PRIMUS TELECOMMUNICATIONS GROUP INC
424B3, 1999-10-29
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)
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                                                     Pursuant to Rule 424(b)(3)
                                           Registration Statement No. 333-89539

- -------------------------------------------------------------------------------
PROSPECTUS

                                  $45,467,000

[Primus Telecommunications Group, Incorporated Logo]

                         11 1/4% Senior Notes due 2009

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

   On June 30, 1999, we issued and sold $45,467,000 aggregate principal amount
of 11 1/4% senior notes that mature on January 15, 2009 in a private placement
to Telegroup, Inc., an Iowa corporation and debtor in possession. In
connection with our private offering to Telegroup, the selling noteholder, we
agreed to register the notes to facilitate the secondary trading by the
selling noteholder. This prospectus will be used by the selling noteholder to
resell its notes. All of the proceeds from the sale of the notes will go to
the selling noteholder. Accordingly, we will not receive any proceeds from the
sale of the notes.

   The selling noteholder obtained its notes in connection with the Company's
acquisition of the global retail telecommunications business and certain
assets of Telegroup.

   The selling noteholder may offer its notes through public or private
transactions on or off the United States exchanges, at prevailing market
prices, or at privately negotiated prices.

   We urge you to carefully read this Prospectus which will describe the
specific terms of the offering before you make your investment decision.

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

   An investment in the notes involves a high degree of risk. See "Risk
Factors" beginning on page 5.

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

   Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is
a criminal offense.

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


                The date of this Prospectus is October 28, 1999
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                               TABLE OF CONTENTS
<TABLE>
<S>                                                                          <C>
Forward Looking Information.................................................   i
Prospectus Summary..........................................................   1
Risk Factors................................................................   5
Use of Proceeds.............................................................  16
The Company.................................................................  17
Description of Other Indebtedness...........................................  22
Description of the Notes....................................................  26
Federal Income Tax Considerations...........................................  54
</TABLE>
<TABLE>
<S>                                                                          <C>
Selling Noteholder..........................................................  57
Plan of Distribution........................................................  57
Incorporation of Certain Documents by Reference.............................  58
Where You Can Find More Information.........................................  59
Legal Matters...............................................................  59
Experts.....................................................................  59
</TABLE>
                               ----------------

   In this prospectus, we use: "dollars" and "$" to refer to United States
dollars; and "C$" to refer to Canadian dollars.

                          FORWARD-LOOKING INFORMATION

   We have included in this prospectus "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities and Exchange Act of 1934. These statements are statements other than
historical information or statements of current condition, relate to future
events, such as the development of our iPRIMUS.com business, and can be
identified by the use of forward-looking terminology such as "believes,"
"estimates," "expects," "intends," "may," "will," "should," or "anticipates,"
or by the discussion of strategy. In addition, from time to time, we or our
representatives have made or may make forward-looking statements, orally or in
writing. Forward-looking statements also may be included in, but are not
limited to, various filings that we have made with the Securities and Exchange
Commission, in press releases or in oral statements made by or with the
approval of one of our authorized executive officers. Forward-looking
statements include, without limitation, statements regarding future margin
performance, customer retention capabilities, future revenues, strategy,
pricing of services and rates of "on-net" traffic. We wish to caution the
reader that the forward-looking statements referred to above involve
predictions. We cannot give you any assurance that the future results will be
achieved or that, if achieved, such results will be indicative of the results
in subsequent periods. The inclusion of forward-looking statements in this
prospectus should not be regarded as a representation by us or any other person
that our objectives or plans will be achieved or that our operating
expectations will be realized. Actual events or results may differ materially
as a result of risks facing us as more fully described in the "Risk Factors"
section of this prospectus. Such risks include those associated with:

  . changes in the telecommunications or Internet industry and the general
    economy;
  . the competition we face;
  . changes in service offerings;
  . our limited operating history, particularly our limited experience
    providing Internet and data services;
  . our entry into developing markets;
  . our ability to manage rapid growth, including successfully integrating
    our recently acquired businesses;
  . our ability to make acquisitions and strategic investments;
  . international operations;
  . our dependence on effective information and billing systems;
  . our ability to develop and manage our communications network; and
  . regulatory developments

   We undertake no obligation to update or revise publicly any forward-looking
statement, whether as a result of new information, future events or otherwise.
All subsequent written and oral forward-looking statements attributable to us
or persons acting on our behalf are expressly qualified in their entirety by
the cautionary statements contained throughout this prospectus.

                                       i
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                               PROSPECTUS SUMMARY

   This summary highlights some of the information in this prospectus. Because
this is a summary, it may not contain all information that may be important to
you. You should read this entire prospectus, including the information
incorporated by reference and the financial data and related notes, before
making an investment decision. When used in this prospectus, the terms "we,"
"our" and "us" refer to Primus Telecommunications Group, Incorporated and not
the selling noteholder.

                                  THE COMPANY
Primus

   We are a full-service, facilities-based global communications company. We
offer a portfolio of bundled international and domestic voice, data and
Internet services to business and residential retail customers and other
carriers located in the United States, Canada, the United Kingdom, continental
Europe, Australia and Japan. We seek to capitalize on the increasing demand for
high-quality international communications services which is being driven by the
globalization of the world's economies, the worldwide trend toward
telecommunications deregulation and the growth of global data and Internet
traffic. Through our recently formed subsidiary, iPRIMUS.com, we target the
market opportunity created by the Internet's rapid growth by providing network-
based Internet and data communications services.

   We primarily target customers with significant international communications
needs, including small- and medium-sized businesses, multinational
corporations, ethnic residential customers and other carriers and resellers. We
provide our approximately 1.7 million customers with a portfolio of
competitively priced services, including:

    . International and domestic long distance services and private
      networks;

    . Prepaid and calling cards, toll-free services and reorigination
      services;

    . Local services in Australia, Canada, Puerto Rico and the United States
      Virgin Islands;

    . Dial-up, dedicated and high-speed Internet access;

    . Virtual private network services; and

    . Web hosting, data center co-location and e-commerce services in some
      of our principal service regions.

Competitive Strengths

   Our competitive strengths include (i) our established global network; (ii)
our opportunistic entry in international markets; (iii) our strong base of
retail customers; (iv) being well-positioned for aggressive expansion of
Internet and data business; and (v) our experienced management team.

   Our objective is to become a leading global provider of international and
domestic voice, data and Internet services. Key elements of our strategy to
achieve this objective include:

    . Provide one-stop shopping for voice, data and Internet services;

    . Expand the reach and data capabilities of our global network;

    . Build base of retail customers with significant international
      communications usage;

    . Pursue early entry into selected deregulating markets; and

    . Grow through selected acquisitions, joint ventures and strategic
      investments.

Recent Developments
 Recently-Completed Offerings

   On October 15, 1999, we completed the sale of 8.0 million shares of common
stock at $22.50 per share and $250 million of 12 3/4% senior notes due 2009.
The net proceeds from these offerings, approximately

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$411.7 million, will be used to fund capital expenditures to expand and enhance
our communications network, to fund operating losses, and for working capital
and other general corporate purposes, including possible acquisitions.

 Acquisitions of German ISPs

   In September 1999, we acquired TouchNet GmbH, a German Internet service
provider (ISP) with a point of presence (POP) in Munich, Germany. Through this
transaction, we acquired approximately 3,000 business customers in Germany. In
May 1999, we acquired TCP/IP GmbH, which operates an Internet backbone in
Germany with over 20 POPs nationwide.

 Digital Subscriber Line Agreement with Covad Communications

   On August 5, 1999, we entered into an agreement with Covad Communications, a
leading broadband access provider, to offer digital subscriber line (DSL)
services in the United States. The agreement will enable us to deliver high-
speed Internet access and other integrated communications services using
Covad's DSL technology to business and residential customers in major U.S.
metropolitan markets. Under this agreement, we will also participate in joint
marketing and advertising activities with Covad.

 Acquisition of Telegroup Retail Assets

   Effective June 1, 1999, we acquired the global retail business of Telegroup,
Inc., including the acquisition of selected Telegroup foreign subsidiaries,
which includes:

    . Approximately 372,000 retail customers located primarily in the United
      States, Europe and Australia;

    . Two carrier-grade switches, one located in the New York City area and
      one located in London, and approximately 20 programmable switching
      platforms and POPs located in the United States, Europe and Japan;

    . Telegroup's global network of sales agents and Web-based order-entry
      and provisioning system for agents; and

    . A global network operations center and call center.

 Acquisition of AT&T Canada Consumer Business

   On May 31, 1999, we purchased the residential long distance customer base of
AT&T Canada and ACC Telenterprises. This acquisition included approximately
428,000 retail voice customers, including 28,000 residential Internet
customers, customer support assets, and related POPs. As part of the
acquisition, we entered into a strategic alliance with AT&T Canada whereby AT&T
Canada agreed to provide us with, among other things, network services in
Canada for up to five years as well as customer support services for 12 months.

 Global Crossing Capacity Purchase Agreements

   On May 24, 1999, we entered into capacity purchase agreements with Global
Crossing Holdings Ltd. We agreed to purchase up to $50 million of fiber
capacity from Global Crossing, and Global Crossing agreed to purchase up to $25
million of services on our global satellite network.

 Acquisition of London Telecom

   On March 31, 1999, we acquired London Telecom and the assets of certain
related companies, which collectively provide domestic and international long
distance services to approximately 162,000 residential and business customers
in Canada.

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

   As of October 21, 1999, our equity market capitalization was approximately
$781.4 million, based upon a closing price of $21.25 per share and
approximately 36,772,293 shares of common stock outstanding.

   Our executive offices are located at 1700 Old Meadow Road, McLean, Virginia
22102, and our telephone number is (703) 902-2800.

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<PAGE>

                                 THE OFFERING

Notes Offered..............  $45,467,000 in aggregate principal amount of 11
                             1/4% Senior Notes due 2009.

Maturity...................  January 15, 2009.

Interest Payment Dates.....  January 15 and July 15, commencing on July 15,
                             1999.

Ranking....................  The notes will rank senior in right of payment to
                             any of our existing and future obligations that
                             are expressly subordinated in right of payment to
                             the notes and will rank pari passu in right of
                             payment with all of our other existing and future
                             senior unsecured obligations, including trade
                             payables. Because we are a holding company that
                             conducts our business through our subsidiaries,
                             all existing and future indebtedness and other
                             liabilities and commitments of any of our
                             subsidiaries, including trade payables, will be
                             structurally senior to the notes.

Optional Redemption........  We may redeem the notes at the redemption prices
                             listed in "Description of Notes--Optional
                             Redemption" at any time on or after January 15,
                             2004. Before January 15, 2002, we may redeem up
                             to 35% of the original principal amount of the
                             notes at the redemption price listed in
                             "Description of Notes--Optional Redemption" with
                             the net cash proceeds of one or more public
                             offerings.

Change of Control..........  If we experience a change of control, each holder
                             of a note may require us to purchase all or any
                             part of such holder's notes at a purchase price
                             in cash equal to 101% of the principal amount
                             thereof, plus accrued and unpaid interest and
                             liquidated damages, if any, to the date of
                             purchase.

Covenants..................  The indenture governing the notes limits our
                             ability and that of our restricted subsidiaries
                             to:

                                  .incur additional indebtedness,

                                  .issue preferred stock,

                                  .pay dividends or make other distributions,

                                  .repurchase capital stock or subordinated
                               indebtedness,

                                  .make certain other restricted payments,

                                  .create certain liens,

                                  .enter into certain transactions with
                               affiliates,

                                  .sell assets,

                                  .issue or sell capital stock of our
                               restricted subsidiaries, or

                                  .enter into certain mergers and
                               consolidations.

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<PAGE>


Registration Rights.........  Unless the registration of the notes would not be
                              permitted by applicable law or Securities and
                              Exchange Commission policy, we will

                                   (i) file the registration statement with the
                                Securities and Exchange Commission registering
                                the resale by the selling noteholder of the
                                notes. If we do not cause the registration
                                statement to be declared effective by the
                                Securities and Exchange Commission by October
                                28, 1999 (a Registration Default), additional
                                cash interest (Liquidated Damages) shall accrue
                                on the notes commencing upon the occurrence of
                                such Registration Default in an amount equal to
                                .50% per annum of the principal amount of
                                notes. The amount of Liquidated Damages shall
                                increase by an additional .50% per annum of the
                                principal amount of notes with respect to each
                                subsequent 90 day period (or portion thereof)
                                until the Registration Default has been cured,
                                up to a maximum rate of Liquidated Damages of
                                1.5% per annum of the principal amount of
                                notes. Immediately upon the cure of the
                                Registration Default, there shall be no further
                                accrual of Liquidated Damages with respect to
                                the notes; and

                                   (ii) pay any reasonable and customary
                                expense incurred by the selling noteholder in
                                the sale of such notes in a private placement
                                or brokered transaction pursuant to which all
                                or substantially all of the notes are sold in
                                one (or one series of) non-registered or
                                registered transactions in accordance with the
                                Securities Act and applicable state securities
                                laws.

