence of:
                                        -------------------------

- ------------------------------------


                                     -30-

 
                                      74.

                                   ANNEXURE 2

                       Share Mortgage to Original Vendors


                                     -31-

 
                          EQUITABLE MORTGAGE OF SHARES

                                    between

                 PRIMUS TELECOMMUNICATIONS INTERNATIONAL, INC.

                                      and

                           ASPECT COMPUTING PTY. LTD.
                               A.C.N. 005 083 670

                       ALTA TELECOMMUNICATIONS PTY. LTD.
                               A.C.N. 067 270 375
                   (as trustee of the Caravias Family Trust)

                            CCT AUSTRALIA PTY. LTD.
                              A.C.N. 006 955 1 11
                     (as trustee of the Burns Family Trust)

                            CT CORPORATION PTY. LTD.
                               A.C.N. 062 380 803
                     (as trustee of the Lucas Family Trust)

                              WILLOWARE PTY. LTD.
                               A.C.N. 065 497 458
                    (as trustee of the Keenan Family Trust)

                                 INCO PTY. LTD.
                               A.C.N. 066 926 403
                 (as trustee of the Darren Slaney Family Trust)

                           LPS INVESTMENTS PTY. LTD.
                               A.C.N. 066 926 494
                 (as trustee of the Peter Slaney Family Trust)

                           SMNR CONSULTING PTY. LTD.
                               A.C.N. 062 871 381
                         (as trustee of the SMNR Trust)

                                     -32-

 
                               TABLE OF CONTENTS



CLAUSE                                                                      PAGE
                                                                      
1.   INTERPRETATION.........................................................   5
     1.1  Definitions.......................................................   5
     1.2  Interpretation....................................................   9

2.   COVENANTS TO PAY.......................................................   9
     2.1  Agreement.........................................................   9
     2.2  Demands by Mortgagee..............................................  10

3.   MORTGAGE OF SECURED PROPERTY...........................................  10
     3.1  Mortgage of Secured Property......................................  10
     3.2  Deposit of Certificates and Transfers.............................  10
     3.3  Priority Amount...................................................  10

4.   RELEASE OF MORTGAGE....................................................  10
     4.1    Release of Mortgage.............................................  10

5.   DISTRIBUTIONS AND VOTING...............................................  11
     5.1  Acquisition of Rights by Mortgagor................................  11
     5.2  Prior to Event of Default.........................................  11
     5.3  After Event of Default............................................  11
     5.4  Voting and Other Restrictions.....................................  12

6.   REPRESENTATIONS AND WARRANTIES.........................................  12
     6.1  Representations and Warranties Relating to
          Secured Property..................................................  12
     6.2  Acknowledgment of Reliance........................................  13
     6.3  Additional Representations
          and Warranties....................................................  13

7.   UNDERTAKINGS   13
     7.1  Undertakings Relating to Secured Property.........................  13
     7.2  Other Undertakings................................................  15
     7.3  Costs.............................................................  15

8.   EVENTS OF DEFAULT......................................................  15
     8.1  Events of Default.................................................  15
     8.2  Mortgagee's Right to Remedy Default...............................  16

9.   POWERS OF MORTGAGEE ON DEFAULT.........................................  16
     9.1  Powers of Mortgagee...............................................  16
     9.2  Exclusion of Notice...............................................  18
     9.3  Not Mortgagee in Possession.......................................  18
     9.4  Give up Possession................................................  18
     9.5  Exclusion of Liability............................................  18
     9.6  Protection of Third Parties.......................................  18
 
10.  TRANSFER OF SECURED PROPERTY...........................................  18
     10.1 Transfer of Secured Property......................................  18
 

                                     -33-

 
                                                                      
11.  APPOINTMENT OF RECEIVER................................................  19
     11.1  Appointment......................................................  19
     11.2  Agent of Mortgagor...............................................  20
     11.3  Powers of Receiver...............................................  20
 
12.  RECEIPT AND APPLICATION OF MONEYS......................................  20
     12.1  Order of Application.............................................  20
     12.2  Credit Actual Receipts...........................................  20
     12.3  Amounts Contingently Due.........................................  21
     12.4  Surplus Moneys...................................................  21
     12.5  Appropriation....................................................  21
     12.6  Reinstatement of Mortgage........................................  21
 
13.  GENERAL SECURITY PROVISIONS............................................  22
     13.1  Further Assurances...............................................  22
     13.2  Power of Attorney................................................  22
     13.3  Other Security Interests.........................................  22
     13.4  Priority of Future Advances......................................  22
     13.5  Rights Regarding Prior Security Interests........................  23
     13.6  Judgments........................................................  23
     13.7  Notice of Deed...................................................  23
     13.8  Release..........................................................  23
     13.9  Acceptance of Payments...........................................  24
     13.10 Continuing Security..............................................  24
 
14.  WITHHOLDINGS...........................................................  24
     14.1  Payments in Gross................................................  24
     14.2  Deductions and Withholdings......................................  24
     14.3  Receipts.........................................................  24
 
15.  EXPENSES...............................................................  24
     15.1  Expenses.........................................................  24
     15.2  Stamp Duty and Registration Fees.................................  25
     15.3  Mortgagee May Debit Account of Mortgagor.........................  25
 
16.  PAYMENTS AND EVIDENCE OF DEBT..........................................  25
     16.1  Payments by Mortgagor............................................  25
     16.2  Business Days....................................................  25
     16.3  Certificate Conclusive and Binding...............................  26
 
17.  INDEMNITIES............................................................  26
     17.1  General Indemnity................................................  26
     17.2  Currency Indemnity...............................................  26
 
18.  SET-OFF................................................................  26
     18.1  Set-Off..........................................................  26
 
19.  NOTICES................................................................  27
     19.1  Notices and Other Written Communications.........................  27
     19.2  Time of Receipt..................................................  27
     19.3  Address for Notices..............................................  27
 


                                     -34-

 
                                                                      
20   ASSIGNMENT.............................................................  28
     20.1  Assignment by Mortgagor..........................................  28
     20.2  Assignment by Mortgagee..........................................  28
     20.3  Disclosure.......................................................  28
 
21.  MISCELLANEOUS..........................................................  28
     21.1  Waiver...........................................................  28
     21.2  Invalidity.......................................................  28
     21.3  Amendments.......................................................  29
     21.4  Counterparts.....................................................  29
     21.5  Mortgagee's Rights Cumulative....................................  29
     21.6  Survival of Indemnities..........................................  29
     21.7  Successors and Assigns...........................................  29
     21.8  Moratorium Legislation...........................................  29
     21.9  Consent by Mortgagee.............................................  30
     21.10 Governing Law....................................................  30
     21.11 Jurisdiction.....................................................  30
     21.12 Confidentiality..................................................  30



                                     -35-

 
THIS DEED is made the day of  1996

BETWEEN:

      PRIMUS TELECOMMUNICATIONS INTERNATIONAL, INC. a company incorporated in
      the State of Delaware, in the United States of America with its office at
      8180 Greensboro Drive, McLean, Virginia, USA ("the Mortgagor");

AND   ASPECT COMPUTING PTY. LTD. A.C.N. 005 083 670 of 551 Glenferrie Road,
      Hawthorn, Victoria, 31 22;

AND   ALTA TELECOMMUNICATIONS PTY. LTD. A.C.N. 067 270 375 (as trustee of the
      Caravias Family Trust) of 6 Union Grove, Armadale, Victoria, Australia,
      3143;

AND   CCT AUSTRALIA PTY. LTD. A.C.N. 006 965 111 (as trustee of the Burns Family
      Trust) of C/- Hershan Serebro, Ground Floor, 377 Lonsdale Street,
      Melbourne, Victoria, Australia, 3000;

AND   CT CORPORATION PTY. LTD. A.C.N. 062 380 803 (as trustee of the Lucas
      Family Trust) of 10 Powlett Street, East Melbourne, Victoria, 3002;

AND   WILLOWARE PTY. LTD. A. C.N. 065 497 458 (as trustee of the Keenan Family
      Trust) of 5 Dinsdale Court, Mooroolbark, Victoria, Australia, 3138;

AND   INCO PTY. LTD. A.C.N. 066 926 403 (as trustee of the Darren Slaney Family
      Trust) of 3 Stanley Street, Williamstown, Victoria, 3016;

AND   LPS INVESTMENTS PTY. LTD. A.C.N. 066 926 494 (as trustee of the Peter
      Slaney Family Trust) of 15 Killara Court, Werribee, Victoria, Australia,
      3030;

AND   SMNR CONSULTING PTY. LTD. A.C.N. 062 871 381 (as trustee of the SMNR
      Family Trust) of 16 Highgate Grove, Ashburton, Victoria, Australia, 3147;
                                         (collectively called "the Mortgagees").

THIS DEED WITNESSES AS FOLLOWS:

1.    INTERPRETATION
1.1   Definitions
      In this Deed, unless the context otherwise requires:

      "Agreement" means the Share Acquisition Deed;

      "Authorisation" includes any authorisation, approval, consent, licence,
      permit, franchise, permission, filing, registration, resolution,
      direction, declaration and exemption;

 
      "Authorised Officer" means:
      (a)  in relation to the Mortgagor, each director and secretary of the
           Mortgagor and each person from time to time notified in writing by
           the Mortgagor to the Mortgagee to be an Authorised Officer; and

      (b)  in relation to the Mortgagee, each person or firm nominated by the
           Mortgagee to the Mortgagor as an Authorised Officer and not
           subsequently notified by the Mortgagee to the Mortgagor as having
           ceased to be an Authorised Officer);

      "Bank" means a bank authorised under the Banking Act 1959 (Cth), or under
      the laws of a state, to carry on banking business in Australia or in that
      state;

      "Business Day" means a day on which Banks are open for business in
      Melbourne;

      "Certificates" means certificates or other instruments evidencing shares
      or other property forming part of the Secured Property;

      "Cleared Funds" means moneys that are immediately available to, and freely
      transferable by, the recipient;

      "Company" means Axicorp Pty Ltd (A.C.N. 061 754 943);

      "Event of Default" means any event specified as such in Clause 8.1;

      "Governmental Agency" includes any government, whether federal, state,
      territorial or local, and any minister, department, office, commission,
      delegate, instrumentality, agency, board, authority or organ thereof,
      whether statutory or otherwise;

      "Insolvency Event" means in respect of the Mortgagor:
      (a)  if a receiver, receiver and manager, liquidator provisional
           liquidator, administrator, a trustee in bankruptcy, or any similar
           official is appointed in respect of or over all of the assets of the
           Mortgagor or in respect of or over the Mortgagor's interest in the
           Shares (except where such appointment is made with the prior written
           consent of the Mortgagee); or

      (b)  if a person pursuant to a Security Interest takes possession, or
           assumes control, whether by an agent or howsoever otherwise of all or
           any of the assets of the Mortgagor or the Mortgagor's interest in the
           Shares;

                                     -37-

 
      "Mortgage" means the mortgage over the Secured Property created by this
      Deed;

      "Permitted Securities" means:
      (a)  the Mortgage; and
      (b)  liens or charges arising by operation of law in the ordinary course
           of business (other than those not discharged when due);

      "Potential Event of Default" means any event which, with the giving of
      notice, the passage of time or the fulfilment of any other condition
      stipulated in this Deed or the Agreement, would become an Event of
      Default;

      "Priority Amount" means $9 million;

      "Receiver" means the person or persons appointed in accordance with Clause
      11;

      "Related Body Corporate" has the same meaning as in the Corporations Law;

      "Required Currency" means the lawful currency for the time being of the
      Commonwealth of Australia;

      "Rights" means all of the Mortgagor's right, title and interest in and to
      all dividends, distributions, bonus shares, rights, issues, options,
      warrants, notes, convertible instruments, securities and other instruments
      of any kind whatsoever, and all allotments, accretions, offers, benefits
      and advantages whatsoever, now or hereafter made, granted, issued or
      otherwise distributed in respect of, in substitution for, in addition to,
      or in exchange for, the Shares, whether or not upon or by reason of a
      winding up, conversion, redemption, bonus, cancellation, re-
      classification, option, rights issue or otherwise;

      "Secured Moneys" means all moneys, obligations and liabilities of any
      nature whatsoever that may now be, or might at any time in the future
      become or remain, due, owing or payable, whether actually or contingently,
      by the Mortgagor to the Mortgagee under the Agreement and this Deed and
      whether on account of or by way of unpaid purchase price (including any
      unpaid purchase price after exercise of any option under the Agreement),
      interest, fees, commissions, charges, costs, expenses, indemnity payments,
      losses, damages or otherwise and irrespective of:
      (a)  the capacity (whether as principal, agent, trustee, beneficiary,
           partner or otherwise) of the Mortgagor or Mortgagee;

                                     -38-

 
      (b) whether the Mortgagor is liable as principal debtor or as surety; and
      (c)  whether the Mortgagor is liable alone or jointly and/or severally
           with any other person but shall not include any moneys due, owing or
           payable under a covenant or stipulation rendered void by section 261
           of the Income Tax Assessment Act 1936 (Cth);

      "Secured Property" means the Shares and the Rights;

      "Security Interest" includes any mortgage, charge, bill of sale, pledge,
      deposit, lien, encumbrance, hypothecation, arrangement for the retention
      of title and any other right, interest, power or arrangement of any nature
      whatsoever having the purpose or effect of providing security for, or
      otherwise protecting against default in respect of, the obligations of any
      person;

      "Share Acquisition Deed" means the Share Acquisition Deed between the
      Mortgagor, Mortgagee and others dated on or about the date of this Deed
      pursuant to which the Mortgagee agreed to sell 78,667 shares in the
      capital of the Company to the Mortgagor and to grant to and be granted by
      the Mortgagor options in respect of 157,333 shares in the capital of the
      Company owned by the Mortgagee;

      "Shareholders" means those persons who from time to time hold shares in
      the Company;

      "Shares" means
      (a)  78,667 ordinary shares in the capital of the Company, owned by the
           Mortgagor; and
      (b)  any shares in the capital of the Company acquired by the Mortgagee
           upon any exercise (if applicable) of the First Put Option or the
           First Call Option in respect of whole or part of the First Tranche or
           of the Second Put Option or the Second Call Option in respect of the
           whole or part of the Second Tranche and acquisition by the Mortgagor
           of any shares following such option exercise, unless at the time of
           the relevant acquisition the Mortgagor acquires the whole or (if
           applicable) the balance of the First Tranche and the Second Tranche;

      "Tax" includes any tax, levy, charge, impost, rate, fee, deduction, stamp
      duty, financial institutions duty, bank account debit tax or other tax,
      withholding or remittance of any nature, now or hereafter payable or
      required to be remitted to, or imposed, levied, collected or assessed by,
      any Governmental Agency and includes any interest, expense, fine, penalty
      or other charge payable or claimed in respect

                                     -39-

 
      thereof but does not include any tax on overall net income of the
      Mortgagee; and

      "Transfer" means a transfer in registrable form executed by the Mortgagor
      (or if the Mortgagor is not the registered holder of the Secured Property,
      by such registered holder) as transferor, but otherwise blank.

1.2   Interpretation
      In this Deed, unless the context otherwise requires:
      (a)  words importing the singular include the plural and vice versa;
      (b)  words importing a gender include every gender;
      (c)  references to any document (including this Deed) are references to
           that document as amended, consolidated, supplemented, novated or
           replaced from time to time;
      (d)  references to this Deed are references to this Deed and the
           Annexures;
      (e)  references to Clauses, paragraphs and Annexures are references to
           clauses and paragraphs of, and annexures to, this Deed;
      (f)  headings are for convenience only and shall be ignored in construing
           this Deed;
      (g)  references to any party to this Deed include references to its
           respective successors and permitted assigns;
      (h)  references to law include references to any constitutional provision,
           treaty, decree, convention, statute, act, regulation, rule,
           ordinance, subordinate legislation, rule of common law and of equity
           and judgment;
      (i)  references to any law are references to that law as amended,
           consolidated, supplemented or replaced from time to time;
           references to judgment include references to any order, injunction,
           decree, determination or award of any court or tribunal;
      (k)  references to any person include references to any individual,
           company, body corporate, association, partnership, firm, joint
           venture, trust and Governmental Agency;
      (l)  references to time are to Melbourne time; and
      (m)  the terms "First Put Option", "First Call Option", "First Tranche"
           and "Second Tranche" have the same meanings as in the Agreement.

2.    COVENANTS TO PAY
2.1   Agreement
      The Mortgagor shall pay or satisfy the Secured Moneys as and when due in
      accordance with the Agreement or this Deed but if an Event of Default
      occurs and has not been remedied or waived the Mortgagor shall,
      notwithstanding any delay or

                                     -40-

 
      waiver of any previous default, pay those Secured Moneys upon demand by
      the Mortgagee.

2.2   Demands by Mortgagee
      Any demand by the Mortgagee under Clause 2.1 shall be by written notice to
      the Mortgagor and may be made from time to time.

3.    MORTGAGE OF SECURED PROPERTY
3.1   Mortgage of Secured Property
      The Mortgagor as beneficial owner mortgages to the Mortgagee all of the
      Mortgagor's right, title and interest in and to the Secured Property by
      way of first ranking equitable mortgage as security for the due and
      punctual payment and satisfaction of the Secured Moneys.

3.2   Deposit of Certificates and Transfers
      The Mortgagor shall deposit with the Mortgagee:
      (a)  on the date of this Deed, three (3) Transfers in respect of the
           Shares; and
      (b)  on the date on which the Mortgagor receives the Certificates in
           respect of the Shares, all Certificates in respect of the Shares.
      (c)  on the date the Mortgagor beneficially acquires any Secured Property
           which becomes subject to this Deed after the date of this Deed, all
           Certificates evidencing that Secured Property and such number of
           Transfers in respect of that Secured Property as the Mortgagee may
           reasonably require.

3.3   Priority Amount
      For the purpose only of Division 3 of Part 3.5 of the Corporations Law and
      without limiting the Secured Moneys, the maximum prospective liability
      (within the meaning of the Corporations Law) secured by this Deed is the
      Priority Amount.

4.    RELEASE OF MORTGAGE
4.1   Release of Mortgage
      The Mortgagee shall not be obliged to discharge the Mortgage unless
      either:
      (i)  all of the Secured Moneys have been paid or satisfied in full; or
      (ii) the Mortgagor has provided alternative security to the Mortgagee in
           accordance with Clause 6.5 of the Agreement.

                                     -41-

 
5.    DISTRIBUTIONS AND VOTING
5.1   Acquisition of Rights by Mortgagor
      The Mortgagor shall:
      (a)  upon the earlier of the acquisition by the Mortgagor of any Rights or
           receipt by the Mortgagor of notification of any entitlement to any
           Rights, provide the Mortgagee with full particulars of those Rights;
      (b)  acquire Rights upon the request of the Mortgagee if failure to take
           up such Rights might, in the Mortgagee's discretion, result in this
           Deed being materially lessened in value; and
      (c)  subject to Clause 5.2(a), pay to the Mortgagee any moneys received by
           the Mortgagor in respect of any Rights.

5.2   Prior to Event of Default
      Until the Secured Property is registered in the name of the Mortgagee (or
      its nominee) or the Mortgagee gives written notice to the Mortgagor
      following the occurrence of an Event of Default that has not been remedied
      or waived (whichever is the sooner):
      (a)  the Mortgagor may retain and apply for its own use any money
           (including without limitation any cash dividend) or property payable
           in respect of the Secured Property;
      (b)  the Mortgagor may, subject to Clause 5.4, exercise the right to vote
           in respect of the Secured Property and exercise the right to acquire
           any further shares in the Company; and
      (c)  the Mortgagee shall not exercise any voting or other rights in
           respect of the Secured Property other than those rights which it may
           have under this Deed.

5.3   After Event of Default
      Immediately after the earlier of the Secured Property  becoming registered
      in the name of the Mortgagee (or its nominee) or the Mortgagor receiving
      written notice under Clause 5.2, all the rights of the Mortgagor under
      Clause 5.2 shall cease and the Mortgagee alone shall be entitled to
      exercise those rights and the Mortgagor shall, at its own expense,
      promptly execute such proxies and other instruments as the Mortgagee may
      require to enable the Mortgagee to exercise the right to vote in respect
      of the Secured Property and to become the registered holder of the Secured
      Property. If the Mortgagor receives any cash dividend or any other
      property which forms part of the Secured Property after the Secured
      Property is registered in the name of the Mortgagee (or its nominee) or
      after receipt of any such notice, the Mortgagor shall promptly pay the
      amount of any such cash dividend and deliver any such other property
      received by it to the Mortgagee and the Mortgagee may retain and apply any
      such amount or other

                                     -42-

 
      property received by it in reduction of the Secured Moneys in accordance
      with Clause 12.

5.4   Voting and Other Restrictions
      The Mortgagor shall not vote or agree to vote in favour of any resolution
      the effect of which will be to vary the Memorandum or Articles of
      Association of the Company or vote, agree to vote, vary, agree to vary,
      terminate or agree to terminate any agreements relating to the Secured
      Property without the prior written consent of the Mortgagee which consent
      shall not be unreasonably withheld.

6.    REPRESENTATIONS AND WARRANTIES
6.1   Representations and Warranties Relating to Secured Property
      The Mortgagor represents and warrants to the Mortgagee by  reference to
      facts and circumstances existing at the time, that as long as any Secured
      Moneys are owing to the Mortgagee:
      (a)  ownership:  the Mortgagor is, or is entitled to be, or in the case of
           ---------                                                            
           the First Tranche and the Second Tranche may become entitled to be,
           and at the time of delivery of any Certificates or Transfers pursuant
           to Clause 3, will be, the sole registered and beneficial owner of the
           Secured Property;
      (b)  priority:  the Mortgage is a first ranking mortgage over the Secured
           --------                                                            
           Property and the obligations of the Mortgagor under this Deed rank
           ahead of all other obligations of the Mortgagor (other than those
           which may be mandatorily preferred by law);
      (c)  no Security Interests:  the Secured Property is free from all
           ---------------------                                        
           Security Interests except Permitted Securities;
      (d)  no options:  there are no existing options, warrants, conversion
           ----------                                                      
           privileges, rights to call or commitments of any kind relating to the
           Secured Property created by the Mortgagor;
      (e)  compliance with laws:  the Secured Property complies with all laws
           --------------------                                              
           and no Governmental Agency has issued any notice or otherwise
           directed or requested the Mortgagor or any other person to do any
           act, matter or thing in relation to any Secured Property, which
           notice, direction or request has not been complied with to the
           satisfaction of the relevant Governmental Agency; and
      (f)  no litigation:  no litigation, arbitration, administrative proceeding
           -------------                                                        
           or other procedure for the resolution of disputes is currently taking
           place, pending or, to the knowledge of the Mortgagor, threatened,
           which involves the Secured Property.
      (9)  non-contravention:  this Mortgage does not contravene any of the
           -----------------                                               
           provisions of the Mortgagor's constituent documents.

                                     -43-

 
 6.2  Acknowledgment of Reliance
      The Mortgagor acknowledges that the Mortgagee has entered into this Deed
      in reliance upon the representations and warranties contained in this
      Deed.

6.3   Additional Representations and Warranties
      The representations and warranties contained in Clause 6.1 are in addition
      to any other representations and warranties contained in the Agreement.

7.    UNDERTAKINGS
7.1   Undertakings Relating to Secured Property
      Unless the Mortgagee otherwise agrees in writing, which agreement shall
      not be unreasonably withheld, the Mortgagor shall:
      (a)  no Security Interests: not create, agree or attempt to create or
           ---------------------                                           
           allow to exist, any Security interest (other than Permitted
           Securities) over or in respect of any Secured Property;
      (b)  Permitted Securities:  promptly comply with all the terms of any
           --------------------                                            
           Permitted Security and not do, omit to do or allow to occur any act,
           thing or omission whereby the obligations of any other person in
           respect of the Permitted Security would be in any way lessened;
      (c)  no sales:  not sell, redeem, dispose of, part with possession of or
           --------                                                           
           otherwise deal with, any Secured Property other than in accordance
           with this Deed;
      (d)  calls:  pay all calls, instalments or other moneys which are payable
           -----                                                               
           in respect of the Secured Property;
      (e)  transfer requirements:  if the requirements for the transfer of any
           ---------------------                                              
           Secured Property alter as to the form or content of transfer approved
           by the Company, the information required by the Company in connection
           with a transfer or in any other respect, immediately upon such
           alteration notify the Mortgagee and lodge with or provide to the
           Mortgagee all instruments and information as may, in the reasonable
           opinion of the Mortgagee, be necessary to enable the Secured Property
           to be transferred to the Mortgagee in accordance with the terms of
           this Deed;
      (f)  notices to Shareholders:  at the same time as notices are, by the
           -----------------------                                          
           Corporations Law or by the Memorandum or Articles of Association of
           the Company, required to be given to Shareholders, give to the
           Mortgagee a copy of each such notice (together with copies of all
           reports, accounts, circulars or other information distributed with
           such a notice) and, upon request, give to the Mortgagee any reports,
           accounts, circulars or other information or documents which may be
           given to members from time to time;

                                     -44-

 
      (g)  protect:  institute or defend any legal proceedings which the 
           -------                                                  
           Mortgagee may require to protect any of the Secured Property;
      (h)  not prejudice:  not do, omit to do or allow to occur, any act,
           -------------                                                 
           omission or thing which would or might result in any Secured Property
           being  surrendered, forfeited, cancelled or materially prejudiced in
           any manner whatsoever or reduced in value, or this Deed or any
           rights, powers or remedies of the Mortgagee under this Deed being
           materially prejudiced or adversely affected;
      (i)  pay  Taxes:  whether or not the Mortgagee has taken possession, duly
           ----------                                                           
           and punctually pay all Taxes in respect of any Secured Property and
           upon demand provide the Mortgagee with copies of all notices received
           in respect of such Taxes and copies of receipts for all payments;
      (j)  comply with laws:  duly and punctually comply with and observe all
           ----------------                                                  
           laws and all guidelines, directions, requests or requirements of any
           Governmental Agency applicable to or affecting any Secured Property
           or the enjoyment of the Secured Property by the Mortgagor;
      (k)  other obligations:  duly and punctually comply with and observe all
           -----------------                                                  
           Security Interests affecting any Secured Property;
      (1)  consents:  duly and punctually comply with the terms attaching to any
           --------                                                             
           consent given by the Mortgagee in connection with this Deed; and
      (m)  issue of Certificates:  procure that the Company issues Certificates
           ---------------------                                               
           in respect of the Shares in the name of the Mortgagor immediately
           after payment of stamp duty on the transfers relating to the Shares
           and shall then comply with clause 3.2(b);
      (n)  merger:  procure that the Company shall not merge or consolidate with
           ------                                                               
           any other entity or take any step with a view to dissolution,
           liquidation or winding-up, such consent not to be unreasonably
           withheld;
      (o)  capital reorganisation:  procure that the Company shall not purchase
           ----------------------                                              
           or redeem any of its issued shares, reduce its capital, pass any
           resolution under section 1 88(2) of the Corporations Law, issue any
           shares or make a distribution of assets or other capital to its
           shareholders;
      (p)  dividends:  procure that the Company shall not declare or pay any
           ---------                                                        
           dividend or make any other income distribution to its shareholders if
           an Event of Default or Potential Event of Default has occurred and
           has not been remedied or waived in writing; and
      (q)  representations:  notify the Mortgagee immediately upon any of the
           ---------------                                                   
           representations contained in Clause 6.1 hereof failing to continue to
           be true and correct

                                     -45-

 
           with reference to the facts and circumstances then subsisting.

7.2   Other Undertakings
      The undertakings contained in Clause 7.1 are in addition to any other
      undertakings of the Mortgagor contained in any Agreement.

7.3   Costs
      All costs and expenses incurred in doing or refraining from doing any act,
      matter or thing in accordance with Clause 7.1 shall be paid by the
      Mortgagor.

8.    EVENTS OF DEFAULT
8.1   Events of Default
      Each of the following events shall be an Event of Default:
      (a)  default under Agreement:  an event of default (however described)
           -----------------------                                          
           occurs under the Agreement and has not been remedied or waived;
      (b)  default under this Deed:  the Mortgagor fails to perform or observe
           -----------------------                                            
           any provision of this Deed and if that failure can be remedied that
           failure is not remedied within 30 Business Days after the Mortgagor
           receives notice from the Mortgagee requiring the failure to be
           remedied;
      (c)  ownership:  the Mortgagor ceases for any reason to be the registered
           ---------                                                           
           and beneficial owner of any part of the Secured Property (other than
           as permitted by Clause 5.2(a));
      (d)  other Security Interests: any Security Interest over any or all
           ------------------------                                       
           property, assets or revenues of the Mortgagor becomes capable of
           being enforced or is enforced;
      (e)  resumption:  any Governmental Agency seizes, confiscates,
           ----------                                               
           requisitions, resumes or compulsorily acquires (whether permanently
           or temporarily and whether with payment of compensation or not) any
           Secured Property;
      (f)  litigation:  a Judgment or award is obtained, against the Mortgagor,
           ----------                                                          
           in which the title of the Mortgagor to any Secured Property is
           impeached;
      (g)  priority:  the Mortgage ceases for any reason whatsoever to be a
           --------                                                        
           first ranking mortgage or any obligation of the Mortgagor (other than
           obligations which may be mandatorily preferred by law) ranks ahead of
           or pari passu with the Secured Moneys;
      (h)  failure to pay:  the Mortgagor shall fail to pay any part of the
           --------------                                                  
           Secured Moneys on the due date (including any agreed grace period);
      (i)  Insolvency Events:  an Insolvency Event occurs to the Mortgagor; and
           -----------------                                                   

                                     -46-

 
      (j)  representations:  any representation or warranty made by the
           ---------------                                         
           Mortgagor in this Deed or in the Agreement proves to have been
           incorrect or misleading when made in any material respect or if at
           any time any of the events described in Clause 6.1 hereof prove to be
           incorrect or misleading in any material respect.

8.2   Mortgagee's Right to Remedy Default
      If an Event of Default occurs the Mortgagee may (without being obliged to
      do so) do or procure the doing of all things and pay or procure the
      payment of all moneys necessary to remedy that Event of Default.  Any
      moneys which the Mortgagee pays or expenses which the Mortgagee incurs in
      remedying or attempting to remedy any Event of Default shall form part of
      the Secured Moneys.

9.    POWERS OF MORTGAGEE ON DEFAULT
9.1   Powers of Mortgagee
      Immediately upon or at any time after the occurrence of an Event of
      Default, in addition to any rights, powers or remedies conferred by this
      Deed or by law, and notwithstanding any delay or waiver of any previous
      default, the Mortgagee shall have the power to do all acts and things and
      exercise all rights, powers and remedies that the Mortgagor could do or
      exercise in relation to the Secured Property including, without
      limitation, the power to:
      (a)  take possession:  take possession and assume control of the Secured
           ---------------                                                    
           Property;
      (b)  receive distributions:  receive all dividends or other  distributions
           ---------------------                                                
           (whether monetary or otherwise) made or to be made in respect of the
           Secured Property;
      (c)  sell:  sell or agree to sell the Secured Property (whether or not the
           ----                                                                 
           Mortgagee has taken possession) on such terms as the Mortgagee thinks
           fit and:
           (i)    whether by public auction, private treaty or by tender;
           (ii)   for cash or on terms that payment of all or any part of the
                  purchase price is deferred (whether at interest or not and
                  whether with or without security);
           (iii)  in one lot or in parcels;
           (iv)   whether or not in conjunction with the sale of other
                    property by the Mortgagee or any other person; and
           (v)    whether with or without special provisions as to title or time
                  or mode of payment of the purchase money or otherwise;
      (d)  grant options:  grant to any person an option to purchase any Secured
           -------------                                                        
           Property upon such terms as the Mortgagee thinks fit;

                                     -47-

 
      (e)  transfer property:  surrender or transfer the Secured Property to any
           -----------------                                     
           Governmental Agency (whether or not for fair compensation);
      (f)  exchange property:  exchange (whether or not for fair value) with any
           -----------------                                                    
           person any Secured Property for an interest in property of any tenure
           and the property so acquired may be dealt with by the Mortgagee as if
           it were part of the Secured Property and, for that purpose, the
           Mortgagee may create a Security Interest over that property in favour
           of the Mortgagee;
      (g)  employ:  employ managers, solicitors, officers, agents, accountants,
           ------                                                              
           auctioneers, consultants, workmen and servants on such terms as the
           Mortgagee thinks fit;
      (h)  delegate:  delegate to any person for such time as the Mortgagee
           --------                                                        
           approves any or all of the powers of the Mortgagee on such terms as
           the Mortgagee thinks f it;
      (i)  give receipts:  give receipts for all moneys and other assets that
           -------------                                                     
           may come into the hands of the Mortgagee, which receipts shall
           exonerate any person paying or handing over such moneys or other
           assets from all liability to see to the application thereof and from
           all liability to enquire whether the Secured Moneys have become due
           or payable or otherwise as to the propriety or regularity of the
           appointment of any Receiver or other person appointed by the
           Mortgagee; perform and enforce: carry out and enforce, or refrain
           from carrying out or enforcing, rights and obligations of the
           Mortgagor which may arise in connection with the Secured Property or
           obtained or incurred in the exercise of the rights, powers and
           remedies of the Mortgagee;
      (k)  take proceedings:  institute, conduct, defend, settle, arrange,
           ----------------                                               
           compromise and submit to arbitration any claims, questions or
           disputes whatsoever which may arise in connection with the business
           of the Mortgagor or in respect of the Secured Property or in any way
           relating to this Deed, and to execute releases or other discharges in
           relation thereto;
      (l)  borrow:  advance moneys or otherwise provide financial accommodation
           ------                                                              
           for the account of the Mortgagor or borrow any money or obtain other
           financial accommodation from any person which may be required for any
           of the purposes mentioned in this Clause 9.1 and in the name of the
           Mortgagor or otherwise and secure any borrowings or other financial
           accommodation by a Security Interest over the Secured Property
           ranking in priority to, pari passu with or after the Mortgage, in
           each case on such terms as the Mortgagee thinks fit; and
      (m)  execute documents:  execute documents on behalf of the Mortgagor
           -----------------                                               
           under seal or under hand to effect any of

                                     -48-

 
           the foregoing and any moneys which the Mortgagee pays or becomes
           liable to pay by reason of doing any of the above shall form part of
           the Secured Moneys.

9.2   Exclusion of Notice
      Any notice, period of time or other condition precedent prescribed by law
      to the exercise of any rights, powers or remedies of the Mortgagee is
      dispensed with except to the extent (if any) that the relevant law does
      not afford the opportunity to dispense by agreement with its requirements,
      in which event the relevant right, power or remedy may be exercised by the
      Mortgagee at the time and in the circumstances prescribed by law.

9.3   Not Mortgagee in Possession
      If the Mortgagee, an attorney of the Mortgagee or Receiver takes
      possession of any Secured Property none of the Mortgagee, any such
      attorney or the Receiver shall be liable as a mortgagee in possession.

9.4   Give up Possession
      The Mortgagee may give up possession of any Secured Property at any time
      and may discontinue any receivership.

9.5   Exclusion of Liability
      The Mortgagee shall not be responsible for any losses of any kind
      whatsoever (including, without limitation, the negligence, default or
      dishonesty of any servant, agent or auctioneer employed by the Mortgagee,
      any attorney of the Mortgagee or the Receiver) which may occur in or about
      the exercise, attempted exercise or non-exercise of any of the rights,
      powers or remedies of the Mortgagee.

9.6   Protection of Third Parties
      No person dealing with the Mortgagee, any attorney of the Mortgagee or the
      Receiver in connection with the exercise of any of the rights, power or
      remedies of the Mortgagee shall be bound to inquire whether any Event of
      Default has occurred, as to the due appointment of any Receiver or
      otherwise as to the propriety or regularity of any such dealing and shall
      not be affected by express notice that any such dealing is unnecessary or
      improper, and notwithstanding any irregularity or impropriety in any such
      dealing the same shall as regards the protection of that person be deemed
      to be valid and effective.

10.        TRANSFER OF SECURED PROPERTY
10.1  Transfer of Secured Property
      Without limiting any rights, powers or remedies conferred upon the
      Mortgagee by this Deed or by law, at any time after the occurrence of an
      Event of Default that has not been remedied or waived:

                                     -49-

 
      (a)  the Mortgagee may:
           (i)    insert the name of the Mortgagee or its nominee (or the name
                  of any purchaser pursuant to a power of sale conferred by law
                  or the power of sale referred to in Clause 9.1) in all or any
                  of the Transfers (and other relevant documents, if any)
                  deposited with  the  Mortgagee  in  respect  of the Secured
                  Property;
           (ii)   in the name of the Mortgagor sign, seal and deliver all or any
                  of those Transfers (and those other relevant documents);
           (iii)  cause all or any of those Transfers to be registered; and
           (iv)   deliver the Certificates deposited with the Mortgagee in
                  respect of the Secured Property (and/or any certificates
                  issued consequent upon any such registration of the Transfers)
                  to any such nominee (or any such purchaser); and
      (b)  the Mortgagor shall forthwith on the request of the Mortgagee procure
           the approval of the Company and/or the board of directors of the
           Company or any other relevant person (if necessary) to the
           registration of the Transfers (and, if applicable, the delivery to
           the Mortgagee or its nominee (or any such purchaser of any
           certificates issued upon any such registration of the Transfers).

11.   APPOINTMENT OF RECEIVER
11.1  Appointment
      Immediately upon or at any time after the occurrence of an  Event of
      Default that has not been remedied or waived and  notwithstanding that an
      order may have been made or a resolution passed for the winding up of the
      Mortgagor, the Mortgagee may appoint in writing any person to be a
      receiver or receiver and manager of any Secured Property and:
      (a)  the Receiver may be appointed  by  the  Mortgagee  on  such  terms
           as  the Mortgagee thinks fit;
      (b)  the Mortgagee may remove a Receiver and, in the case of removal,
           retirement or death of the Receiver, may appoint another in his
           place;
      (c)  the Mortgagee may from time to time fix the remuneration of the
           Receiver at an amount or rate of commission agreed between the
           Mortgagee and the Receiver and, in the absence of such agreement, at
           the rate determined by the Mortgagee; and
      (d)  if 2 or more persons are appointed as Receiver they may be appointed
           jointly and/or severally and may be appointed in respect of different
           parts of the Secured Property.

                                     -50-

 
11.2  Agent of Mortgagor
      Unless and until the Mortgagee by notice in writing to the Mortgagor and
      to the Receiver requires that the Receiver act as agent of the Mortgagee,
      or until an order is made or resolution is passed for the winding up of
      the Mortgagor, the Receiver shall be the agent of the Mortgagor, and the
      Mortgagor alone shall be responsible for the acts and defaults of the
      Receiver, but in exercising any powers of the Mortgagee, the Receiver
      shall have the authority of both the Mortgagor and the Mortgagee.

11.3  Powers of Receiver
      Subject to any specific limitations placed upon him by the terms of his
      appointment, the Receiver may, in addition to any right, power or remedy
      conferred upon him by law, do any act, matter or thing and exercise any
      right, power or remedy that may be done or exercised by the Mortgagee in
      relation to the Secured Property.

12.   RECEIPT AND APPLICATION OF MONEYS
12.1  Order of Application
      All moneys received by the Mortgagee, any attorney of the Mortgagee or the
      Receiver on account of the Secured Moneys shall be applied in the
      following order, unless the Mortgagee elects otherwise:
      (a)  firstly, in payment of the costs, charges, expenses and other moneys
           payable by the Mortgagor under Clause 1 5 and Clause 17 or otherwise
           incurred in the exercise or attempted exercise of the rights, powers
           or remedies of the Mortgagee;
      (b)  secondly, in payment of the Receiver's remuneration;
      (c)  thirdly, in payment or satisfaction of Security Interests of which
           the Mortgagee has notice having priority over the Mortgage, in order
           of, and to the extent of, their priorities;
      (d)  fourthly, in payment of the Secured Moneys;
      (e)  fifthly, in payment of subsequent security interests of which the
           Mortgagee has notice, in the order of their priorities; and
      (f)  sixthly, in payment to the Mortgagor.

12.2  Credit Actual Receipts
      In applying any moneys toward satisfaction of the Secured Moneys, the
      Mortgagee shall credit the Mortgagor with only those moneys actually
      received by the Mortgagee in cash, and such credit shall date from the
      time of actual receipt.

                                     -51-

 
12.3  Amounts Contingently Due
      If any moneys are available for distribution to the Mortgagee in respect
      of Secured Moneys contingently due to the Mortgagee, those moneys shall be
      placed in a interest bearing deposit account with a person (including the
      Mortgagee or a Related Body Corporate of the Mortgagee) selected by the
      Mortgagee on terms selected by the Mortgagee until those Secured Moneys
      become actually due and payable or the Mortgagee determines they are
      unlikely ever to become actually due and payable.  At that time the amount
      actually owing may be paid to the Mortgagee and the balance distributed in
      accordance with Clause 12.1.

12.4  Surplus Moneys
      If at any time after satisfaction of the Secured Moneys the Mortgagee
      holds any surplus money payable to the Mortgagor, those moneys shall carry
      interest and may be placed to the credit of an account in the name of the
      Mortgagor with a bank and the Mortgagee shall thereupon be under no
      further liability in respect thereof.

12.5  Appropriation
      The Mortgagor irrevocably authorises the Mortgagee to appropriate any
      money received by the Mortgagee, any attorney of the Mortgagee or any
      Receiver in and toward such of the Secured Moneys as the Mortgagee thinks
      fit.

12.6  Reinstatement of Mortgage
      If any claim is made that any moneys received by the Mortgagee in payment
      or satisfaction of the Secured Moneys must be repaid or refunded, or that
      any settlement, obligation, transaction, conveyance or transfer affecting
      or relating to the Secured Moneys is void or voidable, under any law
      (including, without limitation, under any law relating to preferences,
      bankruptcy, insolvency or the winding up of companies):
      (a)  the Mortgagor shall, at its own expense, promptly do, execute and
           deliver, and use its best endeavours to cause any relevant third
           person to do, execute and deliver, all such acts and instruments as
           the Mortgagee may require to reinstate the Mortgage upon the terms of
           this Deed and to restore to the Mortgagee any Security Interest,
           guarantee, indemnity or other security held by it immediately prior
           to such payment, satisfaction, obligation, transaction, conveyance or
           transfer; and
      (b)  if the claim is upheld, compromised or admitted, the Mortgagee shall
           be entitled to the same rights, powers and remedies against the
           Mortgagor and the Secured Property as it would have had if the
           relevant moneys had never been applied in payment or satisfaction of
           the Secured Moneys or if such settlement, obligation,

                                     -52-

 
           transaction, conveyance or transfer had not been incurred or taken
           place, and this Clause 12.6 shall survive the discharge of the
           Mortgage unless the Mortgagee expressly agrees otherwise in writing.

13.   GENERAL SECURITY PROVISIONS
13.1  Further Assurances
      If requested by the Mortgagee, acting reasonably, from time to time to do
      so, the Mortgagor shall at its own expense promptly do, execute and
      deliver, and cause any relevant third person to do, execute and deliver,
      all such other and further acts and instruments as are necessary for more
      satisfactorily giving effect to this Deed and for more fully vesting in
      the Mortgagee all rights, powers and remedies conferred or intended to be
      conferred by this Deed.

13.2  Power of Attorney
      The Mortgagor irrevocably appoints the Mortgagee, each Authorised Officer
      of the Mortgagee and each Receiver for the time being, severally, the
      attorneys of the Mortgagor for such time as an Event of Default continues
      unremedied  and unwaived to do (either in the name of the Mortgagor or the
      attorney) all acts and things that the Mortgagor is obliged to do under
      this Deed or which, in the opinion of the Mortgagee, are necessary or
      desirable in connection with the Secured Property or the protection or
      perfection of the Mortgagee's interest in the Secured Property or the
      exercise of the rights, powers and remedies of the Mortgagee and, without
      limiting the generality of the foregoing, to execute all documents of
      whatever nature, but without rendering the Mortgagee liable as a mortgagee
      in possession and with full power for all or any of such purposes from
      time to time to appoint a substitute or sub-attorney and to revoke any
      such appointment.

13.3  Other Security Interests
      This Deed is in addition to, and not in substitution for any other
      Security Interest which the Mortgagee now has, or may hereafter take, in
      respect of the Secured Moneys.  This Deed does not merge with, discharge,
      postpone or otherwise affect prejudicially any other Security Interest
      held by the Mortgagee.

13.4  Priority of Future Advances
      Notwithstanding any rule of law or equity to the contrary, all moneys
      which are expressed to be secured by this Deed and which are advanced,
      paid or otherwise provided after the receipt of notice by the Mortgagee of
      the creation of any other Security Interest shall nevertheless be secured
      by this Deed in priority to any moneys secured by that

                                     -53-

 
      other Security Interest, unless the Mortgagee specifically agrees
      otherwise in writing.

13.5  Rights Regarding Prior Security Interests
      The Mortgagee may (but without being obliged to do so) pay any moneys,
      obligations or liabilities secured by any Security Interest having
      priority over this Deed and, at the expense of the Mortgagor, take a
      transfer thereof for the benefit of the Mortgagee and:
      (a)  the Mortgagee shall not be bound to enquire whether the moneys
           claimed to be owing under that prior Security Interest are actually
           owing;
      (b)  the person having the benefit of the prior Security Interest shall
           not be bound to enquire whether any moneys remain due under this
           Deed;
      (c)  the Mortgagor authorises, directs and consents to person having the
           benefit of the prior Security Interest providing the Mortgagee from
           time to time with all information it may require in relation to the
           prior Security Interest, including the state of accounts thereunder;
           and
      (d)  any moneys paid by the Mortgagor to the Mortgagee after the date of
           transfer shall be available to be applied by the Mortgagee in its
           absolute discretion to either the Secured Moneys or to the moneys
           secured by the prior Security Interest.

13.6  Judgments
      Notwithstanding any judgment which the Mortgagee may recover against the
      Mortgagor in respect of any Secured Moneys, the Mortgagee shall hold the
      judgment collaterally with this Deed as security for the due payment and
      satisfaction of Secured Moneys and this Deed shall not merge in any
      judgment.

13.7  Notice of Deed
      The Mortgagee need not give any notice of this Deed to any person, enforce
      payment of any Secured Moneys, enforce or realise any Collateral
      Securities or take any steps or proceedings for any purpose unless the
      Mortgagee thinks fit.

13.8  Release
      The Mortgagee may release any Secured Property from the mortgage granted
      in accordance with this Deed at any time and any such release shall not in
      any way affect, prejudice or invalidate the Mortgage over any other
      Secured Property or the obligations of the Mortgagor under this Deed or
      any Agreement and the Mortgagor shall not be obliged to resort to the
      Agreement in priority to this Deed.

                                     -54-

 
13.9  Acceptance of Payments
      This Deed may be enforced notwithstanding that the Mortgagee may have
      accepted payment of any Secured Moneys after the occurrence of an Event of
      Default.

13.10 Continuing Security
      This Deed shall be a continuing security notwithstanding any settlement of
      account or other matter or thing whatsoever until a final discharge shall
      have been given to the Mortgagor.

14.   WITHHOLDINGS
14.1  Payments in Gross
      All moneys payable by the Mortgagor under this Deed shall be paid in full
      without set-off (subject to any contrary term in the Agreement) or
      counterclaim of any kind and free and clear of any Tax, deduction or
      withholding of any kind.

14.2  Deductions and Withholdings
      If the Mortgagor or any other person required by law to make any deduction
      or withholding from any payment to the Mortgagee under this Deed, the
      Mortgagor shall, together with such payment, pay an additional amount so
      that, after all deductions or withholdings, the Mortgagee actually
      receives for its own benefit the full amount which it would have received
      if no such deductions or withholdings had been required but the
      obligations of the Mortgagor under this Clause shall not include
      obligations of the nature rendered void by Section 261 of the Income Tax
      Assessment Act 1936 (Cth).

14.3  Receipts
      The Mortgagor shall pay the full amount of any deduction or withholding
      referred to in Clause 14.2 to the appropriate Governmental Agency within
      the time required by applicable law and promptly forward to the Mortgagee
      the originals of all official receipts.

15.   EXPENSES
15.1  Expenses
      The Mortgagor shall forthwith upon demand pay or reimburse the Mortgagee
      for all reasonable costs, charges and expenses (including legal fees and
      disbursements on a full indemnity basis) incurred or payable by the
      Mortgagee in connection with or arising out of:
      (a)  any approval, consent, valuation or waiver to be made or given by the
           Mortgagee under this Deed, provided those costs, charges and expenses
           do not exceed $500 or the Mortgagee has obtained the prior written
           consent of the Mortgagor for any costs, charges and expenses which
           exceed $500; and

                                     -55-

 
      (b)  any variation, release or discharge to be made or given by the
           Mortgagee under this Deed; and
      (c)  any enforcement of or preservation of rights, powers and remedies
           under this Deed or otherwise in respect of the Secured Property.

15.2  Stamp Duty and Registration Fees
      The Mortgagor shall pay when due all present and future stamp duties and
      other like levies, charges and imposts (including financial institutions
      duty and bank account debit taxes) and any interest, fines or penalties in
      relation thereto (other than as may be incurred by reason of the wilful
      default or negligence of the Mortgagee), and all registration, recording
      and other like fees which may be payable in respect of this Deed and any
      documents executed pursuant to Clause 12.6 or Clause 13.1 and the
      Mortgagor indemnities the Mortgagee from and against all actions, suits,
      claims, demands, losses, liabilities, damages, costs and expenses which
      may be made or brought against or suffered or incurred by the Mortgagee
      arising out of or in connection with any default in the payment thereof.

15.3  Mortgagee May Debit Account of Mortgagor
      The Mortgagee may without prejudice to any other right, power or remedy of
      the Mortgagee, at any time and from time to time, without further
      authority than this Clause 15.3, debit and charge any account of the
      Mortgagor with the Mortgagee with any of the following moneys:
      (a)  any costs, expenses or other moneys referred to in Clause 15.1;
      (b)  any stamp duties or other moneys referred to in Clause 15.2; and
      (c)  any moneys referred to in Clause 17.

16.   PAYMENTS AND EVIDENCE OF DEBT
16.1  Payments by Mortgagor
      All payments by the Mortgagor under this Deed shall be made in the
      Required Currency (which shall be the currency of account and of payment)
      and shall be made to the Mortgagee not later than 11:00 am on the due date
      for payment in Cleared Funds as the Mortgagee may from time to time notify
      in writing.

16.2  Business Days
      If any amount would otherwise become due for payment on a day which is not
      a Business Day, that amount shall become due on the next following
      Business Day or, if that Business Day is in another calendar month, on the
      immediately preceding Business Day.

                                     -56-

 
16.3      Certificate Conclusive and Binding
          A certificate signed by an Authorised Officer of the Mortgagee stating
          any  amount  or  rate  for  the  purpose  of this Deed shall, be prima
          facie evidence of its contents.

17.       INDEMNITIES

17.1      General Indemnity
          The Mortgagor indemnities the Mortgagee from and against all actions,
          suits, claims, demands, losses, liabilities, damages, reasonable costs
          and expenses which may be made or brought against or suffered or
          incurred by the Mortgagee arising out of or in connection with:

          (a)  any Event of Default or Potential Event of Default;
          (b)  any failure by the Mortgagor to make a payment or perform an
               obligation in accordance with this Deed;
          (c)  the holding of the Secured Property; or

          (d)  the exercise or non-exercise of any right, power or remedy
               contained, referred to or implied in this Deed.

17.2      Currency Indemnity
          If any amount is received by the Mortgagee in a currency other than
          the Required Currency (whether pursuant to a judgment, in the winding
          up of the Mortgagor or otherwise), the Mortgagor's obligations under
          this  Deed shall be discharged only to the extent that the Mortgagee
          may, upon receipt of such amount, purchase the Required Currency with
          such other currency in accordance with the usual banking procedures of
          the Mortgagee.  if the amount in the Required Currency which may be so
          purchased is, after deducting any costs of exchange and any other
          related costs, less than the relevant sum payable under this Deed, the
          Mortgagor shall, as a separate and independent  obligation  and
          notwithstanding any time or other indulgence granted to the Mortgagor
          or any other act, matter or thing, forthwith pay to the Mortgagee the
          amount of the shortfall.

18.       SET-OFF
18.1      Set-Off
          If an Event of Default occurs and has not been remedied or waived, the
          Mortgagee may (in addition to any general or banker's lien, right of
          set-off, right to combine accounts or any other right to which it may
          be entitled), without notice to the Mortgagor or any other person, 
          set-off and apply any credit balance (or any part thereof in such 
          amounts as the Mortgagee may elect) on any account (whether subject 
          to notice or not and whether matured or not and in whatever currency) 
          of the Mortgagor with the Mortgagee and any other moneys owing by the
          Mortgagee or any Lender to the Mortgagor against the liabilities
          (whether actual or contingent) of the Mortgagor under this Mortgage,
          and the Mortgagee may purchase with the moneys standing to the 

                                     -57-

 
          credit of any such account such other currencies as may be necessary
          for this purpose.

19.       NOTICES
19.1      Notices and Other Written Communications
          All notices and other communications required by this Deed to be in
          writing shall be given by an Authorised Officer of  the  relevant
          party  and  shall  be  sent  to  the recipient  by  hand,  telegram,
          pre-paid  post  (airmail if outside Australia), telex or facsimile.

19.2      Time of Receipt
          Without limiting any other means by which a party may be able to prove
          that a notice has been received by another party, a notice or other
          communication shall be deemed to be duly received:

          (a)  if sent by hand or telegram, when left at the address of the
               recipient;
          (b)  if sent by pre-paid post, on actual delivery;
          (c)  if sent by telex, upon receipt by the sender of the recipient's
               answerback code at the end of transmission; or
          (d)  if sent by facsimile, upon receipt by the sender of an
               acknowledgement or transmission report generated by the machine
               from which the facsimile was sent indicating that the facsimile
               was sent in its entirety to the recipient's facsimile   number.

19.3      Address for Notices
          All notices and other communications shall be sent to the recipient at
          the address, telex or facsimile number set out below or to such other
          address, telex or facsimile number as a party may from time to time
          notify to the other in writing:

          (a)  to the Mortgagor:

               Address:       8180 Greensboro Drive, Suite 1100 
                              McLean, Virginia
                              USA
               Attention:     Mr Paul Singh/Ms Julie Correlli
               Facsimile No:  00111 703 848 4641
               with copy to:  Julia Corelli
                              Pepper Hamilton & Scheetz
                              3000 Two Logan Square
                              18th and Arch Streets
                              PHILADELPHIA PENNSYLVANIA
                              19103-2799
               Facsimile No:  0015 1 215 981 4750

                                     -58-

 
          (b)  to the Mortgagee:
 
               Address:    475 Victoria Avenue
                           CHATSWOOD  NSW  2067
               Attention:  The Company Secretary
            Facsimile No:  02 413 4139

20.       ASSIGNMENT
20.1      Assignment by Mortgagor
          The Mortgagor shall not assign or otherwise transfer the benefit of
          this Deed or any of its rights, duties or obligations under this Deed
          without the prior written consent of the Mortgagee such consent not to
          be unreasonably withheld.

20.2      Assignment by Mortgagee
          The Mortgagee may assign, transfer and otherwise grant participations
          or sub-participations in all or any part of the benefit of this Deed
          and any of its rights, duties and obligations under this Deed without
          the consent of the Mortgagor.

20.3      Disclosure
          The Mortgagee may only disclose to a potential assignee, transferee,
          participant or sub-participant information about the Mortgagor with
          the Mortgagor's consent which shall not be unreasonably withheld.

21.       MISCELLANEOUS
21.1      Waiver
          No waiver by the Mortgagee of any provision of, or any right, power or
          remedy under this Deed shall be effective unless it is in writing
          signed by an Authorised Officer of the Mortgagee and such waiver
          shall be effective  only  in  the  specific  instance  and  for the
          specific  purpose  for  which  it  was  given.  No  failure or delay
          by the Mortgagee to exercise any right, power or remedy under this
          Deed or to insist on strict compliance by the Mortgagor with any
          obligation under this Deed, and no custom or practice of the parties
          at variance with the  terms  of  this  Deed,  shall  constitute  a
          waiver of the Mortgagee's right to demand exact compliance with this
          Deed.

21.2      Invalidity
          Any provision of this Deed which is or becomes prohibited or
          unenforceable in any jurisdiction shall, as to such jurisdiction, be
          ineffective to the extent thereof without invalidating any other
          provision of this Deed, and any such 

                                     -59-

 
          prohibition or unenforceability shall not invalidate such provision in
          any other jurisdiction.

21.3      Amendments
          This Deed may be only amended by an instrument in writing signed by
          the parties.

21.4      Counterparts
          This Deed may be signed in any number of counterparts and all such
          counterparts taken together shall be deemed to constitute one and the
          same instrument.

21.5      Mortgagee's Rights Cumulative
          The rights, powers and remedies of the Mortgagee contained in this
          Deed are cumulative and not exclusive of any rights, powers or
          remedies provided to the Mortgagee by law.  No single or partial
          exercise by the Mortgagee of any right, power or remedy under this
          Deed shall preclude any other or further exercise thereof or the
          exercise of any other right, power remedy.

21.6      Survival of Indemnities
          The indemnities contained in this Deed are continuing obligations of
          the Mortgagor, separate and independent from the other obligations of
          the Mortgagor and shall survive the termination of this Deed.

21.7      Successors and Assigns
          This Deed shall be binding upon and inure to the benefit of the
          parties to this Deed and their respective successors and permitted
          assigns.  The Mortgagor shall at its own expense, within 5 Business
          Days of written demand by the Mortgagee, execute and cause its
          successors and permitted assigns to execute any instrument and do
          everything necessary, to bind its successors and permitted assigns to
          this Deed.

21.8      Moratorium Legislation
          To the fullest extent permitted by law, the provisions of all existing
          or future laws which operate or may operate directly or indirectly to
          lessen or otherwise vary the Mortgagor's obligations under this Deed
          or to delay, curtail or otherwise prevent or prejudicially affect the
          exercise by the Mortgagee of all or any of its rights, powers and
          remedies under this Deed are expressly negatived and excluded.

                                     -60-

 
21.9      Consent by Mortgagee
          Any consent required of the Mortgagee under this Deed may, unless this
          Deed specifically provides otherwise, be given or withheld by the
          Mortgagee in its absolute discretion and either conditionally or
          unconditionally.

21.10     Governing Law
          This Deed shall be governed by and construed in accordance with
          the.laws of the State of Victoria.

21.11     Jurisdiction
          The Mortgagor irrevocably and unconditionally:

          (a)  submits to the non-exclusive jurisdiction of the courts of the
               State of Victoria;
          (b)  waives any objection it may now or in the future have to the
               bringing of proceedings in those courts and any claim that any
               proceedings have been brought in an inconvenient forum; and
          (c)  agrees, without preventing any other mode of service permitted by
               law, that any document required to be served in any proceedings
               may be served in the manner in which notices and other written
               communications may be given under Clause 19.

21.12     Confidentiality
          The Mortgagee undertakes that it, its employees, agents or
          representatives will not disclose any provision of this Deed and all
          information flowing from it to a third person without the prior
          consent of the Mortgagor unless the disclosure is related to
          information already within the public domain, required by law or any
          competent governmental authority, necessary for the purpose of
          protecting the interests of the Mortgagee in relation to the Secured
          Property or made to the Mortgagee's professional advisers.

EXECUTED as a deed on the date first appearing.

                                     -61-

 
THE MORTGAGOR
- -------------
SIGNED SEALED AND DELIVERED 
by
PRIMUS TELECOMMUNICATIONS,
INTERNATIONAL INC
by its 
in the presence of:                              



THE MORTGAGEE
- -------------
SIGNED SEALED AND DELIVERED by
FUJITSU AUSTRALIA LIMITED
by its Attorney TERENCE JOHN ROBERTSON
in the presence of:                              

                                     -62-


                                     75. 
                


                                  ANNEXURE 3

                                Disclosure Book



 


                                AXICORP PTY LTD
                SALE BY FUJITSU AUST. LTD & "ORIGINAL VENDORS"
                                      TO
                        PRIMUS TELECOMMUNICATIONS, INC.

                                DISCLOSURE BOOK
(Reference to warranty sec. below are for case of reference and do not imply 
that the section is relevant only to the stated warranty.)

Documents referred to in italics are still to be provided.

Contents

VOLUME 1
CARRIERS
1.    Telstra
      1.1    BCS Tariffs (contained on computer disc):
             (a)    Service Provider Tariff 1
             (b)    Multi Site Plan 1 (now expired)
             (c)    Call Saver 1, 5, 8 & 10 Flexi-Plans
             (d)    Netplan 1, 2 & 3
             (e)    Pacplan
      1.2    Application Forms for Pricing Plans as follows:
             (a)    Multi Site Plan 1
             (b)    Call Saver 8 Flexi-Plan
             (c)    Netplan 1
             (d)    Netplan 2
             (e)    Netplan 3
             (f)    Pacplan
             (g)    Call Saver Flexi-Plans
             (h)    Service Provider Tariff 1
      1.3    Service Provider Agreement commencing 3 May 1995 between Telstra 
             and Axicorp (nb - applies to mobile services only)
      1.4    Telstra Solution Plus Dealer Agreement Fixed Network between
             Telstra and Auscorp Telecommunications Pty Ltd (then called
             Ultimate Communications Pty Ltd) dated 8/1/96
      1.5    Letter from the Company to Telstra dated 18/1/96 re: change of 
             control of Axicorp
      1.6    Letter from Telstra to the Company dated 23/1/96 re: change of 
             control of Axicorp
      1.7    Strategic Partnership Agreement dated 22 October 1993
      1.8    Strategic Partnership Agreement Release document dated 30/6/95.
      1.9    Agreement between Telstra and the Company (Consulting Agreement)
             undated, effective 1/7/95 to 30/4/96.

2.    Optus
      2.1    Reseller Agreement (Long Distance) dated 12 October 1994 between 
             Optus Networks Pty Ltd and Axicorp
      2.2    Optus Reseller Manual (referred to in Agreement in 2.1)

AGENTS AND DEALERS
3.    Non-Standard Agreements - Agents and Associations
      3.1    Preferred Supplier Agreement between the National Purchasing 
             Corporation Ltd and Axicorp dated 8 June 1994
      3.2    Deed of Endorsement dated 22/11/95 between Axicorp and The Pharmacy
             Guild of Australia
      3.3    Bell Horizon Pty Ltd - Memorandum of Understanding dated 11/3/94
      3.4    Bell Horizon Pty Ltd - Non-Disclosure 15/6/94
      3.5    Fujitsu Australia Limited - Letter dated 23/2/96 re existing 
             arrangements
      


 
                                       2

4. Axicorp Agency Agreements
   4.1  Standard Agency Agreement
   4.2  Carrera Telecommunications P/L
   4.3  Tooreelier P/L
   4.4  PSR Marketing Australia
   4.5  Australian Telephone Services P/L
   4.6  Pulse Communications Pty Ltd

5. Axicorp Distributor Agreements
   List-Axicorp Distributor Network
   5.1  AC Communications Pty Ltd
   5.2  Allcom Pty Ltd dated 20/4/1995
   5.3  Bendigo Telephone Company dated 21/4/95
   5.4  Bettatech Service Pty Ltd dated 28/7/95
   5.5  Carrera Telecommunications P/L dated 23/3/95
   5.6  Geelong Telephone Co (Applcorp Pty Ltd) dated 27/11/95
   5.7  Group Business Services Pty Ltd dated 1/8/95
   5.8  Mildura Office equipment Pty Ltd
   5.9  Parrys Office Supplies dated 27/4/95
   5.10 Rivercom Pty Ltd dated 30/10/95
   5.11 Southtel Communications (Alemdar Holdings Pty Ltd) dated 22/5/95
   5.12 TWS Pty Ltd
   5.13 Warrnambool Telephone Company (E & J Read Pty Ltd) dated 23/5/95
   5.14 Watersons Communications Pty Ltd dated 15/5/95

VOLUME 2
6. Axicorp Savings Plan Agreements
   6.1  List of associations paid commission by the Company
   6.2  Albany Chamber of Commerce & Industry
   6.3  Australian Dental Association, South Australian Branch Inc
   6.4  Australian Dental Association Victorian Branch Inc
   6.5  South West Region Tourist Association

7. Axicorp Mobile Agency Arrangements
   7.1  Note to Burns, King & Youdel dated 9/8/95
   7.2  Letter to JR Allied
   7.3  Letter to Equal Access

8. General
   8.1  Incomplete (unsigned) Agreements and File notes
        (a)  Australian Dental Association Western Australia Branch Inc
   8.2  Termination Arrangements and Disputes - Agreements, Correspondence & 
        File Notes
        (a)  Hounslow Communications
        (b)  Consolidated Communications P/L
        (c)  Accountants Resource Network
        (d)  Change the Way Pty Ltd
        (e)  Phone-net

PERSONNEL
9. Personnel (Warranty 60 & 61)
   9.1  Employee Handbook
   9.2  Standard Conditions of Employment (current)
   9.3  Mary Chrisant



                                      3
 
     9.4  Document headed "Sales Force".
     9.5  Document headed "Management, Personnel and Board of Directors
     9.6  Agreement to join BT Master Superannuation Fund dated 11/4/94
     9.7  Bankers Trust Life Superannuation Trust Trust Deed as at November 1995

10.  Commission Structures
     10.1 Agents Commission payments 1995
     10.2 Axicorp Staff Commission payments 1995
     10.3 Consulting payments for 1995
     10.4 Axicorp Staff Commission schedule 1/1/96
     10.5 Regional Distributors Commission Schedule
     10.6 Axicorp Channels & Commissions 1/1/96
     10.7 Axicorp Mobile Services Compensation Plan 1995
     10.8 Internal memorandum by David Miller dated 10/11/95 re Commission 
          Structure (distributed to all staff but subsequently not implemented
          due to change in Telstra tariff)
     10.9 Internal memorandum by Campbell Burns dated 1/2/96 re: Commission 
          Structure.
     10.10 Draft Pricing plan for 1996
     10.11 Internal memorandum by Campbell Burns dated 5/2/96 re: Mobile Phone 
           Bonus.

VOLUME 3
11.  Employee Contracts
     11.1 Personnel Details
     11.2 Individual Contracts, as per list of Personnel Details
          Abletez, Ferdinand (O)
          Andronikou, Paul (O)
          Auddino, Maria (O)
          Barrett, Clare (O)
          Basdogan, Connie (O)
          Bell, George (O)
          Bell, Shirley (N, CA)
          Berrill, Ian (O)
          Boylan, Kevin (N, CA)
          Bylstra, Jan (O)
          Byrne, Chris (O)
          Carlson, Linda (N, CA)
          Charleston, Kate (N, CA)
          Claasz, Elisabeth (O)
          Clarke, Andrew (N, CA)
          Close, Toni (N, no CA)
          Colantuono, Robert (O)
          Commisso, Rose (N, CA)
          Cornelissen, Sue (O)
          Crespi, Daniel (N, CA)
          Crutchfield, Leanne (O)
          Di Carlo, Caroline (O)
          Edwards, Andy (O)
          Elliott, Geoffrey (O)
          Forster, Enza (O)
          Goninon, Anthea (O)
          Grasso, Mary-Anne (O)
          Green, Marc (N, CA)
          Ho, Joe (N, CA)



                                       4
 
Horgan, John (O)
Jaffe, Peter (O)
Jenkins David (O)
Johnston, Fiona (O)
Kemeris, Sue (formerly Vasiliadis)
Kenny, Maurice (O)
Knights, David (N, no CA)
Kocsis, Belinda (O)
Koning, Suzanne (N, CA)
Lade, Jacqueline (O)
Liamzon, Gloria (O)
Larsen, Kalev (N, CA)
Lau, Catherine (O)
MacFarlane, David (O)
McQuaid, Rebecca (O)
Miller, David (non-standard, no termination provision, signed by both parties, 
       subsequent renegotiation not resolved - no confidentiality agreement)
Mills, Jennifer (N, CA)
Minettos, Denise (N, CA)
Mizzi, Felicity (O)
Morgan, Rod (non standard, no termination provision, signed by both parties, 
       - no confidentiality agreement)
Moritz, Kyla (O)
Muffet, David (O)
Murley, Joan (O)
Nelson, Claire (O)
O'Grady, Alicia (O)
O'Shannessy, Graeme (O)
Papandreou, Loula (O)
Pearson, Priscilla (N, CA)
Peng, Beverley (O)
Pengelly, Allison (N, CA)
Price, David (N, CA)
Rahiman, Hughes (O)
Redmond, Gary (O)
Riddell, Grant (O)
Ryan, Patricia (O)
Sach, Andrew (O)
Salmon, Craig (O)
Sebastian, Lorraine (offer - non-standard - acceptance and other papers to be 
provided)
Sherwill, Christopher (O)
Slaney, Roger (O)
Smedley, Mark (O)
Sortino, Vincent (O - Paxus format)
Squires, Lisa (N, CA)
Stamatakis, Shawn (O)
Tapsas, Vicky (O)
Taylor, Andrew (N, CA)
Thompson, Sarah (O)
Tovey, Tim (O)
Turner, Laverne (non standard - no formal agreement, done by letter - no 
termination clause, CA)



                                       5
 
                Usenich, Rob (O)
                Vasiliadis, Sue (see Kemeris, Sue)
                Verruso, Mario (O)
                Wadsworth, Deborah (O - not signed)
                Wakefield, Karen (N, CA)
                Walsh, Felicity (N, CA)
                Watson, Darin (N, CA)
                Williams, Tracey (N, CA)
                Wilson, Justin (N, no CA)
                Xiang, Dale (N, CA)
        Code is:  O = old form of contract
                  N = new form of contract
                  CA = Confidentiality Agreement

VOLUME 4
12.     Consulting Agreements
        12.1 Services Agreement dated 24 November 1995 between Axicorp and C.T. 
             Corporation Pty Ltd
        12.2 Services Agreement dated 24 November 1995 between Axicorp and Alta 
             Telecommunications Pty Ltd
        12.3 Contract of Confidentiality dated 3/10/95 with Sklenar Software Pty
             Ltd (systems development and related duties)
        12.4 Contract for systems development dated 19/9/95 with Sklenar
             Software Pty Ltd
        12.5 Contract - Barry Foster dated 17/10/94
        12.6 Contract extension dated 5/4/95 - Barry Foster (systems 
             development)
        12.7 Contract extension dated 19/9/95 - Barry Foster (systems 
             development)
        12.8 Engagement letter for Curtis, Robert (not signed by Curtis)

FINANCE
13.     Audited Accounts
        13.1 Financial Statements 31/3/95
        13.2 Price Waterhouse letter dated 24/8/95 re:
             -  audit qualification
             -  management controls

14.     Balance Sheet and Other Financial Statements 31/12/95

15.     Various Financial Information (NB Not warranted or represented, insofar 
        as relates to future)
        -    Customer Breakdown provided 1/2/96
        -    Customer Billings by Carrier Segment provided 1/2/96
        -    Breakdown of items comprising Operating Expenses
        -    Various Client Reports

16.     Asset Register - List of Capital assets >$1,000 in value at purchase 
        (Warranty 23)

17.     Debtors Summary as at 31/12/96 & List of Telstra Doubtful Debts 
        (Warranty 25)

18.     List of Cancelled Clients 13/10/95 to 12/1/96 (Warranty 36)

FINANCE
19.     Finance Agreements & Rental Agreements
        Schedule of Rentals - Axicorp
        19.1 Lease Agreement with Canon Finance Australia Ltd dated 27/1/95 for 
        Canon 6030

 
                                       6

           Photocopier  
     19.2  Rental Agreement with Corporate Acceptance Pty Ltd dated 18/5/94 for
           2 Ricoh photocopiers, models 5590 and FT4220
     19.3  Contract Rental Agreement with Esanda Finance Corporation Ltd dated 
           27/3/95 1994 for 1 x Minolta photocopier
     19.4  Rental Agreement with Berkman Capital Finance P/L dated 21/9/94 for 
           Messages on Hold and related product - Melb. & Sydney.
     19.5  Rental Agreement with Berkman Capital Finance P/L dated 21/9/94 for 
           Messages on Hold and related product.
     19.6  Rental Agreement with Berkman Capital Finance P/L for Messages on
           Hold and related product - Bris. & Perth.
     19.7  Rental Agreement with Telecom Aust. re telephone system
     19.8  Master Facility Agreement dated 15/2/96 with Multilease Limited for 
           Fujitsu PABX system
     19.9  Canon Finance Lease for Photocopier $469 p mth dated 1/9/95
     19.10 Motor Vehicle Sub-Leasing Plans (Salary Sacrifice):
           -    Joe Ho
           -    Paul Keenan
           -    Jan Bylstra
           -    David Price

20.  Bank Guarantees

ADMINISTRATION
21.  Axicorp Applications for Telecommunications Services
     21.1  Telecom Australia Services Only
     21.2  Optus Long Distance Only

22.  Insurance Policies
     22.1  N.Z.I. Insurance Australia Ltd Multi Risk Policy, Policy no. 74 
           WF06130 OFF, covering al properties & contents, expiring 2/12/96
     22.2  Associated Marine Insurers, Policy no. WCN 340919, covering mobiles 
           and laptops
     22.3  Pacific Indemnity, Policy no. CA 46912, covering professional 
           indemnity insurance.
     22.4  Various material on workers compensation obligations

23.  Internal Policies, Practices and Financial Controls

VOLUME 5
24.  Premises Leases
     24.1  Lease dated 4/5/94 between the Company and Local Authorities
           Superannuation Board in respect of part premises at Level 4, 468 St.
           Kilda Road, Melbourne
     24.2  Deed of Variation of Lease in (i) dated 2/2/95
     24.3  Draft Lease between the Company and Local Authorities Superannuation
           Board in respect of premises at Level 4, 468 St. Kilda Road,
           Melbourne
     24.4  Lease dated 29/5/95 between the Company and Local Authorities 
           Superannuation Board in respect of premises at Level 5, 468 St. Kilda
           Road, Melbourne
     24.5  Lease dated 2/2/95 between the Company and Local Authorities
           Superannuation Board in respect of premises at Level 5, 468 St. Kilda
           Road, Melbourne
     24.6  Lease between the Company and Showa Shoji Aust. P/L in respect of
           premises at Level 4, Tower 32, Walker Street, North Sydney NSW
     24.7  Deed of Covenant dated 2/4/95 between the Company, TKC Services Pty
           Ltd and Australian Mutual Provident Society in respect of premises at
           Level 13, 10 Eagle Street, Brisbane, Qld.

 
                                       7

    24.8 Sub-Lease between the Company, MSJ Services Pty Ltd and Australian City
         Properties Pty Ltd in respect of premises at Level 5, 225 St. Georges
         Terrace, Perth, WA


GENERAL
25. Non Standard Agreements
    25.1 Australian Fine Bone China Company Pty Ltd
    25.2 Boston Technology, Inc.- Marketing Representative Agreement dated 
         13/12/95
    25.3 Cheker Consultancy Pty Ltd - Auditing Service Agreement 19/4/95
    25.4 Datacraft Australia Pty Ltd - draft "Preferred Supplier" agreement
    25.5 AT&T Easylink Services Australia Ltd - Agency Agreement dated 23/2/94
    25.6 Frontier Communications International Inc. - Non-Disclosure Agreement 
         dated 28/9/95
    25.7 Matrix Telecommunications Ltd - Reciprocal Non-Disclosure Agreement 
         undated & unexecuted by Matrix
    25.8 Ericsson Australia P/L, Telstra, TCSI Corporation & the Company - 
         Confidentiality Agreement dated 13/11/95
    25.9 Canon Photocopier Maintenance Agreement dated 25/8/95

    NB - Reference is also made to the Management Agreement (as defined in the
         Share Acquisition Deed) which is a material contract of the Company but
         is not disclosed here as it is a separate annexure to the Deed.

26. Limitations/Influences on Business/Material Considerations
    26.1 Billing System - Limitations (Warranty 40B)
    26.2 Statement of factors influencing Company's Business (Warranty 52)
    26.3 Primus/Axicorp descriptive memorandum - Axicorp Section dated 11/1/96
    26.4 Pages from presentation re Axicorp (Warranty 52)
    26.5 Statement of general factors affecting Axicorp's business. (Warranty 
         52)

27. Marketing Material used by Axicorp
28. Notification of Claim by Greek Community (Warranty 54)
29. Intellectual Property (Warranty 27)
    Copies of 3 trade mark applications and Coltmans letter dated 14/7/95 
    advising lodgement
30. Price Waterhouse letter dated 23/2/96 re: carry forward tax losses (warranty
    48)

VOLUME 6 - GLOBENET
Includes:
1.  Agreement dated 22 October 1993 between Axicorp and Globenet Pty Ltd (no 
    longer applicable)
2.  Correspondence between the Company & Globenet
3.  Correspondence between solicitors:
    3.1  Correspondence from Clayton Utz Solicitors to Axicorp
    3.2  Correspondence from Rawling & Company to Clayton Utz
4.  ITC
5.  Other

VOLUME 7 - STATUTORY RECORDS
Certified copy of memorandum & Articles of Association Of Axicorp (Warranty 2)
Statutory Records of Axicorp

VOLUME 8 - MINUTES OF DIRECTORS MEETINGS
Minutes of Directors Meetings



 
                                AXICORP PTY LTD
                        Profit & Loss for December 1995

 
 
- --------------------------------------------------------------------------------
                               Accrual for               Budget       Difference
                                 Dec-95                  Dec-95            %
                               -------------------------------------------------
                                                              
Profit & Loss Statement

Basic Carriage Services
Customer Billing                9,609,601               12,187,264      -21.15%
Reseller Discount               3,018,918                2,195,806       37.49%
CRP Bonus - 1.5% to 2.3%          100,000                  435,958      -77.06%
Payment to Telecom              9,616,581               11,216,342      -14.26%
Distribution to Customers       1,626,662                1,401,415       16.07%

Surplus                         1,485,276                2,201,271      -32.53%

Extraordinary Items             

Commissions                       448,834                  467,000       -3.89%

VAS's - (Net)                      30,165                   65,540      -53.97%

Gross Margin                    1,066,607                1,799,811      -40.74%

Operating Expenses      
  Finance Expenses                 28,899                    3,900      641.01% 
  Salaries & Contractors          347,910                  397,480      -12.47%
  Casual/Consulting                71,998                    5,500     1209.06%
  Labour On Cost                   64,953                   84,266      -22.92%
  Management Fee - Comm.          288,529                  223,407       29.15%
  Management Fee - Expenses        72,720                   63,024       15.38%
  Subscriptions & Mem'ship            807                    2,000      -59.66%
  Advertising & Promotions         38,642                   16,830      129.60%
  Billing & Office Systems      (216,349)                  115,260     -287.71%
  Entertainment                    13,781                   10,700       28.79%
  Freight & Postage                13,496                    4,000      237.39%
  Professional Fees                 4,240                   30,965      -86.31%
  Repair & Maintenance              9,382                    6,800       37.98%
  Stationary                       16,097                    7,900      103.76%
  Travelling Expense               29,995                   22,000       36.34%
  Insurance                         2,618                    7,650      -65.78%
  Occupancy                        41,869                   44,766       -6.47%
  Communications                   27,730                   19,210       44.35%
  Depreciation                     24,043                   26,349       -8.75%
  Provision for Bad Debts          49,609                   48,570        2.14%

Total Operating Expenses          930,970                1,140,577      -18.38%

                               -------------------------------------------------

Net Profit Before Tax             135,637                  659,234      -79.43%

Income Tax                        108,500                  237,324
                               -------------------------------------------------

Net Profit After Tax               27,137                  421,910      -93.57%
- --------------------------------------------------------------------------------
 

                                    Page 1

 
AXICORP PTY LTD

PROFIT & LOSS FOR 9 MONTHS ENDED 31 DECEMBER 1995


Profit & Loss Statement
- --------------------------------------------------------------------------------


                                 Apr-95       May-95          Jun-95           Jul-95          Aug-95          Sep-95
                                                                                             
Gross Billings                 12,666,667      13,910,417      15,179,167       16,472,917      18,004,167      19,560,417

Basic Carriage Services
Customer Billing                  275,543         331,296         393,760          556,708         769,166         868,768
Reseller Discount               2,618,240       2,544,584       2,771,475        3,233,868       2,863,106       4,164,840
CRP Bonus - 1.5% to 2.3%
Payment to Telecom                270,294         322,305         368,877          509,643         704,672         785,388
Distribution to Customers       1,425,803       1,295,347       1,626,699        2,156,935       2,285,927       2,158,054
                              ---------------------------------------------------------------------------------------------
Surplus                         1,197,686       1,258,228       1,169,660        1,123,998         641,673       2,090,166

Commissions                       303,963         336,476         276,586          445,619         325,690         406,955

                              ---------------------------------------------------------------------------------------------
Gross Margin                      893,723         921,752         893,074          678,379         315,982       1,683,211

Value Added Services
Revenue                            14,308          33,034          18,380           58,153         124,070          77,126

Cost of Sale                       13,124          13,354          12,420           18,551          71,204          45,138

                              ---------------------------------------------------------------------------------------------
Gross Margin                        1,184          19,680           5,960           39,602          52,866          31,988
% of Revenue

Operating Expenses
 Finance Expense                    3,662           7,883            (375)           8,473           6,746          13,596
 Salaries & Contractors           219,427         248,045         277,120          325,383         309,727         321,110
 Counsel/Consulting                40,591          70,075          51,450           45,402          33,458          35,876
 Labour On Cost                    35,362          41,946          54,306           58,662          65,516          56,062
 Commissions - Staff               11,000           9,500          40,317           67,310          64,938          72,713
 Management Fee - Comm.           119,000         121,534         123,000          166,589         161,354         151,472
 Management Fee - Expenses         60,600          60,600          60,600           60,600          72,720          72,720
 Subscriptions & Mem'ship           1,187           2,889           2,742              964           1,948           1,864
 Advertising & Promotions          38,324          59,917          18,669           12,193          10,833          12,850
 Billing & Office Systems          48,670          47,554          48,469           52,945          65,054          60,108
 Entertainment                      6,806           9,644          15,442           11,988          23,788           8,295
 Freight & Postage                167,681           9,114          10,939           11,561           7,409           6,599
 Professional Fees                    -             8,970          15,147            3,563          20,600          13,787
 Repair & Maintenance               3,564          12,719          10,414           10,661          13,893           9,135
 Stationary                         7,944          10,801          11,313           10,950          15,765          11,078
 Travelling Expenses               20,419          28,780          36,684           25,745          45,715          36,003
 Insurance                          2,000           2,000          (1,602)           1,368           1,368           1,614
 Occupancy                         31,436          32,940          37,557           39,738          39,633          43,984
 Communications                     7,243          10,826          21,611           19,468          25,383          28,927
 Depreciation                      13,760          17,215          30,590           22,600          26,993          25,377
 Provision for Bad Debts              -               -            85,000           15,332          10,459          19,237
                              ---------------------------------------------------------------------------------------------
Total Operating Expenses          838,675         812,973         949,393          971,495       1,023,299       1,002,407


                              ---------------------------------------------------------------------------------------------
Net Profit Before Tax              56,232         128,459         (50,359)        (253,514)       (654,450)        712,792

Income Tax                            -               -               -                -               -               -

                              ---------------------------------------------------------------------------------------------
Net Profit After Tax               56,232         128,459         (50,359)        (253,514)       (654,450)        712,792
                              ---------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------

- -------------------------------------------------------------------------------------------------

                                Oct-95        Nov-95           Dec-95             Total
                                                                     
Gross Billings                 21,216,667      22,427,677       23,302,677       162,740,773

Basic Carriage Services
Customer Billing                  987,682       1,052,502       11,902,803        17,138,229
Reseller Discount               4,105,947       3,136,693        3,080,044        28,518,796
CRP Bonus - 1.5% to 2.3%                          500,000          100,000           600,000
Payment to Telecom                853,161       1,035,891       12,173,293        17,023,524
Distribution to Customers       2,557,448       2,190,174        1,234,334        16,930,721
                              ---------------------------------------------------------------
Surplus                         1,683,021       1,463,130        1,675,219        12,302,780

Commissions                       575,956         415,450          375,351         3,462,047

                              ---------------------------------------------------------------
Gross Margin                    1,107,064       1,047,680        1,299,848         8,840,732

Value Added Services
Revenue                            93,487          57,600          111,973           588,132

Cost of Sale                       53,245          38,912           81,807           347,755

                              ---------------------------------------------------------------
Gross Margin                       40,242          18,689           30,165           240,377
% of Revenue

Operating Expenses
 Finance Expense                   14,972          17,184           28,899           101,038
 Salaries & Contractors           316,751         327,570          347,910         2,693,044
 Counsel/Consulting                31,580          39,497           71,998           419,927
 Labour On Cost                    62,383          60,871           64,953           500,061
 Commissions - Staff               79,484         104,693           79,641           529,595
 Management Fee - Comm.           164,000         291,711          288,529         1,587,188
 Management Fee - Expenses         72,720          72,720           72,720           606,000
 Subscriptions & Mem'ship           2,013           1,960              807            16,372
 Advertising & Promotions          23,197          12,926           38,642           227,551
 Billing & Office Systems          55,223          35,442         (216,349)          197,115
 Entertainment                      9,639           7,633           13,781           107,017
 Freight & Postage                  8,970          16,057           13,496           251,827
 Professional Fees                 22,128          18,943            4,240           107,378
 Repair & Maintenance              12,499          14,280            9,382            96,547
 Stationary                         7,828          11,525           16,097           103,303
 Travelling Expenses               16,098          23,659           29,995           263,098
 Insurance                          2,555           1,368            2,618            13,289
 Occupancy                         41,246          50,450           41,869           359,053
 Communications                    27,249         (13,185)          27,730           155,251
 Depreciation                      24,995          24,444           24,043           210,037
 Provision for Bad Debts           34,800          44,380           49,609           258,817
                              ---------------------------------------------------------------
Total Operating Expenses        1,030,329       1,164,328        1,010,611         8,803,509