Use of Proceeds.............  We will not receive any proceeds from the sale by
                              the selling noteholder of the notes offered in
                              this prospectus.

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

   For a discussion of certain risks that should be considered in connection
with an investment in the notes, see "Risk Factors" beginning on page 5.

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                                  RISK FACTORS

   You should consider carefully the following risks, in addition to the other
information contained elsewhere in this prospectus, in evaluating whether to
purchase the notes.

Our high level of debt may adversely affect our financial and operating
flexibility.

   We have substantial indebtedness. The indenture governing the notes limits,
but does not prohibit, our incurrence of additional indebtedness and does not
limit the amount of indebtedness that can be incurred to finance the cost of
telecommunications equipment. We have recently incurred additional
indebtedness, including in connection with our Telegroup acquisition. We expect
that we will incur additional indebtedness in the future and our level of
indebtedness could have important consequences to you, including the following:

  .  any additional indebtedness could make it more difficult for us to make
     payments of interest on our outstanding debt, including the notes;

  .  we may limit our ability to obtain any necessary financing in the future
     for working capital, capital expenditures or other purposes;

  .  we must dedicate a substantial portion of our cash flow from operations,
     if any, to the payment of principal and interest on our indebtedness and
     this cash flow will not be available for our use elsewhere in our
     business;

  .  our flexibility in planning for, or reacting to, changes in our business
     could be limited;

  .  we may be at a competitive disadvantage because we are more highly
     leveraged than some of our competitors; and

  .  we may be more vulnerable in the event of a downturn in our business if
     we have a high level of indebtedness.

   We must increase substantially our net cash flow in order to meet our debt
service obligations and cannot assure you that we will be able to meet our debt
service obligations, including our obligations under the notes. The holders of
such indebtedness can accelerate the maturity of such indebtedness if there is
a default and that could cause defaults under our other indebtedness. Such
defaults could result in a default on the notes and could delay or preclude
payments of interest or principal thereon.

We experienced historical, and will experience future, operating losses,
negative cash flow from operations and net losses.

  Our net revenue growth in each of the last 17 quarters should not be
considered to be indicative of future net revenue growth, if any. We expect to
continue to incur operating losses and negative cash flow from operations as we
expand our operations and build-out and upgrade our telecommunications network.
We cannot assure you that our net revenue will grow or be sustained in future
periods or that we will be able to achieve or sustain profitability or generate
positive cash flow from operations in any future period. If we cannot achieve
and sustain operating profitability or positive cash flow from operations, we
may not be able to meet our debt service or working capital requirements,
including our obligations with respect to the notes.

If we are unable to obtain additional financing, we may have to reduce the size
of our expansion.

   We continually evaluate the expansion of our service offerings and plan to
make further investments in and enhancements to our telecommunications network
and in distribution channels. To fund these additional cash requirements, we
anticipate that we will have to raise additional financing from public or
private equity or debt sources. Additionally, we may be required to seek
additional capital sooner than expected if:

  .  our plans or assumptions change or are inaccurate, including with
     respect to the development of our telecommunications network, the
     expansion of our service offerings, the scope of our operations and our
     operating cash flow;

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  .  we consummate additional investments or acquisitions;

  .  we experience unexpected costs or competitive pressures; or

  .  our existing cash and any other borrowings prove to be insufficient.

We have agreed in the indenture and certain other agreements governing our
indebtedness to restrictive covenants that will affect, and in many respects
will limit or prohibit significantly, our ability to incur additional
indebtedness and to create liens. If we do raise additional funds through the
incurrence of debt, we would likely become subject to additional restrictive
financial covenants. If we are unable to obtain additional capital at all or on
acceptable terms, we may be required to reduce the scope of our expansion,
including the expansion of iPRIMUS.com, which could adversely affect our
business prospects and our ability to compete. We cannot assure you that we
will be able to raise equity capital, obtain capital lease or bank financing or
incur other borrowings on commercially reasonable terms, if at all, to fund any
such expansion or otherwise.

We may not be able to pay interest and principal on the notes if we do not
receive distributions from our subsidiaries.

   We are a holding company and our principal assets are the stock of our
operating subsidiaries. Dividends, intercompany loans and other permitted
payments from our direct and indirect subsidiaries, and our own credit
arrangements, are our sources of funds to meet our cash needs, including the
payment of expenses and principal and interest on the notes. Our subsidiaries
are legally distinct from us and have no obligation to pay amounts due with
respect to the notes or to make funds available to us. Our subsidiaries will
not guarantee the notes. Many of our subsidiaries are organized in
jurisdictions outside the United States. Their ability to pay dividends, repay
intercompany loans or make other distributions may be restricted by, among
other things, the availability of funds, the terms of various credit
arrangements entered into by them, as well as statutory and other legal
restrictions. Additionally, payments from our subsidiaries may result in
adverse tax consequences. If we do not receive dividends, distributions and
other payments from our subsidiaries, we would be restricted in our ability to
pay interest and principal on the notes and on our ability to utilize cash flow
from one subsidiary to cover shortfalls in working capital at another
subsidiary.

Our holding company structure may limit your recourse to our assets.

   Creditors of the holding company, including the holders of the notes, and
the holding company itself generally will have subordinate claims against the
assets of a particular subsidiary as compared to the creditors of such
subsidiary. Accordingly, the notes will be subordinated structurally to all
existing and future indebtedness and other liabilities and commitments of our
subsidiaries, including trade payables. Our right to receive assets of any
subsidiary upon the liquidation or reorganization of such subsidiary (and the
consequent rights of the holders of the notes to participate in those assets)
will be subordinated structurally to the claims of such subsidiary's creditors.
However, if the holding company itself is recognized as a creditor, its claims
would be subordinate to any secured indebtedness of such subsidiary and any
indebtedness of such subsidiary that is senior to the holding company's claims.
In addition, holders of our secured indebtedness have a claim on the assets
securing such indebtedness that is prior to the claim of the holders of the
notes and would have a claim that is pari passu with the claim of the holders
of the notes to the extent such security did not satisfy such indebtedness. We
have no significant assets other than the stock of our subsidiaries. If we were
to enter into a bank credit facility or similar arrangement, we expect that the
stock of the subsidiaries would be pledged to secure any such credit facility
or arrangement.

We may enter new markets or businesses where we have limited or no operating
experience.

   We have limited experience in operating our business. Our company was
founded in February 1994 and began generating operating revenues in March 1995.
We intend to enter additional markets or businesses, including offering
Internet services, where we have limited or no operating experience.
Accordingly, we cannot

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assure you that our future operations will generate operating or net income,
and you must consider our prospects in light of the risks, expenses, problems
and delays inherent in establishing a new business in a rapidly changing
industry.

We cannot assure you that our Internet and data business will be successful.

   We have recently begun targeting businesses and residential customers for
Internet and data services through our newly formed subsidiary, iPRIMUS.com,
and other recently acquired ISPs. We intend to expand our offering of data and
Internet services worldwide and we anticipate offering a full-range of Internet
protocol-based data and voice communications over our existing global network
infrastructure. We have limited experience in the Internet business and cannot
assure you that we will successfully establish or expand the business.
Currently, we only provide Internet services to business and residential
customers in Australia, Canada and Germany, and offer Internet transmission
services in the Indian Ocean/Southeast Asia regions through our satellite earth
station in London.

   The market for Internet connectivity and related services is extremely
competitive. Our primary competitors include other ISPs that have a significant
national or international presence. Many of these carriers have substantially
greater resources, capital and operational experience than we do. We also
expect we will experience increased competition from traditional
telecommunications carriers that expand into the market for Internet services.
In addition, we will require substantial additional capital to make investments
in our Internet operations and we may not be able to obtain that capital on
favorable terms or at all.

   Further, even if we are able to establish and expand our Internet business,
we will face numerous risks that may adversely affect the operations of our
Internet business. These risks include:

  . competition in the market for Internet services;

  . our limited operating history as an ISP;

  . our ability to adapt and react to rapid changes in technology related to
    our Internet business;

  . uncertainty relating to the continuation of the adoption of the Internet
    as a medium of commerce and communications;

  . vulnerability to unauthorized access, computer viruses and other
    disruptive problems due to the accidental or intentional actions of
    others;

  . adverse regulatory developments;

  . the potential liability for information disseminated over our network;
    and

  . our need to manage the growth of our Internet business, including the
    need to enter into agreements with other providers of infrastructure
    capacity and equipment and to acquire other ISPs and Internet- related
    businesses on acceptable terms.

We must complete our network, operate it efficiently and generate additional
traffic.

   Our long-term success is dependent upon our ability to design, implement,
operate, manage and maintain our communications network, and our ability to
generate and move traffic onto the network. We have incurred additional fixed
operating costs due to our acquisition of telecommunications equipment and
other assets of TresCom, London Telecom, AT&T Canada and ACC Telenterprises and
Telegroup. We will incur additional fixed operating costs as we further expand
our network. These costs typically are in excess of the revenue attributable to
the transmission capacity funded by such costs until we generate additional
traffic volume for such capacity. We cannot guarantee that we will generate
sufficient traffic to utilize economically our capacity or that we can complete
our network in a timely manner or operate it efficiently. We also intend to
expand our network as more countries deregulate their telecommunications
industries. We cannot guarantee that we will be able to obtain the required
licenses or purchase the necessary equipment on favorable terms or, if we do,
that we will be able to develop successfully our network in those countries.

                                       7
<PAGE>

We must manage our development and rapid growth effectively.

   Our continued growth and expansion places a significant strain on our
management, operational and financial resources, and increases demands on our
systems and controls. We continue to add switches and fiber optic cable and to
expand our operations. We have expanded our retail operations through our
recent acquisitions of TresCom, London Telecom, the consumer business of AT&T
Canada, the residential long distance business of ACC Telenterprises and the
retail business of Telegroup. We have also recently acquired several ISPs and
created iPRIMUS.com, our subsidiary through which we intend to operate our
Internet and data businesses. To manage our growth effectively, we must
continue to implement and improve our operational and financial systems and
controls, purchase and utilize other transmission facilities, and expand, train
and manage our employee base. If we inaccurately forecast the movement of
traffic onto our network, we could have insufficient or excessive transmission
facilities and disproportionate fixed expenses. We cannot guarantee that we
will be able to develop further our facilities-based network or expand at the
rate presently planned, or that the existing regulatory barriers to such
expansion will be reduced or eliminated. As we proceed with our development, we
will place additional demands on our customer support, billing and management
information systems, on our support, sales and marketing and administrative
resources and on our network infrastructure. We cannot guarantee that our
operating and financial control systems and infrastructure will be adequate to
maintain and manage effectively our future growth.

We may not successfully integrate our recent acquisitions and we may not
successfully complete or integrate future acquisitions.

   A key element of our business strategy is to acquire or make strategic
investments in complementary assets and businesses, and a major portion of our
growth in recent years is as a result of such acquisitions. Acquisitions,
including our recent TresCom, London Telecom, AT&T Canada, ACC Telenterprises,
Telegroup, GlobalServe and TCP/IP acquisitions, and strategic investments
involve financial and operational risks. We may incur indebtedness in order to
effect an acquisition and will need to service that indebtedness. An
acquisition may not provide the benefits originally anticipated while we
continue to incur operating expenses. There may be difficulty in integrating
the service offerings, distribution channels and networks gained through
acquisitions and strategic investments with our own. In a strategic investment
where we acquire a minority interest in a company, we may lack control over the
operations and strategy of the business, and we cannot guarantee that such lack
of control will not interfere with the integration of services and distribution
channels of the business with our own. Although we attempt to minimize the risk
of unexpected liabilities and contingencies associated with acquired businesses
through planning, investigation and negotiation, such unexpected liabilities
nevertheless may accompany such strategic investments and acquisitions. We
cannot guarantee that we successfully will:

  .  identify attractive acquisition and strategic investment candidates;

  .  complete and finance additional acquisitions on favorable terms; or

  .  integrate the acquired businesses or assets into our own.

   We cannot guarantee that the integration of our business with any acquired
company's business, including the businesses of TresCom, London Telecom, AT&T
Canada and ACC Telenterprises, Telegroup, GlobalServe and TCP/IP, will be
accomplished smoothly or successfully, if at all. If we encounter significant
difficulties in the integration of the existing services or technologies or the
development of new technologies, resources could be diverted from new service
development, and delays in new service introductions could occur. We cannot
guarantee that we will be able to take full advantage of the combined sales
forces' efforts. Successful integration of operations and technologies requires
the dedication of management and other personnel which may distract their
attention from our day-to-day business, the development or acquisition of new
technologies, and the pursuit of other business acquisition opportunities.