                              ---------------------------------------------------------------
Net Profit Before Tax             116,977         (97,959)         319,423           277,600

Income Tax                            -               -            108,500           108,500

                              ---------------------------------------------------------------
Net Profit After Tax              116,977         (97,959)         210,923           169,100
                              ---------------------------------------------------------------

- --------------------------------------------------------------------------------
                                    Page 1

 
                                AXICORP PTY LTD
                                ---------------

               PROFIT & LOSS FOR 9 MONTHS ENDED 31 DECEMBER 1995
 
       
- ------------------------------------------------------------------------------------------------------------
                           Actual       Actual       Actual      Accrual for    Accrual for    Accrual for    
                           Apr-95       May-95       Jun-95        Jul-95         Aug-95         Sep-95    
                                                                              
Profit & Loss Statement  
Basic Carriage Services  
Customer Billing             275,543      331,296      393,760       556,708        769,168        868,768
Reseller Discount          2,334,584    2,337,934    3,073,868     3,202,345      3,295,600      4,020,326
MRP Bonus - 1.5% to 2.3%                                             100,000        100,000        100,000
Payment to Telecom          (270,294)    (322,305)    (368,877)     (509,643)      (704,672)      (785,388)
Distribution to Customers (1,566,525)  (1,433,988)  (1,809,914)   (1,932,771)    (1,805,693)    (2,404,392)
                         -----------------------------------------------------------------------------------
Surplus                      779,308      912,937    1,288,837     1,416,638      1,654,401      1,799,314
                         
Extraordinary Items      
                         
Commissions                 (322,203)    (364,719)    (490,784)     (429,476)      (402,109)      (622,011)
                         
VAS's - (Net)                  1,184       19,680        5,960        39,602         52,866         31,988
                         -----------------------------------------------------------------------------------
Gross Margin                 452,289      567,899      804,014     1,026,765      1,305,158      1,209,291
                         
Operating Expenses       
 Finance Expense              (3,662)      (7,883)         375        (8,473)        (6,746)       (13,596)
 Salaries & Contractors     (219,427)    (248,045)    (277,120)     (325,383)      (309,727)      (321,110)
 Casual/Consulting           (40,591)     (70,075)     (31,450)      (45,402)       (33,458)       (35,876)
 Labour Or Cost              (35,362)     (41,946)     (54,306)      (58,662)       (65,516)       (56,062)
 Management Fee - Comm.     (119,000)    (121,534)    (123,000)     (166,589)      (161,354)      (151,472)
 Management Fee -        
  Expenses                   (60,600)     (60,600)     (60,600)      (60,600)       (72,720)       (72,720)
 Subscriptions &         
  Mem'ship                    (1,187)      (2,889)      (2,742)         (964)        (1,948)        (1,864)
 Advertising & Promotions    (38,324)     (59,917)     (18,689)      (12,193)       (10,833)       (12,850)
 Billing & Office Systems    (48,670)     (47,554)     (48,469)      (52,945)       (65,054)       (60,108)
 Entertainment                (6,806)      (9,644)     (15,442)      (11,988)       (23,788)        (8,295)
 Freight & Postage          (167,681)      (9,114)     (10,939)      (11,561)        (7,409)        (6,599)
 Professional Fees               -         (8,970)     (15,147)       (3,563)       (20,600)       (13,787)
 Repair & Maintenance         (3,564)     (12,719)     (10,414)      (10,661)       (13,893)        (9,135)
 Stationery                   (7,944)     (10,801)     (11,313)      (10,950)       (15,765)       (11,078)
 Traveling Expense           (20,419)     (28,780)     (36,684)      (25,745)       (45,715)       (36,003)
 Insurance                    (2,000)      (2,000)       1,602        (1,368)        (1,368)        (1,614)
 Occupancy                   (31,436)     (32,940)     (37,557)      (39,738)       (39,633)       (43,984)
 Communications               (7,243)     (10,826)     (21,611)      (19,468)       (25,383)       (28,927)
 Depreciation                (13,760)     (17,235)     (30,590)      (22,600)       (26,993)       (25,377)
 Provision for Bad Debts         -            -        (85,000)      (15,332)       (10,459)       (19,237)
                         -----------------------------------------------------------------------------------
Total Operating Expenses    (827,675)    (803,473)    (909,076)     (904,185)      (958,361)      (929,694)
                         
                         -----------------------------------------------------------------------------------
Net Profit Before Tax       (375,387)    (235,575)    (105,062)      122,580        346,797        279,597
                         
Income Tax                       -            -            -             -              -              -
                         -----------------------------------------------------------------------------------
Net Profit After Tax        (375,387)    (235,575)    (105,062)      122,580        346,797        279,597

- ------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------- 
   
                           Accrual for    Accrual for    Accrual for      Prior    
                             Oct-95         Nov-95         Dec-95         Year            Total
                                                                          
Profit & Loss Statement    
Basic Carriage Services 
Customer Billing             1,106,740      3,514,846      9,609,601                    17,138,229 
Reseller Discount            2,942,314      3,302,925      3,018,918      138,884       27,955,898
MRP Bonus - 1.5% to 2.3%       100,000        100,000        100,000                       600,000
Payment to Telecom            (982,200)    (3,463,564)    (9,616,581)                  (17,023,524)
Distribution to Customers   (2,112,669)    (2,055,457)    (1,626,662)     (21,151)     (16,769,222)
                           -------------------------------------------------------------------------
Surplus                      1,054,186      1,398,750      1,485,276      117,733       11,901,382
                        
Extraordinary Items                                                       401,398          401,398
                        
Commissions                   (486,924)      (485,844)      (448,834)      61,261       (3,991,643)
                        
VAS's - (Net)                   40,242         18,689         30,165                       240,377
                         
Gross Margin                   607,504        931,595      1,066,607      580,392       8,551,514
                        
Operating Expenses      
 Finance Expense               (14,972)       (17,184)       (28,899)                     (101,038)
 Salaries & Contractors       (316,751)      (327,570)      (347,910)                   (2,693,044)
 Casual/Consulting             (31,580)       (39,497)       (71,998)                     (419,927)
 Labour Or Cost                (62,383)       (60,871)       (64,953)                     (500,061)
 Management Fee - Comm.       (164,000)      (291,711)      (288,529)                   (1,587,188)
 Management Fee -                                                                                   
  Expenses                     (72,720)       (72,720)       (72,720)                     (606,000) 
 Subscriptions &        
  Mem'ship                      (2,013)        (1,960)          (807)                      (16,372)
 Advertising & Promotions      (23,197)       (12,926)       (38,642)                     (227,551)
 Billing & Office Systems      (55,223)       (35,442)       216,349                      (197,115)
 Entertainment                  (9,639)        (7,633)       (13,781)                     (107,017)
 Freight & Postage              (8,970)       (16,057)       (13,496)                     (251,827)
 Professional Fees             (22,128)       (18,943)        (4,240)                     (107,378)
 Repair & Maintenance          (12,499)       (14,280)        (9,382)                      (96,547)
 Stationery                     (7,828)       (11,525)       (16,097)                     (103,303)
 Traveling Expense             (16,098)       (23,659)       (29,995)                     (263,098)
 Insurance                      (2,555)        (1,368)        (2,618)                      (13,289)
 Occupancy                     (41,246)       (50,630)       (41,869)                     (359,053)
 Communications                (27,249)        13,185        (27,730)                     (155,251)
 Depreciation                  (24,995)       (24,444)       (24,043)                     (210,037)
 Provision for Bad Debts       (34,800)       (44,380)       (49,609)                     (258,817)
                           -------------------------------------------------------------------------
Total Operating Expenses      (950,845)    (1,059,635)      (930,970)         -         (8,273,914)
                        
                           -------------------------------------------------------------------------
Net Profit Before Tax         (343,341)      (128,040)       135,637      580,392          277,600
                        
Income Tax                         -              -         (108,500)         -           (108,500)
                           -------------------------------------------------------------------------
Net Profit After Tax          (343,341)      (128,040)        27,137      580,392          169,100

- ---------------------------------------------------------------------------------------------------- 
 

 
                                      76.


                                  ANNEXURE 4

                 Axicorp Balance Sheet as at 31 December 1995



                                    Sheet 1
 


AXICORP PTY LTD

Statement of Cash Flows
For the nine months ended 31 December 1995

 
 

                                                      Dec-95          Mar-95
                                                             
Cash flows from operating activities                
Receipts from trade and other debtors               34,234,298      11,317,189
Payments to trade creditors, other 
 suppliers and creditors and employees             (31,347,754)     (9,417,595)
Interest received                                      109,991          22,554
Income tax paid                                       (126,865)            -
Interest paid                                            4,921          (7,614)
                                                  ------------    -------------

Net cash inflows/(outflows) from
 operating activities                                2,874,591       1,914,534
                                                  ------------    ------------

Cash flows from investing activities
Payments for property, plant and equipment            (709,676)       (458,608)
Payments for investments                               173,228        (216,312)
                                                  ------------    ------------

Net cash flows from investing activities              (536,448)       (674,920)
                                                  ------------    ------------

Cash flows from financing activities
Proceeds from issue of shares                              -            30,000
Proceeds from borrowings                             1,795,079         359,921
                                                  ------------    ------------

Net cash flows from financing activities             1,795,079         389,921
                                                  ------------    ------------

Net increase in cash held                            4,133,222       1,629,535

Cash at the beginning of the financial year          1,973,231         343,696
                                                  ------------    ------------

Cash at the end of the financial year                6,106,453       1,973,231
                                                  ============    ============
 



                                  PRIM_CF XLS




                                    Sheet 1


 
AXICORP PTY LTD



Balance Sheet as at 31 December 1995

 
 

                            Note             31-Dec-95       31-Mar-95
                                                 $               $
                                                         
CURRENT ASSETS 
Cash                                          6,106,453      1,973,231
Receivables                       2          14,670,640      2,292,131
Investments                       3              58,084        231,312
Other                             5             452,362        179,916
                                            -----------    -----------

TOTAL CURRENT ASSETS                         21,287,539      4,676,590
                                            -----------    -----------

NON-CURRENT ASSETS
Investments                       3              10,000         10,000
Property, Plant and Equipment     4           1,002,019        502,380
Other                             5             860,974        298,209
                                            -----------    -----------

TOTAL NON-CURRENT ASSETS                      1,872,993        810,589
                                            -----------    -----------

TOTAL ASSETS                                 23,160,532      5,487,179
                                            -----------    -----------

CURRENT LIABILITIES
Creditors and borrowings          6          17,263,854      3,315,941
Provisions                        7             785,893        556,080
Other                             8           1,234,098        561,266
                                            -----------    -----------

TOTAL CURRENT LIABILITIES                    19,283,845      4,433,287
                                            -----------    -----------

NON-CURRENT LIABILITIES
Creditors and borrowings          6           2,155,000        359,921
Provisions                        7             974,506        115,890
                                            -----------    -----------

TOTAL NON-CURRENT LIABILITIES                 3,129,506        475,811
                                            -----------    -----------

TOTAL LIABILITIES                            22,413,351      4,909,098
                                            -----------    -----------

NET ASSETS                                      747,181        578,081
                                            ===========    ===========

SHAREHOLDERS' EQUITY
Share Capital                     8             590,000        590,000
Accumulated profits                             157,181        (11,919)
                                            -----------    -----------

TOTAL SHAREHOLDERS' EQUITY                      747,181        578,081
                                            ===========    ===========
 



                                    Page 1



 
Notes to and forming part of the accounts for the nine months ended 31 December 
1995

1.      Summary of Significant Accounting Policies

The principal accounting policies adopted in preparing the accounts of the 
company Axicorp Pty Ltd are stated to assist in a general understanding of these
accounts.

The accounts and consolidated accounts have been prepared in accordance with the
requirements in Schedule 5 of the Corporations Regulations, and the Accounting 
Standards of the Australian Society of Certified Practicing Accountants and the 
Institute of Chartered Accountants of Australia.

(a)     Basis of accounting

The accounts have been prepared on the basis of historical costs and except 
where stated, do not take into account current valuations of non-current assets.
Cost is based on the fair values of the consideration given in exchange for 
assets.

Non-current assets are revalued from time to time as considered appropriate by 
the directors and are not stated at amounts in excess of their recoverable 
amounts.  Except where stated recoverable amounts are not determined using 
discounted cash flows.

(b)     Investments

Investments have been brought to accounts as follows:

Interest in companies - the Company's interests in companies which are not 
controlled are brought to account at cost and dividends are recognized in the 
profit and loss account when received.

(c)     Depreciation and amortization of property, plant and equipment

Property, plant and equipment, other than freehold land, are depreciated over 
their estimated useful lives using the straight line method.  Profits and losses
on disposal of property, plant and equipment are taken into account in 
determining the profit for the year.

(d)     Receivables

A provision is raised for any doubtful debts based on a review of all 
outstanding amounts at year end.  Bad debts are written off during the period in
which they are identified.

(e)     Employee entitlements

Liabilities for employees' entitlements to wages and salaries, annual leave, 
sick leave and other current employee entitlements are accrued at nominal 
amounts calculated on the basis of current wage and salary rates.  Liabilities 
for other employee entitlements, which are not expected to be paid or settled 
within 12 months of balance date, are accrued in respect of all employees at the
present values of future amounts expected to be paid.

Contributions to employee superannuation plans are charged as an expense as the 
contributions are paid on become payable.  Any deficiency in the net assets of 
the superannuation plan is recognized as a provision when it arises.

(f)     Income tax

Income tax has been brought to account using the liability method of tax effect 
accounting.

 
(g)      Operating Revenue

Sales revenue represents revenue earned from the sale of the Company's products 
and services. Other revenue includes fees earned from associations.

 
 
                                                 31 December      31 March
                                                   1995             1995
                                                     $                $
                                                             
2.       Receivables

Current
Trade debtors                                    14,797,534       2,287,123
Deduct Provision for doubtful debts               (256,937)         (1,610)
                                                  ---------        --------
                                                 
                                                 14,540,597       2,285,513

Other debtors                                       130,043           6,618
                                                    -------        --------

                                                 14,670,640       2,292,131
                                                 ----------       ---------

3.       Investments

Current
Unlisted Securities (at cost)
         Bank bills                                                 198,853
         Amounts on deposit with 
           financial institutions                    58,084          32,459
                                                     ------          ------

                                                     58,084         231,312
                                                     ------         -------

Non Current
Unlisted Securities (at cost)
         Shares in other corporations                10,000          10,000
                                                     ------          ------

4.       Property, Plant and Equipment

Leasehold improvements
         At cost                                    109,511          60,588
         Less accumulated amortisation             (11,479)           (269)
                                                   --------          ------

         Written down value                          98,032          60,319
                                                     ------          ------

Plant and equipment
         At cost                                  1,167,000         506,515
         Less accumulated amortisation            (263,013)        (64,454)
                                                  ---------        --------

         Written down value                         903,987         442,061
                                                    -------         -------

         Total Property, Plant and Equipment      1,002,019         502,380
                                                  ---------         -------

 

 
 
 
                                                31 December     31 March
                                                  1995            1995
                                                   $               $
                                                           
5.     Other Assets     

Current                                                                   
Prepayments                                      214,992          170,323 
Stock                                            237,370                - 
Other current assets                                   -            9,593 
                                                 -------          -------



                                                 452,362          179,916
                                                 -------          -------

Non-Current
Future income tax benefit                        860,974          298,209
                                                 -------          -------


6.     Creditors and Borrowings                  

Current (Unsecured) 
Trade creditors                               16,887,849        3,075,055
Other creditors                                  376,005          240,886
                                                 -------          -------

Total current unsecured creditors and 
 borrowings                                   17,263,854        3,315,941
                                              ----------        ---------

Non Current (Secured) 
From chief entity                              2,155,000          359,921
                                              ----------          -------

Total non current secured creditors 
and borrowings                                 2,155,000          359,921
                                              ----------          -------


7.     Provisions

Current
Taxation                                               -          187,351
Employee entitlements                            201,373           85,463
Customer Loyalty Programme                       584,520          283,266
                                                 -------          -------

                                                 785,893          556,080
                                                 -------          -------


Non Current
Deferred income tax                              974,506          115,890
                                                 -------          -------


8.                                       Other Liabilities         

Current                                          
Other                                          1,234,098          561,266
                                               ---------          -------

 
                                       3


 
 
 
                                                                  31 December     31 March
                                                                     1995           1995
                                                                      $               $
9.     Share Capital
                                                                            
Authorized Share Capital
10,000,000 (30 June 1994: 1,000,000) ordinary
shares of $1 each                                                10,000,000      10,000,000 
98,820 redeemable reference shares of $1 each                        98,820          98,820 
1,180 special cumulative redeemable preference                                              
shares of $1 each                                                     1,180           1,180 
                                                                      -----           ----- 
                                                                                            
                                                                 10,100,000      10,100,000 
                                                                 ----------      ---------- 
                                                                                            
                                                                                            
Issued Share Capital                                                                        
590,000 ordinary shares of $1 each                                  590,000         590,000 
Less: Calls in arrears                                                    -               - 
                                                                                            
1,180 (30 June 1994: NIL) special cumulative redeemable                                     
preference shares of $1 each                                          1,180           1,180 
Less: Calls not yet made                                            (1,180)         (1,180) 
                                                                    -------         ------- 
                                                                                            
                                                                    590,000         590,000 
                                                                    -------         -------  
 

Assumptions made and breakdown of accounts as at 31 December 1995
- -----------------------------------------------------------------

2. Receivables

Trade Debtors

Trade debtors has three major components - Billing, BCS Discounts, Mobile and 
Contracting/Contracting Sales.

Billing - actual amounts billed to customers for the periods up to and including
December 95 that as at month end were still unpaid. The amounts billed related 
to Telstra, Optus, DDS, Call Plan and Mobiles traffic.

The invoicing for December 95 period are accrued at month end and were sent to 
customers in January 96 (Telstra accrual $6.5M and Optus $934K).

BCS Discounts - are amounts owing to Axicorp from Telstra for SP1, Cost Mapping,
Basic Carriage Services, Mobiles and Residential access adjustment that have 
been accrued but unpaid at month end.

Month end accruals -

SP1 for the period October 95 to December 95 total $288K which are conservative 
estimates based on known Axicorp billing volumes.

Cost Mapping for the period July 95 to December 95 total $600K based on an 
agreed amount of $100K per month.

                                       4

 
Basic Carriage Services Reseller Discounts based on prior month traffic volumes
total $3.1M. This figure has been reduced by $351K which are December discounts
that are accounted for in the Gross bill allocation and the payment owing to
Telstra. The total monthly accrual for Basic Carriage Services Reseller
Discounts is $2.7M.

Mobiles have been accrued for the months of November and December 95 based on 
historical information received from MobileNet.  The accruals are $170K per 
month therefore totalling $340K.

Residential Access Adjustment has been accrued for the months of October and 
November 95 after Axicorp had received acknowledgement from Telstra that the 
amounts were still outstanding at month end.  the total amount is $53K.

Mobile and Contracting/Contracting Sales - actual amounts billed to customers 
for the periods up to and including December 95 that as at month end were still 
unpaid.

Other Debtors

Other debtors relate to recovery of tax overpaid at March 95 and minor clearing 
accounts for items such as cancelled cheques.


3. Investments

Current-
Amounts on deposit with financial institutions are all Term Deposits held with 
the ANZ Banking Group Limited to cover bank guarantees and valued at cost.

Non Current-
Shares in other companies are listed at cost.


4. Property, Plant and Equipment

see note 1 (c).


5. Other Assets

Prepayments can be broken down into two components being General and Commission.

General prepayments primarily consist of Advertising & Promotion, Rent, Computer
maintenance and Insurance expenses that have been paid before month end but 
relate to future periods.

Commission prepayments are commissions advanced to Rep's/Agents in relation to
timing mismatches between revenue recognition and cash receipt.  At month end 
Axicorp has not brought income to account for the periods that the commission 
advances relate to.

Stock relates to Mobile phones and relevant accessories which Axicorp commenced 
selling on a small scale in August 95.  Stock on hand is valued at average cost 
with over 60% of the month end figure having been purchased during the month of 
December 95.

As at December 95 month end there have been no stock revaluations or write offs.

                                       5

 
6. Creditors and Borrowings

Current (Unsecured)

Trade Creditors

Trade creditors has five major components - Billing, BCS rebates, Commission, 
Contracting/Contracting Sales and General Creditors.

Billing - relates to actual amounts owing to Telstra and Optus by Axicorp in 
relation to traffic billed to customers by Axicorp up to and including December 
95.

BCS Rebates - are estimated amounts owing to customers in relation to estimated 
traffic volumes, Mobile rebates, SPI Lodgement fees.

Month end accruals -

BCS Rebate - November 95 $1.9M based on actual discount received of $3.2M 
multiplied by 68.15% (historical average of discount received that is paid out 
to customers) less $267K which are discounts that have been passed to customers 
via Axicorp billing. December 95 $1.4M based on estimated discount levels of 
$3.2M less $827K passed to customers via Axicorp billing.

Rebates in relation to Mobile traffic has been accrued for the months of 
November and December 95 based on Axicorp earning 7.5% and paying discounts to 
customers at an average of 4%.

SPI Lodgement fees have been estimated at YTD $80K at month end based on 
billing details submitted to Telstra.

Commission - has been estimated for the months of November and December 95 based
on the actual and estimated discounts received and using a rate of 13.62% 
(historical average of discount received that is paid out in commission) for 
commission to be paid. The December 95 accrual has been reduced by an amount of 
$60K due to a reduction in rates to Globenet.

In addition commission has been accrued for Mobiles based on Axicorp earning 
7.5% and paying commission at an average of 2% for the months of November and 
December 95.

Contracting/Contracting Sales - Actual costs incurred in relation to invoicing 
processed up to the end of December 95 that have not been paid by Axicorp at 
month end.

General Creditors - Expenses which Axicorp has received an invoice for that have
been incurred but remain unpaid at December 95 end.

Other Creditors

Other creditors are Group tax, Payroll tax and Fringe Benefits tax that have 
been incurred and estimated but remain unpaid at December 95 end.

Non Current (Secured)

Secured (Fixed and Floating Charge) borrowing's from Fujitsu Australia Limited 
that remain outstanding at December 95 month end.

                                       6



 
7. Provisions

Current

Taxation provision relates to estimated provision as at December 95.

Employee entitlements relates to annual leave that is accrued monthly for all 
employees from their commencement date with Axiocorp.

Customer Loyalty Programme (CSP 1000) is a provision for customers where they 
are paid 1% additional rebate after completion of one year from their date of
joining Axicorp. The payment is made annually and only after each full year is
completed, it is not paid for part years. The accrual is calculated monthly
based on the full liability owed at month end.



Non Current

Deferred income tax is based on the estimated calculations as at December 95.

8.  Other Liabilities

Other liabilities relate to accruals for known incurred expenditure for which 
Axicorp has not received an invoice at December 95 end.  The major components of
this account are Royalty payments owing to Ultrasys, Help Desk payment to 
Telstra, Audit costs to Price Waterhouse and Debt Collection costs to Dun & 
Bradstreet.


 
                                                                    EXHIBIT 10.2

                                                                    CONFIDENTIAL
  
                          SWITCHED TRANSIT AGREEMENT
             BETWEEN TELEGLOBE AND GLOBAL TELECOMMUNICATIONS, INC.
                             FOR SERVICES To INDIA

The Service:
- ----------- 

     Teleglobe will arrange to provide GTI, at its designated and agreed upon
operating center, and GTI will use and pay Teleglobe for international switched
transit services to India via the following configuration, whereby GTI will
arrange foreign-end service in cooperation with VSNL (India) including direct
settlement, subject to Teleglobe's receipt of confirmation of satisfactory
settlement procedures from GTI and VSNL (India). The provision of these
facilities will be on satellite and cable facilities now, or in the future, in
operation.

     Transition from switched to hardpatched facilities may occur following
Primus' request and following 90 days from which time the international switched
facilities become operational, and subject to capacity and concurrence and
readiness by Teleglobe and VSNL to effectuate service transition. No penalties
or charges would be incurred by GTI in requesting and implementing this
transition.

Configuration:
- ------------- 

                                                                 TRANSOCEANIC
                                                                 CABLE ROUTING

                                   -------------------------

                                      TORONTO        DCME

                                   -------------------------
                                                                 
                                                                 ---------
               CANADA/US BORDER                                  NEW DELHI    

                      =
                      =   
                      =
60 HUDSON             =                                          359E SATELLITE
NEW YORK, NY          =                                                ROUTING
                      =                                                
                ---------------    -------------------------

- ---------------- MOORER'S FORK ----   MONTREAL       DCME   --------------------

                ---------------    -------------------------     ---------
                                                                 BOMBAY







Invoicing:
- --------- 

     Teleglobe will invoice GTI monthly for the services. All invoice amounts
are due 30 days from invoice date. The service commencement date will be the "in
service" date of the international facilities.

     Teleglobe reserves the right to terminate service with thirty (30) days
written notice for accounts with past due balances.

 
                                                                    CONFIDENTIAL

Operational:
- ----------- 

     The service performance will be commensurate with Teleglobe's backbone
network, which meets and exceeds the standards of the industry.

     DCME or low-rate encoded compression will be used to no more than 4:1 on
the routes.

Liability:
- --------- 

     TELEGLOBE shall not be liable for any loss or damage sustained by GTI, its
interconnecting carriers or its end users. by reason of any failure in or
breakdown of the communication facilities associated with the circuits under
this agreement or for any interruption or degradation of service whatsoever
shall be the cause of such failure, breakdown, interruption or degradation and
however long it shall last.

     TELEGLOBE will not be responsible for any direct, indirect, consequential,
or any other damages resulting from any action that might be taken by VSNL which
would result in the cancellation of service or cause a disruption of service.

Confidentiality:
- --------------- 

     GTI will treat this agreement, all product information, descriptions and
prices, methods of operation and their terms and conditions as strictly
confidential. GTI will not disclose any of this information or any of these
materials to any person who is not a party to this agreement. Notwithstanding
the foregoing, GTI may disclose, on a limited basis, agreement terms as
necessary or required by regulatory authorities, auditors, attorneys or
government agents.

Term:
- ---- 

     The term for this service will be one year, commencing upon the "in-
service" date of the international facilities, or until service transition to
hardpatch transit circuits occurs.

Pricing and Volume Commitment:
- ----------------------------- 

     The monthly charge for this service will be US$22,500. Teleglobe will
retroactively adjust billing to GTI, based upon GTI's actual monthly call volume
at the rate of $0.15/minute, with call durations rounded up to the nearest six
seconds and monthly volume rounded up to the nearest minute, and subject to an
average volume commitment of 150,000 minutes per month during the period that
GTI has in service with Teleglobe. Any installation charges for line connections
from New York to the US/Canadian border, not to exceed US$3,000 per line, would
be passed through as assessed.

Force Majeure:
- ------------- 

     No failure or omission by either party to carry out or observe any of the
terms and conditions of this Agreement shall give rise to any claim against the
party in question or be deemed a breach of this Agreement if such failure or
omission arises from a cause of force majeure, an act of Government or any other
cause beyond the reasonable control of that party.

                                      -2-

 
                                                                    CONFIDENTIAL

Termination:
- ----------- 

     If, before the expiration of the contracted terms, the service is canceled
by GTI for any reason, GTI shall pay a termination charge of one hundred percent
(100%) of the total monthly charges for the unexpired portion of the contracted
term, unless GTI signs a new, mutually agreeable commitment that would provide
Teleglobe with revenues that would be equal to or exceeding those of the
original requirements remaining dollar commitment over an equivalent period.

Approval:
- -------- 

     The parties have executed this Agreement through their duly authorized
representatives .

TELEGLOBE                              GLOBAL TELECOMMUNICATIONS, INC.


______________________________         ______________________________ 
Name                                   Name



______________________________         ______________________________ 
Title                                  Title



______________________________         ______________________________ 
Date                                   Date

                                      -3-

 
                                                                    CONFIDENTIAL

                              LETTER OF AGREEMENT
                     BY AND BETWEEN TELEGLOBE USA INC. AND
                        GLOBAL TELECOMMUNICATIONS, INC.

Re:  Switched and Hardpatch Transit Service Agreement between Teleglobe and
     Global Telecommunications, Inc.; India

In connection with the telecommunications services agreement between Teleglobe
and Global Telecommunications, Inc. dated ______________, 1995, Teleglobe has
agreed to provide Global Telecommunications, Inc. with a credit of US$2,000 per
month against the fixed monthly charges of the DS-1 (____________) interconnect
circuit.

This credit will continue in effect so long as the current facility
configuration between Teleglobe and GTI remains unchanged, and may be adjusted
from time to time to reflect changes in the cost of leased line facilities.


Agreed to by:


TELEGLOBE                              GLOBAL TELECOMMUNICATIONS, INC.


______________________________         ______________________________
Name                                   Name



______________________________         ______________________________ 
Title                                  Title



______________________________         ______________________________ 
Date                                   Date

                                      -4-


 
                                                                    EXHIBIT 10.3

                                                                    CONFIDENTIAL

                          HARDPATCH TRANSIT AGREEMENT
             BETWEEN TELEGLOBE AND PRIMUS TELECOMMUNICATIONS, INC.
                             FOR SERVICES TO IRAN

Description of Service:
- ---------------------- 

     Teleglobe will arrange to provide Primus, at its designated and agreed upon
operating center, and Primus will use and pay for a 512 KB circuit (eight clear
64 KB contiguous channel voice half-circuits) to Iran.  The provision of this
facility is in cooperation with T.C.I. (Iran) via INTELSAT 359E satellite
facilities now, or in the future, in operation, or other satellite facilities as
may be required and mutually agreed to by Teleglobe, T.C.I. and Primus.

     These facilities will be subject to concurrence and matching order by
T.C.I.

Term:
- ---- 

     The term for this service will be six months, commencing upon the "in
service" date of the international facilities.  This service will be renewable
in calendar month increments.

Pricing:
- ------- 

     The monthly charge for the eight clear channel international voice half-
circuit service is US$11,908. FOB 60 Hudson, Room 1107, New York, New York
10013.

Invoicing:
- --------- 

     Teleglobe will invoice Primus monthly for the service.  All invoice amounts
are due 30 days from invoice date.  The service commencement date will be the
"in service" date of the international facilities.

     Teleglobe reserves the right to terminate service with thirty (30) days
written notice for accounts with past due balances.

Operational:
- ----------- 

     The service activation for the eight clear channel international voice
half-circuits would be within 60 days of the execution of the Agreement.
Teleglobe will request space segment match from T.C.I. and initiate procurement
of space segment within seven days of the execution of this agreement.

     The service performance will be commensurate with Teleglobe's backbone
network, which meets and exceeds the standards of the industry.

     Any required echo cancellation and/or signaling will be the responsibility
of GTI.

     The restoration of these station-kept, non-preemptible satellite
facilities, in the event of an outage or failure, would be in accordance with
the standard INTELSAT policy under Article III of the INTELSAT Agreement.

 

                                                                    CONFIDENTIAL
 
Termination:
- ----------- 

     If, before the expiration of the contracted terms, the service is canceled
by the customer for any reason, the customer shall pay a termination charge of
one hundred percent (100%) of the total monthly charges for the unexpired
portion of the contracted term, unless the customer signs a new, mutually
agreeable commitment that would provide Teleglobe with revenues that would be
equal to or exceeding those of the original requirements remaining dollar
commitment over an equivalent period.

Force Majeure:
- ------------- 

     No failure or omission by either party to carry out or observe any of the
terms and conditions of this Agreement shall give rise to any claim against the
party in question or be deemed a breach of this Agreement if such failure or
omission arises from a cause of force majeure, an act of Government or any other
cause beyond the reasonable control of that party.

Liability:
- --------- 

     TELEGLOBE shall not be liable for any loss or damage sustained by Primus,
its interconnecting carriers or its end users, by reason of any failure in or
breakdown of the communication facilities associated with the circuits under
this Agreement or for any interruption or degradation of service whatsoever
shall be the cause of such failure, breakdown, interruption or degradation and
however long it shall last.

     TELEGLOBE will not be responsible for any direct, indirect, consequential,
or any other damages resulting from any action that might be taken by T.C.I.
which would result in the cancellation of service or cause a disruption of
service.

Confidentiality:
- --------------- 

     Primus will treat this agreement, all product information, descriptions and
prices, methods of operation and their terms and conditions as strictly
confidential.  Primus will not disclose any of this information or any of these
materials to any person who is not a party to this agreement.  Notwithstanding
the foregoing, Primus may disclose, on a limited basis, agreement terms as
necessary or required by regulatory authorities, auditors, attorneys or
government agents.

Approval:
- -------- 

     The parties have executed this Agreement through their duly authorized
representatives.

TELEGLOBE                          PRIMUS TELECOMMUNICATIONS, INC.


_________________________          __________________________
Name                               Name


_________________________          __________________________ 
Title                              Title


_________________________          __________________________
Date                               Date

                                      -2-


 
                                                                    EXHIBIT 10.4


                                   AGREEMENT


                                      FOR


                                  BILLING AND


                               RELATED SERVICES


                                    between


                        GLOBAL TELECOMMUNICATIONS, INC.


                                      and


                      ELECTRONIC DATA SYSTEMS CORPORATION

 
                                   AGREEMENT
                                FOR BILLING AND
                               RELATED SERVICES


               THIS AGREEMENT, dated as of February _____, 1995 (the "Effective
Date"), is between Global Telecommunications, Inc., a ___________ corporation
("Customer"), and Electronic Data Systems Corporation, a Texas corporation
("EDS").

                                   RECITALS

               WHEREAS, Customer desires to purchase from EDS certain billing
and related services, and EDS is willing to provide, or cause to be provided,
such services to Customer upon the terms and subject to the conditions set forth
in this Agreement;

               NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained in this Agreement, the parties agree as
follows:

                  ARTICLE I.  AGREEMENT, TERM AND DEFINITIONS

1.1     Agreement.
        ---------  

        (a)    Scope.  During the term of this Agreement, EDS will provide to
               ----                                                          
               Customer, and Customer will purchase from EDS, the billing and
               related services described in this Agreement, all upon the terms
               and subject to conditions specified in this Agreement.

        (b)    Affiliates.  If Customer so requests, EDS will provide Services
               ----------
               (as defined in Section 2.1) pursuant to this Agreement to any
               specified affiliate of Customer, provided that such affiliate
               agrees in writing to be bound by the terms and provisions of this
               Agreement by its execution and delivery of a "Ratification and
               Acceptance Agreement," substantially in the form attached as
               Exhibit A. Unless otherwise specified or the context otherwise
               requires, any references in this Agreement to "Customer" also
               include a reference to any such affiliate of Customer to which
               EDS provides Services. Customer agrees to be jointly and
               severally liable with any such affiliates for any obligations or
               liabilities incurred by any such affiliates pursuant to this
               Agreement.

1.2     Term and Renewal.
        ---------------- 

        (a)    Term.  The term of this Agreement will commence on the date
               ----
               hereof and will expire on the 60-month anniversary of the Start
               of Processing Date (as defined in Section
                                                 -------

                                      -2-

 
               1.3), unless earlier terminated in accordance with Article VIII
               or extended pursuant to Section 1.2(b).
                                       -------------- 

        (b)    Automatic Renewal.  Notwithstanding the provisions of Section
               -----------------                                     -------
               1.2(a), the term of this Agreement will automatically extend for
               ------
               successive one-year periods after the 60-month anniversary of the
               Start of Processing Date unless either of the parties notifies
               the other party in writing at least six months prior to such
               anniversary date or at least six months prior to the end of any
               such one-year extension period, as the case may be, that this
               Agreement will not be so extended (such expiration date, on the
               60-month anniversary of the Start of Processing Date or as so
               extended, being hereinafter referred to as the "Expiration
               Date"). In the event that Customer notifies EDS that the term of
               this Agreement will not be extended pursuant to this Section
                                                                    -------
               1.2(b), EDS will cooperate with the transition of the Services as
               ------
               reasonably requested by Customer, provided that to the extent any
               such transition requires resources beyond those otherwise then
               being provided by EDS hereunder, all such services will be
               performed as Additional Services pursuant to Section 2.4.
                                                            ------------

1.3     Certain Definitions.  As used in this Agreement, the terms set forth
        -------------------
        below will have the following respective meanings:

               "Business Day" means any day except a Saturday, Sunday or other
        day on which national banks in the city where EDS is providing Services
        pursuant to this Agreement are authorized or required by law to close.

               "Client" means a customer of Customer that provides various
        telecommunications services to End Users and that desires to receive
        billing services through EDS from Customer.

               "Customer Data" means the data specific to the business of
        Customer, Clients, and End Users of Customer, with respect to which
        Services are to be provided under this Agreement.

               "End User" means the ultimate customer or subscriber of the
        telephone or information services provided by Customer or one of the
        Clients.

               "Governmental Authority" means any nation or government, any
        state or other political subdivision thereof and any entity exercising
        executive, judicial, regulatory or administrative functions of or
        pertaining to government (including, without limitation, the Federal
        Communications Commission and any public utility commission or public
        service commission of any state).

                                      -3-

 
               "Local Time" means the time at the EDS Data Center (as defined in
        Section 2.1) where EDS is performing Services pursuant to this
        Agreement.

               "Message" means a record of those mutually agreed upon and
        legally permitted (i) telephone calls originated by an End User through
        Customer or one of the Clients, or (ii) other services provided by or
        through Customer to End Users.

               "Person" means any individual, corporation, partnership, joint
        venture, association, trust or any other entity or organization of any
        kind or character, including a Governmental Authority.

               "Software" means (a) computer programs, including without
        limitation software, application programs, operating systems, files and
        utilities, (b) supporting documentation for such computer programs,
        including without limitation input and output formats, program listings,
        narrative descriptions, operating instructions, and (c) the tangible
        media upon which such programs and documentation are recorded, including
        without limitation hard copy, tapes and disks.

               "Start of Processing Date" means the date when EDS prints the
        first End User bills pursuant to Section 1.6 of Schedule 2.1, as such
                                         -----------    ------------
        date is reflected on the "Start of Processing Date Notice" delivered by
        EDS to Customer in accordance with Section 2.1.
                                           ----------- 

               "Tax Returns" means returns, declarations, reports, claims for
        refund and informational returns or statements relating to Taxes,
        including any schedules or attachments thereto.

               "Taxes" means any taxes, however designated or levied, based upon
        amounts payable to EDS pursuant to this Agreement, including state,
        local, and federal taxes, and any taxes or amounts in lieu thereof paid
        or payable by EDS in respect of the foregoing, exclusive, however, of
        franchise taxes, taxes based on the net income of EDS and taxes that (i)
        are measured by (A) EDS' cost in acquiring property, goods and services
        and not by Customer's cost in acquiring property, goods or services from
        EDS, or (B) with respect to property taxes, the value of any property
        used by EDS in performing the Services under this Agreement and (ii) are
        imposed on EDS' purchase or use of such property, goods or services.

1.4     Other Definitions.  Capitalized terms in this Agreement that are not
        -----------------                                                   
        otherwise defined in Section 1.3 will have the respective meanings
                             -----------
        assigned to such terms in this Agreement.

                                      -4-

 
                         ARTICLE II.  EDS OBLIGATIONS

2.1     EDS Services.  Commencing on the Start of Processing Date, EDS will
        ------------
        provide to Customer the services described on Schedule 2.1 (the
                                                      ------------
        "Services") and promptly thereafter deliver to Customer a "Start of
        Processing Date Notice", substantially in the form attached as Exhibit
        B; any or all of which Services may be undertaken in any one or more
        data or information processing centers maintained by EDS (an "EDS Data
        Center"). Notwithstanding the foregoing, any failure of EDS to deliver
        the Start of Processing Date Notice will not affect the rights or
        obligations of the parties under this Agreement.

2.2     Performance Standards.  EDS will provide the Services in accordance with
        ---------------------                                                   
        the performance standards set forth on Schedule 2.2 (the "Performance
                                               ------------                  
        Standards").

2.3     Safeguarding of Customer Data.  EDS will maintain safeguards against the
        ----------------------------- 
        destruction, loss or alteration of the Customer Data in the possession
        of EDS in conformity with the safeguards described on Schedule 2.3.
                                                              ------------ 

2.4     Additional Services.  Customer may from time to time request EDS to
        -------------------
        provide services that relate to Customer's billing and related needs but
        that are not expressly provided for in this Agreement, including,
        without limitation, any enhancements or modifications to any of EDS'
        Software (the "Additional Services"). EDS will provide to Customer such
        Additional Services as to which the parties have reached a written
        agreement regarding (a) the scope and nature of the Additional Services
        to be provided, (b) the time period in which EDS will provide the
        Additional Services and (c) the basis upon which EDS will be compensated
        therefor in accordance with Section 3.4.
                                    -----------
 
2.5     Disclaimer of Warranties.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
        ------------------------
        THIS AGREEMENT, EDS MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR
        IMPLIED, TO CUSTOMER OR TO ANY OTHER PERSON, INCLUDING, WITHOUT
        LIMITATION, ANY WARRANTIES REGARDING TITLE, THE MERCHANTABILITY,
        SUITABILITY, ORIGINALITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE
        (IRRESPECTIVE OF ANY PREVIOUS COURSE OF DEALINGS BETWEEN THE PARTIES OR
        CUSTOM OR USAGE OF TRADE) OF ANY SERVICES, SOFTWARE OR MATERIALS
        PROVIDED UNDER THIS AGREEMENT.

2.6     Reliance on Instructions.  EDS will be entitled to rely upon any routine
        ------------------------                                                
        instructions or information provided to EDS by the Customer
        Representative (as defined in Section 4.7) or by such other persons
                                      -----------
        designated in writing by Customer, and EDS will incur no liability in so
        relying.

                                      -5-

 
                         ARTICLE III.  PAYMENTS TO EDS

3.1     Compensation to EDS.  In consideration for the Services to be provided
        -------------------
        by EDS pursuant to this Agreement, Customer will pay to EDS the charges
        and fees set forth in Schedule 3.1.
                              ------------ 

3.2     Reimbursement of Expenses.  Customer will pay, or reimburse EDS for, all
        -------------------------                                               
        actual out-of-pocket costs and expenses, including, without limitation,
        travel and travel-related expenses, incurred with the approval of the
        Customer Representative and in connection with EDS' performance of its
        obligations under this Agreement.

3.3     Extension Period Charges.  If this Agreement is extended for any period
        ------------------------                                               
        pursuant to Section 1.2(b), the charges for the Services provided by EDS
                    -------------                                               
        for such period will be such charges as will be mutually agreed upon by
        the parties in writing for such period by an amendment or supplement to
        Schedule 3.1; provided, however, that in the absence of such an express
        ------------                                                           
        agreement in writing, the charges will be based on the rates then in
        effect under this Agreement, as adjusted for the new year pursuant to
        Section 3.6.
        ----------- 

3.4     Charges for Additional Services.  In consideration for any agreement by
        -------------------------------
        EDS from time to time to provide Additional Services pursuant to Section
                                                                         -------
        2.4, Customer will pay to EDS (a) any applicable additional charges set
        ---
        forth on Schedule 3.1 or any other amounts mutually agreed upon by the

        parties for such Additional Services by an amendment or supplement to
        Schedule 3.1, if any, and (b) the reasonable out-of-pocket expenses,
        ------------
        including, without limitation, travel and travel-related expenses,
        incurred by EDS with the approval of the Customer Representative and in
        connection with the provision by EDS of the Additional Services.

3.5     Rerun Expenses.  Customer will pay all reasonable fees and expenses of
        --------------
        EDS (not to exceed the fees and expenses set forth on Schedule 3.1) for
                                                              ------------
        reruns necessitated (a) by incorrect, incomplete or omitted information,
        or erroneous instructions supplied to EDS by Customer, its employees or
        agents, (b) for the correction of programming, operator and other
        processing errors caused by Customer, its employees or agents, and (c)
        by incorrect reports that were not rejected by Customer within the
        applicable time periods provided in Section 4.4.
                                            ----------- 

3.6     Cost of Living Adjustments.  If, during the term of this Agreement, the
        --------------------------                                             
        Consumer Price Index for All Urban Consumers, All Cities Average, 1982-
        84 = 100, as published by the Bureau of Labor Statistics of the
        Department of Labor (the "CPI"), will at any anniversary of the first
        calendar day of the month in which the Start of Processing Date occurs
        (the "Current Index") be higher than the highest CPI on any previous

                                      -6-

 
        anniversary of the first calendar day of the month in which the Start of
        Processing Date occurs (the "Base Index"), then, effective as of such
        anniversary, all amounts payable to EDS from and after such anniversary
        pursuant to this Article III will be increased thereafter by the
        percentage that the Current Index will have increased from the Base
        Index and such amounts as increased pursuant to this Section 3.6 will be
                                                             -----------
        deemed incorporated herein. Notwithstanding the foregoing, the
        percentage increase in any 12-month period will not exceed 3 % per year.

3.7     Invoice and Time of Payment.  Any amount due EDS pursuant to this
        ---------------------------
        Agreement for which a time for payment is not otherwise specified will
        be due and payable 30 days after Customer's receipt of an invoice from
        EDS. Any amount owing to EDS pursuant to this Agreement that is not paid
        when due and payable will thereafter bear interest until paid at a rate
        of interest equal to 4% per annum more than the prime or base rate
        established from time to time by Citibank, N.A. in New York, New York;
        provided, however, that in no event will such interest rate exceed the
        maximum rate of interest allowed by applicable law.

3.8     Taxes.  There will be added to any charges under this Agreement, and
        -----                                                               
        Customer will pay to EDS, amounts equal to any Taxes, or surcharges,
        however designated or levied, based upon such charges, or upon this
        Agreement, or the Services, or items provided pursuant to this
        Agreement, or their use, including state and local sales, use, privilege
        or excise taxes, or federal excise taxes based on gross revenue and any
        taxes or amounts in lieu thereof paid or payable by EDS in respect of
        the foregoing, exclusive, however, of franchise taxes and taxes based on
        net income of EDS.*

                       ARTICLE IV.  CUSTOMER OBLIGATIONS

4.1     Customer Obligations.  As soon as is practicable after the date hereof
        --------------------
        but, in any event, before the Start of Processing Date and throughout
        the term of this Agreement, Customer will perform those obligations set
        forth on Schedule 4.1.
                 ------------

4.2     Certification Requirements.  Commencing with the date hereof and
        --------------------------
        throughout the term of this Agreement, Customer (a) will, and will cause
        each Client to, obtain and maintain in full force and effect all legally
        required licenses, franchises, privileges, permits, consents,
        exemptions, certificates (including, without limitation, certificates of
        public convenience and necessity), registrations, orders, approvals,
        authorizations and similar documents and instruments (collectively, the
        "Certifications"), (b) will promptly notify EDS in writing of any
        expiration, revocation, termination, amendment or renewal of any such
        Certification, and (c) will,

                                      -7-

 
        and will cause each Client to, comply in all respects with the
        Certifications.

4.3     Bad Debt Collection.  Customer will be solely responsible for the
        -------------------                                              
        collection of any End User bills not paid by the End Users. EDS will
        have no responsibility or liability with respect to any such unpaid End
        User bills.

4.4     Inspection of Reports.  Customer will inspect and review all reports
        ---------------------                                               
        prepared by EDS and reject all incorrect reports (a) within five
        Business Days after receipt thereof with respect to daily reports, (b)
        within seven Business Days after receipt thereof with respect to weekly
        reports, and (c) within ten Business Days after receipt thereof with
        respect to monthly or other reports. Failure to reject any such report
        within the times provided in this Section 4.4 will constitute acceptance
                                          -----------
        thereof.

4.5     Data Transportation, Communication, Access and LEC Billings.  Customer
        -----------------------------------------------------------
        will (a) provide, or will request EDS to provide at Customer's expense,
        all necessary transportation for delivery of data and other input from,
        and for distribution of reports and other output to, Customer, (b) be
        responsible for the acquisition and provision of any equipment
        (including, without limitation, terminals, printers and modems but
        excluding any data telecommunication lines or equipment at or between
        any EDS Data Centers), that are necessary or appropriate for Customer to
        access Customer Data at any EDS Data Center, (c) be responsible for the
        payment of all LEC and clearinghouse charges related to LEC billings,
        and (d) enter into arrangements with data telecommunication network
        carriers for the provision of access to such networks and pay any usage
        costs or charges relating thereto, as may be necessary or appropriate
        for Customer to access Customer Data at any EDS Data Center.

4.6     Priorities and Cooperation.  Customer will cooperate with EDS (a) to
        --------------------------                                          
        establish priorities for the Services to be provided to Customer and (b)
        in good faith in the performance of Customer's activities contemplated
        by this Agreement through, among other things, making available, as
        reasonably requested by EDS, such information, facilities, management
        decisions, approvals, authorizations and acceptances in order that EDS'
        provision of Services under this Agreement may be accomplished in a
        proper, timely and efficient manner.

4.7     Customer Representative.  Customer will designate an officer or employee
        -----------------------
        of Customer (the "Customer Representative") who will be authorized to
        act generally as the primary point of contact for EDS in dealing with
        Customer with respect to the Services. If Customer will fail to
        expressly designate a Customer Representative, the principal executive
        officer of

                                      -8-

 
        Customer will be the Customer Representative.  The Customer
        Representative will be responsible for directing, insofar as EDS is
        concerned, all activities of Customer affecting the provision by EDS of
        the Services under this Agreement and will also work with EDS to
        establish Customer's priorities for the Services.

4.8     Other Financial Obligations.  In addition to any other financial
        ---------------------------                                     
        responsibilities of Customer contemplated by this Agreement, Customer
        will pay all costs and expenses related to each item that is to be
        provided by Customer pursuant to this Agreement and for which the
        financial responsibility has not been expressly assigned to EDS,
        including, without limitation, those items set forth in this Article IV.
                                                                     ---------- 

           ARTICLE V.  PROPRIETARY, DATA, SECURITY AND AUDIT RIGHTS

5.1     EDS Software.  Any Software that is owned by EDS (and not proprietary to
        ------------                                                            
        any other party), any developments, improvements, modifications,
        additions or enhancements made by or for EDS to any such Software and
        any new Software developed or created by EDS pursuant to this Agreement
        will be and will remain solely EDS' property. Customer will have no
        ownership interests or other rights to any of such items.

5.2     Customer Data.  As between EDS and Customer, the Customer Data will
        -------------
        remain solely Customer's property. Customer hereby authorizes EDS to
        have access to and to make use of the Customer Data (including, without
        limitation, the back-up copies of switch data established and maintained
        by Customer pursuant to Section 1.4 of Schedule 4.1) as is appropriate
                                -----------    ------------
        for the performance by EDS of its obligations under this Agreement and
        in accordance with the safeguards described in Schedule 2.3. Upon the
                                                       ------------
        expiration or termination of this Agreement for any reason, EDS will
        either delete such Customer Data from the data files maintained by EDS
        or return the Customer Data to Customer. Except as is expressly provided
        for in this Agreement, EDS will not sell, assign, lease or otherwise
        dispose of, or commercially exploit, the Customer Data.

5.3     Confidentiality.  Except as otherwise provided in this Agreement, all
        ---------------                                                      
        confidential information or trade secrets (including, without
        limitation, any Software or Customer Data) (collectively, the
        "Confidential Information") communicated to one party by the other
        party, whether before or after the Start of Processing Date, will be,
        and will be deemed to have been, received in strict confidence and will
        be used only for the purposes of carrying out the obligations of, or as
        otherwise contemplated by, this Agreement. Without obtaining the prior
        written consent of the other party, neither party will disclose any such
        Confidential Information received from the other party. Confidential
        Information will not include

                                      -9-

 
        any information that (a) is already in the possession of such party
        without being subject to another confidentiality agreement; (b) is or
        becomes generally available to the public other than as a result,
        directly or indirectly, of a disclosure of information by such party or
        by other persons to whom such party disclosed information; (c) is or
        becomes available to such party on a non-confidential basis from a
        source other than the other party or its representatives, provided that
        such source is not bound by a confidentiality agreement with the other
        party; (d) is independently developed by such party without the use of
        the other party's information; (e) is required to be disclosed pursuant
        to an arbitration proceeding conducted in accordance with Article VI,
                                                                  ----------
        provided that such disclosure is made in accordance with the approval
        and at the direction of the Arbitration Panel (as defined in Section
                                                                     -------
        6.1(c)); or (f) is required to be disclosed pursuant to a requirement of
        ------
        any Governmental Authority or any statute, rule or regulation, provided
        that such party gives the other party notice of such requirement prior
        to any such disclosure.

5.4     Security Access.  Only by complying with such reasonable security
        ---------------                                                  
        procedures that EDS may adopt from time to time, will the employees,
        officers or authorized agents of Customer be permitted to (a) enter any
        EDS Data Center, (b) operate, directly or indirectly, any equipment or
        Software in any EDS Data Center or (c) access data or information in any
        EDS Data Center via telecommunications lines or modems.

5.5     Audit Rights.  Upon reasonable prior written notice by Customer, EDS
        ------------
        will agents from any Governmental Authority exercising jurisdiction over
        Customer's business with (a) reasonable access to any Customer Data
        located at any EDS Data Center from which EDS is providing Services
        pursuant to this Agreement for the limited purpose of performing audits
        or inspections of Customer and (b) such assistance of a routine nature
        as they may reasonably require in connection with such audit or
        inspection. In the event of any request beyond the scope of the
        foregoing, such request will be deemed a request for Additional Services
        pursuant to Section 2.4. Notwithstanding the foregoing, any such access
        provided pursuant to this Section 5.5 will be limited to the Customer
        Data and will not interfere with, and will be limited by, EDS'
        reasonable work or security needs.

                           ARTICLE VI.  ARBITRATION

6.1     Dispute Resolution.  In the event of any dispute, controversy or claim
        ------------------
        of any kind or nature arising under or in connection with this Agreement
        or the provision of the Services by EDS that the parties are unable to
        resolve through informal

                                      -10-

 
        discussions or negotiations, the parties agree to submit such dispute,
        controversy or claim to arbitration in accordance with the following
        procedures:

        (a)    Either party may demand arbitration by giving the other party
               written notice to such effect, which notice will (i) describe, in
               reasonable detail, the nature of the dispute, controversy or
               claim, and (ii) name an arbitrator who is experienced in the
               resolution of disputes, controversies or claims relating to
               information technology services.

        (b)    Within 30 days after the other party's receipt of such demand,
               such other party will name a second arbitrator who is experienced
               in the resolution of disputes, controversies or claims relating
               to information technology services.

        (c)    The two arbitrators so named will promptly select a third
               arbitrator who also is experienced in the resolution of disputes,
               controversies or claims relating to information technology
               services. The arbitration will be heard by a panel of the three
               arbitrators so chosen (the "Arbitration Panel"), and the
               resolution of the dispute, controversy or claim will be
               determined by a majority vote of the Arbitration Panel. The
               Commercial Arbitration Rules of the American Arbitration
               Association will govern the conduct of the arbitration.

        (d)    Customer and EDS will each bear 50% of all fees, costs and
               expenses of the arbitration, and each party will bear its own
               legal fees and expenses, and costs of all experts and witnesses;
               provided, however, that if the claim of either party is upheld by
               the Arbitration Panel in all material respects, then the
               Arbitration Panel may apportion between the parties as the
               Arbitration Panel may deem equitable the costs incurred by the
               prevailing party.

        (e)    The party demanding arbitration will request the Arbitration
               Panel to (i) allow for the parties to request reasonable
               discovery pursuant to the rules then in effect under the Federal
               Rules of Civil Procedure for a period not to exceed 60 days prior
               to such arbitration and (ii) require the testimony to be
               transcribed. No findings of fact or opinions of law will be
               required to be made by the arbitrators.

        (f)    Any award rendered by the Arbitration Panel will be final,
               conclusive and binding upon the parties and any judgment thereon
               may be entered and enforced in any court of competent
               jurisdiction.

                                      -11-

 
6.2     Exclusive Remedy.  Other than any action necessary to enforce the
        ----------------                                                 
        award of the Arbitration Panel, the parties agree that the provisions of
        this Article VI are a complete defense to any suit, action or other
             ----------
        proceeding instituted in any court or before any administrative tribunal
        with respect to any dispute, controversy or claim arising under or in
        connection with this Agreement or the provision of the Services by EDS.
        Nothing in this Article VI prevents the parties from exercising their
                        ----------
        rights to terminate this Agreement in accordance with this Agreement.

6.3     Continued Performance.  Unless (a) EDS has commenced a proceeding or has
        ---------------------                                                   
        presented a claim pursuant to this Article VI for nonpayment of amounts
                                           ----------
        due under this Agreement by Customer and Customer does not promptly pay
        all amounts in dispute into the escrow account referred to below, or (b)
        this Agreement has been terminated in accordance with Article VIII
                                                              ------------
        (including, without limitation, Section 8.2), EDS will continue to
                                        -----------
        provide the Services during any arbitration proceedings commenced
        pursuant to this Article VI and Customer will continue to perform its
                         ----------
        obligations (including the making of payments to EDS) in accordance with
        this Agreement. Up to the maximum amount in dispute, any disputed
        payment will be paid pending rendition of the award by the Arbitration
        Panel, into an escrow account that is structured by agreement of the
        parties, or if agreement cannot be reached, as directed by the
        Arbitration Panel. Any such escrow account will provide for the payment
        of interest on the amounts deposited therein, and the Arbitration Panel
        will make the determination regarding distribution of such deposited
        amounts plus interest. Notwithstanding the foregoing, if EDS has
        commenced a proceeding or presented a claim pursuant to this Article VI
                                                                     ----------
        for nonpayment of amounts due under this Agreement by Customer, and
        Customer does not promptly pay all amounts in dispute into such escrow
        accounts, EDS may (upon the exercise of its sole discretion and without
        reference to any independent standard of judgment) (x) cease to perform
        Services ten days after the commencement of such proceeding or the
        presentation of such claim for the duration of such arbitration
        proceeding and/or (y) exercise its rights to terminate this Agreement
        pursuant to Section 8.2.
                    ----------- 

6.4     Tax Disputes.  Customer is liable for all Taxes to the same extent that
        ------------                                                           
        Customer is liable for other amounts payable to EDS by Customer under
        this Agreement. Customer will pay Taxes to EDS at the same time and in
        the same manner that it pays such other amounts to which the Taxes
        related. EDS and Customer will cooperate to minimize and properly
        calculate any applicable Taxes and, in connection therewith, Customer
        will provide EDS any resale certificates, information regarding out-of-
        state use of materials, services or sales, or other exemption
        certificates or information reasonably requested by

                                      -12-

 
        EDS. EDS will have sole control over the response to and settlement of
        any claims for Taxes that may be asserted by applicable taxing
        authorities. Customer will be entitled to any refunds or rebates of
        taxes granted to the extent such refunds or rebates are of Taxes that
        were paid by Customer.

                    ARTICLE VII.  INDEMNITIES AND LIABILITY

7.1     Personal Injury and Property Indemnity.  Customer will not be liable to
        -------------------------------------- 
        EDS for any injury to any person or property caused by the acts of EDS
        or its employees, and EDS agrees to indemnify, defend and hold harmless
        Customer from and against any and all claims, actions, damages,
        liabilities, costs and expenses (including, without limitation,
        reasonable attorneys' fees and expenses) relating to or arising out of
        any such injury. EDS will not be liable to Customer for any injury to
        any person or property caused by the acts of Customer or its employees,
        and Customer agrees to indemnify, defend and hold harmless EDS from and
        against any and all claims, actions, damages, liabilities, costs and
        expenses (including, without limitation, reasonable attorneys' fees and
        expenses) relating to or arising out of any such injury.

7.2     Intellectual Property Indemnity.  Each of the parties will indemnify,
        -------------------------------                                      
        defend and hold harmless the other party from and against any and all
        claims, actions, damages, liabilities, costs and expenses (including,
        without limitation, reasonable attorneys' fees and expenses) relating to
        or arising out of any claims of infringement of any patent, copyright,
        trademark, service mark, trade name, trade secret or similar proprietary
        rights conferred by contract or by common law or by any law of the
        United States or any state alleged to have occurred because of Software
        or other intellectual property (or the access or other rights to such
        Software or property) provided by such party to the other party pursuant
        to this Agreement.

7.3     Tax Indemnity.  Customer will indemnify, defend and hold harmless EDS
        -------------
        from and against any and all claims, actions, damages, liabilities,
        costs and expenses (including reasonable attorneys' fees and expenses)
        relating to or arising out of any Taxes payable by EDS as a result of
        (a) the delay or failure of Customer, for any reason, to pay any such
        Taxes, or to timely file any Tax Return as required by law or this
        Agreement; (b) EDS' compliance with this Agreement or any determination,
        direction or advice of Customer; (c) EDS' use, in accordance with this
        Agreement, of information provided by Customer; (d) in the absence of
        any direction from Customer to the contrary, any act or omission of EDS,
        excluding any act or omission that is determined to have been undertaken
        by EDS with willful misconduct or gross negligence; or (e) a
        determination by the Internal Revenue Service ("IRS") or any

                                      -13-

 
        other Governmental Authority, whether in response to a ruling request or
        in the course of an audit of any Person, that EDS is responsible for
        collecting and remitting Taxes or for filing any Tax Returns relating
        thereto, applicable to Customer; provided, however, that with respect to
        this clause (e), EDS will not be entitled to any indemnification with
        respect to any penalties or interest on any such Taxes that EDS failed
        to collect and remit in violation of its obligations under this
        Agreement.

7.4     Billing Related Indemnities.  Customer will indemnify, defend and hold
        ---------------------------                                           
        harmless EDS from and against any and all claims, actions, damages,
        liabilities, costs and expenses (including, without limitation,
        reasonable attorneys' fees and expenses) relating to or arising out of
        (a) the failure, neglect or refusal of any End User to pay any amounts
        due and owing to Customer, (b) any breach or alleged breach by Customer
        of Customer's obligations set forth in Section 4.2, (c) the
                                               -----------
        incorrectness or incompleteness of any data or information supplied to
        EDS by Customer pursuant to Section 1.1, 1.2 or 1.3 of Schedule 4.1 or
                                    -----------  ---    ---    ------------     
        (d) any of Customer's billing or collection practices determined by any
        Governmental Authority to be unlawful.

7.5     Indemnity Procedures.  Any party entitled to indemnification under this
        --------------------                                                   
        Article VII will give the party from which it is seeking indemnification
        -----------                                                             
        prompt written notice of any matters in respect of which the indemnity
        may apply and of which the party claiming indemnification has knowledge;
        provided, however, that if a party claiming indemnification fails to
        give the other party prompt written notice, such other party will only
        be relieved of its obligations under this Article VII if and to the
                                                  -----------
        extent that such party is prejudiced thereby. In addition, the party
        claiming indemnification will give the other party full opportunity to
        control the response thereto and the defense thereof, including, without
        limitation, any agreement relating to the settlement thereof.

7.6     Limitation of Liability.  If EDS is at any time liable to Customer as a
        -----------------------                                                
        result of any breach, dispute, controversy or claim of any kind or
        nature arising under or in connection with this Agreement (including,
        without limitation, any failure of EDS to comply with its obligations
        under Section 2.3), whether arising by negligence or otherwise, the
              -----------  
        amount of damages recoverable against EDS for all events, acts or
        omissions will not exceed, in the aggregate, an amount equal to the
        aggregate amount of all charges paid to EDS pursuant to this Agreement
        during the three-month period immediately preceding the initial
        occurrence of such event, act or omission. Notwithstanding any other
        provisions in this Agreement to the contrary, in no event will the
        measure of damages recoverable by Customer against EDS include any

                                      -14-

 
        amounts for indirect, consequential or punitive damages of Customer or
        any other Person, or for loss of anticipated profits or other economic
        loss of Customer or any other Person, or for damages that could have
        been avoided, using reasonable diligence, by Customer. In addition,
        Customer may not assert any cause of action against EDS that accrued
        more than two years prior to the filing of a suit alleging such cause of
        action.

7.7     Acknowledgement.  Customer and EDS expressly acknowledge that the
        ---------------                                                  
        limitations contained in Section 7.6 represent the express agreement of
                                 -----------
        the parties with respect to the allocation of risks between the parties,
        including the level of risk to be associated with the provision of the
        Services as related to the amount of the payments to be made to EDS for
        such Services, and each party fully understands and irrevocably accepts
        such limitations.

                           ARTICLE VIII.  TERMINATION

8.1     Termination for Cause.  Subject to Section 10.3, if either party
                                           ------------
        materially or repeatedly defaults in the performance of any of its
        duties or obligations under this Agreement (excluding a default in
        payments to be made to EDS, which will be governed by Section 8.2),
                                                              ----------- 
        which default is not substantially cured within 45 days after written
        notice is given to the defaulting party specifying the default, or, with
        respect to those defaults that cannot reasonably be cured within 45
        days, if the defaulting party fails to proceed within 45 days to
        commence curing said default and thereafter to proceed with all
        reasonable diligence substantially to cure the same, then the non-
        defaulting party may, by giving written notice thereof to the defaulting
        party, terminate this Agreement as of the date of receipt by the
        defaulting party of such notice or as of a future date specified in such
        notice of termination.

8.2     Termination for Nonpayment.  If Customer defaults in the payment when
        --------------------------
        due of any amount due to EDS pursuant to this Agreement and does not
        cure such default within 30 days after being given written notice of
        such default, then EDS may, by giving written notice thereof to
        Customer, terminate this Agreement as of the date of receipt by Customer
        of such notice or as of a future date specified in such notice of
        termination.

8.3     Termination for Insolvency.  If either party is declared insolvent or
        --------------------------                                           
        bankrupt, is the subject of any proceedings relating to its liquidation,
        insolvency or for the appointment of a receiver or similar officer for
        such party, makes an assignment for the benefit of all or substantially
        all of its creditors, or enters into an agreement for the composition,

                                      -15-

 
        extension or readjustment of all or substantially all of its
        obligations, then the liquidator, trustee, receiver, conservator, new
        owner, manager or other agent or representative of such party will,
        subject to applicable law, have 60 days from the date of any initial
        declaration, commencement of proceedings, or such assignment or
        agreement to notify the other party, subject to applicable law, that it
        is terminating this Agreement as of a date within such 60-day period. If
        the other party is not so notified, this Agreement will not be
        terminated but will continue in full force and effect on all of the
        terms and conditions stated in this Agreement.

8.4     Termination for Regulatory Event.  Either party may terminate this
        --------------------------------                                  
        Agreement if any statute, rule, regulation, interpretation, judgment,
        order or injunction will have been enacted, enforced, promulgated,
        amended, issued or deemed applicable to (a) either party or any of its
        affiliates or (b) this Agreement, the transactions contemplated by this
        Agreement or the provision of the Services by EDS pursuant to this
        Agreement, by any Governmental Authority that renders illegal or
        materially inhibits the provision of the Services by EDS pursuant to
        this Agreement. To terminate this Agreement pursuant to this Section
                                                                     -------
        8.4, the party seeking such termination will give written notice thereof
        ---
        to the other party at least 30 days prior to the date on which such
        party desires to terminate this Agreement.

8.5     Rights Upon Termination.  Upon expiration or termination of this
        -----------------------
        Agreement for any reason, Customer will pay EDS for all Services
        provided and expenses incurred through the date of such expiration or
        termination. The provisions of this Section 8.5, Section 5.3, Articles
                                            -----------  -----------  --------
        VI and VII will survive the expiration or termination of this Agreement
        --     ---
        for any reason.

                    ARTICLE IX.  OPTION TO ACQUIRE LICENSE

9.1     Option to Acquire License.  Provided Customer is not then in default of
        -------------------------
        any of its obligations under this Agreement, Customer will have the
        option at anytime during the term of this Agreement to acquire a license
        from EDS to use the Software described in Section 2 of Schedule 2.1 in
        order that Customer may perform its own billing services (the "Billing
        Software"), which option may only be exercised by Customer complying
        with each of the following requirements:

        (a)    giving written notice to EDS at least 90 days prior to the date
               that Customer desires to acquire a license to the Billing
               Software;

        (b)    executing EDS' then current standard form of license agreement
               for the Billing Software (or, if no standard

                                      -16-

 
               form then exists, an agreed upon license agreement for the
               Billing Software);

        (c)    paying to EDS a Billing Software object code license fee of
               $175,000, plus a maintenance fee equal to EDS' then current
               maintenance fees; and

        (b)    complying with any applicable provisions of Section 8.5 of this
                                                           -----------        
               Agreement, including payment of the Minimum Message Requirement
               for the 12-month period ending on the date Customer acquires such
               license, prorated as appropriate for any partial 12-month period.

                           ARTICLE X.  MISCELLANEOUS

10.1    Right of EDS to Perform Services for Others.  Customer acknowledges and
        -------------------------------------------                            
        agrees that EDS may provide billing and related services to other
        Persons at any EDS Data Center that EDS may utilize for providing the
        Services or for processing the Customer Data pursuant to this Agreement.

10.2    Relationship of Parties.  EDS, in furnishing the Services to, or on
        -----------------------                                            
        behalf of, Customer, is acting only as an independent contractor. EDS
        does not undertake by this Agreement or otherwise to perform any
        obligation of Customer or any other Person, whether regulatory or
        contractual, or to assume any responsibility for the business or
        operations of Customer or any other Person. EDS will not be considered
        or be deemed to be an employee, joint venturer or partner of Customer or
        any other Person, and no other similar relationship is intended or
        created by and between EDS and Customer or any other Person. EDS has the
        sole right and obligation to supervise, manage, contract, direct,
        procure, provide or cause to be provided, all Services to be provided
        pursuant to this Agreement.

10.3    Force Majeure.  Each party will be excused from performance under this
        -------------                                                         
        Agreement for any period, and the time of any performance will be
        extended, to the extent reasonably necessary under the circumstances, if
        such party is prevented from performing, in whole or in part, its
        obligations under this Agreement, as a result of acts or omissions by
        the other party or any act of God or any Governmental Authority or any
        outbreak or escalation of hostilities, war, civil disturbance, court
        order, labor dispute, third party nonperformance or any other cause
        beyond its reasonable control, including without limitation, failures or
        fluctuations in electrical power, heat, light, air conditioning or
        telecommunications equipment or lines or other equipment. Such
        nonperformance on the part of either party will not be a default under
        this Agreement or a ground for termination of this Agreement; provided
        that the party

                                      -17-

 
        whose performance has been excused will perform such obligation as soon
        as is reasonably practicable after the termination or cessation of such
        event or circumstance.

10.4    Compliance with Laws.  In performing its obligations under this
        --------------------
        Agreement, neither party will be required to undertake any activity that
        would conflict with the requirements of any applicable statute, rule,
        regulation, interpretation, judgment, order or injunction of any
        Governmental Authority.

10.5    Media Releases.  All press and media releases, public announcements and
        --------------                                                         
        public disclosures by either party relating to this Agreement or its
        subject matter, including, without limitation, promotional or marketing
        material (but not including any announcement intended solely for
        internal distribution by such party to its directors, officers or
        employees or any disclosures required by legal, accounting or regulatory
        requirements beyond the reasonable control of the parties) will be
        coordinated with and approved by the other party prior to the release
        thereof. When consent or approval of either party is required for
        release of promotional or marketing material, neither party may
        unreasonably withhold or delay its consent.

10.6    Notices.  Except as otherwise expressly provided in this Agreement, all
        -------                                                                
        notices, requests, claims, demands, designations, approvals, consents,
        acceptances and other communications under this Agreement will be in
        writing and will be deemed to have been duly given if delivered
        personally, telecopied or mailed by first class mail, postage prepaid,
        to the parties at the addresses specified on Schedule 10.6. All notices
        and other communications required or permitted under this Agreement that
        are addressed as provided in Schedule 10.6, (i) if delivered personally,
        will be deemed given upon delivery, (ii) if delivered by telecopy, will
        be deemed given when confirmed and (iii) if delivered by mail in the
        manner described above, will be deemed given on the seventh Business Day
        after the day it is deposited in a regular depository of the United
        States mail. Any party from time to time may change its address for the
        purpose of notices to that party by giving a similar notice specifying a
        new address, but no such notice will be deemed to have been given until
        it is actually received by the party sought to be charged with the
        contents thereof.

10.7    Severability.
        ------------ 

        (a)    Subject to the provisions of Section 10.7(b), if any provision of
               this Agreement or the application of any such provision to any
               Person or circumstance, will be declared judicially to be

                                      -18-

 
               invalid, unenforceable or void, such decision will not have the
               effect of invalidating or voiding the remainder of this
               Agreement, it being the intent and agreement of the parties that
               this Agreement will be deemed to have been amended by modifying
               such provision to the extent necessary to render it valid, legal
               and enforceable while preserving its intent or, if such
               modification is not possible, by substituting therefor another
               provision that is legal and enforceable and that achieves the
               same objective.  In addition, if such invalid, unenforceable or
               void provision does not materially affect the payments to be made
               to EDS under this Agreement, and if the remainder of this
               Agreement will not be affected by such declaration and is capable
               of substantial performance, then each provision not so affected
               will be enforced to the maximum extent permitted by law.

        (b)    If any provision referred to in Section 10.7(a) is declared
               judicially to be invalid, unenforceable or void, and the fact
               thereof, or any amendment or modification thereto as set forth in
               Section 1  , materially affects the payments to be made to EDS
               under this Agreement, then this Agreement in its entirety will be
               entirely void and of no force and effect.

10.8    Amendment.  This Agreement may not be modified or amended except by a
        ---------                                                            
        written instrument executed by or on behalf of each of the parties to
        this Agreement.

10.9    Waivers.  The observance of any term of this Agreement may be waived
        -------                                                             
        (either generally or in a particular instance and either retroactively
        or prospectively) by the party entitled to enforce such term, but such
        waiver will be effective only if it is in a writing signed by the party
        entitled to enforce such term and against which such waiver is to be
        asserted. Unless otherwise expressly provided in this Agreement, no
        delay or omission on the part of any party in exercising any right or
        privilege under this Agreement will operate as a waiver thereof, nor
        will any waiver on the part of any party of any right or privilege under
        this Agreement operate as a waiver of any other right or privilege under
        this Agreement nor will any single or partial exercise of any right or
        privilege preclude any other or further exercise thereof or the exercise
        of any other right or privilege under this Agreement.

10.10   Entire Agreement.  This Agreement (including the Schedules and Exhibits
        ----------------                                                       
        hereto) constitutes the entire agreement between the parties with
        respect to the subject matter of

                                      -19-

 
        this Agreement and supersedes all prior and contemporaneous agreements
        and understandings, whether written or oral, between the parties with
        respect to the subject matter of this Agreement, and there are no
        representations, understandings or agreements relating to this Agreement
        that are not fully expressed in this Agreement. All Exhibits and
        Schedules attached to this Agreement are expressly made a part of, and
        are incorporated by reference into, this Agreement.

10.11   Parties in Interest; Assignment.  This Agreement will be binding upon
        -------------------------------
        and inure to the benefit of the parties to this Agreement and their
        respective successors and assigns (it being understood and agreed that,
        except as expressly provided in this Agreement, nothing contained in
        this Agreement is intended to confer upon any other Person (including
        any affiliate of Customer or any End User) any rights, benefits or
        remedies of any kind or character whatsoever under or by reason of this
        Agreement). No party may assign this Agreement without obtaining the
        prior written consent of the other party. Notwithstanding the foregoing,
        either party may assign this Agreement, and its rights and obligations
        under this Agreement, to any of its respective affiliates without the
        consent of the other party; provided, however, that any such assignment
        will not relieve the assigning party of any of its obligations under
        this Agreement.

10.12   Certain Construction Rules.  The Article and Section headings and the
        --------------------------                                           
        table of contents used in this Agreement are for convenience of
        reference only and in no way define, limit, extend or describe the scope
        or intent of any provisions of this Agreement. In addition, as used in
        this Agreement, unless otherwise expressly stated to the contrary, (a)
        all references to days, months or years are references to calendar days,
        months or years and (b) any reference to a "Section," "Article,"
        "Exhibit" or "Schedule" is a reference to a Section or Article of this
        Agreement or an Exhibit or Schedule attached to this Agreement.

10.13   Inconsistencies.  The provisions of this Agreement are qualified in
        ---------------
        their entirety by reference to the information and the terms set forth
        in the Schedules and the Exhibits. To the extent that the provisions of
        this Agreement and the Schedules to this Agreement are inconsistent, the
        provisions of the Schedules and the Exhibits to this Agreement will
        govern and control.

10.14   Governing Law.  This Agreement will be construed in accordance with, and
        -------------                                                           
        the rights of the parties will be governed by, the substantive laws of
        the State of Texas,

                                      -20-

 
        without giving effect to any choice-of-law rules that might require the
        application of the laws of another jurisdiction.

10.15   Counterparts.  This Agreement may be executed in multiple counterparts,
        ------------                                                           
        each of which will be deemed an original and all of which taken together
        will constitute one instrument.

        IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the date first set forth above.

ELECTRONIC DATA SYSTEMS                    GLOBAL TELECOMMUNICATIONS,INC.
CORPORATION


By:_________________________               By:_________________________

Name:_______________________               Name:_______________________

Title:______________________               Title:______________________

                                      -21-

 
                                                                    SCHEDULE 2.1
                                                                    ------------


                                 EDS SERVICES

SECTION 1 - BILLING SERVICES

Utilizing the Software described in Section 2 of this Schedule 2.1, EDS will
                                    ---------         ------------          
provide to Customer the following billing services:

1.1     Standard Message Format.  EDS will from time to time communicate with
        -----------------------                                              
        Customer relating to the standard record detail format required by EDS
        in order to process the Messages (the "Standard Message Format"). EDS
        may from time to time communicate to Customer revisions of the Standard
        Message Format for Messages as they become necessary.

1.2     Editing, Balancing and Formatting.  Upon receipt of Messages from
        ---------------------------------  
        Customer, EDS will determine whether the Messages contained thereon are
        in the Standard Message Format. If Customer's Messages are in the
        Standard Message Format, EDS will edit, balance and format such Messages
        for subsequent processing. If any of Customer's Messages are not in the
        Standard Message Format or are rejected by EDS as a result of editing or
        balancing of the Messages (collectively, the "Rejected Messages"), EDS
        will notify the Customer of such fact.

1.3     Message Rating.  EDS will (a) calculate the applicable charges for all
        --------------                                                        
        Messages transmitted by Customer to EDS solely based on the rating
        information and the End User information provided by Customer to EDS
        pursuant to Section 1.2 and 1.3 of Schedule 4.1 and (b) have no
                    -----------     ---    ------------  
        responsibility or liability for any miscalculation of charges for any
        Messages resulting from any such information that is inaccurate or
        incomplete. As and when requested by Customer, EDS will forward any
        applicable Messages to a clearinghouse or other billing agent who
        provides LEC billing services to Customer.

1.4     Calculation of Taxes.  EDS will use commercially reasonable efforts to
        --------------------
        (a) calculate the federal excise tax and all local and state taxes or
        tax-like charges and surcharges, applicable to each Message (the
        "Calculated Taxes") and (b) furnish the information relating to such
        Calculated Taxes to Customer in sufficient detail to enable Customer or
        Client to file the appropriate Tax Returns. EDS will have no
        responsibility or liability for any miscalculation of any End User's
        Taxes resulting from the use by EDS of inaccurate or incomplete tax or
        End User information supplied to EDS by Customer pursuant to Section 1.3
                                                                     -----------
        of Schedule 4.1. Customer expressly acknowledges and agrees that EDS
           ------------ 
        will rely, and will have no liability in so relying, upon (i) Customer
        for determining the

                                     2.1-1

 
        tax status of Customer's End Users, (ii) such End User information as is
        provided by Customer to EDS and (iii) in connection with determining the
        applicable tax rates, such tax data as is provided to EDS by Vertex,
        Inc. of Philadelphia, Pennsylvania or by Customer pursuant to Section
                                                                      -------
        1.3 of Schedule 4.1, as the case may be.
        ---    ------------                     

1.5     Billing of Taxes.  EDS will, for the benefit of and on behalf of
        ----------------      
        Customer, use commercially reasonable efforts to print all applicable
        federal, state and local excise taxes and surcharges on bills to be sent
        to End Users. Customer acknowledges and agrees that EDS is acting only
        as Customer's agent with respect to the billing of such taxes, and in no
        event will EDS be entitled to retain or receive from Customer (or from
        any End User) any statutory fee or share of such taxes to which the
        Person collecting the same may be entitled under applicable law unless
        the IRS determines that EDS has the responsibility for collecting such
        taxes and filing federal excise tax returns.

1.6     Printing & Bill Format.  On any date EDS will bill an End User as
        ---------------------- 
        mutually agreed to by Customer and EDS, EDS will (a) sort all rated
        Messages into the applicable End User account and (b) print, directly on
        the End User's bill, any or all of Customer's or Client's name or such
        promotional messages of Customer or Client as Customer may request five
        or more Business Days prior to such date and that are in conformity with
        the bill format shown on Exhibit C. Neither EDS' name nor EDS' logo will
                                 ---------
        appear on any End User bills. Subject to any applicable regulations of
        any Governmental Authority, any promotional messages so requested to be
        printed on the End User bill summary page will comprise no more than two
        lines, each line having up to 78 characters. Any requests by Customer
        for changes in the bill format shown on Exhibit C will be deemed to be
                                                ---------
        requests for Additional Services pursuant to Section 2.4 of this
                                                     -----------
        Agreement.

1.7     Promotional Inserts.  Subject to size limitations and any applicable
        -------------------                                                 
        regulations of any Governmental Authority, EDS will also include in the
        assembled End User bills up to three promotional inserts of Customer or
        Client as Customer supplies to EDS for such purposes; provided, however,
        that the number of such inserts, when added to the number of printed
        promotional pages will not exceed three per End User bill per month.

1.8     Mailing of Bills.  EDS will (a) presort the End Users' bills to take
        ----------------                                                    
        advantage of any applicable postage discounts, (b) affix appropriate
        first class U.S. mail postage and (c) deliver the End Users' bills to
        the U.S. Postal Service.

                                     2.1-2

 
1.9     Billing Reports.  EDS will provide Customer, at such times as EDS and
        ---------------                                                      
        Customer mutually agree, with standardized accounting reports, in the
        format set forth on Exhibit D. Any request by Customer for other
                            ---------
        information regarding End User billing or changes in the list of reports
        set forth on Exhibit D will be deemed to be a request for Additional
                     ---------
        Services pursuant to Section 2.4 of this Agreement.
                             -----------                   
   
SECTION 2 - DESCRIPTION OF SOFTWARE

2.1     The description of the EDS proprietary software that will be used by EDS
        to perform the Billing Services, known as "IXplus" is described below:

        MENU SYSTEM      Menus may be modified to meet business requirements.
                         Selections can be tailored for specific users or
                         departments and passwords may be assigned for security.

        CALL RATING      The IXplus Software can process and account for all of
                         the data received from the network switching equipment.
                         The information from the switch is converted into a
                         format compatible with the IXplus Software and
                         accounting totals are accumulated. Unbillable calls are
                         reported and routed back through the IXplus Software
                         for corrective procedures. These calls are maintained
                         by the IXplus Software until they are corrected or
                         deleted.

                         The Call Rating subsystem allows for virtually
                         unlimited rate structures.  Call Rating variables
                         include:

                         V/H Coordinates                    
                         Flat Rate                          
                         Mileage Band                       
                         A/C and LATA Band                  
                         Rate Step                          
                         Day/Evening/Night - Weekend/Holiday 

        CALL BILLING     The Call Billing subsystem creates the customer bill
                         format, offering selectable features such as customized
                         messages, call detail reporting and discounts.

                         The Project Billing subsystem provides a commercial
                         customer with call detail plus the total levels
                         required for charge-back of telecommunications
                         expenses. This subsystem also allows for variable
                         volume discounts and unlimited rate steps.

                                     2.1-3

 
                         The Cycle Billing subsystem assists cash flow tracking
                         and provides a method for distributing the work load
                         more evenly for a large customer base. The Cycle-end
                         reporting subsystem provides the necessary checkpoints
                         and controls to properly manage a billing cycle.

                         A copy of the printed customer bills may be maintained
                         on-line for inquiries, reprints, and archival purposes.
                         The statement images may be transferred to magnetic
                         tape for long-term storage.

          CUSTOMER
          SERVICE        The IXplus Software allows customer inquiries to be
                         made by name or partial name, authorization code,
                         account code, and telephone number.

                         Customer calls concerning new business, service changes
                         and complaints may be recorded in an on-line database.
                         Customer service personnel may then record the
                         responses to customer calls in the same manner. A
                         follow-up screen may be used by management to insure
                         that the customer is being handled in a timely manner.

          ACCOUNTS
        RECEIVABLE       An accounts receivable system will assist in cash flow
                         management.

                         The Accounts Receivable subsystem provides detailed
                         reports of cash receipts, adjustments, customer
                         charges, deposits, account balances, and aged
                         receivables. Numerous inquiry screens display current
                         and historical customer transactions and information
                         regarding collection contacts.

                         A delinquent processing function provides the ability
                         to customize and print past due notices and final
                         notices.

          TRAFFIC
          ANALYSIS       The Traffic Analysis subsystem produces a series of
                         reports that provides the ability to analyze traffic
                         patterns, time patterns, line usage, and line
                         utilization by billing cycle. Some of the reports which
                         may be generated are:

                                     2.1-4

 
                         Traffic by LATA                             
                         Traffic by Top 100 LATAs                    
                         Traffic by City                             
                         Traffic by Top 100 Cities                   
                         Traffic Analysis by Product                 
                         Busy Hours by Output Facility and Line      
                         Traffic Analysis by Output Facility and Line
                         Traffic Analysis by Input Facility and Line 
                         Billing Analysis by Output Facility         
                         Revenue by Volume and Customer               

2.2     The EDSCDC - Call Detail Collection Software communicates with switching
        equipment, billing, traffic and security systems to deliver call detail
        information in real time. EDSCDC - Call Detail Collection Software also
        converts the call detail information into the IXplus CDR format.