We experience 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. The industry has relatively limited

                                       8
<PAGE>

barriers to entry in the more deregulated countries 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, customers can switch carriers at any time. We
believe that competition in all of our 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 the non-United States
markets continue to experience deregulatory influences. Further deregulation in
other countries such as Canada, the United Kingdom, Germany and Japan, could
result in greater competition in telecommunications services offered in these
countries. This increase in competition could adversely affect net revenue per
minute and gross margin as a percentage of net revenue. We compete primarily on
the basis of price, particularly with respect to our sales to other carriers,
and also on the basis of customer service and our ability to provide a variety
of telecommunications products and services. Prices for long distance calls in
several of the markets in which we compete have declined in recent years and
are likely to continue to decrease. We cannot guarantee that we will be able to
compete successfully in the future.

   Many of our competitors are significantly larger than we, and many of our
competitors have:

    .  substantially greater financial, technical and marketing resources;

    .  larger networks;

    .  a broader portfolio of services;

    .  controlled transmission lines;

    .  stronger name recognition and customer loyalty; and

    .  long-standing relationships with our target customers.

In addition, many of our competitors enjoy economies of scale that can result
in a lower cost structure for transmission and related costs, which could cause
significant pricing pressures within the industry. Several long distance
carriers in the United States, including most recently, AT&T, MCI/WorldCom and
Sprint, have introduced pricing strategies that provide for fixed, low rates
for calls within the United States. If this strategy is adopted widely, it
could have an adverse effect on our results of operations and financial
condition if increases in telecommunications usage do not result or are
insufficient to offset the effects of such price decreases. Our competitors
include, among others: AT&T Corp., MCI/WorldCom, Sprint Corp., Frontier
Communications Services, Inc., Pacific Gateway Exchange, Inc. and Qwest
Communications International, Inc. in the United States; Telstra, Optus
Communications Pty. Limited, AAPT, WorldxChange and GlobalOne in Australia;
British Telecommunications plc., Cable and Wireless Communications, AT&T,
MCI/WorldCom, GlobalOne, ACC Corporation, Colt Telecom, Energis, GTS/Esprit
Telecom Group, and RSL Communications in the United Kingdom; Deutsche Telekom,
O.tel.o Communications, Mannesmann ARCOR, Colt, MCI/WorldCom, and RSL
Communications in Germany; Stentor and Sprint Canada in Canada; Telmex, the
other PTTs in Latin America, AT&T, MCI/WorldCom and Sprint in Latin America;
Kokusai Denshin Denwa Co., Ltd. (KDD), Nippon Telegraph and Telephone
Corporation, Japan Telecom, IDC and a number of second tier carriers such as
Cable & Wireless, MCI/WorldCom and ATNet in Japan.

   Recent and pending deregulation in various countries may encourage new
entrants to compete, including Internet service providers, cable television
companies and utilities. For example, the United States and 68 other countries
have committed to open their telecommunications markets to competition pursuant
to an agreement under the World Trade Organization which began on January 1,
1998. Further, in the United States once certain conditions are met under the
United States Telecommunications Act of 1996, the regional bell operating
companies will be allowed to enter the domestic long distance market, AT&T,
MCI/WorldCom 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. In addition, we could experience
additional competition in the Australian market from newly licensed
telecommunications carriers with the ongoing deregulation of the Australian
telecommunications market and the granting of additional carrier licenses.

                                       9
<PAGE>

A deterioration in our relationships with facilities-based carriers could have
a material adverse effect on us.

   We primarily connect our customers' telephone calls through transmission
lines that we lease under a variety of arrangements with other facilities-based
long distance carriers. Many of these carriers are, or may become, our
competitors. Our ability to maintain and expand our business is dependent upon
whether we continue to maintain favorable relationships with the facilities-
based carriers from which we lease transmission lines. If our relationship with
one or more of these carriers were to deteriorate or terminate, it could have a
material adverse effect upon our cost structure, service quality, network
diversity, results of operations and financial condition. Moreover, we lease
transmission lines from some vendors that currently are subject to tariff
controls and other price constraints which in the future may be changed.

Uncertainties and risks associated with international markets could adversely
impact our international operations.

   A key element of our business strategy is to expand in international
markets. In many international markets, the existing incumbent carrier has
certain advantages, including:

  .  controlling access to the local networks;

  .  enjoying better brand recognition and brand and customer loyalty; and

  .  having significant operational economies, including a larger backbone
     network and more foreign carrier agreements with other incumbent
     carriers and other service providers.

Moreover, the incumbent carrier may take many months to allow competitors to
interconnect to its switches. To achieve our objective of pursuing growth
opportunities in international markets, we may have to make significant
investments for an extended period before returns, if any, on such investments
are realized. In addition, we cannot guarantee that we will be able to obtain
the permits and operating licenses required by us to:

  .  operate our own transmission facilities or switches;

  .  obtain access to local transmission facilities; or

  .  market, sell and deliver competitive services in these markets.

In addition, such permits and operating licenses, if we obtain them, may not be
obtained in the time frame that we currently contemplate.

   There are additional risks inherent in doing business on an international
level which could materially and adversely impact our international operations.
These risks include:

  .  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 and
     holiday periods; and

  .  potentially adverse tax consequences resulting from operating in
     multiple jurisdictions with different tax laws.

                                       10
<PAGE>

A significant portion of our net revenue and expenses is denominated, and is
expected to continue to be denominated, in currencies other than United States
dollars. Changes in exchange rates may have a significant effect on our results
of operations. Historically, we have not engaged in hedging transactions, and
currently do not contemplate engaging in hedging transactions to mitigate
foreign exchange risk.

   On January 1, 1999, 11 member countries of the European Union established
fixed conversion rates between their national currencies and the "euro". At
that time, the euro began trading on currency exchanges and became usable for
non-cash transactions. However, traditional currencies will continue to be used
until at least January 1, 2002. Given the extent of our current and expected
services in continental Europe and the nature of those services, we currently
do not expect euro conversion to have a material impact on operations or cash
flows. However, uncertainties exist as to the effects of euro conversion on
certain European customers and on the economies of the participating countries.
Euro conversion also will cause a better ability to compare prices in different
countries which may negatively impact pricing strategies in different
participating countries. We plan to continue to evaluate the impact of euro
conversion on our computer and financial systems, business processes, market
risk and price competition.

Malfunctions in our existing information systems or delays in implementing new
ones could adversely affect us.

   To bill our customers, we must record and process massive amounts of data
quickly and accurately. We believe that our management information system will
have to grow as our business expands and it will have to change as new
technological developments occur. We believe that the successful implementation
and integration of new information systems and backroom support will be
important to our ability to:

  .  develop and grow our business;

  .  monitor and control costs;

  .  bill our customers accurately and in a timely fashion; and

  .  achieve operating efficiencies.

We cannot guarantee that we will avoid delays or cost-overruns, and we may
suffer adverse consequences in implementing these systems. Any such delay or
other malfunction of our management information systems could have a material
adverse effect on our business, financial condition and results of operations.

We must modify our systems to be Year 2000 ready.

   In 1998, we began a comprehensive inventory and Year 2000 assessment of our
principal computer systems, network elements, software applications and other
business systems throughout the world. The Year 2000 problem is the result of
computer programs being written using two digits, rather than four digits, to
define the applicable year. Any of our systems, elements or applications that
have time-sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in improperly routed traffic, a
major system failure or miscalculations in invoices. We have completed our
inventory assessment and have begun repairing or replacing the most critical
items that we have determined not to be Year 2000 ready. We expect to complete
the repair, replacement, testing and certification of substantially all non-
ready network elements by the middle of the fourth quarter 1999. We are using
both internal and external resources to identify, correct or reprogram, and
test our systems for Year 2000 readiness. In addition, we are contacting third
party suppliers of major equipment, software, systems and services that we use
to identify and, to the extent possible, to resolve issues involving Year 2000
readiness. However, we have limited or no control over the actions of these
third party suppliers. Consequently, we cannot guarantee that these suppliers
will resolve any or all Year 2000 issues before the occurrence of a material
disruption to our business or any of our customers.

                                       11
<PAGE>

   We expect to incur in the aggregate approximately $1 to $3 million in
expenditures during 1999 to complete our Year 2000 readiness program. These
estimates do not include the cost of systems, software and equipment that are
being replaced or upgraded in the normal course of business. The costs of
modifying our network elements, software and systems for Year 2000 readiness
are being funded from existing cash resources. If we do not achieve readiness
prior to December 31, 1999, or if we fail to identify and remedy all critical
Year 2000 problems, our results of operations or financial condition could be
materially and adversely affected. We have determined that non-ready network
elements and systems may result in improperly routed traffic and that non-
ready, non-network systems may result in errors in customer billing and
accounting records. We may also be adversely affected by general economic
disruptions caused by the Year 2000 issue even in circumstances where our
systems and the systems of our customers are Year 2000 ready. We have begun to
develop appropriate contingency plans to mitigate, to the extent possible, any
significant Year 2000 non-readiness. If we are required to implement our
contingency plans, the cost of Year 2000 readiness may be greater than the
amount referenced above and cannot guarantee that these plans will be adequate.

Rapid changes in the telecommunications industry could adversely affect our
competitiveness and our financial results.

   The international telecommunications industry is changing rapidly due to:

  .  deregulation;

  .  privatization of incumbent carriers;

  .  technological improvements;

  .  expansion of telecommunications infrastructure; and

  .  the globalization of the world's economies.

In addition, deregulation in any particular market may cause such market to
shift unpredictably. We cannot guarantee that we will be able to compete
effectively or adjust our contemplated plan of development to meet changing
market conditions.

   The telecommunications industry generally is experiencing a rapid
technological evolution. New products and service offerings are being
introduced. Satellite and undersea cable transmission capacity is increasingly
available for services similar to those we provide. Potential developments that
could affect us adversely if we do not anticipate them or appropriately respond
to them include:

  .  improvements in transmission equipment;

  .  development of switching technology allowing voice/data/video multimedia
     transmission simultaneously; and

  .  commercial availability of competitively-priced Internet-based domestic
     and international switched voice/data/video services.

Our profitability will depend on our ability to anticipate, assess and adapt to
rapid technological changes and our ability to offer, on a timely and cost-
effective basis, services that meet evolving industry standards. We cannot
guarantee that we will be able to assess 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.

Natural disasters could adversely affect our business.

   Many of the geographic areas where we conduct our business may be affected
by natural disasters, including hurricanes and tropical storms. Hurricanes,
tropical storms and other natural disasters could have a material adverse
effect on our business by damaging our network facilities or curtailing
telephone traffic as a result of the effects of such events, such as
destruction of homes and businesses.

                                       12
<PAGE>

The loss of our key personnel could significantly impact us.

   We depend upon the efforts of our management team and our key technical,
marketing and sales personnel, particularly those of K. Paul Singh, our
Chairman and Chief Executive Officer. If we lose the services of one or more of
these key individuals, particularly Mr. Singh, our business and its future
prospects could be materially and adversely affected. We have entered into an
employment agreement with Mr. Singh,
which continues until May 30, 2000, and from year to year thereafter unless
terminated. We do not maintain any key person life insurance on the lives of
any officer, director or key employee. Our future success will also depend on
our ability to attract and retain additional key management and technical and
sales personnel required in connection with the growth and development of our
business. The competition to hire qualified employees and personnel in the
telecommunications and Internet industries is intense, particularly in non-U.S.
markets, and there are a limited number of persons with knowledge of and
experience in particular sectors of the telecommunications industry. We cannot
guarantee that we will be successful in attracting and retaining such
executives and personnel.

We are subject to potential adverse effects of regulation.

   Regulation of the telecommunications industry is changing rapidly, both
domestically and internationally. Although we believe that deregulation efforts
will create opportunities for us, they also present risks, which could have a
material adverse effect on our business.

   As a multinational telecommunications company, we are subject to varying
degrees of regulation in each of the jurisdictions in which we provide our
services. Local laws and regulations, and the interpretation of such laws and
regulations, differ significantly among the jurisdictions in which we operate.
Future regulatory, judicial, legislative and government policy changes may have
a material adverse effect on us and domestic or international regulators or
third parties may raise material issues with regard to our compliance or
noncompliance with applicable regulations, and therefore may have a material
adverse impact on our competitive position, growth and financial performance.