2.3     EDSSEC - Fraud Detection Software analyzes records from the network as
        they occur. EDSSEC - Fraud Detection Software alerts you of potential
        fraud, identifies the source, and can take corrective action on its own.
        EDSSEC -Fraud Detection Software learns the calling patterns of your
        customers on your network and provides self adjusting alert thresholds.

 
                                                                    SCHEDULE 2.2
                                                                    ------------


                             PERFORMANCE STANDARDS

SECTION 1 - BILLING SERVICES PERFORMANCE STANDARDS

1.1     Certain Definitions.
        ------------------- 

               When used in this Section 1 of Schedule 2.2, the following terms
will have the following respective definitions:

        (a)    "On-line Availability" will mean the "uptime" percentage
               measurement indicating the time that the EDS central processing
               unit (CPU) will be available for on-line terminal usage by
               Customer. This measurement will be based on scheduled Online
               Availability, as set forth in Section 1.2(b) of this Schedule
               2.2, and will not reflect any period of non-availability because
               of any circuit outage, any application Software problem or any
               problem caused by Customer or Customer's personnel, agents or
               representatives. The calculation is expressed in percentages and
               is derived by reviewing any incidents that have caused a service
               interruption and subtracting the interruption time from the
               scheduled time.

        (b)    "Prime Time" will mean 6:00 a.m. to 6:00 p.m., Local Time, Monday
               through Friday.

        (c)    "Daily On-line Outage During Prime Time" will mean the amount of
               time when the EDS equipment or Software is unavailable during
               Prime Time on a daily basis during each month.

1.2     Performance Standards.
        --------------------- 

        (a)    Mailing of End User Bills.  EDS will print and mail End Users'
               -------------------------   
               bills within an average of six Business Days after the applicable
               Determination Date (as defined herein). Such average time period
               will be determined by (i) measuring, for the month in question
               and for each of the five preceding months, the number of days
               elapsed between the Determination Date and the date on which the
               End Users' bills corresponding to such Determination Date were
               actually mailed, (ii) adding together the number of such days
               elapsed for all six months measured, and (iii) dividing such sum
               by six. A "Determination Date" is the later to occur of (i) the
               date on which EDS is to bill a particular End User (as such date
               is set forth in the End User information provided to EDS pursuant
               to Section 1.3 of Schedule 4. 1) or (ii) the date of the receipt
               of the

                                     2.1-1

 
               most recent magnetic tape or disk containing the applicable
               Messages.

        (b)    On-line Availability.  The average On-line Availability during
               --------------------                         
               Prime Time during each month will be 98%.

        (c)    Maximum and Average Daily On-line Outages During Prime Time.  The
               -----------------------------------------------------------      
               maximum Daily On-line Outage During Prime Time will not exceed
               one hour per day for more than any two days in any month and the
               average Daily On-line Outage During Prime Time will not exceed 10
               minutes during any month.

        (d)    Scheduled On-line Availability.
               ------------------------------ 

               (i)    Monday through Friday: 12 hour availability during Prime
                      Time or as otherwise mutually agreed. All other time,
                      Monday through Friday, will be held in reserve for data
                      back-up or emergencies which cannot wait for the
                      maintenance time period scheduled on Sunday.

               (ii)   Saturday and Sunday: unavailable midnight to 8:00 a.m.
                      Local Time, and available at such other times as Customer
                      has requested in advance and that EDS has approved in
                      advance.

                                     2.1-2

 
                                                                    SCHEDULE 2.3
                                                                    ------------


                                  SAFEGUARDS

SECTION I - RETENTION SCHEDULE

          EDS will store any Customer Data that is sent off-site for recovery
purposes in a protected vault for mutually agreeable periods of time.

SECTION 2 - OFF-SITE DATA STORAGE

          The off-site data storage facility will employ security and
environmental protection systems that guard against theft and fire and that
control humidity and temperature.

SECTION 3 - SOFTWARE AND DATA SECURITY

          EDS will require users of the Software operated by EDS to enter a
valid password in order to gain access to certain applications, functions and
databases that contain the Customer Data. EDS will secure the Customer Data
using Software that restricts access to the Customer Data and assists in the
administration of the security of the Customer Data.

SECTION 4 - FACILITY SECURITY

          EDS will control and limit physical access to any EDS Data Centers
where the Services are provided, and EDS will utilize alarm systems that guard
against theft, fire, heat and water.

SECTION 5 - CONTINGENCY PLANS

          EDS will provide a contingency plan to facilitate continued processing
of Messages at the EDS Data Center in the event of a catastrophe or other event
of natural force majeure or in the event of single processor failure within the
EDS Data Center or the failure of the entire EDS Data Center.

SECTION 6 - MAILING RECORD

          For a period of at least six months after mailing of End User bills,
EDS will retain a record of such mailing.

                                     2.3-1

 
                                                                    SCHEDULE 3.1
                                                                    ------------

                                    CHARGES

SECTION I - INSTALLATION CHARGES

1.1     Installation and Training Fee.  Customer will pay to EDS a one-time
        -----------------------------                                      
        installation and training fee of $29,200 in consideration of EDS
        providing its standard installation and training assistance for the
        IXplus Software, the EDSCDC - Call Detail Collection Software and the
        EDSSEC - Fraud Detection Software. The installation and training support
        will include three to five days of on-site assistance to be provided by
        EDS at Customer's McLean, Virginia location for the purpose of assisting
        Customer with its data input process. The installation and training fee
        will be due and payable by Customer to EDS as follows: (i) $5,840 upon
        the Start of Processing Date, and (ii) the remaining $23,360 will be
        payable by Customer in twelve equal monthly installments of $1,946.67
        each beginning with the month following the six-month anniversary of the
        Effective Date, plus interest accruing from such date on the unpaid
        balance of such fee at a rate of interest equal to 9.5% per annum. In
        the event that any installation and or training is required that is in
        excess of the standard installation and training assistance provided by
        EDS, then such assistance will be performed as Additional Services
        pursuant to Section 2.4. Pursuant to Section 3.2, Customer will pay or
                    -----------              -----------           
        reimburse EDS for all out-of-pocket expenses incurred in the performance
        of the installation and training assistance.

SECTION 2 - BILLING SERVICES CHARGES

2.1     Minimum Message Requirement and Charge.
        -------------------------------------- 

        (a)   Subject to the Minimum Message Requirement payment set forth
        below, Customer will pay to EDS a monthly charge based on the number of
        Messages (other than Rejected Messages) rated and billed by EDS during
        each 12-month period during the term of this Agreement calculated at the
        following charge per Message:



 
                                                        Minimum Message
12-Month Periods following the                          Requirement per
Start of Processing Date          Charge per Message    12-Month Period
- ------------------------------    ------------------    ---------------
                                                  
Months 1 through 12               $.0069 per Message     12,000,000 Messages
Months 13 through 24              $.0059 per Message     30,000,000 Messages
Months 25 through 36              $.0054 per Message     60,000,000 Messages
Months 37 through 48              $.0053 per Message    100,000,000 Messages
Months 49 through 60              $.0052 per Message    135,000,000 Messages


                                     3.1-1

 
        (b)    During the term of this Agreement, Customer will be obligated to
        submit to EDS for rating and billing the Minimum Message Requirement per
        each 12-month period as set forth above in the last category. If, at the
        end of each 12-month period during the term of this Agreement, the total
        number of Messages (other than Rejected Messages) rated and billed by
        EDS is less than the Minimum Message Requirement for such 12-month
        period, then within 30 days after the end of each 12-month period,
        Customer will pay to EDS an amount equal to the difference between (i)
        the actual number of Messages (other than Rejected Messages) submitted
        by Customer for rating and billing by EDS, and (ii) the applicable
        Minimum Message Requirement, multiplied by $.0002 per Message.
        Notwithstanding anything in this subparagraph (b) to the contrary, the
        Minimum Message Requirement and all amounts owed to EDS in connection
        therewith for Months 1 through 24 will accrue during the first 24 months
        following the Start of Processing Date, with all amounts due and owing
        to EDS for such 24-month period to be paid by Customer within 30 days
        after Month 24.

        (c)    Notwithstanding anything in subparagraph (b) above to the
        contrary, if, upon the 60-month anniversary of the Start of Processing
        Date, the total number of Messages (other than Rejected Messages)
        submitted by Customer for rating and billing for the prior 12-month
        period is less than the Minimum Message Requirement for such period,
        then Customer may, by providing EDS with written notice within 30 days
        following the 60-month anniversary of the Start of Processing Date,
        elect to extend the term of this Agreement for an additional 12 month
        period in lieu of Customer's requirement to pay EDS the shortfall
        calculated in accordance with subparagraph (b) above. During each month
        of such 12-month extension period, Customer will pay EDS at the rate of
        $.0052 per Message (other than Rejected Messages) submitted to EDS for
        rating and billing.

        (d)    In the event Messages are submitted by Customer or Clients to EDS
        from a foreign country, and EDS is unable to process such Messages for
        any reason, then EDS will adjust the Minimum Message Requirement for any
        12-month period as appropriate.

2.2     Monthly Image Charges.  For each month following the Start of Processing
        ---------------------                                                   
        Date and during the term of this Agreement, Customer shall pay to EDS,
        in addition to the monthly Message charge, a monthly print charge of
        $0.041 per image. For purposes of this Agreement, "Image" means one side
        of an End User's bill on which EDS has printed billing data, Customer's
        or Client's name or logo, or any promotional message of Customer or
        Client requested by Customer in accordance with Section 1.6 of Schedule
                                                        -----------    --------
        2.1 of this Agreement. By way of example, a two-sided End User bill
        ---
        printed by EDS for Customer hereunder shall constitute two Images.

                                     3.1-2

 
 2.3    Other Billing Related Charges.
        ----------------------------- 

 
 
Description                                        Charge
- -----------                                        ------
                                                 
EDS Data Center personal computer usage fee        $100.00 per month
Carrier billing records/1/                         $0.0020 per Message
Messages sent to clearinghouse for LEC billing     $0.0025 per Message
Past due notices (once per month)                  $0.15 each letter
Forms and envelopes                                cost plus 10%
Microfiche/postage                                 cost plus 5%
Delivery                                           cost plus 10%
Magnetic tapes and/or floppy diskettes
   sent to Customer                                $8.00 handling fee plus
                                                   supplies at cost plus 10%
Mail stuffing:
  Large envelope                                   $0.30 per bill
  Box                                              $5.00 per box
Inserts for billing                                $0.02 each page
 

SECTION 3 - CHARGES FOR ADDITIONAL SERVICES

3.1     Additional Personnel.  Customer will pay to EDS the following charges in
        --------------------                                                    
        consideration for any Additional Services provided to Customer by EDS
        pursuant to Section 2.4 of this Agreement which require additional
        personnel resources:

               Job Category              Monthly Rate
               ------------              ------------

               Systems Engineer          $ 9,600.00

3.2     Additional Computer Resources.  Customer will pay to EDS the following
        -----------------------------                                         
        charges in consideration for any Additional Services provided to
        Customer by EDS pursuant to Section 2.4 of this Agreement which require
                                    -----------                          
        additional computer resources:


___________________________

1.   Any carrier billing records which are processed by EDS but are to be billed
by the carrier will be returned to such carrier at no charge to the Customer;
provided however, Customer will furnish the tapes and supplies related to all
such carrier billing records.

                                     3.1-3

 
 
 
               Time                                Charge
               ----                                ------
                                            
               CPU/1/ - Interactive           $4.47 per minute
               CPU/1/ - Batch
               Prime Time/2/                  $2.68 per minute

               Non-Prime Time/2/              $1.34 per minute

               Direct-Access Storage
               Device (DASD)                  $0.0245 per Megabytes/day

               Laser Print                    $0.732 per 1000 lines
 

3.3     Other Charges.  Customer will pay to EDS such other charges for any
        -------------                                                      
        Additional Services provided to Customer pursuant to Section 2.4 as
                                                             -----------   
        mutually agreed upon and approved in writing by the parties from time to
        time.

_________________________

1.  CPU unit charges are based upon an IBM AS/400 E70 processor. If EDS operates
on any other processor EDS will normalize the actual CPU minutes to reflect the
amount of time that would have been required had EDS been using an IBM AS/400
Model E70.

2.  "Prime Time" is defined in Section 1.1(b) of Schedule 2.2.  "Non-Prime
                               --------------    ------------
Time" means all times other than Prime Time.

                                     3.1-4

 
                                                                    SCHEDULE 4.1
                                                                    ------------

                             CUSTOMER OBLIGATIONS

SECTION 1 - BILLING OBLIGATIONS

1.1     Preliminary Processing and Delivery of Messages.  Customer will record
        -----------------------------------------------
        and deliver the Messages to EDS from the appropriate Customer switching
        location via magnetic tape or electronic data transmission, in the
        Standard Message Format, to allow EDS to process the Message in
        accordance with Section 1 of Schedule 2.1. Customer will establish and
                        ---------    ------------   
        maintain appropriate Customer procedures regarding the development and
        delivery of such Messages to EDS. EDS will have no responsibility or
        liability to Customer, any of the Clients or any other Person for the
        accuracy or completeness of any data or Messages supplied by or through
        Customer. Customer acknowledges that EDS will have no obligation to
        accept for processing any Messages that do not conform to the Standard
        Message Format.

1.2     Rating Information.  Customer will (a) determine, initially enter into
        ------------------ 
        the appropriate database and subsequently maintain a schedule of rates
        containing all necessary information regarding its pricing programs and
        optional calling plans and will be solely responsible for any changes or
        additions thereof and (b) if EDS is required to respond to End Users'
        inquiries pursuant to this Agreement, provide EDS with copies of
        Customer's policies with respect to granting credits or adjustments to
        the End Users' accounts.

1.3     End User and Tax Information.  Customer will enter into the applicable
        ----------------------------                                          
        database any information specific to the End Users that is needed to
        rate Messages and calculate End User bills (including the dates on which
        EDS is to bill each particular End User). EDS will establish the format
        for such End User information. Customer may, if mutually agreed upon by
        the parties, provide EDS with tax data to be used for determining the
        applicable tax rates.

1.4     Customer Back-up of Switch Data.  Customer will (a) establish back-up
        -------------------------------                                      
        security for and keep back-up switch data in its possession and (b) for
        a period of at least 60 days after delivery of such switch data, produce
        and retain duplicate copies of all Messages delivered to EDS pursuant to
        Section 1.1 of this Schedule 4.1; provided, however, that EDS will have
        -----------         ------------                                       
        such access to any such back-up switch data as is reasonably required by
        EDS in connection with the performance of its obligations under this
        Agreement.

1.5     Filing and Paying of Taxes.  Customer will be solely responsible for (a)
        --------------------------                                              
        preparing and filing in a timely manner with the applicable taxing
        authorities and Governmental Authorities all

                                     4.1-1

 
        Tax Returns and for promptly paying in full and remitting to such taxing
        authorities and Governmental Authorities all Taxes owed, and (b) will be
        obligated to pay any additional Taxes imposed by any Governmental
        Authority as a result of the nonpayment of required Taxes by Customer.
        If, as a result of any request or requirement of any Governmental
        Authority, it is necessary for EDS to deliver copies of such Tax
        Returns, Customer will provide EDS with copies of any and all Tax
        Returns that Customer has prepared and filed and other applicable
        information relating to the payment of the Taxes; provided, however,
        that Customer will not be required to provide EDS with any information
        regarding Customer's state or federal income taxes. Notwithstanding the
        foregoing, Customer will not be deemed to be in breach of this Section
                                                                       -------
        1.5 of this Schedule 4.1, if it is contesting in good faith the
        ---         ------------ 
        imposition of any unpaid Taxes in appropriate administrative or
        litigation proceedings. In addition, EDS will furnish Customer all
        information in EDS' possession reasonably necessary for Customer to file
        its Tax Returns. Such information will be in a format agreed upon by
        Customer and EDS.

1.7     Notice of Volume Changes.
        ------------------------ 

        Customer acknowledges and agrees that the resources of EDS are limited.
        Customer agrees to provide estimates and forecasts, from time to time,
        to EDS in order to enable EDS to have adequate facilities to handle the
        volume of Messages anticipated by Customer without having an excessive
        amount of under-utilized capacity. If Customer anticipates, after
        achieving a monthly volume of 5,000,000 Messages, that any additional
        increase in Customer's volume of Messages in any six month period will
        exceed 100% of the volume of Messages in the immediately preceding six
        month period, then Customer will give EDS written notice of such
        anticipated increase at least 120 days prior to the need for such
        increased level of utilization. If Customer does not give EDS such
        written notice, EDS will have 120 days to increase its resources to
        handle the increased load, during which period EDS will have no
        liability for failure to meet the Performance Standards set forth in
        Section 1.2 of Schedule 2.2, and any failure by EDS to meet the
        -----------    ------------                                
        Performance Standards set forth in Section 1.2 of Schedule 2.2 will not
                                           -----------    ------------         
        be considered a default under this Agreement or grounds for termination
        of this Agreement.

                                     4.1-2

 
                                                                   SCHEDULE 10.6
                                                                   -------------


                                    NOTICES

Any notice referred to in Section 10.6 will be addressed to the appropriate
                          ------------                                     
parties specified below:

     (a)  If to EDS, to it at:

          Electronic Data Systems Corporation
          5400 Legacy Drive
          Mailstop H1-5C-35
          Plano, Texas 75024
          Attention: Communications Industry Group

          with a copy to:

          Electronic Data Systems Corporation
          5400 Legacy Drive
          Mailstop H3-3A-05
          Plano, Texas 75024
          Attention: General Counsel

     (b)  If to Customer, to it at:

          Global Telecommunications, Inc.
          8180 Greensboro Drive, Suite 1100
          McLean, Virginia 22102
          Attention: K. Paul Singh, CEO
          Telecopy: 703/848-4641

                                    10.6-1

 
                                                                       EXHIBIT A
                                                                       ---------

                                   AFFILIATE
                     RATIFICATION AND ACCEPTANCE AGREEMENT

          THIS AFFILIATE RATIFICATION AND ACCEPTANCE AGREEMENT, dated as of
__________ __, 19__ ("Ratification Agreement"), is between _______________, a
__________ corporation/partnership ("Affiliate"), and Electronic Data Systems
Corporation, a Texas corporation ("EDS").  All terms used but not defined herein
will have the meanings set forth in the Agreement referred to below.

          WHEREAS, __________ ("Customer") and EDS have entered into an
Agreement for Billing and Related Services, dated as of __________ __, 19__ (the
"Agreement"), relating to the provision by EDS of certain billing and related
services to Customer upon the terms and subject to the conditions set forth in
the Agreement, and the Affiliate desires to obtain billing and related services
under the Agreement upon such same terms and conditions;

          NOW, THEREFORE, in consideration of the premises, and in order to
induce EDS to provide certain billing and related services to the Affiliate
pursuant to the Agreement, the Affiliate hereby agrees and represents and
warrants to EDS as follows:

          1.   The Affiliate, by executing and delivering this Ratification
Agreement, agrees to be bound by and subject to the terms and provisions of the
Agreement with the same effect as if the Affiliate were an original party
thereto and appoints Customer as the Affiliate's duly authorized and designated
agent.  The Affiliate acknowledges that Customer has and at all times during the
term of the Agreement will have the authority (which is coupled with an interest
and is irrevocable) to act for and on behalf of the Affiliate with respect to
all matters relating to the Agreement and this Ratification Agreement, including
without limitation, with regard to the giving or withholding of any agreement,
approval, acceptance, consent, notice or other action required or permitted by
the Agreement and this Ratification Agreement, the making of all payments to
EDS, and the waiver, amendment or modification of any provision of the
Agreement.

          2.   This Ratification Agreement will be construed in accordance with,
and the rights of the parties will be governed by, the substantive laws of the
State of Texas, without giving effect to any choice-of-law rules that might
require the application of the laws of another jurisdiction.

                                      A-1

 
          IN WITNESS WHEREOF, the Affiliate has duly executed and delivered this
Ratification Agreement as of the date first set forth above.


                                               ______________________________
                                               [INSERT NAME OF THE AFFILIATE]



                                               By:______________________________
                                                    Name:_______________________
                                                    Title:______________________


ACCEPTED AND AGREED:

ELECTRONIC DATA SYSTEMS CORPORATION



By:_________________________
   Name:____________________
   Title:___________________

                                      A-2

 
                                                                       EXHIBIT B
                                                                       ---------


                                    FORM OF
                        START OF PROCESSING DATE NOTICE

     This START OF PROCESSING DATE NOTICE serves to notify GLOBAL
TELECOMMUNICATIONS, INC. that ELECTRONIC DATA SYSTEMS CORPORATION ("EDS") has
commenced providing billing and related services as of __________ __, 19__ (the
"Start of Processing Date"), pursuant to that certain Agreement for Billing and
Related Services, dated as of   1995, between Global Telecommunications, Inc.
and EDS.



                                              ELECTRONIC DATA SYSTEMS
                                              CORPORATION


                                              By:______________________________
                                                   Name:_______________________
                                                   Title:______________________

                                      B-1

 
                                                                       EXHIBIT C
                                                                       ---------


                                  BILL FORMAT


SECTION 1 - BILL PAGE SIZE:

          Page Measure 8 1/2" x 11" (single side or duplex).

SECTION 2 - LOGO:

          Color logo on preprinted white stock.

SECTION 3 - SPECIFICATIONS FOR BILL INSERTS:

3.1  Size.                    8 1/2" x 11"
     ----                                 

3.2  Thickness of Media.
     ------------------ 

                              1/250" (0.01mm) to 3/16" (4.76mm) The total
                              thickness of the bill, insert and return envelope
                              must not exceed 7/32" (5.6mm) in order to properly
                              insert mechanically into the mailing envelope.

SECTION 4 - SAMPLE BILL PAGES: See attached additional pages.

                                      C-1

 
                                                                       EXHIBIT D
                                                                       ---------

                            LIST OF BILLING REPORTS


                               [TO BE INSERTED]

                                      D-1

 
EDS Bills
                                        


                                         Cost/Unit
                                         --------- 
                                      
Mail Stuffing - Large Envelopes             0.30
Mail Stuffing - boxes                       5.00
Implementation Fee
EDS Data Center PC usage                     100
Postage (cost + 5%)
Delivery (cost + 10%)
Pass Through Travel
Monthly Image Charges                     0.0410
Minimum Message Req. & Charge             0.0069
Bill Stock (cost + 10%)
Total
Less: Nonrecurring Costs
Total Processing Charges

Bills Printed
Cost per Bill


 
                              EMPLOYMENT AGREEMENT


          THIS AGREEMENT made as of June 1, 1994 by and between K. Paul Singh, a
resident of Alexandria, Virginia (the "Execu-tive"), and Global
Telecommunications, Inc., a corporation organized and existing under the laws of
the State of Delaware (the "Company").

                                  WITNESSETH:

          WHEREAS, the Executive is currently the Chairman of the Board,
President and Chief Executive Officer of the Company; and

          WHEREAS, the Board of Directors of the Company desires assurance that
the Executive will continue as its leader for at least the next five years; and

          WHEREAS, the Executive is willing to commit to undertake his
responsibilities as Chairman of the Board, President and Chief Executive Officer
of the Company on the terms and conditions hereinafter set forth.

          NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, and intending to be legally bound, the parties,
subject to the terms and conditions set forth herein, hereby agree as follows:

     1.   Employment and Term. The Company hereby employs the Executive, and the
          -------------------                                            
Executive hereby accepts employment with the Company, for the period commencing
on the date hereof and continuing until May 30, 1999 and from year to year
thereafter,

 
unless terminated by either party by written notice of termination given to the
other party.  Termination by the Company of the employment of Executive
hereunder shall be effective (a) 90 days after the date such notice is given if
such termination is pursuant to paragraphs 5 or 6 below, or (b) immediately upon
the date such notice is given if such termination is pursuant to paragraph 7
below.

     2.   Responsibilities. During the term of his employment, the Executive
          ----------------                                         
shall devote his full time, attention, loyalty, skill and efforts to the
performance of his responsibilities to the Company as Chairman of the Board,
President and Chief Executive Officer, or if another person should be appointed
President by the Board of Directors, as Chairman of the Board and Chief
Executive Officer. Executive shall also be a member of the Compensation
Committee of the Board of Directors. The Company will not during the terms of
this Agreement demote the Executive of reduce his responsibility as the CEO, or
otherwise reduce his stature in the Company.

     3.   Compensation. The Company shall pay or provide to the Executive, and
          ------------                                                     
the Executive shall accept, the following as full compensation for all services
rendered hereunder. All compensation shall be subject to all applicable
withholding and similar requirements.

          (A)  Base Salary. The Company shall pay to the Executive a base salary
               -----------     
(the "Base Salary") at the annual rate of

                                      -2-

 
$185,000.  The Base Salary shall be reviewed on an annual basis and may be
increased from time to time at the discretion of the Board of Directors.  It is
understood and agreed that Executive has and will defer payment of Base Salary
until April 1, 1995, at which time Executive will be entitled to received Base
Salary since June 1, 1994.

          (B)  Bonus or Incentive Compensation.  Executive will participate in
               -------------------------------                                
any bonus or incentive compensation plan (including stock option and stock bonus
plans) approved by the Board of Directors for senior management of the Company.

          (C)  Benefits. The Company shall provide to the Executive, without any
               --------                              
payment or contribution by the Executive or members of his family, throughout
his employment by the Company the following benefits:

               a.   Life Insurance. The policy in the amount of three times the
                    --------------                   
Base Salary insuring the life of the Executive currently owned by the Company,
the death benefits of which are payable to the beneficiaries designated by the
Executive.

               b.   Disability Insurance.  Disability Insurance providing the
                    --------------------                                     
Executive with monthly payments during the period of his disability (after
termination of his employment) in an amount equal to 1/12th of his then
applicable annual Base Salary immediately prior to his disability.  If the
disability insurance policy should begin payment while the Executive is still
being compensated by the Company under the terms of this Agreement, the

                                      -3-

 
Executive will reimburse the Company for all portions of such payments which
cause his total compensation to exceed the amounts otherwise payable to the
Executive under the terms of this Agreement.

               c.   Medical. Medical insurance protection for the Executive and
                    -------                        
his family at least as favorable to the Executive and his family as the
protection and plan being made available to them on the date of this Agreement.
In addition, if not covered by insurance, the Company shall provide the
Executive with an annual health checkup.

               d.   Professional Services Allowance. The Company will pay up to
                    -------------------------------                             
$2,500 per year for Executive's tax planning and preparation and/or other
financial planning services used by the Executive.

               e.   Other. Such other benefits, not duplicative of the
                    -----                   
foregoing, which the Board of Directors may now or in the future make available
to its senior Executives.

     4.   Support and Expenses. The Company shall provide the Executive with an
          --------------------                                    
office, staff and other support appropriate for the Chief Executive Officer of
an organization of the stature of the Company, and the Company shall pay or
reimburse the Executive for all reasonable travel and other expenses incurred by
him in connection with the performance of his services under this Agreement upon
presentation of expense statements or vouchers and such other supporting
information as the Company may from time to time reasonably request.

                                      -4-

 
     5.   Termination by Company After May 30, 1999. If the Company shall
          -----------------------------------------                       
terminate the employment of Executive after May 30, 1999, for a reason other
than "disability" or "cause," as defined in Section 7 hereof, the Company shall
continue to pay the Executive all of his compensation set forth in Section 3
hereof through the effective date of termination. Thereafter the Company shall
pay to the Executive any compensation and other benefits which were vested as of
the effective date of termination but payable at a later date. In addition to
all of the foregoing, the Company shall pay to the Executive on the first
business day of the month following the effective date of termination severance
pay (herein called "Severance Pay") in a lump sum equal to 1/12th of his then
applicable annual Base Salary.

     6.   Termination by Company Prior to June 1, 1999. If the Company shall
          --------------------------------------------                 
terminate the employment of Executive prior to June 1, 1999, for a reason other
than "disability" or "cause" as defined in Section 7 hereof, or if the Executive
shall terminate his employment after the Company has committed a material breach
of this Agreement, then the Company shall pay to the Executive as they become
due, amounts otherwise payable to the Executive if he had remained in the
employment of the Company until June 1, 1999. In addition, the Company shall (i)
forthwith pay Severance Pay computed in accordance with Section 5 hereof, (ii)
thereafter pay all amounts of compensation and benefits which were vested on the
date of termination but not payable until a later date, including

                                      -5-

 
amounts payable under Section 3B hereof, and (iii) comply with Section 9 hereof.

     7.   Termination for Disability of Cause. The Company may terminate the
          -----------------------------------                            
Executive's employment due to "disability" if the Board of Directors shall
determine in good faith, that, by reason of physical or mental illness or other
condition continuing for more than one hundred and twenty (120) consecutive days
or for shorter periods aggregating more than one hundred and twenty (120) days
in any period of twelve (12) months (excluding in each case days on which on the
Executive was on vacation), the Executive has been substantially unable to
render services of the character contemplated by this Agreement. The Company may
terminate the Executive's employment for "cause" if the Board of Directors shall
determine in good faith that there shall have been a willful breach by the
Executive in a material manner of his duty of loyalty to the Company. If the
Company shall terminate the employment of Executive for disability or for cause
at any time, the Company shall have no further obligation hereunder except for
payment of Base Salary for services previously rendered, payment or provision of
other compensation or benefits previously vested, and the duty set forth in
Section 9 hereof.

     8.   Voluntary Termination. If prior to breach of this Agreement by the
          ---------------------                                          
Company, the Executive shall resign as an employee during the term of his
employment, the Company shall

                                      -6-

 
have no further obligation hereunder except for payment of Base Salary for
services previously rendered, payment or provision of other compensation or
benefits previously vested, and the duty set forth in Section 9 hereof.

     9.   Insurance after Termination. If the Company's group life, health and
          ---------------------------                                      
disability insurance plans do not continue to protect the Executive after
termination of employment, the Company will use its best efforts upon
termination of the Executive's employment for any reason other than death to
arrange for transfer from a Company plan to the Executive (to be carried
thereafter at his own expense) any life, health and disability insurance
protection which may be so transferred.

    10.   Loans. Executive has loaned the Company $300,000 (Three-hundred
          -----                                                           
thousand dollars). It is agreed that the Company shall repay the loan, plus
interest, out of operating revenues of the Company. Interest shall be calculated
at the rate in effect from time to time designated by The Chase Manhattan Bank,
N.A., as its prime rate.

    11.   Covenant Not to Compete. The Executive covenants and agrees that, from
          -----------------------                                     
the date hereof and until (i) six months following resignation by the Executive
pursuant to Section 8 hereof, or (ii) in the case of any other termination of
Executive's employment, six months following the date upon which the final
payment of amounts payable to the Executive by the Company by reason of such
termination becomes due, he shall not,

                                      -7-

 
either directly or indirectly, (a) engage in or conduct any business competitive
with the Company's business, whether individually or as an employee, agent,
officer, director, owner, consultant or otherwise, without the prior written
consent of the Board of Directors of the Company, or (b) induce or attempt to
induce any existing or future employee or consultant of the Company or any of
its Affiliates to leave such employment.

     12.  Litigation. If litigation shall be brought by either party to enforce
          ----------
or interpret any provision contained herein and such party (the "prevailing
party") shall prevail on any issue contested in such litigation either through
settlement or judgment in favor of the prevailing party, the other party shall
reimburse the prevailing party for reasonable attorneys' fees and disbursements
incurred by the prevailing party in such litigation, and shall pay prejudgment
interest on any money judgment obtained by the prevailing party calculated at
the rate in effect from time to time designated by The Chase Manhattan Bank,
N.A., as its prime rate from the date of the breach by such other party under
this Agreement.

     13.  Entire Agreement; Amendments. This Agreement contains the entire
          ----------------------------                                     
agreement and understanding of the parties relating to the subject matter hereof
and supersedes all prior discussions, agreements and understandings of every
nature between them. This Agreement may not be changed or modified, except by an
agreement in writing signed by all of the parties hereto.

                                      -8-

 
          IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day of year first above written.




                                        _______________________________
                                        K. Paul Singh


ATTEST:                                 GLOBAL TELECOMMUNICATIONS, INC.



________________________________        By:____________________________
Secretary

                                      -9-


 
                        GLOBAL TELECOMMUNICATIONS, INC.
                               STOCK OPTION PLAN


          Section 1.  Purposes.
                      -------- 

          The purposes of the Plan are (a) to recognize and compensate selected
employees of the company and its Subsidiaries who contribute to the development
and success of the Company and its Subsidiaries; (b) to maintain the competitive
position of the Company and its Subsidiaries by attracting and retaining
employees; and (c) to provide incentive compensation to such employees based
upon the Company's performance as measured by the appreciation in Common Stock.
The Options granted pursuant to the Plan are intended to constitute either
incentive stock options within the meaning of Section 422 of the Code, or non-
qualified stock options, as determined by the Board or the Committee at the time
of grant.  The type of options granted will be specified in the Option Agreement
between the Company and the recipient of the Options.  The terms of this Plan
shall be incorporated in the Option Agreement to be executed by the Optionee.

          Section 2.  Definitions.
                      ----------- 

          (a)  "Board" shall mean the Board of Directors of the Company, as
constituted from time to time.

          (b)  "Change of Control" shall mean the occurrence of any of the
following events:

               (i) the acquisition in one or more transactions by any "Person"
(as the term person is used for purposes of Sections 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act")) of "Beneficial
Ownership" (as the term beneficial ownership is used for purposes of Rule 13d-3
promulgated under the 1934 Act) of fifty percent (50%) or more of the combined
voting power of the Company's then outstanding voting securities (the "Voting
Securities"), provided that for purposes of this Section 2(b)(i), the Voting
Securities acquired directly from the Company by any Person shall be excluded
from the determination of such Person's Beneficial Ownership of Voting
Securities (but such Voting Securities shall be included in the calculation of
the total number of Voting Securities then outstanding); or

               (ii) Approval by shareholders of the Company of (A) a merger,
reorganization or consolidation involving the Company if the shareholders of the
company immediately before such merger, reorganization or consolidation do not
or will not own directly or indirectly immediately following such merger,
reorganization or consolidation, more than fifty percent (50%) of the combined
voting power of the outstanding voting securities of the corporation resulting
from or surviving such merger, reorganization or consolidation in substantially
the same

 
proportion as their ownership of the Voting Securities immediately before such
merger, reorganization or consolidation, or (B) (1) a complete liquidation or
dissolution of the Company or (2) an agreement for the sale or other disposition
of all or substantially all of the assets of the Company; or

               (iii) Acceptance by shareholders of the Company of shares in a
share exchange if the shareholders of the Company immediately before such share
exchange do not or will not own directly or indirectly immediately following
such share exchange more than fifty percent (50%) of the combined voting power
of the outstanding voting securities of the corporation resulting from or
surviving such share exchange in substantially the same proportion as the
ownership of the voting Securities outstanding immediately before such share
exchange.

          (c)  "Code" shall mean the Internal Revenue Code of 1986, as amended.

          (d)  "Committee" shall mean the Committee appointed by the Board in
accordance with Section 4(a) of the Plan, if one is appointed, in which event,
in connection with this Plan, the Committee shall possess all of the power and
authority of, and shall be authorized to take any and all actions required to be
taken hereunder by, and make any and all determinations required to be made
hereunder by, the Board.

          (e)  "Company" shall mean Global Telecommunications, Inc. a Delaware
corporation.

          (f)  "Common Stock" shall mean common stock of the Company, $.01 par
value per share.

          (g)  "Disability" or "Disabled" shall mean the inability of a
Participant or Optionee, as the case may be, to perform his or her normal
employment duties for the Company resulting from a mental or physical illness,
impairment or any other similar occurrence which can be expected to result in
death or which has lasted or can be expected to last for a period of twelve (12)
consecutive months, as determined by the Board of Directors.

          (h)  "Employee" shall mean any person (including officers) employed by
the Company or any Subsidiary.  A director of the Company or any Subsidiary
shall not be considered to be employed by the Company or any Subsidiary for
purposes of this Plan solely by reason of serving as such director or receiving
compensation from the Company or any Subsidiary for serving as such director.

          (i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
in effect from time to time.

                                      -2-

 
          (j)  "Fair Market Value,, shall mean the fair market value of a share
of Common Stock, as determined pursuant to Section 7 hereof.

          (k)  "Option" shall mean an incentive stock option or non-qualified
stock option to purchase common Stock that is granted pursuant to the Plan.

          (l)  "Option Agreement" shall mean a written agreement in such form or
forms as the Board (subject to the terms and conditions of this Plan) may from
time to time approve evidencing and reflecting the terms of an Option.

          (m)  "Optionee" shall mean a Participant to whom an option is granted.

          (n)  "Participant" shall mean each Employee.

          (o)  "Plan" shall mean this Stock Option Plan, as amended from time to
time.

          (p)  "Proprietary Information" shall mean any and all confidential,
proprietary, business and technical information or trade secrets of the company
or of any Subsidiary or affiliate of the Company revealed, obtained or developed
in the course of Optionee's employment with the Company or in the course of
optiones's performance of services for the Company in any other capacity. Such
Proprietary Information shall include but shall not be limited to, methods of
production and manufacture, research, marketing and development plans and
efforts, cost information, pricing information, marketing methods and plans,
identities of customers and suppliers, the Company's relationship with actual or
potential customers and the needs and requirements of any such actual or
potential customers, and any other confidential information relating to the
business of the Company. Proprietary Information shall not include (i) such
information as may be necessary or appropriate for an Optionee to disclose in
the course of his employment f or the effective and efficient discharge of his
duties as an employee of the Company or as may be required-by law to be
disclosed; and (ii) such information as is readily available to the general
public so long as such information did not become available to the general
public as a direct or indirect result of optionee's breach of his obligation to
maintain confidentiality.

          (q)  "Securities Act" shall mean the Securities Act of 1933, as in
effect from time to time.

          (r)  "Shares" shall mean shares of Common Stock.

          (s)  "Stock Purchase Agreement" shall mean an agreement in such form
as the Board may from time to time approve, which an

                                      -3-

 
Optionee may be required to execute as a condition of purchasing Shares upon
exercise of an option.

          (t)  "Subsidiary" shall mean a subsidiary corporation of the Company,
whether now or hereafter existing, as defined in Sections 424(f) and (g) of the
Code.

                                 
          Section 3.  Participation.
                      ------------- 

          The Board may grant options at any time and from time to time to
Participants who shall be selected by the Board.  Options may be granted only to
Participants.  Any grant of Options may include or exclude any Participant, as
the Board shall determine in its sole discretion.  A Participant who has been
granted an option, if he or she is otherwise eligible, may be granted additional
Options.

          Section 4.  Administration.
                      -------------- 

          (a)  Procedure.  The Plan shall be administered by the Board or a
               ---------                                                   
Committee consisting of not less than two persons appointed by the Board.
Members of the Board or the committee who are eligible for options or have been
granted Options, may vote on any matters affecting the administration of the
Plan or the grant of any Options pursuant to the Plan, except that no such
member shall act upon the granting of an option to himself or herself, but any
such member may be counted in determining the existence of a quorum at any
meeting of the Board or Committee during which action is taken with respect to
the granting of Options to himself or herself.

               If a Committee is appointed by the Board, the Committee shall
have the power to administer the Plan on behalf of the Board, subject to such
terms and conditions as the Board may prescribe. Members of the Committee shall
serve for such period of time as the Board may determine. From time to time the
Board may increase the size of the Committee and appoint additional members
thereto, remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies however caused, or remove all members of
the Committee and thereafter directly administer the Plan.

          (b)  Powers of the Board and the Committee.  Subject to the provisions
               -------------------------------------                            
of the Plan, the Board or its Committee shall have the authority, in its
discretion: (i) to grant Options; (ii) to determine the Fair Market Value per
Share in accordance with Section 7 of the Plan; (iii) to determine the exercise
price of the Options to be granted in accordance with Sections 6 and 7 of the
Plan; (iv) to determine the Participants to whom, and the time or times at
which, Options shall be granted, and the number of Shares to be subject to each
option, (v) to prescribe, amend and rescind rules and regulations relating to
the Plan; (vi) to

                                      -4-

 
determine the terms and provisions of each Option granted under the Plan, each
Option Agreement and each Stock Purchase Agreement (which need not be identical
with the terms of other Options, Option Agreements and Stock Purchase
Agreements), (vii) to modify or amend any Option, Option Agreement or Stock
Purchase Agreement, including, without limitation, to accelerate the exercise
date of any option or to change the termination date of any option, (viii) to
determine whether any Participant will be required to execute a Stock Purchase
Agreement or other agreement as a condition to the exercise of an Option, and to
determine the terms and provisions of any such agreement (which need not be
identical with the terms of any other such agreement) and, with the consent of
the Optionee, to amend any such agreement,, (ix) to interpret the Plan or any
agreement entered into with respect to the grant or exercise of Options; (x) to
authorize any person to execute on behalf of the Company any instrument required
to effectuate the grant of an option previously granted by the Board or to take
such other actions as may be necessary or appropriate with respect to the
Company's rights pursuant to Options or agreements relating to the grant or
exercise thereof; and (xii) to make such other determinations and establish such
other procedures as it deems necessary or advisable for the administration of
the Plan.

          (c)  Effect of the Board's or Committee's Decision.  All decisions,
               ---------------------------------------------                 
determinations and interpretations of the Board or the Committee shall be final
and binding on all Optionee's and any other holders of any Options granted under
the Plan.

          (d)  Limitation of Liability.  Notwithstanding anything herein to the
               -----------------------                                         
contrary, no member of the Board or of the Committee shall be liable for any
good faith determination, act or failure to act in connection with the Plan or
any Option granted hereunder.

          Section 5.  Stock Subject to the Plan.
                      ------------------------- 

          Subject to this Section 5 and to the provisions of Section 8 of the
Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is two-hundred and fifty thousand (250,000).  Options may be
either incentive stock options or non-qualified stock options, as determined by
the Board.  If an option expires or becomes unexercisable for any reason without
having been exercised in full, the Shares subject to such option shall, unless
the Plan shall have been terminated, return to the Plan and become available for
future grant under the Plan.

          Section 6.  Terms and Conditions of Options.
                      -------------------------------

          Each Option granted pursuant to the Plan shall be authorized by the
Board and shall be evidenced by an option

                                      -5-

 
Agreement.  Each Option Agreement shall incorporate by reference all other terms
and conditions of the Plan, and shall contain the following terms and
conditions:

          (a)  Number of Shares.  The number of shares
               ----------------                       
subject to the option.

          (b)  Option Price.  The price per share payable on the exercise of any
               ------------                                                     
Option shall be stated in the option Agreement and shall be no less than the
Fair Market Value per share of the Common Stock on the date such option is
granted, without regard to any restriction other than a restriction which will
never lapse.  Notwithstanding the foregoing, if an option which is an incentive
stock option shall be granted under this Plan to any person who, at the time of
the grant of such option, owns capital stock possessing more than 10% of the
total combined voting power of all classes of the Company's capital stock, the
price per share payable upon exercise of such incentive stock Option shall be no
less than 110 percent (110%) of the Fair Market Value per share of the Common
Stock on the date such option is granted.