   In the United States, regulatory considerations that affect or limit our
business include the following:

    .  The recent trend in the United States toward reduced regulation has
       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 us;

    .  Any failure to maintain proper federal and state tariffs or
       certification, or any finding by the federal or state agencies that
       we are not operating under permissible terms and conditions, may
       result in an enforcement action or investigation;

    .  Under new FCC rules, local exchange carriers will be permitted to
       allow certain volume discounts in the pricing of access charges,
       which may place many long distance carriers, including us, at a
       significant cost disadvantage to larger competitors. The FCC may
       amend its rules to require us to contribute to universal service
       funds based on foreign revenues as well as domestic revenues;
       currently, the FCC only requires such contribution based on domestic
       revenues; and

    .  To the extent that the FCC finds that the International Settlements
       Policy still applies to us, the FCC could find that, absent a
       waiver, certain terms of our foreign carrier agreements do not meet
       the requirements of the International Settlements Policy. The FCC
       could, among other things, issue a cease and desist order or impose
       fines if it finds that these agreements conflict with the
       International Settlements Policy.

                                       13
<PAGE>

   In Canada, regulatory considerations that affect or limit our business
include the following:

    .  The Canadian Radio-television and Telecommunications Commission is
       currently conducting an examination of its international services
       contribution regime in light of its recent decision to move from a
       per circuit to a per minute contribution charge arrangement. We
       cannot assure you that the new regulatory framework, once
       implemented in Canada, will allow us to compete effectively in
       offering telecommunications services.

   In Australia, regulatory considerations that affect or limit our business
include the following:

    .  Carriers must meet the universal service obligation to assist in
       providing all Australians, particularly those living in remote
       areas, with reasonable access to standard telephone services. The
       Australian Communications Authority could make an assessment of a
       universal service levy that would be material or the Australian
       government could legislate universal service obligations that would
       be material.

   In Europe, regulatory considerations that affect or limit our business
include the following:

    .  A change in regulatory policy in Germany has taken place which
       requires us to invest in additional points of presence and
       transmission lines in order to continue to receive the lowest
       available interconnection rates. Growth of operations also requires
       adding additional interconnection lines. However, the cumulative
       demand for additional points of interconnection and interconnection
       lines by all alternative carriers has created a severe order backlog
       with Deutsche Telekom. The regulatory authority has generally
       declined to force Deutsche Telekom to supply our orders of points of
       interconnection and interconnection lines within a certain supply
       period. Deutsche Telekom has not yet supplied our orders and has
       delayed supply of some orders contrary to its contractual
       obligations. Our capacity will be severely restricted until these
       orders are fulfilled. RegTP has so far denied action on the late or
       even delayed supply of interconnection points and lines by Deutsche
       Telekom which may severely affect our business as we may not be able
       to meet customer demand;

    .  In Germany, we are subject to numerous regulatory requirements when
       we operate under our license, including the requirement that we
       present our standard terms and conditions to German regulators and
       possibly that we contribute to universal service mechanisms; and

    .  Deutsche Telekom has exercised its option to terminate its current
       interconnection agreement with us as of the end of 1999 and has
       asked that renegotiations be commenced. Deutsche Telekom has at the
       same time presented us with a new draft interconnection agreement
       containing terms less favorable to us than in the current agreement,
       including, higher interconnection fees; higher resale fees for
       certain interconnecting calls; and minimum traffic volume
       requirements. Most of these new terms have not been accepted by the
       German telecommunications regulatory authority for the period of the
       current interconnection regime until the end of 1999. The same terms
       may, however, be introduced under the new interconnection regime as
       of the year 2000 and may then adversely affect our business. The
       first interconnection agreement signed to cover the year 2000 and
       beyond, however, reduced interconnection tariffs substantially. Its
       other terms and conditions are unknown and non-discrimination
       between large and smaller carriers like ourselves will, thus, become
       a serious issue. Whether or not non-discrimination can be ensured
       with respect to all terms and conditions and in a timely fashion
       will severely impact our business.

   In Japan, there can be no guarantee that the Japanese regulatory environment
will allow us to provide services in Japan at competitive rates.

                                       14
<PAGE>

   In other jurisdictions regulatory considerations that affect or limit our
business include the following:

    .  In countries that enact legislation intended to deregulate the
       telecommunications sector or that have made commitments to open
       their markets to competition in the World Trade Organization
       Agreement, 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 our entry into such additional markets; and

    .  In some countries, regulators may make subjective judgments in
       awarding licenses and permits, and we may be excluded from such
       markets without any legal recourse. If we are able to gain entry
       into such a market, we cannot assure you that we will be able to
       provide a full range of services in such market. In addition, we may
       have to modify significantly our operations to comply with changes
       in the regulatory environment in such markets.

A group of our stockholders could exercise significant influence over our
affairs.

   As of October 15, 1999, our executive officers and directors beneficially
owned approximately 26.2%, or 9,947,973 shares, of our common stock. The
executive officers and directors also have been granted options to purchase an
additional 590,003 shares of our common stock which vest after October 15,
1999. Of these amounts, Mr. K. Paul Singh, our Chairman and Chief Executive
Officer, beneficially owns 4,762,371 shares of our common stock, including
options to purchase 371,433 shares of our common stock. Investors affiliated
with E.M. Warburg, Pincus & Co., LLC beneficially own 3,875,689 shares of our
common stock. As a result, the executive officers, directors and Warburg,
Pincus exercise significant influence over such matters as the election of our
directors, amendments to our charter, other fundamental corporate transactions
such as mergers and asset sales, and otherwise the direction of our business
and affairs. Additionally, under the terms of a shareholders' agreement among
Warburg, Pincus, Mr. Singh and us, entered into in connection with our merger
with TresCom, we agreed to nominate one individual selected by Warburg, Pincus
and reasonably acceptable to our non-employee directors, to serve as a member
of our board of directors. This nomination right remains effective so long as
Warburg, Pincus is the beneficial owner of 10% or more of our outstanding
common stock. In June 1998, Douglas Karp joined our board of directors pursuant
to the foregoing arrangement.

There Could Be No Market for the Notes

   Prior to this offering, only a limited public market has existed for the
notes. We do not intend to list the new notes on any national securities
exchange or to seek to have them admitted to trade on The Nasdaq Stock Market.
We cannot guarantee that an active public or other market will develop for the
notes. If a trading market does not develop or is not maintained, holders of
the notes may experience difficulty in reselling the notes or may be unable to
sell them at all. If a market for the notes develops, it may be discontinued at
any time. If a public trading market develops for the notes, future trading
prices of the notes will depend on many factors, including prevailing interest
rates, our results of operations and the market for similar securities. The
price at which holders of the notes will be able to sell such notes is not
assured and the notes could trade at a premium or discount to their purchase
price or face value. Depending on prevailing interest rates, the market for
similar securities and other facts, including our financial condition, the
notes may trade at a discount from their principal amount.

   The liquidity of, and trading market for, the notes may be adversely
affected by declines in the market for the 1997 senior notes, the 1998 senior
notes, the $200 million of senior notes issued on January 29, 1999, and the
$250 million of senior notes issued on October 15, 1999, by changes in the
overall markets for similar securities issued by other companies, and by
changes in our financial performance or prospects or prospects for companies in
our industry generally.

                                       15
<PAGE>

                                USE OF PROCEEDS

   All of the net proceeds from the sale of the notes will go to the selling
noteholder. Accordingly, we will not receive any proceeds from the sale of the
notes.

                                       16
<PAGE>

                                  THE COMPANY

Primus

   We are a full-service, facilities-based global communications company. We
offer a portfolio of bundled international and domestic voice, data and
Internet services to business and residential retail customers and other
carriers located in the United States, Canada, the United Kingdom, continental
Europe, Australia and Japan. We seek to capitalize on the increasing demand for
high-quality international communications services which is being driven by the
globalization of the world's economies, the worldwide trend toward
telecommunications deregulation and the growth of data and Internet traffic.

   We primarily target customers with significant international long distance
usage, including small- and medium-sized businesses, multinational
corporations, ethnic residential customers and other telecommunications
carriers and resellers. We provide our approximately 1.7 million customers with
a portfolio of competitively priced services, including:

     .International and domestic long distance services and private networks;

     .Prepaid and calling cards, toll-free services and reorigination
  services; and

     .Local services in Australia, Canada, Puerto Rico and the United States
  Virgin Islands.

Through our newly formed subsidiary, iPRIMUS.com, we target business and
residential customers for data and Internet services, including dial-up,
dedicated and high-speed Internet access, virtual private networks, Web
hosting, data center co-location, e-commerce services and other data services.

Competitive Strengths

 Established Global Network

   Our worldwide network includes:

    . 19 carrier-grade switches, consisting of 15 international gateway
      switches (nine in North America, four in Europe and two in the Asia-
      Pacific region) and four domestic switches in Australia;

    . More than 100 POPs and Internet access nodes in additional markets
      within our principal service regions worldwide;

    . Ownership interests in 23 operational undersea fiber optic cable
      systems connecting 29 countries, as well as interests in eight
      additional undersea fiber optic cable systems currently under
      construction; and

    . A satellite earth station in London to carry Internet and data
      traffic to and from the Indian Ocean/Southeast Asia region.

 Opportunistic Entry in International Markets

   We are building our global communications business by entering selected
deregulating markets that we believe present immediate market opportunities.
For example, we expect our recent Telegroup acquisition and our recent
acquisitions in Canada to enable us to capitalize on the growth and profit
potential that we anticipate in Europe and Canada due to recent deregulation in
those regions.

 Strong Base of Retail Customers

   Through a program of internal growth and acquisitions, we have increased our
customer base to approximately 1.7 million business and residential customers.
This compares with 175,000 customers as of December 31, 1997 and 447,000
customers as of December 31, 1998. We expect this increase in retail customers
to continue as we expand our ability to offer our customers voice, data and
Internet services on a

                                       17
<PAGE>

bundled basis. We believe that our ability to increase our retail customers has
been and will continue to be important because we generally realize a higher
gross margin as a percentage of net revenue from these customers compared to
carrier customers.

 Well-Positioned for Aggressive Expansion of Internet and Data Business

   We believe that our existing marketing channels and global network
infrastructure position us to grow our Internet and data business. We now
provide Internet access and data services to business and residential customers
in Australia, Canada and Germany. We recently acquired a number of ISPs
worldwide, including GlobalServe Communications, Ltd., a leading ISP in Canada,
the remaining interest in HotKey Internet Services Pty. Ltd., an Australian
ISP, that we did not previously own, and two German ISPs, TCP/IP, which
operates an Internet backbone in Germany with over 20 POPs nationwide, and
TouchNet. With our satellite earth station in London, we also offer Internet
transmission services to and from the Indian Ocean/Southeast Asia region. We
intend to deploy additional satellite earth stations to serve Latin America and
the Pacific Rim.

   We intend to invest in a U.S. Internet backbone network and an overlay to
our existing network architecture. This will enable us to carry Internet and
data traffic for our business, residential, carrier and ISP customers. This
network overlay will use packet switched technology, which includes Internet
protocol and asynchronous transfer mode (ATM), in addition to traditional
circuit switched voice traffic. Packet switched technology will enable us to
transport voice and data traffic compressed as "packets" over circuits shared
simultaneously by several users. This network investment will allow us to use
our existing network infrastructure to offer to existing and new customers a
full range of data and voice communications services, including, in selected
geographic areas, dial-up and dedicated Internet access, Web hosting, managed
virtual private network services, and ATM and frame relay data services. Our
commitment and ability to provide reliable, carrier-grade voice, data and
Internet communications over our global network on a standard platform recently
enabled us to qualify as a Cisco powered network.

 Experienced Management Team

   Our management team is composed of a strong base of professionals with
extensive expertise in the communications industry. We deploy our managers to
key geographic regions in an effort to help ensure that our network expansion
is implemented efficiently and our acquisitions are integrated successfully.

Our Business Strategy

   Our objective is to become a leading global provider of international and
domestic voice, data and Internet services. Key elements of our strategy to
achieve this objective include:

  . Provide One-Stop Shopping for Voice, Data and Internet Services: We offer
    in selected markets, and intend to offer our customers in each of the
    markets we serve, a portfolio of bundled voice, data and Internet
    services. We typically enter international markets in the early stages of
    deregulation by initially offering international long distance voice
    services and subsequently expanding our portfolio of offerings to include
    Internet access and data services. For example, through our recent
    acquisitions in Canada, we now offer our business and residential
    customers a comprehensive array of voice services, including
    international and domestic long distance, as well as Internet access and
    enhanced services, including Internet roaming and Web hosting. By
    bundling our traditional voice services with data and Internet services,
    we believe that we will attract and retain a strong base of retail
    customers, which are traditionally the highest margin communications
    customers.

  . Expand the Reach and Data Capabilities of Our Global Network: Through the
    geographic expansion of our global network, we expect to be able to
    increase the amount of our on-net traffic and thereby continue to reduce
    transmission costs and operating costs as a percentage of revenue,
    improve gross

                                       18
<PAGE>

   margins, reduce reliance on other carriers, and improve service
   reliability. In addition, we are planning investments in our network that
   will enable us to provide a full range of ATM, frame relay and Internet
   protocol-based data and voice communications over our existing network
   infrastructure. Our commitment and ability to provide reliable, carrier-
   grade voice, data and Internet communications over our global network on a
   standard platform recently enabled us to qualify as a Cisco powered
   network. In addition, through our satellite earth station in London, we
   currently offer Internet and data transmission services in the Indian
   Ocean/Southeast Asia region. Our target satellite customers are PTTs,
   other communications carriers, ISPs and multinational corporations in
   developing countries. We plan to replicate this strategy by offering
   Internet and data services in Latin America and the Pacific Rim through
   the addition of four satellite earth stations, two on each of the east and
   west coasts of the United States.

  . Build Base of Retail Customers with Significant International
    Communications Usage: We are focused on building a retail customer base
    with significant demand for international voice, data and Internet
    services. These customers typically include small- and medium-sized
    businesses, multinational corporations, and ethnic residential customers.
    Our strategic focus on retail customers reflects that we generally
    realize a higher gross margin as a percentage of net revenue from these
    customers compared to carrier customers. By offering high quality
    services at competitive prices through experienced sales and service
    representatives and bundling a comprehensive portfolio of communications
    services, we intend to further broaden our retail base.

  . Pursue Early Entry Into Selected Deregulating Markets: We seek to be an
    early entrant into selected deregulating communications markets worldwide
    where we believe there is significant demand for voice, data and Internet
    services as well as substantial growth and profit potential. We believe
    that early entry into deregulating markets provides us with competitive
    advantages as we develop sales channels, establish a customer base, hire
    personnel experienced in the local communications industry and achieve
    name recognition prior to a large number of competitors entering these
    markets. We intend to concentrate our immediate expansion plans in those
    markets that are more economically stable and are experiencing more rapid
    deregulation, such as continental Europe and Canada. Subsequently, we
    plan to expand in additional markets, including Japan, other parts of the
    Asia-Pacific region and Latin America.

  . Grow Through Selected Acquisitions, Joint Ventures and Strategic
    Investments: As part of our business strategy, we frequently evaluate
    potential acquisitions, joint ventures and strategic investments with
    companies in the voice, data and Internet businesses. We view
    acquisitions, joint ventures and strategic investments as a means to
    enter additional markets, add new products and market segments (e.g., DSL
    and Web hosting), expand our operations within existing markets, and
    generally accelerate the growth of our customer and revenue base. We
    target voice and data service providers, ISPs and Web hosting companies
    with an established customer base, complementary operations,
    telecommunications licenses, experienced management or network facilities
    in our target markets. In particular, we anticipate that we will make
    additional investments in or acquisitions of ISPs and other Internet-
    related and data service businesses worldwide.

Recent Developments

 Recently-Completed Offerings

   On October 15, 1999, we completed the sale of 8.0 million shares of common
stock at $22.50 per share and $250 million of 12 3/4% senior notes due 2009.
The net proceeds from these offerings, approximately $411.7 million, will be
used to fund capital expenditures to expand and enhance our communications
network, to fund operating losses, and for working capital and other general
corporate purposes, including possible acquisitions.

 Digital Subscriber Line Agreement with Covad Communications

   On August 5, 1999, we entered into an agreement with Covad Communications,
a leading broadband access provider, to offer DSL services in the United
States. DSL technology allows for secure high-speed

                                      19
<PAGE>

Internet access using the existing copper phone wires found in nearly every
home and business today. Once installed, the high-speed DSL connection is
secure and is "always on," removing the need to dial-in each time a user wants
to connect to the Internet. The agreement will enable us to deliver high-speed
Internet access and other integrated communications services using Covad's DSL
technology to business and residential customers in major U.S. metropolitan
markets. Under this agreement, we will also participate in joint marketing and
advertising activities with Covad.

 Acquisition of Telegroup Retail Assets

   On June 30, 1999 and effective as of June 1, 1999, we acquired the global
retail business of Telegroup, including the acquisition of selected Telegroup
foreign subsidiaries, which includes:

  .  Approximately 372,000 retail customers located primarily in the United
     States, Europe and Canada;

  .  Two carrier grade switches, one located in the New York City area and
     one located in London;

  .  Approximately 20 programmable switching platforms and POPs located in
     the United States, Europe and Japan;

  .  Telegroup's global network of sales agents;

  .  A Web-based order-entry and provisioning system for agents; and

  .  A global network operations center and call center.

   We paid the $71.8 million purchase price, plus $22.2 million for certain
current assets, by issuing $45.5 million in aggregate principal amount of our
11 1/4% senior notes due 2009 and by issuing a $4.6 million short-term
promissory note and paying the remainder in cash. The purchase price is subject
to adjustment. The acquisition had an effective date of June 1, 1999 such that
the financial results of the acquired business have been included in the
Company's results beginning June 1, 1999.

 Acquisition of AT&T Canada Consumer Business

   On May 31, 1999, we purchased the residential long distance customer base
and customer support assets and residential Internet customers and network of
AT&T Canada and ACC Telenterprises for a purchase price of C$54.1 million
(C$40.7 million in cash and C$13.4 million in debt). We also entered into a
strategic alliance pursuant to which AT&T Canada agreed to:

  .  provide us with underlying network services in Canada for five years;

  .  provide Canadian domestic termination for our global customers;

  .  provide customer support services to the customer base transferred to us
     for up to twelve months after the purchase; and

  .  license to us its bill face for six months after the purchase.

We intend to integrate the assets and residential long distance customer base
of AT&T Canada and ACC Telenterprises into Primus Canada, our wholly-owned
operating subsidiary in Canada. With this transaction, we acquired
approximately 428,000 retail voice customers, including 28,000 residential
Internet customers, customer support assets, and related POPs.

 Internet and Data Services

   In May 1999, we organized our Internet and data services business to be
operated by our new subsidiary, iPRIMUS.com, which will provide services in
some of the markets where we operate. We expect that we will use our existing
global network infrastructure to offer a full range of Internet Protocol-based
data and voice communications services. In February 1999, we acquired
Globalserve Communications, a leading ISP in

                                       20
<PAGE>

Canada, and we acquired the remaining 40% interest in Hotkey Internet Services
that we did not previously own. We also recently acquired two German ISPs,
TCP/IP, which operates an Internet backbone in Germany with over 20 POPs
nationwide, and TouchNet. As a result of these acquisitions, we are now
providing Internet services to business and residential customers in Australia,
Canada and Germany. With our satellite earth station in London, we offer
Internet transmission services in the Indian Ocean/Southeast Asia region. We
intend to deploy additional satellite earth stations to service Latin America
and the Pacific Rim. Our commitment and ability to provide voice, data and
Internet communications over our global integrated communications network
enabled us to qualify as a Cisco-powered network.

 Global Crossing Capacity Purchase Agreements

   On May 24, 1999, we entered into capacity purchase agreements with Global
Crossing Holdings Ltd. We agreed to purchase up to $50 million of fiber
capacity from Global Crossing and Global Crossing agreed to purchase up to $25
million of services on our global satellite network.

 Acquisition of London Telecom

   On March 31, 1999, we acquired London Telecom, a provider of domestic and
international long distance services to approximately 162,000 residential and
business customers in Canada and substantially all of the operating assets of
Wintel CNC Communications, Inc. and Wintel CNT Communications, Inc., which are
Canadian-based long distance telecommunications providers affiliated with the
London Telecom companies, for C$76.0 million in cash. As part of this
acquisition, we acquired network assets as well as call centers located in
Toronto and Vancouver. We intend to continue marketing the London Telecom
services under the London Telecom brand names.

                                       21
<PAGE>

                       DESCRIPTION OF OTHER INDEBTEDNESS

1997 Senior Notes

   General. Our senior notes issued on August 4, 1997, are senior obligations,
limited to $225 million in principal amount, which mature on August 1, 2004.
The 1997 senior notes, which were issued pursuant to an indenture dated August
4, 1997, accrue interest at a rate of 11 3/4% per annum. Interest is payable
each February 1 and August 1, commencing on February 1, 1998.

   Ranking. The 1997 senior notes will rank senior in right of payment to any
of our future subordinated indebtedness (as defined in the 1997 indenture
governing the 1997 senior notes), and pari passu in right of payment with all
of our senior indebtedness. Because we operate via a holding company that
conducts our business through our subsidiaries, all existing and future
indebtedness and other liabilities and commitments of our subsidiaries,
including trade payables, will be structurally senior to the 1997 senior notes.

   Security. The indenture required us to purchase and pledge to First Union
National Bank, as security for the benefit of the holders of the 1997 senior
notes, securities consisting of U.S. government securities in an amount
sufficient to provide for the payment in full of the first six scheduled
interest payments due on the 1997 senior notes. We used approximately $71.8
million of the net proceeds of the 1997 senior notes to acquire these pledged
securities. Assuming the first six scheduled interest payments on the 1997
senior notes are made in a timely manner, all remaining pledged securities will
be released.

   Optional Redemption. The 1997 senior notes are not redeemable prior to
August 1, 2001. Thereafter, the 1997 senior notes will be redeemable, in whole
or in part, at our option, at the redemption prices set forth in the indenture,
plus accrued and unpaid interest to the applicable redemption date.
Specifically, if redeemed during the 12-month period commencing on August 1 of
the years set forth below, the redemption price will be that amount, expressed
as a percentage of the principal amount of the 1997 senior notes, set forth
below:

<TABLE>
<CAPTION>
                                                                      Redemption
   Year                                                                 Price
   ----                                                               ----------
   <S>                                                                <C>
   2001..............................................................  105.875%
   2002..............................................................  102.938%
   2003 (and thereafter).............................................  100.000%
</TABLE>

   In addition, prior to August 1, 2000, we may redeem up to 35% of the
originally issued principal amount of the 1997 senior notes at 111.750% of the
principal amount thereof, plus accrued and unpaid interest through the
redemption date, with the net cash proceeds of one or more Public Equity
Offerings (as defined in the 1997 indenture); provided, however, that at least
65% of the originally issued principal amount of the 1997 senior notes remains
outstanding after the occurrence of such redemption.

   Change of Control. Upon the occurrence of a Change of Control (as defined in
the 1997 indenture), each holder of 1997 senior notes will have the right to
require us to repurchase all or any part of such holder's 1997 senior notes at
a purchase price in cash equal to 101% of the principal amount thereof, plus
accrued and unpaid interest to the date of purchase.

   Covenants. The 1997 indenture contains certain covenants that, among other
things, limit our ability and that of our Restricted Subsidiaries (as defined
in the 1997 indenture) to:

  .  incur additional indebtedness and issue preferred stock;

  .  pay dividends or make other distributions;

  .  repurchase Capital Stock (as defined in the 1997 indenture) or
     subordinated indebtedness or make certain other Restricted Payments (as
     defined in the 1997 indenture);

  .  create certain liens;

                                       22
<PAGE>

  .  enter into certain transactions with affiliates;

  .  sell assets;

  .  issue or sell Capital Stock of our Restricted Subsidiaries; or

  .  enter into certain mergers and consolidations.

   Pursuant to a consent solicitation, we amended the 1997 indenture to
generally conform portions of covenants relating to debt incurrence, restricted
payments, permitted investments and permitted liens to the corresponding
provisions in the 1998 indenture and to the corresponding provisions contained
in the January 1999 indenture.

   Events of Default. The 1997 indenture contains customary events of default,
including:

     (i) defaults in the payment of principal, premium or interest;

     (ii) defaults in the compliance with covenants contained in the 1997
  indenture;

     (iii) cross defaults on more than $5 million of other indebtedness;

     (iv) failure to pay more than $5 million of judgments that have not been
  stayed by appeal or otherwise; and

     (v) the bankruptcy of Primus or certain of its subsidiaries.

1998 Senior Notes

   General. Our 1998 senior notes are senior obligations, limited to $150
million in principal amount, which mature on May 15, 2008. The 1998 senior
notes, which were issued pursuant to an indenture dated May 19, 1998, accrue
interest at a rate of 9 7/8% per annum. Interest is payable each May 15 and
November 15, commencing on November 15, 1998.

   Ranking. The 1998 senior notes rank senior in right of payment to any future
subordinated Indebtedness (as defined in the 1998 indenture governing the 1998
senior notes), and pari passu in right of payment with all senior indebtedness.
Because we are a holding company that conducts business through subsidiaries,
all existing and future indebtedness and other liabilities and commitments of
our subsidiaries, including trade payables, will be structurally senior to the
1998 senior notes.