          (c)  Consideration.  The consideration to be paid for the Shares to be
               -------------                                                    
issued upon exercise of an option, including the method of payment, shall be
determined by the Board and may consist entirely of cash, check, promissory
notes or Shares having a Fair Market Value on the date of surrender equal to the
aggregate exercise price of the Shares as to which said option shall be
exercised, or any combination of such methods of payment, or such other
consideration and method of payment permitted under any laws to which the
Company is subject which is approved by the Board.  In making its determination
as to the type of consideration to accept, the Board shall consider if
acceptance of such consideration may be reasonably expected to benefit the
Company.

               (i)  If the consideration for the exercise of an option is a
promissory note, it may, in the discretion of the Board, be either full recourse
or nonrecourse and shall bear interest at a per annum rate which is not less
than the applicable federal rate determined in accordance with Section 1274(d)
of the Code as of the date of exercise. In such an instance, the Company may, in
its sole discretion, retain the Shares purchased upon exercise of the option in
escrow as security for payment of the promissory note.

               (ii) If the consideration for the exercise of an Option is the
surrender of previously acquired and owned Shares, the Optionee will be required
to make representations and warranties satisfactory to the Company regarding his
title to the shares used to affect the purchase (the "Payment Shares"),
including without limitation, representations and warranties that the Optionee
has good and marketable title to such Payment Shares

                                      -6-

 
free and clear of any and all liens, encumbrances, charges, equities, claims,
security interests, options or restrictions, and has full power to deliver such
Payment Shares without obtaining the consent or approval of any person or
governmental authority other than those which have already given consent or
approval in a manner satisfactory to the Company.  The value of the Payment
Shares shall be the Fair Market Value of such Payment Shares on the date of
exercise as determined by the Board in its sole discretion, exercised in good
faith.  If such Payment Shares were acquired upon previous exercise of incentive
stock options granted within two years prior to the exercise of the Option or
acquired by the Optionee within one year prior to the exercise of the option,
such Optionee shall be required, as a condition to using the Payment shares in
payment of the exercise price of the Option, to acknowledge the tax consequences
of doing so, in that such previously exercised incentive stock options may have,
by such action, lost their status as incentive stock options, and the Optionee
may have to recognize ordinary income for tax purposes as a result.

          (d)  Form of Option.  The Option Agreement will state whether the
               --------------                                              
Option granted is an incentive stock option or a non-qualified stock option, and
will constitute a binding determination as to the form of option granted.

          (e)  Exercise of Options.  Any option granted hereunder shall be
               -------------------                                        
exercisable at such times and under such conditions as shall be set forth in the
Option Agreement (as may be determined by the Board and as shall be permissible
under the terms of the Plan), which may include performance criteria with
respect to the company and/or the Options, and as shall be permissible under the
terms of the Plan.

               An Option may be exercised in accordance with the provisions of
this Plan as to all or any portion of the Shares then exercisable under an
Option from time to time during the term of the Option. An Option may not be
exercised for a fraction of a share.

               An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company at its principal executive office in
accordance with the terms of the Option Agreement by the person entitled to
exercise the option and full payment for the shares with respect to which the
option is exercised has been received by the Company, accompanied by any
agreements required by the terms of the Plan and/or option Agreement, including
an executed Stock Purchase Agreement. Full payment may consist of such
consideration and method of payment allowable under Section 6 of the Plan. No
adjustment shall be made for a dividend or other right for which the record date
is prior to the date the Option is exercised, except as provided in section a of
the Plan.

                                      -7-

 
               As soon as practicable after any proper exercise of an Option in
accordance with the provisions of the Plan, the Company shall, without transfer
or issue tax to the Optionee, deliver to the Optionee at the principal executive
office of the Company or such other place as shall be mutually agreed upon
between the Company and the optionee, a certificate or certificates representing
the Shares for which the Option shall have been exercised.  The time of issuance
and delivery of the certificates representing the Shares for which the option
shall have been exercised may be postponed by the Company for such period as may
be required by the Company, with reasonable diligence, to comply with any
applicable listing requirements of any national or regional securities exchange
or any law or regulation applicable to the issuance or delivery of such shares.

               Exercise of an option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

          (f)  Terms and Vesting of Options.
               ---------------------------- 

               (i)  Notwithstanding any other provision of this Plan, no Option
shall be (A) granted under this Plan after ten (10) years from the date on which
this Plan is adopted by the Board, or (B) exercisable more than ten (10) years
from the date of grant.

               (ii) No Option granted to any Options shall be treated as an
incentive stock option, to the extent such option would cause the aggregate Fair
Market Value (determined as of the date of grant of each such option) of the
Shares with respect to which incentive stock options are exercisable by such
optionee for the first time during any calendar year to exceed $100,000. For
purposes of determining whether an incentive stock Option would cause the
aggregate Fair Market Value of the stock to exceed the $100,000 limitation, such
incentive stock options shall be taken into account in the order granted. For
purposes of this subsection, incentive stock Options include all incentive stock
options under all plans of the Company that are incentive stock option plans
within the meaning of Section 422 of the Code.

               Except as provided in Section 6(g)(iv), options granted hereunder
shall mature and become exercisable in whole or in part, in accordance with such
vesting schedule as the Board shall determine, which schedule shall be stated in
the option Agreement.  Options may be exercised in any order elected by the
optionee whether or not the optionee holds any unexercised Options under this
Plan or any other plan of the Company.

                                      -8-

 
          (g)  Termination of Options.
               ---------------------- 

               (i)   Unless sooner terminated as provided in this Plan, each
Option shall be exercisable for the period of time as shall be determined by the
Board and set forth in the Option Agreement, and shall be void and unexercisable
thereafter.

               (ii)  Except as otherwise provided herein or in the Option
Agreement, upon the termination of the Optionee's employment with the Company
for any reason, Options exercisable on the date of termination of employment
shall be exercisable by the optionee (or in the case of the Optionee's death
subsequent to termination of employment, by the Optionee's executors) or
administrators)) for a period of three (3) months from the date of the
Optionee's termination of employment.

               (iii) Except as otherwise provided herein or in the Option
Agreement, upon the Disability or death of an Optionee while in the employ of
the Company, Options held by such Optiones which are exercisable on the date of
Disability or death shall be exercisable for a period of twelve (12) months
commencing on the date of the optione2ols Disability or death, by the optionee
or his legal guardian or, in the case of death, by his executors) or
administrators); provided, however, that if such disabled Optionee shall
commence any employment during such one (1) year period with a competitor of the
Company (including, but not limited to, full or part-time employment or
independent consulting work), as determined solely in the judgment of the Board,
all options held by such optionee which have not yet been exercised shall
terminate immediately upon the commencement thereof.

               (iv)  options may be terminated at any time by agreement between
the Company and the optionee.

          (h)  Forfeiture.  Notwithstanding any other provision of this Plan, if
               ----------                                                       
the Optionee's employment is terminated by the Company and the Board makes a
determination that the Optionee (i) has engaged in any type of disloyalty to the
Company, including without limitation, fraud, embezzlement, theft, or dishonesty
in the course of his employment, or (ii) has been convicted of a felony or (iii)
has disclosed any Proprietary Information without the consent of the Company or
(iv) has breached the terms of any written confidentiality agreement or any non-
competition agreement with the Company in any material respect, all unexercised
options held by such Optionte shall terminate upon the earlier of the date of
termination of employment for "cause" or the date of such a finding.

                                      -9-

 
          Section 7.  Determination of Pair Market Value of Common Stock.
                      --------------------------------------------------

          (a)  Except to the extent otherwise provided in this Section 7, the
Fair Market Value of a share of Common Stock shall be determined by the Board in
its sole discretion.

          (b)  In the event that Shares are traded in the over-the-counter
market, the Fair Market Value of a share of Common Stock shall be the mean of
the bid and asked prices for a share of Common Stock on the relevant valuation
date as reported in The Wall Street Journal (or, if not so reported, as
otherwise reported by the National Association of Securities Dealers Automated
Quotation System ("NASDAQ")) , as applicable or, if there is no trading on such
date, on the next preceding trading date.  In the event Shares are listed on a
national or regional securities exchange or traded in the NASDAQ National market
System, the Fair Market Value of a share of Common Stock shall be the closing
price of a share of Common Stock on the exchange or on NASDAQ/NMS, as reported
in The Wall Street Journal on the relevant valuation date, or if there is no
trading on that date, on the next preceding trading date.

          (c)  "Adjusted Fair Market Value"' shall mean in the event of a Change
of Control, the greater of (A) the highest price per share of Common Stock paid
or payable to holders of the Common stock in any transaction (or series of
transactions) constituting or resulting (or as to which approval by shareholders
of the company constitute or results) in the Change of Control or (B) the
highest Fair market Value of a share of Common Stock on any business day during
the ninety (90) day period ending on the date of the Change of Control.

          Section 8.  Adjustments.
                      ----------- 

          (a)  Subject to required action by the shareholders, if any, the
number of shares of Common Stock as to which Options may be granted under this
Plan and the number of shares subject to outstanding Options and the option
prices thereof shall be adjusted proportionately for any increase or decrease in
the number of outstanding shares of Common Stock of the Company resulting from
stock split$, reverse stock splits, stock dividends, reclassifications and
recapitalizations.

          (b)  No fractional shares of Common Stock shall be issuable on account
of any action mentioned in paragraph 8(a) above, and the aggregate number of
shares into which Shares then covered by the Option, when changed as the result
of such action, shall be reduced to the number of whole shares resulting from
such action, unless the Board, in its sole discretion, shall determine to issue
scrip certificates with respect to any fractional shares which scrip
certificates, in such event, shall

                                      -10-

 
be in a form and have such terms and conditions as the Board in its discretion
shall prescribe.

          Section 9.  Rights as a Shareholder.
                      ----------------------- 

          The Optionee shall have no rights as a shareholder of the Company and
shall have neither the right to vote nor receive dividends with respect to any
Shares subject to an Option until such Option has been exercised.

          Section 10.  Time of Granting Options.
                       ------------------------ 

          The date of grant of an Option shall, for all purposes, be the date on
which the Board authorizes the granting of such Option.  Notice of the grant
shall be given to each Participant to whom an option is so granted within a
reasonable time after the date of such grant.

          Section 11.  Modification, Extension and Renewal of Option. 
                       ---------------------------

          Subject to the terms and conditions of the Plan, the Board may modify,
extend or renew an option, or accept the surrender of an option (to the extent
not theretofore exercised.  Notwithstanding the foregoing, (a) no modification
of an Option which adversely affects an Optionee shall be made without the
consent of such Optionee, and (b) no incentive stock Option may be modified,
extended or renewed if such action would cause it to cease to be an "incentive
stock option" under the Code, unless the optionee specifically acknowledges and
consents to the tax consequences of such action.

          Section 12.  Conditions to Issuance of Shares Upon Exercise.
                       ----------------------------------------------

          (a) The obligation of the Company to issue and sell Shares to an
Optiones upon the exercise of an Option granted under the Plan is conditioned
upon (i) the company obtaining any required permit or order from appropriate
governmental agencies, authorizing the company to issue and sell such Shares,
and (ii) such issuance and sale complying with all relevant provisions of law,
including, without limitation, the Securities Act, the Exchange Act, the rules
and regulations promulgated thereunder, and the requirements of any stock
exchange upon which the Shares may then be listed.

          (b)  At the option of the Board, the obligation of the Company to
issue and sell Shares to an optionee upon the exercise of an Option granted
under the Plan may be conditioned upon obtaining appropriate representations,
warranties and agreements of the Optionee set forth in the Stock Purchase
Agreement.  Among other representations, warranties, restrictions and
agreements,

                                      -11-

 
the Optionee may be required to represent and agree that the purchase of Shares
of Common Stock under the Option Agreement shall be for investment, and not with
a view to the public resale or distribution thereof, unless the Shares subject
to the Option are registered under the Securities Act and the issuance and sale
of the Shares complies with all other laws, rules and regulations applicable
thereto.  Unless the issuance of such Shares is registered under the Securities
Act, the Optionee shall acknowledge that the Shares purchased on exercise of the
Option are not registered under the Securities Act and may not be sold or
otherwise transferred unless such shares have been registered under the
Securities Act in connection with the sale or other transfer, or counsel
satisfactory to the Company has issued an opinion satisfactory to the Company
that the sale or other transfer is exempt from registration under the Securities
Act, and unless said sale or other transfer is in compliance with any other
applicable laws, rules and regulations including all applicable federal and
state securities laws, rules and regulations.  Unless the shares subject to an
Option are registered under the securities Act, the certificates representing
all Shares issued upon exercise of such Option shall contain the following
legend:

          THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
          BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
          AMENDED OR ANY APPLICABLE STATE SECURITIES LAWS.
          THESE SHARES HAVE NOT BEEN ACQUIRED WITH A VIEW TO
          DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
          ASSIGNED, EXCHANGED, MORTGAGED, PLEDGED, HYPOTHECATED
          OR OTHERWISE TRANSFERRED OR DISPOSED OF, BY GIFT OR
          OTHERWISE, OR IN ANY WAY ENCUMBERED WITHOUT AN
          EFFECTIVE REGISTRATION STATEMENT FOR SUCH S S UNDER
          THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY
          APPLICABLE STATE SECURITIES LAWS, OR A SATISFACTORY
          OPINION OF COUNSEL SATISFACTORY TO GLOBAL
          TELECOMMUNICATIONS, INC. THAT REGISTRATION IS NOT
          REQUIRED UNDER SUCH ACT AND UNDER APPLICABLE STATE
          SECURITIES LAWS.

          Section 13.  Transferability.
                       --------------- 

          No Option shall be assignable or transferable otherwise than by will
or by the laws of descent and distribution.  During the lifetime of the
optionee, the optionee's options shall be exercisable only by such Optionee, or
in the event of his or her legal incapacity, then-by the Optiones's legal
representative.

                                      -12-

 
          Section 14.  Other Provisions.
                       ---------------- 

          The Option Agreement and Stock Purchase Agreement may contain such
other provisions as the Board of Directors in its discretion deems advisable and
which are not inconsistent with the provisions of this Plan.

          Section 15.  Change of Control.
                       ----------------- 

          (a) For purposes of the Plan, "Option cancellation Date" shall mean,
as to each Option, the later of: (i) the first business day after the expiration
of a period of six (6) months from the date of grant of the option,- (ii) in the
event of a Change of Control as defined in Section 2(b)(ii)(A) or 2(b)(ii)(B)(2)
, the date on which the transaction approved by shareholders of the Company (as
provided in Section 2(b)(ii)) is consummated; and (iii) in the event of a Change
of Control as defined in Section 2(b)(i) or 2(b)(iii) , the first business day
after the expiration of a period of sixty (60) days after the occurrence of such
event.

          (b) upon a Change of Control, all options (whenever granted)
outstanding on the date of such Change of control shall be or become immediately
and fully exercisable.

          (c) In the event of a Change of Control as defined in Section 2(b)(i),
2(b)(ii)(A), 2(b)(ii)(B)(2) or 2(b)(iii), all Options (whenever granted)
outstanding on the option Cancellation Date which are not exercised on or before
the option Cancellation Date shall be canceled on such date by the company, and
the Company shall on such date pay to each holder of each such canceled Option a
cash amount equal to the excess, if any, in respect of each Option canceled, of
(i) the greater of (A) the Fair Market Value of the shares of Common Stock
subject to the Option on the business day immediately preceding the option
Cancellation Date or (B) the Adjusted Fair Market Value of the Common Stock
subject to the option over (ii) the aggregate purchase price which would have
been payable for such shares of Common Stock pursuant to the option had the
option not been canceled.

          Section 16.  Amendment of the Plan.
                       --------------------- 

          Insofar as permitted by law and the Plan, the Board may from time to
time suspend, terminate or discontinue the Plan or revise or amend it in any
respect whatsoever with respect to any Shares at the time not subject to an
option; provided, however, that without approval of the shareholders, no such
revision or amendment may change the aggregate number of Shares for which
Options may be granted hereunder, change the designation of the class of persons
eligible to receive Options or decrease the price at which options may be
granted.

                                      -13-

 
          Any other provision of this Section 16 notwithstanding, the Board
specifically is authorized to adopt any amendment to this Plan deemed by the
Board to be necessary or advisable to assure that the incentive stock Options or
the non-qualified stock options .available under the Plan continue to be treated
as such, respectively, under the law.

          Section 17.  Application of Funds.
                       -------------------- 

          The proceeds received by the company from the sale of shares pursuant
to the exorcise of Options shall be used for general corporate purposes or such
other purpose as may be determined by the Company.

          Section 18.  No Obligation to Exercise Option.
                       -------------------------------- 

          The granting of an option shall impose no obligation upon the Optionee
to exercise such option.

          Section 19.  Reservation of Shares.
                       --------------------- 

          The Company, during the term of this Plan, shall at all times reserve
and keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.

          The Company, during the term of this Plan, shall use its best efforts
to seek to obtain from appropriate regulatory agencies any requisite
authorization in order to issue and sell such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.  The inability of the
company to obtain from any such regulatory agency having jurisdiction the
requisite authorizations deemed by the company's counsel to be necessary for the
lawful issuance and sale of any shares hereunder, or the inability of the
Company to confirm to its satisfaction that any issuance and sale of any Shares
hereunder will meet applicable legal requirements, shall relieve the Company of
any liability in respect to the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.

          Section 20.  Taxes, Fees, Expenses and Withholding of Taxes.
                       ---------------------------------------------- 

          (a) The Company shall pay all original issue and transfer taxes (but
not income taxes, if any) with respect to the grant of Options and/or the issue
and transfer of shares pursuant to the exercise thereof, and all other fees and
expenses necessarily incurred by the Company in connection therewith, and will
from time to time use its beat efforts to comply with all laws and regulations
which, in the opinion of counsel for the company, shall be applicable thereto.

                                      -14-

 
          (b) The grant of options hereunder and the issuance of Shares pursuant
to the exercise thereof is conditioned upon the Company's reservation of the
right to withhold in accordance with any applicable law, from any compensation
or other amounts payable to the optionee, any taxes required to be withheld
under federal, state or local law as a result of the grant or exercise of such
Option or the sale of the Shares issued upon exercise thereof.  To the extent
that compensation or other amounts, if any, payable to the optionee is
insufficient to pay any taxes required to be so withheld, the Company may, in
its sole discretion, require the Optiones, as a condition of the exercise of an
Option, to pay in cash to the Company an amount sufficient to cover such tax
liability or otherwise to make adequate provision for the Company's satisfaction
of its withholding obligations under federal, state and local law.

          Section 21.  Notices.
                       ------- 

          Any notice to be given to the Company pursuant to the provisions of
this Plan shall be addressed to the Company in care of its Secretary (or such
other person as the Company may designate from time to time) at its principal
executive office, and any notice to be given to an optionee shall be delivered
personally or addressed to him or her at the address given beneath his or her
signature on his or her option Agreement, or at such other address as such
Participant or his or her transferee (upon the transfer of the Shares purchased
upon exercise) may hereafter designate in writing to the Company.  Any such
notice shall be deemed duly given when enclosed in a properly sealed envelope or
wrapper addressed as aforesaid, registered or certified, and deposited, postage
and registry or certification fee prepaid, in a post office or branch post
office regularly maintained by the United States Postal service.  It shall be
the obligation of each Optionee and each transferee holding Shares purchased
upon exercise of an Option to provide the Secretary of the Company, by letter
mailed as provided herein, with written notice of his or her direct mailing
address.

          Section 22.  No Enlargement of Optionee Rights.
                       --------------------------------- 

          This Plan is purely voluntary on the part of the Company, and the
continuance of the Plan shall not be deemed to constitute a contract between the
company and any optionee, or to be consideration for or a condition of the
employment or service of any Optionee.  Nothing contained in this Plan shall be
deemed to give any Optionee the right to be retained in the employ or service of
the Company or any Subsidiary, or to interfere with the right of the Company or
any such corporation to discharge or retire any Optionee thereof at any time,
subject to applicable law.  No Optionee shall have any right to or interest in
Options authorized hereunder prior to the grant thereof to such optionee, and
upon such grant he shall have only such rights and interests

                                      -15-

 
as are expressly provided herein, subject, however, to all applicable provisions
of the Company's Certificate of Incorporation, as the same may be amended from
time to time.

          Section 23.  Invalid Provisions.
                       ------------------ 

          In the event that any provision of this Plan is found to be invalid or
otherwise unenforceable under any applicable law, such invalidity or
unenforceability shall not be construed as rendering any other provisions
contained herein as invalid or unenforceable, and all such other provisions
shall be given,full force and effect to the same extent as though the invalid or
unenforceable provision was not contained herein.

          Section 24.  Applicable Law.
                       -------------- 

          This Plan shall be governed by and construed in accordance with the
laws of the State of Delaware.

                                      -16-


 
                          DIRECTOR STOCK OPTION PLAN

1.   PURPOSE

          The purpose of this Director Stock Option Plan (the "Plan") of Global
Telecommunications, Inc. (the "Company"), is to encourage ownership in the
Company by outside directors of the Company whose services are considered
essential to the Company's continued progress and thus to provide them with a
further incentive to continue to serve as directors of the Company.  The Plan is
also intended to assist the Company through utilization of the incentives
provided by the Plan to attract and retain experienced and qualified candidates
to fill vacancies in the Board which might occur in the future.

2.   ADMINISTRATION

          The Plan will be administered by a committee of the Board of Directors
consisting f those Directors who are not Eligible Directors as defined below
(the "Committee").  Subject to the express provisions of the Plan, the Committee
will have complete authority to interpret the Plan; to prescribe, amend, and
rescind rules and regulations relating to it; to determine the terms and
provisions of the respective option agreements (which need not be identical);
and to make all other determinations necessary or advisable for the
administration of the Plan.  The Committee's determination on the matters
referred to in this Section 2 will be conclusive.

3.   PARTICIPATION IN THE PLAN

          Persons who are now or shall become incumbent directors of the Company
who are not at the time employees of the Company or any subsidiary of the
Company (Eligible Directors") shall be eligible to participate in the Plan.  A
director of the Company shall not be deemed to be an employee of the Company
solely by reason of the existence of a consulting contract between such director
and the Company or any subsidiary thereof pursuant to, which the director agrees
to provide consulting services as an independent consultant to the Company or
its subsidiaries on a regular or occasional basis for a stated consideration.

4.   STOCK SUBJECT TO THE PLAN

          The stock subject to the Plan shall consist of 100,000 shares of
Company's Common Stock, $.01 par value ("Common Stock").  Such shares may, as
the Committee shall from time to time determine, be either authorized and
unissued shares of Common Stock or issued shares of Common Stock which have been
reacquired by the Company.  If a option shall expire or terminate for any reason
without having been exercised in full, the shares represented by the portion
thereof not so exercised shall (unless the Plan shall have been terminated)
become available for other Options to be granted under the Plan.


 
5.   STOCK OPTIONS

          (a)  Option Agreements.  Each option granted under this Plan shall be
evidenced by a written agreement in such form as the Committee shall from time
to time approve, which agreements shall comply with and he subject to the terms
and conditions set forth in the Plan.

          (b)  Issuance of Options.  On the effective date of the Plan, each
director who is on that date an Eligible Director and thereafter any director
who becomes an Eligible Director, either upon initial election as a director or
upon a change in status from an employee of the Company to a nonemployee, shall
automatically be granted under the Plan an option to purchase 15,000 shares of
Common Stock.  Subject to the provisions set forth elsewhere in the Plan,
options granted to any Eligible Director shall become exercisable, to the extent
of one third of the number of shares granted thereby (5,000 shares), on the date
of grant, and cumulatively to the extent of any additional one-third, on each of
the next two succeeding anniversaries, so that on the second anniversary of the
date of grant, the options granted to any Eligible Director shall be fully
exercisable.

          (c)  Option Price per Share.  All options granted hereunder shall be
exercisable at a price per share equal to the fair market value (as hereafter
defined) of a share of Common Stock on the date of the grant.  For purposes of
the Plan, the term "fair market value" of a share of Common Stock shall mean, as
of the date on which such fair market value is to be determined, the fair market
value as determined by the Committee in such manner as it, in good faith, may
deem appropriate.  If the Common Stock is at the time of reference publicly
traded, the fair market value shall be the closing price of a share of Common
Stock as reported in the Wall Street Journal (or a publication or reporting
service deemed equivalent to the Wall Street Journal for such purpose by the
Committee) for the over-the-counter market or any national securities exchange
and other securities market which at the time are included in the stock price
quotations of such publication.  If no such sale is so reported for such date,
fair market value shall mean the average of the latest bid and asked prices so
reported for such date.  In the event that the Committee shall determine such
stock price quotation is not representative of fair market value, the Committee
may determine fair market value in such a manner as it shall deem appropriate
under the circumstances.  In no event shall the fair market value of any share
of Common Stock be less than its par value.

          (d)  Options Nontransferable.  Each option granted under the Plan by
its terms shall not be transferable by the optionee otherwise than by will, or
by the laws of descent and

                                      -2-

 
distribution, or pursuant to a qualified domestic relations order as defined by
the Internal Revenue Code of 1986, as amended, or Title I of the Employee
Retirement income Security Act, or the rules thereunder, and shall be
exercisable during the lifetime of the optionee only by him.  No option or
interest therein may be transferred, assigned, pledged, or hypothecated by the
optionee during his lifetime, whether or operation of law or otherwise, or be
made subject to execution, Attachment, or similar processed

          (e)  Accelerated Vesting.  Notwithstanding the provisions hereof
specifying the installments in which options shall be exercisable, options shall
become exercisable in full (i) upon the retirement of the director in accordance
with any mandatory retirement policy for members of the Board, which policy may
be established by the Board, (ii) upon the total and permanent disability or
death f the director, or (iii) if any of the following events shall occur: (a)
the Company shall execute a definitive agreement to merge or consolidate with or
into another corporation and the Company shall not be the surviving corporation
in the merger (or shall become a subsidiary of any other corporation party to
such merger agreement, unless such transaction shall involve no significant
change in beneficial ownership of the Company) and he stockholders of the
Company shall have approved the terms of such agreement; (b) the Company shall
enter into a definitive agreement to sell or otherwise dispose of all or
substantial all of its assets and the stockholders of the Company shall have
approved the terms of such agreement; or (c) any person or group shall acquire,
or increase its ownership to, more than 20% of the Company's then outstanding
voting stock.

          (f)  Expiration of Options.  No option shall be exercisable after the
expiration of the earlier of (i) five years from the date when such option was
granted or (ii) three years following (x) the retirement or resignation of the
optionee as a director of the Company, or (y) the failure of the optionee to be
reelected a director of the Company, or (z) the total and permanent disability
or death of the optionee.

          (g)  Exercise of Options. options may be exercised only by notice to
the Company, accompanied by payment of the full purchase price for the shares as
to which they are exercised, as well as any federal, state, and/or local income
tax withholding required in connection with the exercise.  Such purchase price,
together with any income tax withholding amount required, shall be paid in full
upon any exercise of an option (i) by cash including a personal check payable to
the order of the Company or (ii) by delivering at fair market value, valued as
of the date of delivery, Common Stock already owned by the optionee, or (iii) by
any combination of (i) and (ii) Shares which otherwise would be delivered to the
holder of an option exercise may, at the election of the holder, be retained by
the Company in payment of

                                      -3-

 
any federal, state, and/or local income tax withholding due in connection with
an exercise, and shall be valued at fair market value as of the date of
exercise; provided, however, that the, payment of any amount of withholding tax
by an optionee with shares of Common Stock (whether already owned by the
optionee or retained by the Company from tie number of shares otherwise 
deliverable to the optionee upon exercise) shall be subject to any restrictions
set forth in he related option agreement.

          (h)  Nonstatutory Options.  No option granted under the Plan shall
constitute in "incentive stock option" as that term is defined in the Internal
Revenue Code of 1986.

6.   MODIFICATION, EXTENSION, AND RENEWAL OF OPTIONS

          The Committee shall have the power to modify, extend or renew
outstanding options and authorize the grant of new options in substitution
therefor, provided that such power may not be exercised in a manner which would
(i) alter or impair any rights or obligations under any option previously
granted without the written consent of the optionee or (ii) adversely affect the
qualification of the Plan or any other stock-related plan of the Company under
Rule 16b-3 under the Securities Exchange Act of 1934 or any successor provision.

7.   ASSIGNMENT

          The rights and benefits under this Plan may not be assigned and any
attempted assignment of such rights and benefits shall be null and void.

8.   LIMITATION OF RIGHTS

          (a)  No Right to Continue as a Director.  Neither the Plan, nor the
granting of an option nor any other action taken pursuant to the Plan, shall
constitute or be evidence of any agreement or understanding, express or implied,
that the Company will retain a director for any period of time, or at any
particular rate of compensation.

          (b)  No Stockholder's Rights for Optionees.  An optionee or his
representative shall have no rights as a stockholder with respect to the shares
covered by his option until the date of the issuance to him or his
representative of a stock certificate therefor, and no adjustment will be made
for dividends or other rights for which the record date is prior to the date
such certificate is issued.

9.   CHANGES IN PRESENT STOCK

          In the event of any merger, consolidation, reorganization,
recapitalization, stock dividend, stock split or

                                      -4-

 
other change in the corporate structure or capitalization affecting the
Company's present Common Stock, appropriate adjustment shall be made by the
Committee in the number and kind of shares which are or may become subject to
options granted or to be granted hereunder and the per share option price to be
paid therefor.

10.  EFFECTIVE DATE AND DURATION OF THE PLAN

          Options shall be granted under the Plan, subject to its authorization
and adoption by the Stockholders of the Company, at any time or from time to
time after its adoption by the Board of Directors, but no option shall be
exercisable under the Plan until the Plan shall have been adopted and approved
at the annual meeting of stockholders of the Company next following adoption of
the Plan by the Board.  In tho event the Plan is not so adopted by stockholders,
all options which may have been granted shall be null and void.  The Plan shall
terminate on December 31, 2005 (unless earlier discontinued by the Board) but
such termination shall not affect the rights of the holder of any option
outstanding on such date of termination.

11.  AMENDMENT OF THE PLAN

          The Board may suspend or discontinue the Plan or revise or amend it in
any respect whatever; provided, however, that without approval of the
Stockholders no revision or amendment shall change the number of shares subject
to the Plan (except as provided in Section 9), change the definition of the
class of directors eligible to receive options, or materially increase the
benefits accruing to participants under the Plan.

12.  COMPLIANCE WITH LAW, ETC.

          Notwithstanding any other provision of this Plan or agreements made
pursuant hereto, the Company shall not be required to issue or deliver any
certificate or certificates for shares of Common Stock under this Plan prior to
fulfillment of all of the following conditions:

          (a)  Effectiveness of any registration or other qualification of such
shares or the Company under any state or federal law or regulation which the
Board shall, in its absolute discretion or upon the advice of counsel, deem
necessary or advisable; and

          (b)  Grant of any other consent, approval or permit from any state or
federal governmental agency or securities exchange which the Board shall, in its
absolute discretion or upon the advice of counsel, deem necessary or advisable.
                    
                                     -5- 

 
13.  NOTICE

          Any notice to the Company required by this Plan shall be in writing
addressed to the Secretary of the Company at its principal office, and shall be
deemed delivered only when it is received by the Secretary.

14.  GOVERNING LAW

          This Plan and all determinations made and actions taken pursuant
hereto shall be governed by the law of the State of Delaware, and construed
accordingly.

                                      -6-


 
                       INTERNATIONAL OPERATING AGREEMENT


This agreement concluded the 30th day of November 1995, by and between The
Hondurena Telecomunications Company (hereinafter called HONDUTEL, which shall
include it successors or permitted assigns) having its principal office at the
Telecommunications Building, Colon Avenue, Tegucigalpa Honduras and PRIMUS
TELECOMUNICATIONS, INC. (hereinafter called PRIMUS, which shall include its
successors or permitted assigns) a corporation organized and existing under the
laws of the State of Virginia and having its offices at 8180 Greensboro Drive
11th Floor, McLean, Virginia 22102.


PURPOSE:

Whereas, PRIMUS operates it facilities across the United States, its territories
to include the territories of Puerto Rico, Virgin Islands and Guam which
constitute a telecommunications system within the United States of America.
Honduras operates telecommunications facilities in Honduras to provide
international service within Honduras and whereas HONDUTEL and PRIMUS desire to
jointly provide international telecommunications service between Honduras and
the United States and points beyond; now therefore the named parties in
consideration of the mutual agreement hereby agree to as follows:


1.  ESTABLISHMENT OF SERVICE:

The interested parties agree to establish and continue telecommunications
services between Honduras and the United

                                      -1-

 
States in accordance with the following terms and conditions stated on this
agreement.


2.  SERVICES PROVIDED:

The long distance international telecommunications services provided are those
reflected in Annex A (Services) which comprise an integral part of this
agreement without prejudice for the other services which can be provided at a
later date in accordance with this agreement. Each party agrees to provide the
equipment and means necessary to provide in a continuous fashion the levels and
quality of service universally accepted in each country. International phone
service provided between HONDUTEL and PRIMUS shall be automatic and semi-
automatic, the latter to include person to person, station to station, reverse
charges and direct dial. Callback service between Honduras and the United States
or third countries shall not be offered nor provided to its customers in the
United States or Honduras. The services, subject of this agreement may be
modified or broadened upon concurrence of both parties and it changes
incorporated into this agreement herein.


3.  NATIONAL TARIFFS

The charges that result to the customers for services are hereafter referred to
as "National Tariffs" and may be stated in foreign currency, allowing each party
to liberally determine

                                      -2-

 
National Tariffs to be applied to each of the services detailed in Annex A
(Services) of this agreement.

4.  DIVISION OF REVENUE:

The division of revenue and proportional division of revenues for telephone
services between Honduras and the United States will be in accordance with those
described in Annex B.


5.  PREPARATION AND ESTABLISHMENT OF BILLINGS:

A.  MONTHLY STATEMENTS:

    1.  Each party shall prepare a monthly billing including, but not limited   
    to, the number of calls by class of service, the number of minutes and the  
    share of accounting rate credited to the other.  Each party shall forward   
    such monthly billing as soon as practicable after the calendar month to     
    which the billing relates, but in no event later than the end of the second 
    calendar month following the month to which the billing relates.  In case   
    of delay the parties shall notify one another.  (see Annex C)               
                                                                                
    2.  No credit allowance shall be made in the monthly notice for             
    uncollectible amounts.  Each party shall be responsible for its own         
    uncollectibles. However customer credits resulting from defective service   
    from the monthly notices submitted to the other party may be deducted,      
    provided such deduction is made before the monthly notice involved is       
    forwarded to the other party.                  

                                      -3-

 
B.   PAYMENTS OF STATEMENTS DUE:

     1.  The amount due each month as covered by monthly billing, shall be
     reduced to a net balance due each party, Net balances due one party to the
     other shall be paid by the owing party as soon as possible, but in no event
     later than six weeks after the monthly billing.  A balance owed should not
     be delayed pending an adjustments to a billings.

     2.  Payments made to billings presented under this agreement shall be made
     by the parties in US dollars.

6.   DELAYED PAYMENTS:

Notwithstanding the stipulations of this agreement, if there is a delay on the
part of the parties of the net balance due, in accordance with paragraph 5.b.,
the party owed may notify the owing party in writing, ninety (90) days after the
payment due date of the restriction or suspension of services stipulated in this
agreement.  The party being owed may terminate his obligation stated in the
agreement until the balance due is paid.

7.   ROUTES AND SERVICING OF FACILITIES:

     a.  The telecommunications services cover this agreement shall be served
     by;

     (1) Dedicated circuits between Honduras and the United States.

     (2) Circuits transiting other countries.

                                      -4-

 
     (3) Combination of dedicated and transiting circuits agreed upon by both
     parties.

     b.  Each party shall provide, at its own expense the telecommunication
     facilities located within its area of operation necessary to provide
     service between Honduras and the United States.

     c.  Each party shall provide, at its own expense, half of the international
     telecommunications facilities necessary to provide services between
     Honduras and The United States.

     d.  Each party shall maintain interconnectivity of international circuits
     within the national network within its country or territories.

     e.  Each party shall notify the other as soon as practicable of any failure
     in its facility in its area of operations that will result in an extended
     interruption of service between Honduras and the United States.

8.   TECHNICAL AND OPERATIONAL MATTERS

Unless agreed upon by both parties, the technical and operational methods of
operations applied by the parties will be in accordance with the recommendations
of the International of the Telecommunications Union (ITU) and any future
revision of the same.

9.   RESPONSIBILITIES:

                                      -5-

 
Neither party shall be liable to the other for any loss or damage sustained by
any failure, breakdown of the communications facilities or any interruption of
service set forth on this agreement.

10.  PROPRIETARY INFORMATION:

Any and all information produced as a result of this agreement and considered
private by either party shall be maintained in strict confidence by the party
that receives it, and can only be revealed to a third party upon prior approval
of the corresponding party. if the information is prepared in writing, it should
clearly be stated by the preparing party that the information is proprietary; if
related orally, the party should state he is sharing proprietary information, at
the time of the discussion, following up same in writing.


11.  GOVERNMENTAL APPROVALS:

The parties agree with regard to all commitments and obligations to which they
subject themselves under this agreement to lend themselves a full cooperation in
obtaining and continuance of all necessary governmental licenses, consents,
permit, authorizations and approvals required by the laws of each country.

12.  ADDRESSES:

                                      -6-

 
For purposes of this agreement, it is agreed the following will be the addresses
for the parties involved:

          PRIMUS TELECOMUNICATIONS, INC.
          8180 GREENSBORO DRIVE 11TH FLOOR,
          MCLEAN, VIRGINIA 22102, U.S.A.
          ATTN:  MR. JOHN MELICK III
               VICE PRESIDENT

          EMPRESA HONDURERA DE TELECOMUNICACIONES (HONDUTEL)
          PALACIO DE TELECOMUNICACIONES, AVE. COLON
          APARTADO POSTAL No. 1794
          TEGUCIGALPA, M.D.C. HONDURAS, C.A.
          ATTN:  ABOGADO JOSE MARIO MALDONADO
          GERENTE GENERAL

13.  EFFECTIVE DATE AND DURATION

This agreement shall be in effect on the 30th day of November 1995 and shall be
in effect until one of the parties communicates to the other in writing to
terminate this agreement giving not less than one (1) year notice.  Any
correspondence regarding the termination of this agreement will be considered a
valid document, thirty (30) days from the date the letter is sent to the address
indicated in paragraph 12.  Any monies due to either party, pursuant to
paragraphs 5 and 6, to this agreement shall not be affected by any such
termination.

                                      -7-

 
14.  MODIFICATION AND ADDITIONS:

This agreement and any addition or annex it contains can be modified or expanded
in writing only and signed only by authorized personnel representing each of the
parties.

15.  RELATIONSHIP OF THE PARTIES:

The relationship between HONDUTEL and PRIMUS with regard to this agreement shall
be as coequals in jointly providing telecommunications services and in no case
should it be construed as an association between the parties as such each will
limit his obligation to those stated in this agreement.

16.  ASSIGNMENT:

This agreement shall not be transferred or assigned by PRIMUS without the
written consent of HONDUTEL, and similarly it shall not be transferred or
assigned by HONDUTEL, without the written consent of PRIMUS.  Notwithstanding
the foregoing, either party may, without the other's consent, make an assignment
to a successor, affiliate, subsidiary or to any entity under the same control of
such party.  In the event of any such assignment, the successor shall undertake,
in writing to the other party, the performance and liability for these
obligations, duties and interests which are a part of this agreement and the
predecessor shall be relieved of such obligations, duties, and interests, except
for matters arising out of events occurring prior to the date of such
undertaking.

                                      -8-

 
17.      MISCELLANEOUS PROVISIONS:

Nothing on this agreement shall restrict or prejudice the rights of one or the
other parties for reaching similar service agreement with other parties.

The headings for each of the paragraphs in this agreement serve only as points
of reference and under no circumstances shall they define, modify or restrict
the significance or interpretation of the terms or conditions herein . No
agreement or decision of one or the other parties may impose any provision of
same or interpret same to violate the provisions of this agreement.

This agreements should be written in English and Spanish in two copies; each
shall be considered  an original with identical legal effect.  This agreement
will be executed by the authorized parties mentioned herein.


_______________________________________                       ________________
EMPRESA HONDURENA DE TELECOMUNICACIONES                       DATE
     ABOGADO JOSE MARIO MALDONADO
               GERENTE GENERAL



_______________________________________                        ________________
PRIMUS TELECOMUNICATIONS, INC.                                 DATE
     MR. JOHN MELICK III
     VICE PRESIDENT

                                      -9-

 
                                    ANEXO A

                                    SERVICES


SERVICES

The following are services available to the customers On each country;


Telephone Service:

     International automatic direct dial
     Semiautomatic Person to Person
     Semiautomatic Station to Station
     Reversed Charge calls
     Direct Dial

Circuits leased to third patties:

Television Service:

Radio Transmissions:

These services will be provided by and under contracts or other legal methods
established for such services.


Other Services:

Other services will be agreed upon mutually, such as data transmission, video
conferencing, prepaid or debit card, etc. in accordance with the availability of
the parties.


Special Service:

When a telecomunications company requires the services of the other in the
others country, (Presidential visits, etc) the party whose country is being
visited, shall be responsible for coordinating the required services.


Callback Services:

Callback services between Honduras and the United States and to third countries
should not be offered to customers in the United States in the United States nor
Honduras.

                                      -10-

 
                                    ANEXO B


DISTRIBUTION OF TARIFS AND SHARED TARIF DISTRIBUTION
- ----------------------------------------------------

Rate of Billing                               US $ 1.50/Minute


SHARED TARIFS OF BILLING RATE FOR TRAFFIC TERMINATING IN THE UNITED STATES.
- -------------------------------------------------------------------------- 

                    TO HONDUTEL          TO PRIMUS
                    PER MINUTE           PER MINUTE
                    -----------          ----------

                    US$ 0.75             US$ 0.75


SHARED TARIFS OF BILLING RATE FOR TRAFFIC TERMINATING IN HONDURAS.
- ----------------------------------------------------------------- 

                    TO HONDUTEL          TO PRIMUS
                    PER MINUTE           PER MINUTE
                    -----------          ----------

                    US$ 0.75             US$ 0.75


This rate is applicable to all categories of traffic covered by this agreement
and is expressed in US dollars.

                                      -11-

 
                                    ANEXO C

                               PAYMENT PROCEDURES


a.   For payments HONDUTEL reports to PRIMUS outgoing traffic from Honduras to
     PRIMUS.