   Optional Redemption. The 1998 senior notes are not redeemable prior to May
15, 2003. Thereafter, the 1998 senior notes will be redeemable, in whole or in
part, at our option, at the redemption prices set forth in the indenture, plus
accrued and unpaid interest to the applicable redemption date. Specifically, if
redeemed during the 12-month period commencing on May 15 of the years set forth
below, the redemption price will be that amount, expressed as a percentage of
the principal amount of the 1998 senior notes, set forth below:

<TABLE>
<CAPTION>
                                                                      Redemption
     Year                                                               Price
     ----                                                             ----------
     <S>                                                              <C>
     2003............................................................  104.938%
     2004............................................................  103.208%
     2005............................................................  101.604%
     2006 (and thereafter)...........................................  100.000%
</TABLE>

   In addition, prior to May 15, 2001, we may redeem up to 25% of the
originally issued principal amount of the 1998 senior notes at 109.875% of the
principal amount thereof, plus accrued and unpaid interest through the
redemption date, with the net cash proceeds of one or more Public Equity
Offerings (as defined in the 1998 indenture); provided, however, that at least
75% of the originally issued principal amount of the 1998 senior notes remains
outstanding after the occurrence of such redemption.

                                       23
<PAGE>

   Change of Control. Upon the occurrence of a Change of Control (as defined in
the 1998 indenture), each holder of 1998 senior notes will have the right to
require us to repurchase all or any part of such holder's 1998 senior notes at
a purchase price in cash equal to 101% of the principal amount thereof, plus
accrued and unpaid interest to the date of purchase.

   Covenants. The 1998 indenture contains certain covenants that, among other
things, limit the ability of Primus and its Restricted Subsidiaries (as defined
in the 1998 indenture) to:

  .  incur additional indebtedness and issue preferred stock;

  .  pay dividends or make other distributions;

  .  repurchase Capital Stock (as defined in the 1998 indenture) or
     subordinated indebtedness or make certain other Restricted Payments (as
     defined in the 1998 indenture);

  .  create certain liens;

  .  enter into certain transactions with affiliates;

  .  sell assets;

  .  issue or sell Capital Stock of our Restricted Subsidiaries; or

  .  enter into certain mergers and consolidations.

   These covenants are substantially the same as those contained in the
indenture.

   Events of Default. The 1998 indenture contains customary events of default,
including:

     (i) defaults in the payment of principal, premium or interest;

     (ii) defaults in the compliance with covenants contained in the 1998
  indenture;

     (iii) cross defaults on more than $10 million of other indebtedness;

     (iv) failure to pay more than $10 million of judgments that have not
  been stayed by appeal or otherwise; and

     (v) the bankruptcy of Primus or certain of its subsidiaries.

October 1999 Senior Notes

   General. Our October 1999 senior notes are senior obligations, currently
providing for $250 million in principal amount, which mature on October 15,
2009. The October 1999 senior notes, which were issued pursuant to the October
15, 1999 indenture, accrue interest at a rate of 12 3/4% per annum. Interest is
payable each April 15 and October 15, commencing on April 15, 2000. The
indenture provides for the issuance of up to an additional $75 million in
principal amount of notes under the same indenture, subject to the debt
incurrence provisions thereunder.

   Ranking. The October 1999 notes rank senior in right of payment to any of
our existing and future obligations that are expressly subordinated in right of
payment to the notes and will rank pari passu in right of payment with all of
our other existing and future senior unsecured obligations, including trade
payables. Because we are a holding company that conducts business through
subsidiaries, all existing and future indebtedness and other liabilities and
commitments of our subsidiaries, including trade payables, will be structurally
senior to the October 1999 senior notes.

   Optional Redemption. The October 1999 senior notes are not redeemable prior
to October 15, 2004. Thereafter, the October 1999 senior notes will be
redeemable, in whole or in part, at the redemption prices set

                                       24
<PAGE>

forth in the indenture, plus accrued and unpaid interest to the applicable
redemption date. Specifically, if redeemed during the 12-month period
commencing on October 15 of the years set forth below, the redemption price
will be that amount, expressed as a percentage of the principal amount of the
October 1999 senior notes, set forth below:

<TABLE>
<CAPTION>
                                                                      Redemption
        Year                                                            Price
        ----                                                          ----------
        <S>                                                           <C>
        2004.........................................................  106.375%
        2005.........................................................  104.250%
        2006.........................................................  102.125%
        2007.........................................................  100.000%
</TABLE>

   In addition, prior to October 15, 2002, we may redeem up to 35% of the
originally issued principal amount of the January 1999 senior notes at 112.75%
of the principal amount thereof, plus accrued and unpaid interest and
liquidated damages, if any, through the redemption date, with the net cash
proceeds of one or more Public Equity Offerings (as defined in the October 1999
indenture); provided, that at least 65% of the originally issued principal
amount of the October 1999 senior notes remains outstanding after such
redemption.

   Change of Control. Upon the occurrence of a Change of Control (as defined in
the October 1999 indenture), each holder of October 1999 senior notes will have
the right to require us to repurchase all or any part of such holder's October
1999 senior notes at a purchase price in cash equal to 101% of the principal
amount thereof, plus accrued and unpaid interest and liquidated damages, if
any, to the date of purchase.

   Covenants. The October 1999 indenture contains certain covenants that, among
other things, limit the ability of Primus and its Restricted Subsidiaries (as
defined in the October 1999 indenture) to:

  .  incur additional indebtedness and issue preferred stock;

  .  pay dividends or make other distributions;

  .  repurchase Capital Stock (as defined in the October 1999 indenture) or
     subordinated indebtedness or make certain other Restricted Payments (as
     defined in the October 1999 indenture);

  .  create certain liens;

  .  enter into certain transactions with affiliates;

  .  sell assets;

  .  issue or sell Capital Stock of our Restricted Subsidiaries; or

  .  enter into certain mergers and consolidations.

   These covenants are substantially the same as those contained in the
indenture.

   Events of Default. The October 1999 indenture contains customary events of
default, including:

     (i) defaults in the payment of principal, premium or interest;

     (ii) defaults in the compliance with covenants contained in the October
  1999 indenture;

     (iii) cross defaults on more than $10 million of other indebtedness;

     (iv) failure to pay more than $10 million of judgments that have not
  been stayed by appeal or otherwise; and

     (v) the bankruptcy of Primus or certain of its subsidiaries.

                                       25
<PAGE>

                            DESCRIPTION OF THE NOTES

   The notes were issued under an Indenture dated as of January 29, 1999, as
supplemented by a First Supplemental Indenture dated as of June 30, 1999,
between us, as issuer, and First Union National Bank, as trustee. The following
summary of certain provisions of the indenture does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, all the
provisions of the indenture, including the definitions of certain terms therein
and those terms made a part thereof by the Trust Indenture Act. Whenever
particular sections or defined terms of the indenture not otherwise defined
herein are referred to, such sections or defined terms are incorporated herein
by reference. Copies of the form of the indenture are available upon request
from us or the trustee. The indenture and the form of the note have been filed
as exhibits to the registration statement of which this prospectus is a part.
The indenture and form of note are incorporated by reference as exhibits to the
registration statement of which this prospectus is a part.

General

   The $45.5 million aggregate principal amount of senior notes issued on June
30, 1999 are the subject of this prospectus. The $45.5 million aggregate
principal amount of senior notes issued on June 30, 1999, and the $200 million
aggregate principal amount of notes issued under the indenture on January 29,
1999 are our senior obligations. We have previously issued under other
indentures additional senior notes in the aggregate principal amount of $625
million. The indenture allows for the issuance of an additional $29.5 million
of additional notes which may be of the same series as, and which may vote as a
single class for purpose of the indenture with, the $45.5 million of senior
notes issued on June 30, 1999 and the $200 million of senior notes issued on
January 29, 1999. In addition, the notes have the following characteristics:

<TABLE>
   <S>                                    <C>
   Maturity.............................. January 15, 2009
   Interest.............................. 11 1/4% per annum
   Interest Payable...................... semiannually on January 15 and July 15
                                          of each year, commencing July 15, 1999
</TABLE>

   Interest on the notes will be payable to the person in whose name the note
(or any predecessor note) is registered at the close of business on the
preceding January 1 or July 1 as the case may be. Interest will be computed on
the basis of a 360-day year of twelve 30-day months.

   Principal of, premium, if any, and interest on the notes will be payable by
wire transfer of immediately available funds to the holder of the certificated
notes at the office or agency of Primus (which initially will be the corporate
trust operations office of the trustee at NC 1153, 1125 West W.T. Harris
Boulevard, Charlotte, North Carolina 28262); provided that, at our option,
payment of interest may be made by check mailed to the address of the holders
as such address appears in the note register.

   The notes were issued only in fully registered form, without coupons, in
denominations of $1,000 of principal amount at maturity and any integral
multiple thereof. No service charge will be made for any registration of
transfer or exchange of notes, but we may require payment of a sum sufficient
to cover any transfer tax or other similar governmental charge payable in
connection therewith.

                                       26
<PAGE>

Optional Redemption

   The notes will be redeemable, at our option, in whole or in part, at any
time or from time to time, on or after January 15, 2004 and prior to maturity,
upon not less than 30 nor more than 60 days' prior notice mailed by first class
mail to each holders' last address as it appears in the note register, at the
following redemption prices (expressed in percentages of principal amount
thereof), plus accrued and unpaid interest and liquidated damages, if any,
thereon to the redemption date (subject to the right of holders of record on
the relevant regular record date to receive interest due on an interest payment
date that is on or prior to the redemption date), if redeemed during the 12-
month period commencing on January 15, of the years set forth below:

<TABLE>
<CAPTION>
                                                                      Redemption
   Year                                                                 Price
   ----                                                               ----------
   <S>                                                                <C>
   2004..............................................................  105.625%
   2005..............................................................  103.750%
   2006..............................................................  101.875%
   2007 (and thereafter).............................................  100.000%
</TABLE>

   Notwithstanding the foregoing, prior to January 15, 2002, we may on any one
or more occasions redeem up to 35% of the original principal amount of notes at
a redemption price of 111.25% of the principal amount thereof, plus accrued and
unpaid interest and liquidated damages, if any, thereon to the redemption date,
with the Net Cash Proceeds of one or more Public Equity Offerings; provided (i)
that at least 65% of the original principal amount of notes remains outstanding
immediately after the occurrence of such redemption and (ii) that notice of
such redemption is mailed within 60 days of the closing of each such Public
Equity Offering. (Section 1101)

   In the case of any partial redemption, selection of the notes for redemption
will be made by the trustee in compliance with the requirements of the
principal national securities exchange, if any, on which the notes are listed
or, if the notes are not listed on a national securities exchange, on a pro
rata basis, by lot or by such other method as the trustee in its sole
discretion shall deem to be fair and appropriate; provided that no note of
$1,000 in principal amount at maturity or less shall be redeemed in part. If
any note is to be redeemed in part only, the notice of redemption relating to
such note shall state the portion of the principal amount thereof to be
redeemed. A new note in principal amount equal to the unredeemed portion
thereof will be issued in the name of the holder thereof upon cancellation of
the original note.

Ranking

   The indebtedness evidenced by the notes will rank senior in right of payment
to any of our existing and future obligations that are expressly subordinated
in right of payment to the notes and will rank pari passu in right of payment
with all other of our existing and future senior unsecured obligations,
including trade payables. Because we are a holding company that conducts our
business through our subsidiaries, all existing and future indebtedness and
other liabilities and commitments of our subsidiaries, including trade
payables, will be structurally senior to the notes.

Covenants

 Limitation on Indebtedness

   (a) We will not, and will not permit any of our Restricted Subsidiaries to,
Incur any Indebtedness (other than the notes issued on the Closing Date);
provided, however, that we may Incur Indebtedness if immediately thereafter the
ratio of:

     (i) the aggregate principal amount (or accreted value, as the case may
  be) of Indebtedness of Primus and its Restricted Subsidiaries on a
  consolidated basis outstanding as of the Transaction Date to

     (ii) the Pro Forma Consolidated Cash Flow for the preceding two full
  fiscal quarters multiplied by two, determined on a pro forma basis as if
  any such Indebtedness that had been Incurred and the proceeds

                                       27
<PAGE>

  thereof had been applied at the beginning of such two fiscal quarters,
  would be greater than zero and less than 6.0 to 1.

   (b) Notwithstanding the foregoing, Primus and (except for Indebtedness under
subsections (v), (vii) and (xi) below) any Restricted Subsidiary may Incur each
and all of the following:

     (i) Indebtedness of Primus or any Restricted Subsidiary under one or
  more Credit Facilities in an aggregate principal amount at any one time
  outstanding not to exceed the greater of

       (a) $50 million or

       (b) 65% of Eligible Accounts Receivable, subject to any permanent
    reductions required by any other terms of the indenture;

     (ii) Indebtedness (including Guarantees) Incurred by Primus or a
  Restricted Subsidiary after the Closing Date to finance the cost (including
  the cost of design, development, construction, acquisition, installation or
  integration) of equipment used in the telecommunications business or
  ownership rights with respect to indefeasible rights of use or minimum
  investment units (or similar ownership interests) in domestic or
  transnational fiber optic cable or other transmission facilities, in each
  case purchased or leased by Primus or a Restricted Subsidiary after the
  Closing Date (including acquisitions by way of Capitalized Leases and
  acquisitions of the Capital Stock of a Person that becomes a Restricted
  Subsidiary to the extent of the Fair Market Value (as determined in good
  faith by our board of directors, whose determination shall be conclusive
  and evidenced by a board resolution) of such equipment, ownership rights or
  minimum investment units so acquired);

     (iii) Indebtedness of any Restricted Subsidiary to Primus or
  Indebtedness of Primus or any Restricted Subsidiary to any other Restricted
  Subsidiary; provided that any subsequent issuance or transfer of any
  Capital Stock which results in any such Restricted Subsidiary ceasing to be
  a Restricted Subsidiary or any subsequent transfer of such Indebtedness not
  permitted by this clause (iii) (other than to us or another Restricted
  Subsidiary) shall be deemed, in each case, to constitute the incurrence of
  such Indebtedness, and provided further that Indebtedness to a Restricted
  Subsidiary must be subordinated in right of payment to the notes;

     (iv) Indebtedness of Primus or a Restricted Subsidiary issued in
  exchange for, or the net proceeds of which are used to refinance or refund,
  then outstanding Indebtedness of Primus or a Restricted Subsidiary, other
  than Indebtedness Incurred under clauses (i), (iii), (vi), (viii), (ix) and
  (xii) of this paragraph, and any refinancings thereof in an amount not to
  exceed the amount so refinanced or refunded (plus premiums, accrued
  interest, and reasonable fees and expenses); provided that such new
  Indebtedness shall only be permitted under this clause (iv) if

       (A) in case the notes are refinanced in part or the Indebtedness to
    be refinanced is pari passu with the notes, such new Indebtedness, by
    its terms or by the terms of any agreement or instrument pursuant to
    which such new Indebtedness is issued or remains outstanding, is
    expressly made pari passu with, or subordinate in right of payment to,
    the remaining notes,

       (B) in case the Indebtedness to be refinanced is subordinated in
    right of payment to the notes, such new Indebtedness, by its terms or
    by the terms of any agreement or instrument pursuant to which such new
    Indebtedness is issued or remains outstanding, is made subordinate
    expressly in right of payment to the notes at least to the extent that
    the Indebtedness to be refinanced is subordinated to the notes and

       (C) such new Indebtedness, determined as of the date of Incurrence
    of such new Indebtedness, does not mature prior to the Stated Maturity
    of the Indebtedness to be refinanced or refunded, and the Average Life
    of such new Indebtedness is at least equal to the remaining Average
    Life of the Indebtedness to be refinanced or refunded; and provided
    further that in no event may our Indebtedness be refinanced by means of
    any Indebtedness of any Restricted Subsidiary pursuant to this clause
    (iv);

                                       28
<PAGE>

     (v) Indebtedness not to exceed, at any one time outstanding, 2.00 times

       (A) the Net Cash Proceeds received by us after May 18, 1998 from the
    issuance and sale of our Capital Stock (other than Redeemable Stock) to
    a Person that is not a Subsidiary, to the extent such Net Cash Proceeds
    have not been used pursuant to clause (C)(2) of the first paragraph or
    clauses (iii), (iv) or (vii) of the second paragraph of the "Limitation
    on Restricted Payments" covenant described below to make a Restricted
    Payment and

       (B) the Fair Market Value (as determined in good faith by our board
    of directors, whose determination shall be conclusive and evidenced by a
    board resolution) of property (other than cash and cash equivalents)
    used in a Permitted Business or common equity interests in a Person (the
    property and assets of such Person consisting primarily of
    telecommunications assets) that becomes a Restricted Subsidiary (such
    Fair Market Value being that of the common equity interests received
    pursuant to the transaction resulting in such Person becoming a
    Restricted Subsidiary), and, in each case, received by us after May 18,
    1998 from the issuance or sale of our Capital Stock (other than
    Redeemable Stock) to a Person that is not a Subsidiary to the extent
    such sale of Capital Stock has not been used pursuant to clauses (iii),
    (iv) and (vii) of the second paragraph of the "Limitation on Restricted
    Payments" covenant described below to make a Restricted Payment;
    provided that such Indebtedness does not mature prior to the Stated
    Maturity of the notes and the Average Life of such Indebtedness is
    longer than that of the notes;

     (vi) Indebtedness of Primus or any Restricted Subsidiary

       (A) in respect of performance, surety or appeal bonds or letters of
    credit supporting trade payables, in each case provided in the ordinary
    course of business;

       (B) under Currency Agreements and Interest Rate Agreements; provided
    that such agreements

         (1) are designed solely to protect us or any Restricted
      Subsidiary against fluctuation in foreign currency exchange rates or
      interest rates and

         (2) do not increase the Indebtedness of the obligor outstanding
      at any time other than as a result of fluctuations in foreign
      currency exchange rates or interest rates or by reason of fees,
      indemnities and compensation payable thereunder; and

       (C) arising from agreements providing for indemnification, adjustment
    of purchase price or similar obligations, or from Guarantees or letters
    of credit, surety bonds or performance bonds securing any of our
    obligations or any of our Restricted Subsidiaries pursuant to such
    agreements, in any case Incurred in connection with the disposition of
    any business, assets or Restricted Subsidiary (other than Guarantees of
    Indebtedness Incurred by any Person acquiring all or any portion of such
    business, assets or Restricted Subsidiary for the purpose of financing
    such acquisition), in a principal amount not to exceed the gross
    proceeds actually received by us or any Restricted Subsidiary in
    connection with such disposition;

     (vii) Indebtedness of Primus, to the extent that the net proceeds
  thereof promptly are

       (A) used to repurchase notes tendered in a Change of Control Offer or

       (B) deposited to defease all of the notes as described below under
    "Defeasance or Covenant Defeasance of Indenture";

     (viii) Indebtedness of a Restricted Subsidiary represented by a
  Guarantee of the notes and any other Indebtedness permitted by and made in
  accordance with the "Limitation on Issuances of Guarantees of Indebtedness
  by Restricted Subsidiaries" covenant;

     (ix) Indebtedness of Primus or any Restricted Subsidiary not otherwise
  permitted hereunder in an aggregate principal amount which, when aggregated
  with the principal amount of all other Indebtedness then outstanding and
  incurred pursuant to this clause (ix), does not exceed $200 million at any
  one time outstanding;

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<PAGE>

     (x) Acquired Indebtedness;

     (xi) Strategic Subordinated Indebtedness; and

     (xii) Indebtedness of Primus or any Restricted Subsidiary arising from
  the honoring by a bank or other financial institution of a check or similar
  instrument inadvertently (except in the case of daylight overdrafts) drawn
  against insufficient funds in the ordinary course of business, provided
  that such Indebtedness is extinguished within three business days of
  Incurrence.

   (c) Notwithstanding any other provision of this "Limitation on Indebtedness"
covenant, the maximum amount of Indebtedness that Primus or a Restricted
Subsidiary may Incur pursuant to this "Limitation on Indebtedness" covenant
shall not be deemed to be exceeded with respect to any outstanding Indebtedness
due solely to the result of fluctuations in the exchange rates of currencies.

   (d) For purposes of determining any particular amount of Indebtedness under
this "Limitation on Indebtedness" covenant, Guarantees, Liens or obligations
with respect to letters of credit supporting Indebtedness otherwise included in
the determination of such particular amount shall not be included. For purposes
of determining compliance with this "Limitation on Indebtedness" covenant, in
the event that an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness described in the above clauses, we, in our sole
discretion, shall classify and from time to time may reclassify such item of
Indebtedness and only be required to include the amount and type of such
Indebtedness in one of such clauses. (Section 1011)

 Limitation on Restricted Payments

   We will not, and will not permit any Restricted Subsidiary directly or
indirectly to,

     (i) (A) declare or pay any dividend or make any distribution in respect
  of our Capital Stock to the holders thereof (other than dividends or
  distributions payable solely in shares of Capital Stock (other than
  Redeemable Stock) or in options, warrants or other rights to acquire such
  shares of Capital Stock) or

       (B) declare or pay any dividend or make any distribution in respect
    of the Capital Stock of any Restricted Subsidiary to any Person other
    than dividends and distributions payable to Primus or any Restricted
    Subsidiary or to all holders of Capital Stock of such Restricted
    Subsidiary on a pro rata basis,

     (ii) purchase, redeem, retire or otherwise acquire for value any shares
  of Capital Stock (including options, warrants or other rights to acquire
  such shares of Capital Stock) held by any Person other than a Restricted
  Subsidiary,

     (iii) make any voluntary or optional principal payment, or voluntary or
  optional redemption, repurchase, defeasance, or other acquisition or
  retirement for value of Subordinated Indebtedness or

     (iv) make any Investment, other than a Permitted Investment, in any
  Person (such payments or any other actions described in clauses (i) through
  (iv) being collectively "Restricted Payments") if, at the time of, and
  after giving effect to, the proposed Restricted Payment:

       (A) a Default or Event of Default shall have occurred and be
    continuing;

       (B) Primus could not Incur at least $1.00 of Indebtedness under the
    first paragraph of the "Limitation on Indebtedness" covenant; or

       (C) the aggregate amount expended for all Restricted Payments (the
    amount so expended, if other than in cash, to be determined in good
    faith by our board of directors, whose determination shall be
    conclusive and evidenced by a board resolution) after the date of the
    indenture shall exceed the sum of

         (1) the remainder of

                 (a) 100% of the aggregate amount of the Consolidated Cash
              Flow (determined by excluding income resulting from transfers of
              assets received by Primus or a Restricted Subsidiary from an
              Unrestricted Subsidiary) accrued on a cumulative basis during
              the

                                       30
<PAGE>

              period (taken as one accounting period) beginning on the first
              day of the last fiscal quarter immediately preceding the Closing
              Date and ending on the last day of the last fiscal quarter
              preceding the Transaction Date minus

                 (1) the product of 1.75 times cumulative Consolidated Fixed
              Charges accrued on a cumulative basis during the period (taken
              as one accounting period) beginning on the first day of the last
              fiscal quarter immediately preceding the Closing Date and ending
              on the last day of the last fiscal quarter preceding the
              Transaction Date plus

                 (2) the aggregate Net Cash Proceeds received by us after the
              Closing Date from the issuance and sale of our Capital Stock
              (other than Redeemable Stock) to a Person who is not a
              Subsidiary (except to the extent such Net Cash Proceeds are used
              to incur new Indebtedness outstanding pursuant to clause (v) of
              the paragraph (b) of the "Limitation on Indebtedness" covenant)
              plus

                 (3) the aggregate Net Cash Proceeds received after the
              Closing Date by us from the issuance or sale of debt securities
              that have been converted into or exchanged for Capital Stock
              (other than Redeemable Stock) with the aggregate cash received
              by us at the time of such conversion or exchange plus

                 (4) without duplication of any amount included in the
              calculation of Consolidated Cash Flow, in the case of repayment
              of, or return of capital in respect of, any Investment
              constituting a Restricted Payment made after the Closing Date
              and reducing the amount of Restricted Payments otherwise
              permitted under this clause (C), an amount equal to the lesser
              of the return of capital with respect to such Investment and the
              cost of such Investment, in either case less the cost of the
              disposition of such Investment.