     1.  Automatic traffic

     2.  Semi-automatic traffic (Operator assisted, station to station and
     person to person)

     3.   Incoming reverse charges (collect calls to Honduras)


b.   For payment PRIMUS reports to HONDUTEL:

     1.  Automatic traffic

     2.  Outgoing Service Automatic traffic.

     3.  Incoming reverse Charges (collect calls to the United State).

                                      -12-


 
                                                                  CONFORMED COPY
                                                                  --------------



                             SHAREHOLDERS AGREEMENT


                         Dated as of February 22, 1996


                                     Among


                              TELEGLOBE USA INC.,


                                 K. PAUL SINGH


                                      and


                 PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED

 
                              TABLE OF CONTENTS*
 
 


                                                                            Page
                                                                            ----

                                   ARTICLE I
                                  DEFINITIONS
                                                                       
     SECTION 1.1.   Definitions............................................  1
 
                                                                              
                                   ARTICLE II                                 
                              GOVERNANCE OF PRIMUS                            
                                                                       
     SECTION 2.1.   Board of Directors.....................................  3
             2.2.   Additional Rights......................................  3 

 
                                  ARTICLE III
                                   COVENANTS
                                                                       
     SECTION 3.1.   Information............................................  4
             3.2.   Preemptive Rights......................................  5
             3.3.   Registration Rights....................................  5
 
                                   ARTICLE IV
                   TRANSFER RESTRICTIONS AND OFFER PROCEDURES

                                                                       
     SECTION 4.1.   Transfer Restrictions..................................  6
             4.2.   Legends................................................  7
             4.3.   Right to Compel Sale...................................  7
             4.4.   Tag Along Rights.......................................  8
 
                                   ARTICLE V
                         REPRESENTATIONS AND WARRANTIES

                                                                       
     SECTION 5.1.   Representations and Warranties of
                       Singh...............................................  9
             5.2.   Representations and Warranties of
                       Teleglobe...........................................  9
             5.3.   Representations and Warranties of
                       Primus.............................................. 10
 
                                   ARTICLE VI
                                 MISCELLANEOUS
 
                                                                       
     SECTION 6.1.   Termination............................................ 11
             6.2.   Successors and Assigns; Assignment..................... 11
             6.3.   Specific Performance................................... 11
 


- ----------------------

*The Table of Contents is not a part of this Agreement.


                                      -i-

 

 
                                                                            Page
                                                                            ----


                                                                       
             6.4.   Notices................................................ 12
             6.5.   Expenses............................................... 13
             6.6.   Amendments and Waivers................................. 13
             6.7.   Governing Law.......................................... 13
             6.8.   Counterparts; Effectiveness............................ 13
             6.9.   Headings............................................... 13
             6.10.  Entire Agreement....................................... 13
             6.11.  Separability........................................... 13



                                     -ii-

 
          AGREEMENT dated as of February 22, 1996 among Teleglobe USA Inc., a
Delaware corporation ("Teleglobe"), K. Paul Singh, a resident of Virginia, and
Primus Telecommunications Group, Incorporated, a Delaware corporation
("Primus").

                             W I T N E S S E T H :
                             - - - - - - - - - -  

          WHEREAS, concurrently with the execution of this Agreement, Teleglobe
is purchasing from Primus 121,505 shares of common stock, par value $.Ol per
share, of Primus ("Common Stock"), at a price of $12.00 per share, or $1,456,060
in the aggregate, pursuant to the Securities Purchase and Option Agreement dated
as of January 12, 1996 (the "Securities Purchase and Option Agreement") among
Teleglobe, Primus, Primus Holding Corporation ("PHC") and GTI Network Inc.
("GNI"); and

          WHEREAS, in connection with such transactions the parties hereto wish
to enter into certain arrangements concerning the operation and governance of
Primus and other related matters;

          NOW THEREFORE, the parties hereto agree as follows:


                                   ARTICLE I

                                  DEFINITIONS

          1.1.   Definitions. (a) The following terms, as used herein, have the
                 -----------                                                   
following meanings:

          "Board" means the board of directors of Primus.

          "Capital Stock" means, at any time, the Common Stock and any other
shares of authorized capital stock of Primus.

          "Change of Control" means any transaction or series of transactions in
which any Person or group (within the meaning of Rule 13d-5 under the Exchange
Act and Sections 13(d) and 14(d) of the Exchange Act) other than Singh (but
including any Person or group that becomes an Affiliate of Singh as a result of,
or in contemplation of, any such transaction or series of transactions) becomes
the direct or indirect "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), by way of merger, consolidation, other business combination or
otherwise, of greater than 30% of the total voting power (on a fully diluted
basis as if all convertible securities had been converted and all warrants and
options had been exercised) entitled to vote in the election of directors of
Primus or the surviving Person of any such merger, consolidation or other
business combination (if other than Primus).

          "Common Carrier" means any company that either directly or through any
other entity that it Controls, is Controlled by,

 
or is under common Control with, operates as a common carrier, providing
international telecommunications services for hire to the public in the United
States pursuant to relevant regulatory authority in the United States.

          "Compelled Sale" means a sale by Teleglobe of shares of Capital Stock
pursuant to Section 4.3.

          "Competitor" of either Primus or Teleglobe, as the case may be, means
any company that either directly or through any other entity that it controls,
is controlled by, or is under common control with, competes to a material extent
with Primus or Teleglobe, as the case may be, in the provision of international
telecommunications services in the United States.

          "Control" (including, with correlative meanings, the terms
"controlling", "control", "controlled by" and "under common control with"), as
applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
Person, whether through the ownership of voting securities, by contract or
otherwise.

          "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.

          "Material Adverse Effect" means, with respect to any Person, a
material adverse effect on the financial condition, business, assets or results
of operations of such Person and its Subsidiaries, taken as a whole.

          "Ownership Percentage" means, at any time with respect to any Person,
the ratio of (i) the aggregate number of shares of Capital Stock owned by such
Person at such time to (ii) the aggregate number of shares of Capital Stock
outstanding at such time.

           "Primus Closing Date" means the date of this Agreement.

          "Public Offering" means an underwritten public offering of Capital
Stock pursuant to an effective registration statement under the Securities Act.

          "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

          "Singh" means K. Paul Singh, a resident of Virginia, or in the event
he is not then alive or legally competent, his executor, the administrator of
his estate or his legal


                                      -2-

 
representative (including, without limitation, his guardian, conservator or
other similar fiduciary).

          "Teleglobe's Ownership Percentage" means, at any time, the Ownership
Percentage of Teleglobe at such time.

          "Third Party Purchaser" means any Person that is not an Affiliate of
Primus or Teleglobe that purchases or offers or agrees to purchase shares of
Capital Stock in connection with a Compelled Sale or a Tag Along Sale.

          "Transfer" means, with respect to any securities, any direct or
indirect sale, assignment, transfer, grant of a participation in, pledge, gift
or other disposition thereof, without regard to whether such disposition is for
consideration.

          (b) Each of the following terms has the meaning set forth in the
Securities Purchase and Option Agreement:

          (i)      Affiliate;         
          (ii)     Business Day;
          (iii)    Governmental Authority;
          (iv)     Lien;
          (v)      Person;
          (vi)     Secured Note; and
          (vii)    Subsidiary.

          (c) Each of the following terms is defined in the Section set forth
opposite such term:


 
                Term                 Section
                ----                 -------
                                   
 
          Closing Period               4.1
          Compelled Sale Notice        4.3
          Eligible Assignee            6.2
          New Securities               3.2
          Offer Notice                 4.1
          Offered Shares               4.1
          Primus Tag Along Sale        4.4
          Purchase Notice              4.1
          Sale Notice                  4.4
          Singh Tag Along Sale         4.4
          Tag Along Sale               4.4
          Teleglobe Nominee            2.1
 

                                   ARTICLE II

                              GOVERNANCE OF PRIMUS

          2.1. Board of Directors.  The parties hereto agree that Teleglobe will
               ------------------                                               
be entitled, but not required, to designate one

                                      -3-

 
member of the Board (a "Teleglobe Nominee,,) for as long as Primus or PHC
Controls GNI; provided that the director nominee of Teleglobe must be
              --------                                               
independent of Teleglobe (i.e., such Person may not be an employee, officer or
director of Teleglobe or any of its Affiliates).  Singh agrees that he will vote
all shares of Capital Stock owned or controlled by him to elect, and will
otherwise support the election of, the Teleglobe Nominee as a director of
Primus.  In the event that any Teleglobe Nominee vacates his seat on the Board,
whether by resignation, death, removal or otherwise, the parties hereto agree to
fill any such vacancy with a person designated by Teleglobe.

          2.2. Additional Rights.  Primus will grant to Teleglobe any consent
               -----------------                                             
rights granted by Primus to any Person that has an Ownership Percentage equal to
or less than Teleglobe's Ownership Percentage at such time.


                                  ARTICLE III

                                   COVENANTS

          3.1.   Information. (a) Primus will, at Teleglobe's expense, permit
                 -----------                                                 
Teleglobe's auditors to visit and inspect any of the properties of Primus and
any of its Subsidiaries, including the books of account and other records of
such company (and make copies thereof and take extracts therefrom), and to
discuss its affairs, finances and accounts with the relevant officers and, after
notice to Primus, its independent public accountants and counsel, all at such
reasonable times and as often as Teleglobe may reasonably request.  In
connection with the provision of information by Primus to Teleglobe pursuant to
this Section 3.1, Teleglobe agrees that such information will be deemed to be
"Confidential Information" as defined in Section 4.7 of the Securities Purchase
and Option Agreement and that it will be bound by the restrictions of such
Section 4.7.

          (b) As soon as available and in any event within 30 days after the
close of each quarterly accounting period ending after the date hereof, Primus
will deliver to Teleglobe the consolidated balance sheet of Primus as of the end
of such quarterly period, and the related consolidated statements of income,
shareholders, equity and cash flows for such quarterly period and for the
elapsed portion of the fiscal year ended with the last day of such quarterly
period, and in each case setting forth comparative figures for the related
periods in the prior fiscal year, all of which shall be certified by an
authorized officer of Primus to have been prepared in accordance with generally
accepted accounting principles (subject to normal year-end audit adjustments in
the case of statements for any quarterly accounting period).

                                      -4-

 
          (c) As soon as available and in any event within 90 days after the
close of each fiscal year of Primus, Primus will deliver to Teleglobe the
consolidated balance sheet of Primus as of the end of such fiscal year and the
related consolidated statements of income, shareholders, equity and cash flows
for such fiscal year, in each case setting forth comparative figures for the
preceding fiscal year and certified by independent certified public accountants
of recognized national standing to have been prepared in accordance with
generally accepted accounting principles in the United States.

          (d) Primus will provide Teleglobe with such assistance as Teleglobe
reasonably requests from officers, employees and auditors of Primus to enable
Teleglobe to account for its investment in Primus in its financial statements.

          (e) Primus will furnish to Teleglobe copies of all reports, notices or
other written communications (other than routine correspondence and responses to
routine inquiries) sent to holders of equity or debt securities of, or lenders
to Primus or any of its Subsidiaries, promptly after any such communications are
sent.

          3.2.   Preemptive Rights. (a) Primus agrees that it will grant to
                 -----------------                                         
Teleglobe the preemptive right to purchase its respective Ownership Percentage
of any shares of Capital Stock (and securities of any type whatsoever that are,
or may become, exercisable to purchase, or convertible or exchangeable into,
shares of Capital Stock) which Primus may propose to sell or otherwise issue
from time to time for cash after the date hereof ("New Securities") but only if
and to the extent that (and on the same terms and conditions as) Primus grants
such a preemptive right to any Person that has an Ownership Percentage equal to
or less than Teleglobe's Ownership Percentage at such time.  Such ownership
Percentage will be calculated immediately preceding any such sale or issuance.

          (b) Any shares of Capital Stock purchased by Teleglobe pursuant to
this Section 3.2 or otherwise will be Permanently Unrestricted Share
Certificates (as defined in the by-laws of Primus, as amended in accordance with
Section 4.11   of the Securities Purchase and Option Agreement).

          3.3. Registration Rights.  Primus will grant to Teleglobe the same
               -------------------                                          
registration rights granted by Primus to any Person that has an ownership
Percentage equal to or less than Teleglobe's Ownership Percentage at the time
such registration rights are granted to such Person.  Primus agrees that it will
pay Teleglobe's expenses relating to any registration of Teleglobe's shares of
Capital Stock pursuant to this Section 3.3 in connection with a Public Offering
of Capital Stock.

                                      -5-

 
                                   ARTICLE IV

                   TRANSFER RESTRICTIONS AND OFFER PROCEDURES

          4.1.   Transfer Restrictions. (a) Teleglobe may transfer its shares of
                 ---------------------                                          
Capital Stock to any third party; provided that if Teleglobe wishes to sell its
shares of Capital Stock to a Competitor of Primus, it must comply with the
procedures set forth in Section 4.1(b).

          (b) If, at any time, Teleglobe wishes to sell any of its shares of
Capital Stock to a Competitor of Primus, such sale shall be made pursuant to the
following procedures:

          (i) Teleglobe shall deliver to Primus a written notice of its
     intention (an "Offer Notice"), describing the material terms and conditions
     of the proposed sale, including the number of shares of Capital Stock
     offered for sale (the "Offered Shares") and the proposed price.  Primus
     shall have 180 calendar days from the date of receipt of the Offer Notice
     to give Teleglobe written notice that it intends to purchase (or to have
     another buyer purchase) the Offered Shares on the same terms and conditions
     set forth in the Offer Notice (a "Purchase Notice").  If Primus delivers to
     Teleglobe a Purchase Notice within such time period, the closing for the
     purchase and sale of the Offered Shares to be purchased by Primus (or its
     designee) must take place within 10 Business Days from the date of such
     Purchase Notice (the "Closing Period").  In the event Primus fails to
     deliver to Teleglobe a Purchase Notice within 180 calendar days from the
     date of its receipt of the Offer Notice, delivers a notice indicating that
     it does not intend to purchase the Offered Shares or fails to close the
     purchase and sale of the Offered Shares prior to the expiration of the
     Closing Period, Teleglobe will have the right, for a period of 180 calendar
     days after the earlier of (i) the date Primus delivers a notice indicating
     that it does not intend to purchase the Offered Shares and (ii) the date
     that is 180 calendar days after the date of delivery of the Offer Notice to
     Primus (or the expiration of the Closing Period) to sell the Offered Shares
     to any Competitor of Primus, at a price per share not less than 95@ of the
     price proposed in the Offer Notice.

          (ii)  The purchase price for any shares of Capital Stock purchased by
     Primus or its designee pursuant to this Section 4.1(b) will be paid in cash
     by wire transfer in immediately available funds to a bank account
     designated by Teleglobe not less than three Business Days prior to closing.


                                      -6-

 
          (iii)  At any closing under this Article IV, Teleglobe will deliver to
     the relevant purchaser good and valid title to the shares of Capital Stock
     being sold by Teleglobe, free and clear of any Lien.

          4.2    Legends. Each certificate evidencing outstanding shares of
                 -------                                                   
Capital Stock held by Teleglobe shall bear a legend in substantially the
following form:

          THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
          UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  THESE SHARES MAY NOT BE
          SOLD OR OFFERED FOR SALE UNLESS THERE IS AN EFFECTIVE REGISTRATION
          STATEMENT IN EFFECT UNDER SAID ACT, OR UNLESS AN EXEMPTION FROM
          REGISTRATION IS AVAILABLE.

          THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
          ON TRANSFER AS SET FORTH IN THE SHAREHOLDERS AGREEMENT DATED AS OF
          FEBRUARY 22, 1996, COPIES OF WHICH WILL BE FURNISHED BY PRIMUS
          TELECOMMUNICATION GROUP, INCORPORATED AND ANY SUCCESSOR THERETO UPON
          REQUEST AND WITHOUT CHARGE.

          4.3. Right to Compel Sale. (a) If at any time a Third Party Purchaser
               --------------------                                            
offers to buy 100% of the outstanding shares of Capital Stock and Singh and a
majority of the other stockholders of Primus (other than Teleglobe) agree to
sell their shares of Capital Stock to such Third Party Purchaser, Primus shall
have the right to compel Teleglobe to sell its shares of Capital Stock to such
Third Party Purchaser so long as the terms and conditions for the purchase of
the shares owned by Teleglobe (including the price) are identical to those
relating to the purchase of all other outstanding shares of Capital Stock;
provided that Teleglobe shall not be required to sell any shares of Capital
- --------                                                                   
Stock to any such Third Party Purchaser if such sale is reasonably likely to
constitute a violation of applicable law or regulation.

          (b) If a Third Party Purchaser offers to buy 51% or more of the
outstanding shares of Capital Stock but less than 100% of such shares, Primus
shall have the right to compel Teleglobe to sell a portion of its shares of
Capital Stock equal to a fraction, the numerator of which is the total number of
shares of Capital Stock to be purchased by the Third Party Purchaser, and the
denominator of which is the total number of outstanding shares of Capital Stock
(after giving effect to the proposed transaction), to such Third Party Purchaser
if the following conditions are met: (i) the Third Party Purchaser is a Common
Carrier or a Competitor of Teleglobe, (ii) the consideration to be received by
Teleglobe and every other seller of shares of Capital Stock to such Third Party
Purchaser shall be

                                      -7-

 
cash or liquid securities, (iii) Teleglobe shall receive the same per share
consideration as every other seller of shares of Capital Stock in such sale and
(iv) the consideration to be received by Teleglobe pursuant to such sale shall,
if such sale is to be made prior to the second anniversary of the Primus Closing
Date, equal or exceed $12.00 per share of Common Stock held by Teleglobe, as
such price shall be adjusted from time to time to reflect stock splits, stock
dividends and other similar events.

          (c) In the event Primus elects to exercise its right to cause a
Compelled Sale, it will deliver written notice (a "Compelled Sale Notice") to
Teleglobe, setting forth the consideration and describing the other material
terms and conditions of the Compelled Sale, including the proposed closing date,
which shall be not less than 15 Business Days from the date the Compelled Sale
Notice is delivered.  At the closing for the Compelled Sale, against payment of
the purchase price for the shares of Capital Stock to be sold by Teleglobe,
Teleglobe will deliver to the Third Party Purchaser the certificate or
certificates representing the number of shares of Capital Stock held by
Teleglobe, duly endorsed, together with all other documents which are necessary
in order to effect such Compelled Sale.

          4.4. Tag Along Rights. (a) If Singh proposes to sell, in one
               ----------------                                       
transaction or in a series of related transactions (a "Singh Tag Along Sale")
any equity securities of Primus to -any Third Party Purchaser, or if Primus
proposes to issue, in one transaction or in a series of related transactions (a
"Primus Tag Along Sale") any equity securities to any Third Party Purchaser that
would result in a Change of Control of Primus (each of a Singh Tag Along Sale
and a Primus Tag Along Sale constituting a "Tag Along Sale"), Teleglobe shall
have the right to participate in such Tag Along Sale on the following terms:

          (i) Singh or Primus, as the case may be, shall give Teleglobe not less
     than 20 Business Days' written notice (a "Sale Notice") of its intention,
     describing the price offered, all other material terms and conditions of
     the Tag Along Sale and, if the consideration payable pursuant to the Tag
     Along Sale consists in whole or in part of consideration other than cash,
     such information relating to such other consideration as Teleglobe may
     reasonably request and which is available to Singh or Primus, as the case
     may be.

          (ii) In connection with any Tag Along Sale, Teleglobe shall have the
     right, in its sole discretion, to sell, for the same price per share being
     paid to, and otherwise on the same terms and conditions, as Singh or
     Primus, as the case may be, all or any portion of the shares of Capital
     Stock then held by it.

                                      -8-

 
          (iii) Teleglobe must exercise its tag along right by giving written
     notice to Singh or Primus, as the case may be, within 15 Business Days of
     the delivery of a Sale Notice, specifying the number of shares of Capital
     Stock that Teleglobe desires to include in the Tag Along Sale. At the
     closing for the Tag Along Sale, against payment of purchase price for the
     shares of Capital Stock to be sold by Teleglobe, Teleglobe will deliver to
     the Third Party Purchaser the certificate or certificates representing such
     number of shares of Capital Stock, duly endorsed, together with all other
     documents which are necessary in order to effect such Tag Along Sale.


                                   ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

          5.1.   Representations and Warranties of Singh.  Singh represents and
                 ---------------------------------------                       
warrants to Teleglobe and Primus that as of the date hereof:

          (a) The execution, delivery and performance of this Agreement by Singh
is within his legal capacity.  This Agreement constitutes a valid and binding
agreement of Singh.

          (b) The execution, delivery and performance by Singh of this Agreement
require no action by or in respect of, or filing by Singh with, any Governmental
Authority.

          (c) The execution, delivery and performance by Singh of this Agreement
do not and will not: (i) violate any applicable law, rule, regulation, judgment,
injunction, order or decree binding on Singh or (ii) require any consent or
other action by any Person under, constitute a default under, or give rise to
any right of termination, cancellation or acceleration of any right or
obligation of Singh or to loss of benefit to which Singh is entitled under, any
agreement or other instrument binding upon Singh or any license, permit or other
similar authorization held by Singh, except to the extent that any such
violation, failure to obtain any such consent or other action, default, right or
loss would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect on Singh.

          5.2. Representations and Warranties of Teleglobe.
               ------------------------------------------- 
Teleglobe represents and warrants to each of Singh and Primus that as of the
date hereof:

          (a) The execution, delivery and performance of this Agreement by
Teleglobe are within Teleglobe's corporate powers and have been duly authorized
by all necessary corporate action

                                      -9-

 
on the part of Teleglobe.  This Agreement constitutes a valid and binding
agreement of Teleglobe.

          (b) The execution, delivery and performance by Teleglobe of this
Agreement require no action by Teleglobe in respect of, or filing by Teleglobe
with, any Governmental Authority.

          (c) The execution, delivery and performance by Teleglobe of this
Agreement do not and will not: (i) violate the certificate of incorporation or
by-laws of Teleglobe or (ii) violate any applicable material law, rule,
regulation, judgment, injunction, order or decree binding on Teleglobe, except,
in the case of clause (ii), to the extent that any such violation, would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Teleglobe.

          5.3. Representations and Warranties of Primus.  Primus represents and
               ----------------------------------------                        
warrants to Teleglobe and Singh that as of the date hereof:

          (a) The execution, delivery and performance of this Agreement by
Primus are within Primus's corporate powers and have been duly authorized by all
necessary corporate action on the part of Primus.  This Agreement constitutes a
valid and binding agreement of Primus.

          (b) The execution, delivery and performance by Primus of this
Agreement require no action by Primus in respect of, or filing by Primus with,
any Governmental Authority.

          (c) The execution, delivery and performance by Primus of this
Agreement do not and will not: (i) violate the certificate of incorporation or
by-laws of Primus or any Subsidiary of Primus, (ii) violate any applicable law,
rule, regulation, judgment, injunction, order or decree binding on Primus, (iii)
require any consent or other action by any Person under, constitute a default
under, or give rise to any right of termination, cancellation or acceleration of
any right or obligation of Primus or of any Subsidiary of Primus or to a loss of
any benefit to which Primus or any Subsidiary of Primus is entitled under, any
agreement or other instrument binding upon Primus or any Subsidiary of Primus or
any license, franchise, permit or other similar authorization held by Primus or
any Subsidiary of Primus or (iv) result in the creation or imposition of any
Lien on any material asset of Primus or any Subsidiary of Primus, except in the
case of clauses (ii), (iii) and (iv), to the extent that any such violation,
failure to obtain any such consent or other action, default, right, loss or Lien
would not, reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Primus and its Subsidiaries, taken as a whole.

                                     -10-

 
                                   ARTICLE VI

                                 MISCELLANEOUS

          6.1.   Termination.  The provisions of this Agreement will terminate,
                 -----------                                                   
and be of no further force or effect on the fifth anniversary of the date
hereof; Provided that the provisions of this Agreement will not terminate so
long as Teleglobe is a shareholder of Primus and any portion of the Secured Note
(or any amounts due thereunder) remain unpaid; and Provided further that the
provisions of Sections 3.3 and 6.S shall survive any such termination.

          6.2.  Successors and Assigns; Assignment.  (a)  The provisions of this
                ----------------------------------                              
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, and to the extent applicable heirs,
executors, administrators and legal representatives; provided that the rights
and obligations of Teleglobe in its capacity as a shareholder of Primus as
provided in this Agreement are specific to Teleglobe and will not apply to any
Person to whom Teleglobe transfers Capital Stock (except any Eligible Assignee).

          (b) Except as otherwise provided herein, neither Primus, Singh nor
Teleglobe may assign, delegate or otherwise Transfer any of its rights or
obligations under this Agreement without the prior written consent of all of the
other parties hereto; Provided that Teleglobe may assign its rights and
obligations to any Eligible Assignee at any time after such purchaser has
delivered to Primus and Singh an executed counterpart of this Agreement and
agreed to be bound by the terms of this Agreement as if such Person was
Teleglobe.

          (c) For purposes of this Agreement, "Eligible Assignee" means any
entity which at the time of such assignment is, and thereafter during the term
of this Agreement remains Controlled, directly or indirectly, by Teleglobe.

          6.3. Specific Performance.  Each party hereto agrees that a party
               --------------------                                        
hereto could be irreparably damaged if any party failed to perform any
obligation under this Agreement, and that such party would not have an adequate
remedy at law for money damages in such event.  Accordingly, each party hereto
shall be entitled to specific performance and injunctive and other equitable
relief to enforce the performance of this Agreement.  This provision is without
prejudice to any other rights that such party may have against any party for any
failure by such party to perform its obligations under this Agreement.

                                     -11-

 
          6.4.   Notices.  All notices, requests and other communications
                 -------                                                 
hereunder shall be in writing (including facsimile transmission) and shall be
given,

          if to Primus:

               Primus Telecommunications Group, Incorporated
               8180 Greensboro Drive
               McLean, Virginia 22102
               Fax:   703-848-4641
               Attention:  K. Paul Singh

          with a copy to:

               Pepper, Hamilton & Scheetz
               3000 Two Logan Square
               Eighteenth and Arch Streets
               Philadelphia, Pennsylvania  19103-2799
               Fax:   215-981-4750
               Attention:  Julia D. Corelli

          if to Singh:

               K. Paul Singh
               9888 Windy Hollow Road
               Great Falls, Virginia 22066
               Fax:   703-757-9378

          with a copy to:

               Pepper, Hamilton & Scheetz
               3000 Two Logan Square
               Eighteenth and Arch Streets
               Philadelphia, Pennsylvania  19103-2799
               Fax:   215-981-4750
               Attention:  Julia D. Corelli

          if to Teleglobe:

               Teleglobe USA Inc.
               1751 Pinnacle Drive
               McLean, Virginia 22102
               Fax:   703-714-6652
               Attention:  Philip M. Walker

          with a copy to:

               Davis Polk & Wardwell
               450 Lexington Avenue
               New York, New York 10017
               Fax:  212-450-4800
               Attention:  John W. Buttrick


                                     -12-

 
All such notices, requests and other communications shall be deemed received
on the date of receipt by the recipient thereof if received prior to 5 p.m. in
the place of receipt and such day is a Business Day.  Otherwise, any such
notice, request or communication shall be deemed not to have been received until
the next succeeding Business Day.

          6.5.   Expenses.  All costs and expenses incurred in connection with
                 --------                                                     
this Agreement shall be paid by the party incurring such cost or expense.

          6.6.   Amendments and Waivers.  (a) Any provision of this Agreement
                 ----------------------                                      
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed, in the case of an amendment, by each party to this Agreement, or
in the case of a waiver, by the party against whom the waiver is to be
effective.

          (b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.  The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.

          6.7.   Governing Law.  This Agreement shall be construed in accordance
                 -------------                                                  
with and governed by the law of the State of Delaware, without regard to the
conflicts of law rules of such state.

          6.8. Counterparts; Effectiveness.  This Agreement may be signed in any
               ---------------------------                                      
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.  This
Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.

          6.9.   Headings.  The headings contained in this Agreement are for
                 --------                                                   
reference purposes only and shall not in any way affect the meaning of
interpretation of this Agreement.

          6.10.  Entire Agreement.  This Agreement constitutes the entire
                 ----------------                                        
agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter of this
Agreement.

          6.11.  Separability.  In case any provision of this Agreement shall be
                 ------------                                                   
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

                                     -13-

 
          IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date set forth above.


                                       /s/ K. Paul Singh
                                       ___________________________________
                                       K. PAUL SINGH, individually


                                       TELEGLOBE USA INC.                   
                                                                            
                                                                            
                                          /s/ Paolo Guidi                   
                                       By_________________________________  
                                          Name:   Paolo Guidi               
                                          Title:  President and Chief       
                                                     Executive Officer      
                                                                            
                                                                            
                                       PRIMUS TELECOMMUNICATIONS            
                                         GROUP, INCORPORATED                
                                                                            
                                                                            
                                          /s/ K. Paul Singh                 
                                       By_________________________________  
                                          Name:   K. Paul Singh             
                                          Title:  Chief Executive Officer   
                                                     and President           

                                     -14-


 
                          SECURITYHOLDERS' AGREEMENT

          THIS SECURITYHOLDERS' AGREEMENT (the "Agreement"), entered into this
31st day of July, 1996 is made by and among Primus Telecommunications Group,
Incorporated, a Delaware corporation (the "Company"), K. Paul Singh, a resident
of Virginia, Quantum Industrial Partners LDC, a Cayman Islands limited duration
company ("QIP"), S-C Phoenix Holdings, L.L.C., a Delaware limited liability
company ("S-C"), Winston Partners II LDC, a Cayman Islands limited duration
company ("WP LDC") and Winston Partners II LLC, a Delaware limited liability
company ("WP LLC").  QIP, S-C, NW LDC and WP LLC and their registered assigns
are collectively referred to as the "Investors".

          WHEREAS, pursuant to a Securities Purchase Agreement, dated as of July
31, 1996 (the "Purchase Agreement"), among the Company and the Investors, the
Company shall issue on the date hereof to the Investors (i) 285,714 shares (the
"Purchased Shares") of the Company's common stock, par value $.01 per share (the
"Common Stock") and (ii) warrants (the "Purchase Warrants") exercisable for that
number of shares of Common Stock specified therein and has agreed to issue
additional Common Stock (the "Additional Purchase Agreement Shares") to the
Investors upon the occurrence of certain conditions specified in the Purchase
Agreement.  In addition, the Company has issued to the Investors warrants (the
"Contingent Warrants") providing for the issuance of shares of Common Stock upon
the occurrence of certain conditions specified therein; and

          WHEREAS, the parties desire to set forth more fully their agreements
regarding the investment of the Investors in the Company:

          NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, the receipt and sufficiency of which
are acknowledged, the parties hereto, each intending to be legally bound hereby,
agree as follows:

                                   ARTICLE I
                                  DEFINITIONS

          SECTION 1.1.  Definitions.
                        ----------- 

          As used herein, the following terms shall have the respective meanings
set forth below:

          "Affiliate" of any Person means any Person that directly or indirectly
controls, or is under common control with, or is controlled by, such Person.  As
used in this definition, "control" (including with its correlative meanings,
"controlled by" and "under common control with") shall mean the possession,
directly or indirectly, of the power to direct or cause the

 
direction of the management or policies of a Person (whether through ownership
of securities or partnership or other ownership interests, by contract or
otherwise).  With respect to the Investors, the term "Affiliate" shall include
one or more of Chatterjee Management Company, Purnendu Chatterjee, George Soros
or Soros Fund Management or affiliates thereof, and any Person or entity for
which any such Person or entity acts as investment advisor or investment
manager.

          "Board of Directors" means the Board of Directors of the Company, as
constituted from time to time in accordance with this Agreement and the
Company's by-laws.

          "Business Day" means any day other than a Saturday, Sunday or other
day on which banking institutions are authorized or required by law or executive
order to close in New York, New York.

          "Capital Stock" means any class of capital stock of the Company.

          "Change of Control" means any transaction or series of transactions in
which any person or group (within the meaning of Rule 13d-5 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Sections 13(d) and
14(d) of the Exchange Act) other than Singh (but including any person or group
that becomes an Affiliate of Singh as a result of, or in contemplation of, any
such transaction or series of transactions) becomes the direct or indirect
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), by way of
merger, consolidation, other business combination or otherwise, of greater than
30% of the total voting power (on a fully diluted basis as if all convertible
securities had been converted and all warrants and options had been exercised)
entitled to vote in the election of Directors of the Company or the surviving
Person of any such merger, consolidation or other business combination (if other
than the Company).

          "Compelled Sale" means the sale by the Investors of Investor Shares
pursuant to Section 3.4.

          "Director" means a member of the Board of Directors.

          "Family Group" means a Person's parents, spouse, descendants (whether
or not adopted) and stepchildren and any trust solely for the benefit of such
Person and/or the Person's parents, spouse, stepchildren and/or descendants.

          "First Year Compelled Sale Price" is that Compelled Sale Price
required to be received by an Investor on the date of the Compelled Sale so that
such Compelled Sale Price when added to all cash flows to each Investor from its
investments in the

                                      -2-

 
Company (including, without limitation, dividends and sales of stock, etc.,
during the period from the date hereof to the date of the Compelled Sale)
provides a rate of return of at least 35% on all cash flows from such Investor
in connection with its investments in the Company (including, without
limitation, the initial purchase, the exercise price with respect to any
exercise of warrants or options, other than the Warrant B Alternative Exercise
Price (as defined in the Purchase Warrants) etc., during the period from the
date hereof to the date of the Compelled Sale).  For purposes of this
definition, the 35% rate of return referred to above is the rate required as of
the date of the Compelled Sale and is not to be annualized.  By way of example
only, on the date of the Compelled Sale, the aggregate of the Compelled Sale
Price and all other cash flows to such Investor from its investment in the
Company must be $1.35 for every  $1.00 of cash flow from such Investor in
connection with its investment in the Company.

          "Investor Shares" means (i) the Purchased Shares issued to the
Investors pursuant to the Purchase Agreement; (ii) the Purchase Warrants issued
to the Investors pursuant to the Purchase Agreement; (iii) the Contingent
Warrants issued to the Investors pursuant to the Purchase Agreement; (iv) any
shares of Common Stock issued or issuable upon exercise of the Purchase Warrants
referred to in clause (ii); (v) any shares of Common Stock issued or issuable
upon exercise of the Contingent Warrants referred to in clause (iii); (vi) the
Additional Purchase Agreement Shares; and (vii) any shares of Common Stock
issued or issuable directly or indirectly with respect to the securities
referred to in clauses (i) through (vi) by way of stock dividend or stock split
or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization.  As to any particular shares constituting
Investor Shares, such shares will cease to be Investor Shares when they have
been (x) effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them, or (y) sold to the
public through a broker, dealer or market maker pursuant to Rule 144 (or by
similar provision then in force) under the Securities Act.

          "Person" means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization or
other entity.

          "Priority Return" is the cash amount that the Company would have to
transfer to each Investor on the date of the Compelled Sale so that the internal
rate of return on (i) all the cash flows both to and from each Investor from its
investments in the Company (including, without limitation, the initial purchase,
the exercise price with respect to any exercise of warrants or options,
dividends, sale of stock (including the amount received pursuant to the
Compelled Sale, but excluding the Warrant B

                                      -3-

 
Alternative Exercise Price as defined in the Purchase Warrants) etc., during the
period from the date hereof to and including the date of the Compelled Sale) and
(ii) the cash amount referred to above, would be 35%.

          "Public Offering" means an underwritten public offering of shares of
Common Stock pursuant to an effective Registration Statement under the
Securities Act of 1933, as then in effect or any comparable statement under any
similar federal statute then in force or effect.

          "Qualified Public Offering" means a Public Offering of at least
1,000,000 shares of Common Stock at a price per share of at least $35 (before
underwriting commissions).

          "Singh" means K. Paul Singh, a resident of Virginia, or in the event
he is not then alive or legally competent, his executor, the administrator of
his estate or his legal representative (including, without limitation, his
guardian, conservator or other similar fiduciary).

          "Third Party" means any Person that is not an Affiliate or a member of
the Family Group, as appropriate, of the Company, Singh or the Investors.

          "Underlying Shares" means (i) the Purchased Shares issued to the
Investors pursuant to the Purchase Agreement; (ii) any shares of Common Stock
issued or issuable upon exercise of the Purchase Warrants issued to the
Investors pursuant to the Purchase Agreement; (iii) any shares of Common Stock
issued or issuable upon exercise of the Contingent Warrants issued to the
Investors pursuant to the Purchase Agreement, (iv) the Additional Purchase
Agreement Shares, (v) any shares of Common Stock issued or issuable directly or
indirectly with respect to the securities referred to in clauses (i) through
(iv) by way of stock dividend or stock split or in connection with a combination
of shares, recapitalization, merger, consolidation or other reorganization and
(v) any other shares of Capital Stock held by the Investors; provided that
Underlying Shares will cease to be Underlying Shares when they cease to be
Investor Shares.

                                  ARTICLE II
                    CORPORATE GOVERNANCE; VOTING AGREEMENTS

          SECTION 2.1.  Board of Directors.
                        ------------------ 

             (a) The parties hereto agree that the Investors shall collectively 
be entitled to designate one (1) member of the Board of Directors (the
"Investors' Nominee") to be appointed immediately after the closing of the
issuance of the Purchased Shares and the Purchase Warrant.

                                      -4-

 
              (b) Singh agrees that he will vote all shares of Capital Stock 
owned by him, controlled by him, or over which he has voting power to elect, and
will otherwise support the election of, the Investors' Nominee as a Director. No
transfer of shares of Capital Stock by Singh shall be permitted unless such
transferee agrees to be bound by the provisions of this Section 2.

              (c) The Company agrees that it will take all actions necessary to
insure that the Investors' Nominee is nominated as a member of the Board of
Directors.

              (d) In the event that any Investors Nominee vacates his seat on 
the Board of Directors, whether by resignation, death, removal or otherwise, the
parties hereto agree to fill any such vacancy with a person designated by the
Investors.

        SECTION 2.2.  Approved Offerings.  Each Investor hereby agrees to vote
                      ------------------                                      
its shares of Capital Stock and take all other necessary actions within its
control to approve a debt and/or equity offering (if such an offering is deemed
to be desirable by the Company) on substantially the same terms as have been
proposed as of the date hereof by Lehman Brothers, financial advisor to the
Company (a draft, dated July 26, 1996, of the registration statement of which
has been delivered to the Investors); provided that the price per security
offered in such a debt and/or equity offering is at least $35.  Each Investor
hereby agrees to waive its right to include any of its Underlying Shares in such
offering.

        SECTION 2.3.  Further Assurances.  Each holder of Capital Stock
                      ------------------                               
hereto, and the Company, as applicable, hereby consents and agrees to vote its
shares of Capital Stock and take all actions required under the Company's
certificate of incorporation and by-laws and otherwise use its best efforts to
cause the transactions contemplated by this Agreement and the provisions hereof
to be effectuated.

        SECTION 2.4.  Termination of Obligations.  The obligations set forth
                      --------------------------                            
in Section 2.1 shall terminate upon the consummation of a Qualified Public
Offering.
                                  ARTICLE III
                    PREEMPTIVE RIGHTS; TRANSFER RESTRICTIONS
                              AND OFFER PROCEDURES

        SECTION 3.1.  Preemptive Rights.
                      ----------------- 

              (a) Except for the issuance of the Company's Capital Stock or
securities (i) pertaining to options or rights

                                      -5-

 
to acquire shares of Capital Stock existing on the date hereof, (ii) pursuant to
a Public Offering if the managing underwriter of such Public Offering advises
the Company in writing that in its opinion it is necessary for the Investors to
waive their preemptive rights granted hereunder in order for the Public Offering
to achieve its maximum benefit, (iii) pursuant to the exercise of the Purchase
Warrants and/or the Contingent Warrants, (iv) as the Additional Purchase
Agreement Shares, or (v) additional stock or option issuances to directors or
employees of the Company pursuant to stock option plans existing on the date
hereof including the number of shares issuable thereunder as of the date hereof
(or amendments to such plans or new plans if agreed to by the Investors), if the
Company at any time after the date hereof authorizes the issuance or sale of any
Capital Stock or any securities containing options or rights to acquire any
shares of Capital Stock (other than as a dividend on the outstanding Capital
Stock), the Company shall first offer to sell to each Investor a portion of such
Capital Stock or other securities equal to the percentage of Underlying Shares
held by such Investor at the time of such issuance; provided that for purposes
of this Section 3.1, Underlying Shares shall not include (x) the Contingent
Warrants if the proposed issuance of Capital Stock or other securities by the
Company takes place prior to the time the Contingent Warrants are by their terms
exercisable or have by their terms become null and void or (y) the Additional
Purchase Agreement Shares if the right to receive them has not occurred.

          (b) In order to exercise its purchase rights hereunder, each Investor
must within 20 days after receipt of written notice from the Company describing
in reasonable detail the Capital Stock or securities being offered, the purchase
price thereof, the payment terms and such Investor's pro rata percentage
allotment, deliver a written notice to the Company describing its election
hereunder.  Any Capital Stock not elected to be purchased by the end of such 20-
day period shall be reoffered for an additional 10-day period by the Company on
a pro rata basis to the Investors who elected to purchase all shares of such
Capital Stock originally offered to such Investors.

          (c) Upon the expiration of the offering periods described above, the
Company shall be entitled to sell such Capital Stock or securities which the
Investors have not elected to purchase during the 120 days following such
expiration on terms and conditions no more favorable to the purchasers thereof
than those offered to the Investors.  Any Capital Stock or securities offered or
sold by the Company to any Person after such 120-day period must be reoffered to
the Investors pursuant to the terms of this Section 3.1.

                                      -6-

 
          SECTION 3.2.  Transfer Restrictions.
                        --------------------- 

                (a)  No Investor shall transfer any interest in any Investor 
Shares except pursuant to and in accordance with the provisions of this 
Section 3.2.

                (b)  If, at any time, an Investor wishes to sell any of its 
Investor Shares to a Third Party, such sale shall be made pursuant to the 
following procedures:

                     (i)   Each Investor shall deliver to the Company a written 
notice of its intention (an "Offer Notice"), describing the material terms and
conditions of the proposed sale, including the number of Investor Shares offered
for sale (the "Offered Shares") and the proposed price. The Company shall have
30 calendar days from the date of receipt of the Offer Notice to give each such
Investor written notice that it intends to purchase (or to have its designee
purchase) the Offered Shares on the same terms and conditions set forth in the
Offer Notice (a "Purchase Notice"). If the Company delivers to any such Investor
a Purchase Notice within such time period, the closing for the purchase and sale
of the Offered Shares to be purchased by the Company (or its designee) must take
place within 60 calendar days from the date of such Purchase Notice (the
"Closing Period"). In the event the Company fails to deliver to any such
Investor a Purchase Notice within 30 calendar days from the date of its receipt
of the Offer Notice, delivers a notice indicating that it does not intend to
purchase the Offered Shares or fails to close the purchase and sale of the
Offered Shares prior to the expiration of the Closing Period, any such Investor
will have the right, for a period of 120 calendar days after the earlier of (i)
the date the Company delivers a notice indicating that it does not intend to
purchase the Offered Shares; (ii) the date that is 30 calendar days after the
date of delivery of the Offer Notice to the Company or (iii) the expiration of
the Closing Period to sell the Offered Shares to any Third Party, at a price per
share not less than 95 % of the price proposed in the Offer Notice.

                     (ii)  The purchase price for any Investor Shares purchased 
by the Company (or its designee) pursuant to this Section 3.2(b) will be paid in
cash by wire transfer in immediately available funds to a bank account
designated by each Investor not less than three Business Days prior to closing.

                     (iii) At any closing under this Section 3.2(b), each 
Investor will deliver to the relevant purchaser good and valid title to the
Investor Shares being sold by each such Investor, free and clear of any taxes,
liens or charges.

                (c)  Permitted Transferees.  The restrictions set forth in 
Section 3.2(b) shall not apply to (i) any transfer of Investor Shares by any 
Investor among its Affiliates or (ii) a

                                      -7-

 
transfer of Investor Shares by any Investor pursuant to the laws of descent and
distribution or among such Investor's Family Group; provided that the provisions
of this Agreement will continue to be applicable to the Investor Shares after
any transfer pursuant to clauses (i) and (ii) above and the transferees of such
Investor Shares shall agree in writing to be bound by the provisions of this
Agreement.

          (d) Transfers to Competitors.  Notwithstanding paragraph (c) above,
without the prior written consent of the Company, no Investor shall transfer any
Investor Shares to any company that either directly or through an Affiliate
competes to a material extent with the Company or any of its subsidiaries in the
provision of international telecommunications services in the United States,
Australia, the United Kingdom, France, Germany, Mexico, Hong Kong, Italy and
Canada.  Each Investor agrees to notify the Company if, to its knowledge, it is
transferring any Investor Shares to any company that either directly or through
an Affiliate competes to a material extent with the Company or any of its
Subsidiaries in the provision of international telecommunications.

          (e) Transfers to One Hundred Persons.  Notwithstanding paragraph (c)
above, without the prior written consent of the Company, the Investors will not
transfer their Investor Shares to more than 100 transferees in the aggregate.

          (f) Termination of Restrictions.  The restrictions set forth in
Section 3.2(b) shall terminate upon the consummation of a Qualified Public
Offering.  The restrictions set forth in Section 3.2(d) shall terminate upon the
earlier of (i) the consummation of a Qualified Public Offering or (ii) three
years from the date hereof.  The restrictions in Section 3.2(e) shall terminate
upon the consummation of a Public Offering.

       SECTION 3.3.  Legends.  Each certificate evidencing outstanding
                     -------                                          
Investor Shares held by Investors shall bear a legend in substantially the
following form:

       THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
       UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  THESE SHARES MAY NOT BE
       SOLD OR OFFERED FOR SALE UNLESS THERE IS AN EFFECTIVE REGISTRATION
       STATEMENT IN EFFECT UNDER THE SAID ACT, OR UNLESS AN EXCEPTION FROM
       REGISTRATION IS AVAILABLE.

       THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
       ON TRANSFER AS SET FORTH IN THE SECURITYHOLDERS' AGREEMENT DATED AS OF
       JULY 31, 1996, COPIES OF WHICH WILL BE FURNISHED BY PRIMUS
       TELECOMMUNICATION

                                      -8-

 
          GROUP, INCORPORATED AND ANY SUCCESSOR THERETO UPON REQUEST AND WITHOUT
          CHARGE.

          SECTION 3.4.  Right to Compel Sale.
                        -------------------- 

               (a) If at any time a Third Party offers to buy 80% or more of the
outstanding shares of Capital Stock and holders of a majority of the Capital
Stock, including Singh, (other than the Investor Shares held by the Investors)
agree to sell their shares of Capital Stock to such Third Party, Singh or the
Company shall have the right (but not the obligation) to compel Investors to
sell their Investor Shares to such Third Party if the following conditions are
met: (i) the terms and conditions for the purchase of the Investor Shares
(including the price (the "Compelled Sale Price") are identical to those
relating to the purchase of all other outstanding shares of Capital Stock, (ii)
the Third Party Investor must purchase all of the Investor Shares owned by
Investors, (iii) the consideration to be received by each Investor and every
other seller of shares of Capital Stock to such Third Party shall be cash or
liquid securities, (iv) during the period commencing on the date hereof and
ending on the first anniversary (the "First Anniversary") of the date hereof,
each Investor receives the First Year Compelled Sale Price and (v) following the
First Anniversary, the Compelled Sale Price must be an amount such that the
Priority Return shall be equal to or less than zero.

               (b) In the event the Company or Singh elects to exercise its 
right to cause a Compelled Sale, it will deliver written notice (a "Compelled
Sale Notice") to Investors, setting forth the consideration and describing the
other material terms and conditions of the Compelled Sale, including the
proposed closing date, which shall be not less than 15 Business Days from the
date the Compelled Sale Notice is delivered. At the closing for the Compelled
Sale, against payment of the purchase price for the Investor Shares to be sold
by Investors, Investors will deliver to the Third Party the certificate or
certificates representing the number of Investor Shares held by Investors, duly
endorsed, together with all other documents which are necessary in order to
effect such Compelled Sale.

               (c) The rights and obligations set forth in this Section 3.4 
shall terminate upon the consummation of a Qualified Public Offering.

          SECTION 3.5.  Tag Along.
                        --------- 

               (a) If Singh proposes to sell, in one transaction or in a series 
of related transactions (a "Tag Along Sale") any shares of Common Stock of the
Company to any Third Party, Investors shall have the right to participate in
such Tag Along Sale on the following terms:

                                      -9-

 
               (i)   Singh shall give Investors not less than 20 Business Days' 
written notice (a "Sale Notice") of its intention, describing the price offered,
all other material terms and conditions of the Tag Along Sale and, if the
consideration payable pursuant to the Tag Along Sale consists in whole or in
part of consideration other than cash, such information relating to such other
consideration as Investors may reasonably request and which is available to
Singh.

               (ii)  In connection with any Tag Along Sale, Investors shall 
have the right, in their sole discretion, to sell, for the same price per share
being paid to, and otherwise on the same terms and conditions, as Singh,
Underlying Shares then held by it in such amount as determined pursuant to the
next sentence. If an Investor has elected to participate in such sale, it shall
be entitled to sell such amount of Underlying Shares equal to its pro rata
ownership of shares in comparison to Singh.

          For example, if the sale contemplated a sale of 100 shares by Singh
and if Singh at such time owns 30% of all the shares of the corporation on a
fully-diluted basis and if an Investor elects to participate and owns 20% of all
shares of the corporation on a fully-diluted basis, Singh would be entitled to
sell 60 shares and the Investor Holder would be entitled to sell 40 Underlying
Shares.

          An Investor may sell a Purchase Warrant or a Contingent Warrant (if
such Contingent Warrant is then exercisable) in the proposed transfer rather
than the Underlying Shares relating thereto.  In such case, the price of such
warrant shall be equal to the price at which the Common Stock is to be
transferred times the number of shares of Common Stock into which such warrant
would be exercisable at that time minus the exercise price of such warrant.
With respect to a Purchase Warrant, any such Purchase Warrant will be treated as
if it were exercisable on such date.

               (iii) Investors must exercise their tag along right by giving
written notice to Singh or the Company, as the case may be, within 15 Business
Days of the delivery of a Sale Notice, specifying the number of Investor Shares
that each Investor desires to include in the Tag Along Sale.  At the closing for
the Tag Along Sale, against payment of purchase price for the Investor Shares to
be sold by Investors, Investors will deliver to the Third Party the certificate
or certificates representing such number of Investor Shares, duly endorsed,
together with all other documents which are necessary in order to effect such
Tag Along Sale.

                                      -10-

 
              (b) The provisions of this Section 3.5 shall not apply to any 
sale or sales of up to 2.5% (in the aggregate) of the amount of Common Stock 
owned by Singh on the date hereof.

              (c) The rights and obligations set forth in this Section 3.5 shall
terminate upon the consummation of a Qualified Public Offering.


                                   ARTICLE IV
                                 MISCELLANEOUS

          SECTION 4.1.  Share Certificates.  Any shares of Capital Stock issued
                        ------------------                                     
to an Investor pursuant to the Purchase Agreement, Purchase Warrant, Contingent
Warrant, or pursuant to preemptive rights exercised hereunder will be
Permanently Unrestricted Share Certificates (as defined in the by-laws of the
Company).  The Company shall not amend its by-laws with respect to Article IX
thereof or in any other way that adversely affects an Investor or the
transferability of shares owned by such Investor, without such Investor's prior
written consent.

          SECTION 4.2.  Transfers in Violation of Agreement.  Any transfer or
                        -----------------------------------                  
attempted transfer of any Investor Shares in violation of any provision of this
Agreement shall be void, and the Company shall not record such transfer on its
books or treat any purported transferee of such Investor Shares as the owner of
such shares for any purpose.

          SECTION 4.3.  Amendment and Waiver.  Except as otherwise provided
                        --------------------                               
herein, no modification, amendment or waiver of any provision of this Agreement
shall be effective against any party hereto unless such modification, amendment
or waiver is approved in writing by such party.

          SECTION 4.4.  Severability.  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 the effectiveness or validity of any provision in any
other jurisdiction, and this Agreement shall be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.

          SECTION 4.5.  Entire Agreement.  Except as otherwise expressly set
                        ----------------                                    
forth herein, this document, the Purchase Agreement, the Registration Rights
Agreement, the Purchase Warrant and the Contingent Warrant embody the complete
agreement and understanding among the parties hereto with respect to the

                                      -11-

 
subject matter hereof and supersede and preempt any prior understandings,
agreements or representations by or among the parties, written or oral, which
may have related to the subject matter hereof in any way.

          SECTION 4.6.  Successors and Assigns.  The provisions of this
                        ----------------------                         
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, and to the extent applicable heirs,
executors, administrators and legal representatives and any subsequent holders
of Investor Shares and the respective successors and assigns of each of them, so
long as they hold Investor Shares.

          SECTION 4.7.  Counterparts.  This Agreement may be executed in
                        ------------                                    
separate counterparts each of which shall be an original and all of which taken
together shall constitute one and the same agreement.

          SECTION 4.8.  Remedies.  The parties hereto agree and acknowledge that
                        --------                                                
money damages may not be an adequate remedy for any breach of the provisions of
this Agreement and that the parties hereto shall have the right to injunctive
relief, in addition to all of its rights and remedies at law or in equity, to
enforce the provisions of this Agreement.  Nothing contained in this Agreement
shall be construed to confer upon any Person who is not a signatory hereto any
rights or benefits, as a third party beneficiary or otherwise.

          SECTION 4.9.  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 received by certified mail, return receipt requested, confirmed
telecopy or sent by guaranteed overnight courier service.  Such notices, demands
and other communications will be sent to the parties as indicated in the
Purchase Agreement, and to Singh as indicated below, or to any party (including
any new party) at such address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.

               K. Paul Singh
               9888 Windy Hollow Road
               Great Falls, Virginia 22066
               Fax:  703-757-9378

               with a copy to:

               Pepper, Hamilton & Scheetz
               3000 Two Logan Square
               Eighteenth and Arch Street
               Philadelphia, Pennsylvania 19103-2799
               Attention: Julia D. Corelli

                                      -12-

 
          SECTION 4.10.  Governing Law.  The corporate law of Delaware will
                         -------------                                     
govern all issues concerning the relative rights of the Company and its
stockholders.  All other issues concerning this Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdiction) that would cause the
application of the law of any jurisdiction other than the State of New York.

          SECTION 4.11.  Descriptive Headings.  The descriptive headings of this
                         --------------------                                   
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.

          IN WITNESS WHEREOF, the parties, by their respective officers duly
authorized, have caused this Agreement to be duly executed and delivered as of
the date hereof.

                              PRIMUS TELECOMMUNICATIONS GROUP, 
                              INCORPORATED


                              By:______________________________
                                    K. Paul Singh
                                    President, Chief Executive Officer



                              _________________________________
                              K. PAUL SINGH


                              QUANTUM INDUSTRIAL PARTNERS LDC


                              By:______________________________
                                    Name:
                                    Title:


                              S-C PHOENIX HOLDINGS, L.L.C.


                              By:______________________________
                                    Name:
                                    Title:

                            [EXECUTIONS CONTINUED]

                                      -13-

 
                              WINSTON PARTNERS II LLC

                              By:   Chatterjee Advisors L.L.C., its manager


                              By:______________________________
                                    Name:
                                    Title:


                              WINSTON PARTNERS II LDC


                              By:______________________________
                                    Name:
                                    Title:

                                      -14-


 
                         REGISTRATION RIGHTS AGREEMENT


          THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
July 31, 1996 by and among Primus Telecommunications Group, Incorporated, a
Delaware corporation (the "Company"), Quantum Industrial Partners LDC, a Cayman
Islands limited duration company, S-C Phoenix Holdings, L.L.C., a Delaware
limited liability company, Winston Partners II LDC, a Cayman Islands limited
duration company and Winston Partners 11 LLC, a Delaware limited liability
company (each, an "Investor" and collectively, the "Investors").  Certain
capitalized terms used herein are defined in Section 9.

          WHEREAS, pursuant to a Securities Purchase Agreement, dated as of July
31, 1996 (the "Purchase Agreement"), among the Company and the Investors, the
Company shall issue on the date hereof to the Investors (i) 285,714 shares (the
"Purchased Shares") of the Company's common stock, par value $.01 per share (the
"Common Stock") and (ii) warrants (the "Purchase Warrants") exercisable for that
number of shares of Common Stock as specified therein and the Company has agreed
to issue additional Common Stock to the Purchasers upon the occurrence of
certain conditions specified therein (the "Additional Purchase Agreement
Shares").  In addition, the Company has issued to the Investors warrants (the
"Contingent Warrants") providing for the issuance of shares of Common Stock upon
the occurrence of certain conditions specified therein;

          WHEREAS, in order to induce the Investors to enter into the Purchase
Agreement, the Company has agreed to provide the registration rights set forth
in this Agreement; and

          WHEREAS, the execution and delivery of this Agreement is a condition
to the Closing (as such term is defined in the Purchase Agreement) under the
Purchase Agreement;

          NOW, THEREFORE, the parties to this Agreement hereby agree as follows:

          1.   Demand Registrations.
               -------------------- 

          (a) Requests for Registration.  The Majority Investor Holders may
request at any time after the second anniversary of the Closing (as such term is
defined in the Purchase Agreement), registration under the Securities Act of all
or part of their Registrable Securities on Form S-1, Form S-2 or S-3 or any
similar form of registration.  Each request for a Demand Registration (as
defined below) shall specify the number of Registrable Securities requested to
be registered, the anticipated per share price range for such offering and the
proposed underwriter; provided, that the aggregate number of Registrable
Securities requested to be registered in any one

 
Demand Registration must equal at least 50% of all shares of Common Stock owned
by the Investors in registered form at the time of such request.  Within ten
days after receipt of any such request, the Company will give written notice of
such requested registration to all other holders (if any) of Registrable
Securities and, subject to paragraph l(d) below, will include in such
registration all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within 15 days after the receipt
of the Company's notice.  All registrations requested pursuant to this paragraph
1(a) are referred to herein as "Demand Registrations."

          (b) Number of Demand Registrations.  The Majority Investor Holders
will be entitled to request two (2) Demand Registrations in which the Company
will pay all Registration Expenses.  A registration will not count as one of
such two (2) Demand Registrations until it has become effective or the Investors
withdraw their request (unless such withdrawal is pursuant to the provisions of
Section 1(d) hereunder or due to a material adverse change in the business,
operations, prospects or condition (financial or otherwise) of the Company since
the date of such Demand).  The Company will pay all Registration Expenses in
connection with any initiated registration whether or not it has become
effective unless the Investors withdraw their request (unless such withdrawal is
pursuant to the provisions of Section l(d) hereunder or due to a material
adverse change in the business, operations, prospects or condition (financial or
otherwise) of the Company since the date of such Demand).  If the Demand
Registration is the last Demand Registration permitted under this Section 1(b),
then such registration shall not count as the last Demand Registration (and the
Majority Investor Holders will be entitled to one, and only one, additional
request for a Demand Registration) unless the Investors requesting such
registration are able (and so request) to include in such registration that
amount of Registrable Securities which will result in at least 80% of all
Registrable Securities (excluding shares issuable under the Contingent Warrants
to the extent that such Contingent Warrants are not then capable of being
exercised or have by their terms become null and void) having been registered
pursuant to the Demand Registrations and Piggyback Registrations available
pursuant to this Agreement.

          (c) Priority on Demand Registrations.  The Company will not include in
any Demand Registration any securities which are not Registrable Securities
without the prior written consent of the holders of a majority of the
Registrable Securities included in such registration, provided that up to 5% of
the securities to be included in such registration may be nonRegistrable
Securities without consent of such holders if the managing underwriters advise
the Company and the holders of Registrable Securities being included that the
inclusion of such nonRegistrable Securities would not have a material impact on
the

                                      -2-

 
price or marketability of the offering.  Notwithstanding the proviso contained
in the previous sentence, if the Demand Registration is requested for less than
5% of the Registrable Securities owned by all of the Investors on the date
hereof, than any other non-Registrable Securities may be included in such
registration without the consent of such holders if the managing underwriters
advise the Company and the holders of Registrable Securities being included that
the inclusion of such non-Registrable Securities would not have a material
impact on the price or marketability of the offering.  If a Demand Registration
is an underwritten offering and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable Securities and, if
permitted hereunder, other securities requested to be included in such offering
exceeds the number of Registrable Securities and other securities, if any, which
can be sold therein without adversely affecting the marketability of the
offering (the "Offering Quantity"), the Company will include in such
registration securities in the following priority:

          (i) first, before including any securities which are not Registrable
Securities, the Company will include all of the Registrable Securities requested
to be included by holders thereof, and if the number of Registrable Securities
requested to be included exceeds the Offering Quantity, then the Company shall
include only each such requesting holder's pro rata share of the Offering
Quantity, based on the amount of Registrable Securities held by such holder; and

          (ii) second, to the extent (and only to the extent) that the Offering
Quantity exceeds the aggregate amount of Registrable Securities which are
requested to be included in such registration, the Company shall include in such
registration any other securities requested to be included in the offering.

Any Persons other than holders of Registrable Securities who participate in
Demand Registrations which are not at the Company's expense must pay their share
of the Registration Expenses as provided in Section 5 hereof.

          (d) Restrictions on Demand Registrations.  The Company will not be
obligated to effect any Demand Registration within 180 days after the effective
date of a previous Demand Registration.  The Company may postpone upon one
occasion in any 365 day period for up to 120 days the filing or the
effectiveness of a registration statement for a Demand Registration if (i) the
Company's board of directors determines that such Demand Registration would
reasonably be expected to have a material adverse effect on any proposal or plan
by the Company or any of its subsidiaries to engage in any acquisition of assets
or shares of unrelated companies (other than in the ordinary course of business)
or any merger, consolidation, tender offer or similar

                                      -3-

 
transaction, (ii) if the effective date of the registration statement would
otherwise be 45 calendar days or more after, but prior to 90 calendar days
after, the end of the Company's fiscal year, and the Securities Act requires the
Company to include audited financial statements (as of the end of such fiscal
year) and (iii) the Company is preparing, or within 30 days begins to prepare, a
registration statement which becomes effective within 90 days of the request (an
"Intervening Statement"), provided, however, that in the case of any event
described in clause (ii), such period ends as soon as possible and the Company
takes all commercially reasonable actions to have such audited financial
statements prepared as soon as possible, and provided, further, however, that in
the case of an event described in clause (iii), the holders of the Registrable
Securities requesting the Demand Registration will have a priority over all
other holders (except the Company) in such Intervening Statement with respect to
the inclusion of Registrable Securities.  In the case of any event described
above in clause (i), (ii) or (iii), the holders of a majority of Registrable
Securities requesting such Demand Registration will be entitled to withdraw such
request and, if such request is withdrawn, such Demand Registration will not
count as one of the permitted Demand Registrations hereunder and the Company
will pay all Registration Expenses in connection with such registration.

          (e) Selection of Underwriters.  The holders of a majority of the
Registrable Securities initiating any Demand Registration will have the right to
select the investment banker(s) and manager(s) to administer the offering,
subject to the Company's approval which will not be unreasonably withheld.

          (f) Other Registration Rights.  Except as provided in this Agreement,
the Company will not grant to any Persons the right to request the Company to
register any equity securities of the Company, or any securities convertible or
exchangeable into or exercisable for such securities, without the prior written
consent of the Majority Investor Holders.

          2.   Piggyback Registrations.
               ----------------------- 

          (a) Right to Piggyback.  Whenever the Company proposes to register any
of its securities under the Securities Act (other than pursuant to a Demand
Registration or a registration on Form S-4 or S-8 or any successor or similar
forms) and the registration form to be used may be used for the registration of
Registrable Securities (a "Piggyback Registration"), whether or not for sale for
its own account, the Company will give prompt written notice to all holders of
Registrable Securities of its intention to effect such a registration and will
include in such registration all Registrable Securities with respect to which
the Company has

                                      -4-

 
received written requests for inclusion therein within 30 days after the receipt
of the Company's notice.

          (b) Piggyback Expenses.  The Registration Expenses of the holders of
Registrable Securities will be paid by the Company in all Piggyback
Registrations.

          (c) Priority on Primary Registrations.  If a Piggyback Registration is
an underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing (with a copy to each party hereto
requesting registration of Registrable Securities) that in their opinion the
number of securities requested to be included on a secondary basis in such
registration exceeds the number which can be sold in such offering without
adversely affecting the marketability of such primary or secondary offering (the
"Company Offering Quantity"), the Company will include in such registration
securities in the following priority:

                   (i) first, the securities the Company proposes to sell; and

                  (ii) second, the Company will include all securities requested
to be included by any holders thereof, and if the number of such holders'
securities requested to be included exceeds the Company Offering Quantity, then
the Company shall include only each such requesting holder's pro rata share of
the Company Offering Quantity (remaining after sales by the Company), based on
the amount of securities held by such holder.

          (d) Other Registrations.  If the Company has previously filed a
registration statement with respect to Registrable Securities pursuant to
paragraph 1 or pursuant to this paragraph 2, and if such previous registration
has not been withdrawn or abandoned, the Company will not file or cause to be
effected any other registration of any of its equity securities or securities
convertible or exchangeable into or exercisable for its equity securities under
the Securities Act (except on Form S-4 or S-8 or any successor form), whether on
its own behalf or at the request of any holder or holders of such securities,
until a period of at least 90 days has elapsed from the effective date of such
previous registration.

          3.   Holdback Agreements.
               ------------------- 

          (a) To the extent not inconsistent with applicable law, each Investor
agrees not to effect any public sale or distribution (including sales pursuant
to Rule 144) of equity securities of the Company, or any securities, options or
rights convertible into or exchangeable or exercisable for such securities that
such Investor owns prior to the effective date of any underwritten registration,
during the seven days prior to and

                                      -5-

 
the 180-day period beginning on the effective date of any underwritten
registration, unless the underwriters managing the registered public offering
otherwise agree; provided that such restrictions shall not be more restrictive
in duration or scope than restrictions imposed on (i) any Person which has been
granted registration rights by the Company, (ii) any officer or director of the
Company or (iii) any 5% holder of securities of the Company.

          (b) The Company agrees (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and during the 180-day period beginning on the effective date of any
underwritten Demand Registration or any underwritten Piggyback Registration
(except as part of such underwritten registration or pursuant to registrations
on Form S-4 or S-8 or any successor form), unless the underwriters managing the
registered public offering otherwise agree, and (ii) to cause each holder of its
Common Stock, or any securities convertible into or exchangeable or exercisable
for Common Stock, purchased from the Company at any time after the date of this
Agreement (other than in a registered public offering) to agree not to effect
any public sale or distribution (including sales pursuant to Rule 144) of any
such securities during such period (except as part of such underwritten
registration, if otherwise permitted), unless the underwriters managing the
registered public offering otherwise agree.

          4.   Registration Procedures.  Whenever the Investors have requested
               -----------------------                                        
that any Registrable Securities be registered pursuant to this Agreement, the
Company will use its best efforts to effect the registration and the sale of
such Registrable Securities in accordance with the intended method of
disposition thereof, and pursuant thereto the Company will as expeditiously as
possible:

          (a) prepare and (within 60 days (or 45 days with respect to any Form
S-2 or S-3 registration) after the end of the period within which requests for
registration may be given to the Company with such 60 day period (or 45 day
period with respect to any Form S-2 or S-3 registration) not being cumulative in
addition to any postponement by the Company pursuant to paragraph l(d)) file
with the Securities and Exchange Commission a registration statement with
respect to such Registrable Securities and thereafter use its best efforts to
cause such registration statement to become effective (provided that before
filing a registration statement or prospectus or any amendments or supplements
thereto, the Company will furnish to the counsel selected by the holders of a
majority of the Registrable Securities initiating such registration statement
copies of all

                                      -6-

 
such documents proposed to be filed, which documents will be subject to review
of such counsel);

          (b) prepare and file with the Securities and Exchange Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for a period of either (i) not less than 180 days (subject
to extension pursuant to paragraph 7(b)) or, if such registration statement
relates to an underwritten offering, such longer period as in the opinion of
counsel for the underwriters a prospectus is required by law to be delivered in
connection with sales of Registrable Securities by an underwriter or dealer or
(ii) such shorter period as will terminate when all of the securities covered by
such registration statement have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set forth in
such registration statement (but in any event not before the expiration of any
longer period required under the Securities Act), and to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement until such time as all of such
securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement;

          (c) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;

          (d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any seller reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller (provided that the Company will not be required to (i) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction);

          (e) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event (a "Changing Event") as a result
of which, the prospectus included in such registration statement contains

                                      -7-

 
an untrue statement of a material fact or omits any fact necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made, and, at the request of any such seller, the Company will as soon
as possible prepare and furnish to such seller (a "Correction Event") a
reasonable number of copies of a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus will not contain an untrue statement of a material fact or omit
to state any fact necessary to make the statements therein not misleading in the
light of the circumstances under which they were made;

          (f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be listed on the NASD automated quotation
system;

          (g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;

          (h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
a majority of the Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities (including, without limitation, effecting a stock split
or a combination of shares);

          (i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;

          (j) otherwise use its best efforts to comply with all applicable rules
and regulations of the Securities and Exchange Commission, and make available to
its security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first day of
the Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;

                                      -8-

 
          (k) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any securities included in such registration statement for sale in any
jurisdiction, the Company will use its reasonable best efforts promptly to
obtain the withdrawal of such order;

          (l) use its best efforts to obtain one or more comfort letters, dated
the effective date of such registration statement (and, if such registration
includes an underwritten public offering, dated the date of the closing under
the underwriting agreement), signed by the Company's independent public
accountants in customary form and covering such matters of the type customarily
covered by comfort letters as the holders of a majority of the Registrable
Securities being sold reasonably request (provided that such Registrable
Securities being sold constitute at least 10% of the securities covered by such
registration statement); and

          (m) use its best efforts to provide a legal opinion of the Company's
outside counsel, dated the effective date of such registration statement (and,
if such registration includes an underwritten public offering, dated the date of
the closing under the underwriting agreement), with respect to the registration
statement, each amendment and supplement thereto, the prospectus included
therein (including the preliminary prospectus) and such other documents relating
thereto in customary form and covering such matters of the type customarily
covered by legal opinions of such nature.

The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information regarding
such seller and the distribution of such securities as the Company may from time
to time reasonably request in writing.

          5.   Registration Expenses.
               --------------------- 

          (a) All expenses incident to the Company's performance of or
compliance with this Agreement, including, without limitation, all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, printing expenses, messenger and delivery expenses, and fees and
disbursements of counsel for the Company and all independent certified public
accountants, underwriters (excluding discounts and commissions) and other
Persons retained by the Company (all such expenses being herein called
"Registration Expenses"), will be borne as provided in this Agreement, and the
Company will, in any event, pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of

                                      -9-

 
any annual audit or quarterly review, the expense of any liability insurance and
the expenses and fees for listing the securities to be registered on each
securities exchange on which similar securities issued by the Company are then
listed or on the NASD automated quotation system.

          (b) In connection with each Demand Registration and each Piggyback
Registration, the Company will reimburse the Investors covered by such
registration for the reasonable fees and disbursements (up to a maximum amount
of $25,000) of one counsel chosen by the holders of a majority of the Investor
Registrable Securities initiating such registration.

          (c) To the extent Registration Expenses are not required to be paid by
the Company, each holder of securities included in any registration hereunder
will pay those Registration Expenses allocable to the registration of such
holder's securities so included, and any Registration Expenses not so allocable
will be borne by all sellers of securities included in such registration in
proportion to the aggregate selling price of the securities to be so registered
(other than an opinion as to the authority of such holder to take any action in
connection with such registration).

          6.   Indemnification.
               --------------- 

          (a) The Company agrees to indemnify and hold  harmless, to the extent
permitted by law, each Investor, its officers and directors and each Person who
controls such Investor (within the meaning of the Securities Act) against any
losses, claims, damages, liabilities, joint or several, to which such Investor
or any such director or officer or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon (i) any untrue or alleged untrue
statement of material fact contained in any registration statement, prospectus
or preliminary prospectus or any amendment thereof or supplement thereto or,
(ii) any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Company will reimburse such Investor and each such director, officer and
controlling person for any legal or any other expenses incurred by them in
connection with investigating or defending any such loss, claim, liability,
action or proceeding; provided, however, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon an untrue statement or alleged untrue statement, or omission or alleged
omission, made in such registration statement, any such prospectus or
preliminary prospectus or any amendment or supplement thereto, or in any

                                      -10-

 
application, in reliance upon, and in conformity with, written information
prepared and furnished to the Company by such Investor expressly for use therein
or by such Investor's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such Investor with a sufficient number of copies of the same.  In
connection with an underwritten offering, the Company will indemnify such
underwriters, their officers and directors and each Person who controls such
underwriters (within the meaning of the Securities Act to the same extent as
provided above with respect to the indemnification of the Investors.

          (b) In connection with any registration statement in which an Investor
is participating, each such Investor will furnish to the Company in writing such
information and affidavits as the Company reasonably requests for use in
connection with any such registration statement or prospectus and, to the extent
permitted by law each such Investor, severally, for itself only, will indemnify
and hold harmless the Company, its directors and officers and each other Person
who controls the Company (within the meaning of the Securities Act) against any
losses, claims, damages, liabilities, joint or several, to which such Investor
or any such director or officer or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) which arise out of or are based upon (i) the purchase or sale
of Registrable Securities during any period beginning upon a Changing Event (as
defined in Section 4(e)) and ending on a Correction Event (as defined in Section
4(e)), provided such Holder received proper written notice of such Changing
Event pursuant to Section 4(e), (ii) any untrue or alleged untrue statement of
material fact contained in the registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or in any application,
or (iii) any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, but,
with respect to clauses (ii) and (iii) above, only to the extent that such
untrue statement or omission is made in such registration statement, any such
prospectus or preliminary prospectus or any amendment or supplement thereto, or
in any application, in reliance upon and in conformity with written information
prepared and furnished to the Company by such Investor expressly for use
therein, and such Investor will reimburse the Company and each such director,
officer and controlling Person for any legal or any other expenses incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided, however, that the obligation to
indemnify will be individual to each Investor and will be limited to the net
amount of proceeds received by such Investor from the sale of Registrable
Securities pursuant to such registration statement.

                                      -11-

 
          (c) Any Person entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (provided that the failure to give prompt notice
shall not impair any Person's right to indemnification hereunder to the extent
such failure has not materially prejudiced the indemnifying party) and (ii)
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist with respect to such
claim, permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party.  Such indemnifying
party shall not, however, enter into any settlement with a party without
obtaining an unconditional release of each indemnified party by such party with
respect to any and all claims against each indemnified party.  If such defense
is assumed, the indemnifying party will not be subject to any liability for any
settlement made by the indemnified party without its consent (but such consent
will not be unreasonably withheld).  An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim will not be obligated to pay
the fees and expenses of more than one counsel for all parties indemnified by
such indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.

          (d) The indemnification provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and will survive the transfer of securities.  The Company also
agrees to make such provisions, as are reasonably requested by any indemnified
party, for contribution to such party in the event the Company's indemnification
is unavailable for any reason.

          7.   Participation in Underwritten Registrations.
               ------------------------------------------- 

          (a) No Person may participate in any registration hereunder which is
underwritten unless such Person (i) agrees to sell such Person's securities on
the basis provided in any underwriting arrangements approved by the Person or
Persons entitled hereunder to approve such arrangements (including, without
limitation, pursuant to the terms of any overallotment or "green shoe" option
requested by the managing underwriter(s), provided that no Investor will be
required to sell more than the number of Registrable Securities that such holder
has requested the Company to include in any registration) and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.

                                      -12-

 
          (b) Each Person that is participating in any registration hereunder
agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in paragraph 4(e) above, such Person will forthwith
discontinue the disposition of its Registrable Securities pursuant to the
registration statement until such Person's receipt of the copies of a
supplemented or amended prospectus as contemplated by such paragraph 4(e).  In
the event the Company shall give any such notice, the applicable time period
mentioned in paragraph 4(b) during which a Registration Statement is to remain
effective shall be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to this paragraph to
and including the date when each seller of a Registrable Security covered by
such registration statement shall have received the copies of the supplemented
or amended prospectus contemplated by paragraph 4(e).

          8.   Current Public Information.  At all times after the Company has
               --------------------------                                     
filed a registration statement with the Securities and Exchange Commission
pursuant to the requirements of either the Securities Act or the Securities
Exchange Act, the Company will file all reports required to be filed by it under
the Securities Act and the Securities Exchange Act and the rules and regulations
adopted by the Securities and Exchange Commission thereunder, and will use
commercially reasonable best efforts to take such further action as any Investor
may reasonably request, all to the extent required to enable such Investors to
sell Registrable Securities pursuant to Rule 144 adopted by the Securities and
Exchange Commission under the Securities Act (as such rule may be amended from
time to time) or any similar rule or regulation hereafter adopted by the
Securities and Exchange Commission.

          9.   Definitions.
               ----------- 

          "Majority Investor Holders" at any time means the holders of a
majority of the Registrable Securities.

          "Person" means an individual, a partnership, a joint venture, a
corporation, a trust, a limited liability company, an unincorporated
organization and a government or any department or agency thereof.

          "Registrable Securities" means (i) the Purchased Shares issued to the
Investors pursuant to the Purchase Agreement, (ii) any shares of Common Stock
issued or issuable upon exercise of the Purchase Warrants issued to the
Investors pursuant to the Purchase Agreement, (iii) any shares of Common Stock
issued or issuable upon exercise of the Contingent Warrants, (iv) the Additional
Purchase Agreement Shares if issued to Investors pursuant to the terms of the
Purchase Agreement, (v) any shares

                                      -13-

 
of Common Stock issued or issuable directly or indirectly with respect to the
securities referred to in clauses (i) through (iv) by way of stock dividend or
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization and (vi) any other shares of
Common Stock held by the Investors.

          "Securities Act" means the Securities Act of 1933, as amended, or any
similar federal law then in force.

          "Securities and Exchange Commission" means the Securities and Exchange
Commission and includes any governmental body or agency succeeding to the
functions thereof.

          "Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended, or any similar federal law then in force.

          Unless otherwise stated, each capitalized term contained herein which
is defined in the Purchase Agreement has the meaning set forth in the Purchase
Agreement.

          10.  Miscellaneous.
               ------------- 

          (a) No Inconsistent Agreements.  The Company will not hereafter enter
into any agreement with respect to its securities which is inconsistent with or
violates the rights granted to the Investors in this Agreement.

          (b) Adjustments Affecting Registrable Securities.  Except as otherwise
provided herein, the Company will not take any action, or permit any change to
occur, with respect to its securities which would materially and adversely
affect the ability of the Investors to include such Registrable Securities in a
registration undertaken pursuant to this Agreement or which would adversely
affect the marketability of such Registrable Securities in any such registration
(including, without limitation, effecting a stock split or a combination of
shares).

          (c) Remedies.  The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party hereto shall have the right to injunctive relief,
in addition to all of its other rights and remedies at law or in equity, to
enforce the provisions of this Agreement.

          (d) Amendments and Waivers.  Except as otherwise provided herein, the
provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company and the Majority Investor Holders.

                                      -14-

 
          (e) Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns.  In addition, and whether or not any express
assignment shall have been made, the provisions of this Agreement which are for
the benefit of the Investors (or any portion thereof) as such shall be for the
benefit of and enforceable by any subsequent holder of any Registrable
Securities (or of such portion thereof).

          (f) Severability.  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 the effectiveness or validity of any provision in any
other jurisdiction, and this Agreement shall be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.

          (g) Counterparts.  This Agreement may be executed simultaneously in
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together will constitute
one and the same Agreement.

          (h) Descriptive Headings.  The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.

          (i) 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
received by certified mail, return receipt requested, confirmed telecopy or sent
by guaranteed overnight courier service.  Such notices, demands and other
communications will be sent to Investors at the addresses indicated for such
Persons in the Purchase Agreement, or to any party (including any new party) at
such address or to the attention of such other person as the recipient party has
specified by prior written notice to the sending party.

          (j) Governing Law.  The corporate law of Delaware will govern all
issues concerning the relative rights of the Company and its stockholders.  All
other issues concerning this Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the law of
any jurisdiction other than the State of New York.

                                      -15-

 
          IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement on the day and year first above written.

                              PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED


                              By:______________________________
                                    Its: President, 
                                         Chief Executive Officer


                              QUANTUM INDUSTRIAL PARTNERS LDC


                              By:______________________________
                                    Its:


                              S-C PHOENIX HOLDINGS, L.L.C.


                              By:______________________________
                                    Its:


                              WINSTON PARTNERS II LDC


                              By:______________________________
                                    Its:


                              WINSTON PARTNERS II LLC

                              By:   Chatterjee Advisors L.L.C., 
                                    its manager


                              By:______________________________
                                    Its:

                                      -16-


 
    Exhibit 11.1
    ------------

                 PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
                               AND SUBSIDIARIES

                       COMPUTATION OF PER SHARE EARNINGS


                                                                      Six Months Ended
                        Period from                                       June 30,
                    February 4, 1994 to       Year Ended       -------------------------------
                    December 31, 1994     December 31, 1995        1995              1996
                   --------------------   ------------------   -------------     -------------
                                                                     
Net Loss           $          (577,280)   $      (2,425,238)    $  (793,080)     $(3,232,426)
                   --------------------   ------------------    ------------     ------------
Weighted
average number
of common
shares
outstanding                   -                    -                  -                -      
 
 
Dilutive effect
of preferred      
stock, stock
options and
warrants                      -                    -                  -                -      
                   --------------------   ------------------    ------------     ------------

Weighted
average number    
of common and
common share
equivalents
outstanding                   -                    -                  -                -      
                   --------------------   ------------------    ------------     ------------
                   
 
Net Loss per
common and
common share
equivalent         $          -           $        -            $     -          $     -      
                   ====================   ==================    ============     ============


 
Exhibit 22.1
- ------------

                          Subsidiaries of Registrant
                          --------------------------


                                                     Jurisdiction of
                                                     ----------------
Subsidiary                                            Incorporation
- ----------                                            -------------

Primus Telecommunications, Inc.                          Delaware

Primus Telecommunications, Ltd.                          United Kingdom

Primus Telecommunications Pty., Ltd.                     Australia

Primus Telecommunications de Mexico
  S.A. de C.V.                                           Mexico

Primus Telecommunications International, Inc.            Delaware

Primus Holding Corporation                               Delaware

GTI Network, Inc.                                        Delaware

Axicorp Pty., Ltd.                                       Australia


_____________________________
*  All subsidiaries are wholly-owned by the Registrant except for Primus
Telecommunications de Mexico S.A. de C.V., which is 50% owned by the Registrant
and 50% owned by Primus Telecommunications, Inc., and GTI Network, Inc., which
is wholly-owned by Primus Holding Corporation.

 


 
 
 5

THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED FINANCIAL STATEMENTS OF PRIMMS TELECOMMUNICATIONS
GROUP, INCORPORATED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.

       
                                                  
                   YEAR                   
                          DEC-31-1995  
                             JAN-01-1995  
                               DEC-31-1995  
                                       2,295,843  
                                         0  
                                  797,050  
                                  (132,353)  
                                          0  
                             3,348,803
                                       1,098,590  
                                (149,714)  
                               5,041,611
                        2,053,893  
                                              0  
                                0  
                                          0  
                                        20,891  
                                   2,540,961
                 5,041,611
                                              0  
                             1,167,058  
                                        1,383,763  
                                3,568,170
                                     0  
                                     0  
                             (58,732)  
                             (2,425,238)
                                         0  
                         (2,425,238)  
                                       0  
                                      0  
                                            0  
                                (2,425,238)  
                                        0  
                                        0  

INCLUDES PREPAID EXPENSES AND OTHER CURRENT ASSETS
INCLUDES INTANGIBLES, DEFERRED INCOME TAXES AND OTHER ASSETS
INCLUDES ADDITIONAL PAID-IN CAPITAL, ACCUMULATED DEFICIT AND CUMULATIVE
    TRANSLATION ADJUSTMENT
INCLUDES LONG-TERM OBLIGATIONS
INCLUDES COST OF GOODS SOLD AND TOTAL OPERATING EXPENSES
INCLUDES INTEREST INCOME, OTHER INCOME (EXPENSES)

 


 
 5

THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED FINANCIAL STATEMENTS OF PRIMUS TELECOMMUNICATIONS
GROUP, INCORPORATED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.

       
                                                  
                   6-MOS
               DEC-31-1996
                  JAN-01-1996
                    JUN-30-1996
                            4,397,604
                              0
                    26,454,266
                     (1,605,570)
                               0
                 29,803,403
                            5,983,098
                     (412,868)
                   62,296,810
            44,194,522
                                   0
                     0
                           4,550
                             28,170
                       11,767,416
     62,296,810
                                   0
                 65,414,924
                            60,162,429
                    67,667,223
                   (268,120)
                          0
                 (334,775)
                  (2,770,003)
                       (462,423)
              (3,232,426)
                            0
                           0
                                 0
                     (3,232,426)
                             0
                             0

INCLUDES PREPAID EXPENSES AND OTHER CURRENT ASSETS
INCLUDES INTANGIBLES, DEFERRED INCOME TAXES AND OTHER ASSETS
INCLUDES ADDITIONAL PAID-IN CAPITAL, ACCUMULATED DEFICIT AND CUMULATIVE
    TRANSLATION ADJUSTMENT
INCLUDES LONG-TERM OBLIGATIONS
INCLUDES COST OF GOODS SOLD AND TOTAL OPERATING EXPENSES
INCLUDES INTEREST INCOME, OTHER INCOME (EXPENSES)

 


 
 5

THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF AXICORP PTY., LTD. AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.

 0001006837
 PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
       
                             
                   YEAR
                          MAR-31-1996
                             APR-01-1995
                               MAR-31-1996
                                       3,218,079
                                         0
                               24,093,020
                                 (377,699)
                                          0
                            27,234,328
                                       1,141,400
                               (297,063)
                              31,084,369
                       30,040,175
                                              0
                                0
                                        855
                                       427,514
                                     615,825
                31,084,369
                                              0
                           144,344,939
                                      131,712,076
                              143,504,902
                                     0
                                     0
                                   0
                              1,059,137
                                   492,455
                            566,682
                                       0
                                      0
                                            0
                                   566,682
                                        0
                                        0

INCLUDES OTHER CURRENT ASSETS
INCLUDES DEFERRED TAX ASSETS AND OTHER NON-CURRENT ASSETS
INCLUDES RETAINED (LOSS) EARNINGS AND CUMULATIVE TRANSLATION ADJUSTMENT
INCLUDES COST OF REVENUE AND OPERATING EXPENSES
INCLUDES INTEREST INCOME