   The foregoing provision shall not be violated by reason of:

     (i) the payment of any dividend within 60 days after the date of
  declaration thereof if, at said date of declaration, such payment would
  comply with the foregoing paragraph;

     (ii) the redemption, repurchase, defeasance or other acquisition or
  retirement for value of Indebtedness that is subordinated in right of
  payment to the notes including premium, if any, and accrued and unpaid
  interest, with the proceeds of, or in exchange for, Indebtedness Incurred
  under clause (iv) of paragraph (b) of the "Limitation on Indebtedness"
  covenant;

     (iii) the repurchase, redemption or other acquisition of Capital Stock
  in exchange for, or out of the proceeds of a substantially concurrent
  offering of, shares of Capital Stock (other than Redeemable Stock) (except
  to the extent such proceeds are used to incur new Indebtedness pursuant to
  clause (v) of paragraph (b) of the "Limitation on Indebtedness" covenant);

     (iv) the acquisition of Indebtedness which is subordinated in right of
  payment to the notes in exchange for, or out of the proceeds of, a
  substantially concurrent offering of, shares of Capital Stock (other than
  Redeemable Stock) (except to the extent such proceeds are used to incur new
  Indebtedness pursuant to clause (v) of paragraph (b) of the "Limitation on
  Indebtedness" covenant);

     (v) payments or distributions to dissenting stockholders pursuant to
  applicable law, pursuant to or in connection with a consolidation, merger
  or transfer of assets that complies with the provisions of the indenture
  applicable to mergers, consolidations and transfers of all or substantially
  all of our property and assets;

     (vi) cash payments in lieu of the issuance of fractional shares issued
  in connection with the exercise of any Common Stock warrants;

     (vii) Investments in Permitted Businesses acquired in exchange for
  Capital Stock (other than Redeemable Stock) or the Net Cash Proceeds from
  the issuance and sale of such Capital Stock (except to the extent such
  proceeds are used to incur new Indebtedness pursuant to clause (v) of
  paragraph (b) of the "Limitation on Indebtedness" covenant); provided that
  such proceeds are so used within 270 days of the receipt thereof;

                                       31
<PAGE>

     (viii) the purchase of any Subordinated Indebtedness at a purchase price
  not greater than 101% of the principal amount thereof, together with
  accrued interest, if any, thereof in the event of a Change of Control in
  accordance with provisions similar to the "Repurchase of Notes upon a
  Change of Control" covenant; provided that prior to such purchase we have
  made the Change of Control offer as provided in such covenant with respect
  to the notes and have purchased all notes validly tendered for payment in
  connection with such Change of Control Offer; and

     (ix) other Restricted Payments not to exceed $5.0 million; provided
  that, except in the case of clause (i), no Default or Event of Default
  shall have occurred and be continuing or occur as a consequence of the
  actions or payments set forth therein. (Section 1012)

   Each Restricted Payment permitted pursuant to the immediately preceding
paragraph (other than (1) a Restricted Payment referred to in clause (ii)
thereof, (2) an exchange of Capital Stock for Capital Stock or an exchange of
Indebtedness for Capital Stock referred to in clauses (iii) or (iv) thereof or
(3) an Investment referred to in clause (vii) thereof) and the Net Cash
Proceeds from any issuance of Capital Stock referred to in clauses (iii), (iv)
and (vii) shall be included in calculating whether the conditions of clause (C)
of the first paragraph of this "Limitation on Restricted Payments" covenant
have been met with respect to any subsequent Restricted Payments.

   Any Restricted Payments made other than in cash shall be valued at Fair
Market Value. The amount of any Investment "outstanding" at any time shall be
deemed to be equal to the amount of such Investment on the date made, less the
return of capital, repayment of loans, and release of Guarantees, in each case
of or to us and our Restricted Subsidiaries with respect to such Investment (up
to the amount of such Investment on the date made).

 Limitation on Dividend and Other Payment Restrictions Affecting Restricted
 Subsidiaries

   So long as any of the notes are outstanding, we will not, and will not
permit any Restricted Subsidiary to, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any Restricted Subsidiary to:

     (i) pay dividends or make any other distributions permitted by
  applicable law on any Capital Stock of such Restricted Subsidiary owned by
  us or any other Restricted Subsidiary,

     (ii) pay any indebtedness owed to us or any other Restricted Subsidiary,

     (iii) make loans or advances to us or any other Restricted Subsidiary,
  or

     (iv) transfer any of its property or assets to us or any other
  Restricted Subsidiary.

   The foregoing provisions shall not restrict any encumbrances or
restrictions:

     (i) existing on the Closing Date in the Indenture or any other
  agreements in effect on the Closing Date, and any extensions, refinancings,
  renewals or replacements of such agreements; provided that the encumbrances
  and restrictions in any such extensions, refinancings, renewals or
  replacements are no less favorable in any material respect to the holders
  of the notes than those encumbrances or restrictions that are then in
  effect and that are being extended, refinanced, renewed or replaced;

     (ii) contained in the terms of any Indebtedness or any agreement
  pursuant to which such Indebtedness was issued if the encumbrance or
  restriction applies only in the event of a payment default or default with
  respect to a financial covenant contained in such Indebtedness or agreement
  and such encumbrance or restriction is not materially more disadvantageous
  to the holders of the notes than is customary in comparable financings (as
  determined by us) and we determine that any such encumbrance or restriction
  will not materially affect our ability to make principal or interest
  payments on the notes;

     (iii) existing under or by reason of applicable law;

     (iv) existing with respect to any Person or the property or assets of
  such Person acquired by us or any Restricted Subsidiary, existing at the
  time of such acquisition and not incurred in contemplation

                                       32
<PAGE>

  thereof, which encumbrances or restrictions are not applicable to any
  Person or the property or assets of any Person other than such Person or
  the property or assets of such Person so acquired;

     (v) in the case of clause (iv) of the first paragraph of this
  "Limitation on Dividend and Other Payment Restrictions Affecting Restricted
  Subsidiaries" covenant,

       (A) that restrict in a customary manner the subletting, assignment
    or transfer of any property or asset that is, or is subject to, a
    lease, purchase mortgage obligation, license, conveyance or contract or
    similar property or asset,

       (B) existing by virtue of any transfer of, agreement to transfer,
    option or right with respect to, or Lien on, any of our property or
    assets or those of any Restricted Subsidiary not otherwise prohibited
    by the indenture or

       (C) arising or agreed to in the ordinary course of business, not
    relating to any Indebtedness, and that do not, individually or in the
    aggregate, detract from the value of our property or assets or those of
    any Restricted Subsidiary in any manner material to Primus or any
    Restricted Subsidiary; or

     (vi) with respect to a Restricted Subsidiary and imposed pursuant to an
  agreement that has been entered into for the sale or disposition of all or
  substantially all of the Capital Stock of, or property and assets of, such
  Restricted Subsidiary.

   Nothing contained in this "Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries" covenant shall prevent us or
any Restricted Subsidiary from (1) creating, incurring, assuming or suffering
to exist any Liens otherwise permitted in the "Limitation on Liens" covenant or
(2) restricting the sale or other disposition of property or assets of Primus
or any of its Restricted Subsidiaries that secure Indebtedness of Primus or any
of its Restricted Subsidiaries. (Section 1013)

 Limitation on the Issuance and Sale of Capital Stock of Restricted
 Subsidiaries

   We will not sell, transfer, convey or otherwise dispose of and will not
permit any Restricted Subsidiary, directly or indirectly, to issue, transfer,
convey, sell, lease or otherwise dispose of any shares of Capital Stock
(including options, warrants or other rights to purchase shares of such Capital
Stock) of such or any other Restricted Subsidiary to any Person except:

     (i) to Primus or a Restricted Subsidiary,

     (ii) issuances of director's qualifying shares or sales to foreign
  nationals of shares of Capital Stock of non-U.S. Restricted Subsidiaries to
  the extent required by law and

     (iii) issuances and sales of Capital Stock of Restricted Subsidiaries if

       (A) the Net Cash Proceeds from such issuance, transfer, conveyance,
    sale, lease or other disposition are applied in accordance with the
    provisions of the "Limitation on Asset Sales" covenant,

       (B) immediately after giving effect to such issuance, transfer,
    conveyance, sale, lease or other disposition, such Restricted
    Subsidiary would no longer constitute a Restricted Subsidiary, and

       (C) any Investment in such Person remaining after giving effect to
    such issuance, transfer, conveyance, sale, lease or other disposition
    would have been permitted to be made under the "Limitation on
    Restricted Payments" covenant if made on the date of such issuance,
    transfer, conveyance, sale, lease or other disposition (valued as
    provided in the definition of "Investment"). (Section 1014)

 Limitation on Transactions with Stockholders and Affiliates

   We will not, and will not permit any Restricted Subsidiary, directly or
indirectly, to enter into, renew or extend any transaction (including, without
limitation, the purchase, sale, lease or exchange of property or

                                       33
<PAGE>

assets, or the rendering of any service) with any holder (or any Affiliate of
such holder) of 5% or more of any class of Capital Stock or with any Affiliate
or any Restricted Subsidiary, unless

     (i) such transaction or series of transactions is on terms no less
  favorable to us or such Restricted Subsidiary than those that could be
  obtained in a comparable arm's-length transaction with a Person that is not
  such a holder or an Affiliate,

     (ii) if such transaction or series of transactions involves aggregate
  consideration in excess of $5.0 million, then such transaction or series of
  transactions is approved by a majority of our board of directors, including
  the approval of a majority of the independent, disinterested directors, and
  is evidenced by a resolution of our board of directors, and

     (iii) if such transaction or series of transactions involves aggregate
  consideration in excess of $25.0 million, then we or such Restricted
  Subsidiary will deliver to the trustee a written opinion as to the fairness
  to us or such Restricted Subsidiary of such transaction from a financial
  point of view from a nationally recognized investment banking firm (or, if
  an investment banking firm is generally not qualified to give such an
  opinion, by a nationally recognized appraisal firm or accounting firm). Any
  such transaction or series of transactions conclusively shall be deemed to
  be on terms no less favorable to us or such Restricted Subsidiary than
  those that could be obtained in an arm's-length transaction if such
  transaction or transactions are approved by a majority of our board of
  directors, including a majority of the independent, disinterested
  directors, and are evidenced by a resolution of our board of directors.

   The foregoing limitation does not limit, and will not apply to

     (i) any transaction between us and any of our Restricted Subsidiaries or
  between Restricted Subsidiaries;

     (ii) the payment of reasonable and customary regular fees to our
  directors who are not our employees;

     (iii) any Restricted Payments not prohibited by the "Limitation on
  Restricted Payments" covenant;

     (iv) transactions provided for in the Employment Agreement as in effect
  on the Closing Date; and

     (v) loans and advances to employees of Primus or any Restricted
  Subsidiary not exceeding at any one time outstanding $2.0 million in the
  aggregate, in the ordinary course of business and in accordance with past
  practice. (Section 1015)

 Limitation on Liens

   Under the terms of the indenture, we will not, and will not permit any
Restricted Subsidiary to, create, incur, assume or suffer to exist any Lien
(other than Permitted Liens) on any of our assets or properties of any
character (including, without limitation, licenses and trademarks), or any
shares of Capital Stock or Indebtedness of any Restricted Subsidiary, without
making effective provision for all of the notes and all other amounts due
under the indenture to be directly secured equally and ratably with (or prior
to) the obligation or liability secured by such Lien. (Section 1016)

 Limitation on Asset Sales

   We will not, and will not permit any Restricted Subsidiary to, make any
Asset Sale unless (i) Primus or the Restricted Subsidiary, as the case may be,
receives consideration at the time of such sale or other disposition at least
equal to the Fair Market Value of the assets sold or disposed of as determined
by the good-faith judgment of our board of directors, which determination, in
each case where such Fair Market Value is greater than $5.0 million, will be
evidenced by a board resolution and (ii) at least 75% of the consideration
received for such sale or other disposition consists of cash or cash
equivalents or the assumption of unsubordinated Indebtedness.

   We shall, or shall cause the relevant Restricted Subsidiary to, within 360
days after the date of receipt of the Net Cash Proceeds from an Asset Sale,
(i) (A) apply an amount equal to such Net Cash Proceeds to

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<PAGE>

permanently repay our unsubordinated Indebtedness or Indebtedness of any
Restricted Subsidiary, in each case owing to a Person other than Primus or any
of its Restricted Subsidiaries or (B) invest an equal amount, or the amount
not so applied pursuant to clause (A) in long-term property or assets of a
nature or type or that are used in a business (or in a company having property
and assets of a nature or type, or engaged in a business) similar or related
to the nature or type of the property and assets of, or the business of,
Primus and its Restricted Subsidiaries existing on the date of such investment
(as determined in good faith by our board of directors, whose determination
shall be conclusive and evidenced by a board resolution) and (ii) apply (no
later than the end of the 360-day period referred to above) such excess Net
Cash Proceeds (to the extent not applied pursuant to clause (i)) as provided
in the following paragraphs of this "Limitation on Asset Sales" covenant. The
amount of such Net Cash Proceeds required to be applied (or to be committed to
be applied) during such 360-day period referred to above in the preceding
sentence and not applied as so required by the end of such period shall
constitute "Excess Proceeds."

   If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Excess Proceeds Offer (as
defined below) totals at least $10.0 million, we must, not later than the 30th
Business Day thereafter, make an offer (an Excess Proceeds Offer) to purchase
from the holders on a pro rata basis an aggregate principal amount of notes
equal to the Proportionate Share of the Excess Proceeds on such date, at a
purchase price equal to 100% of the principal amount of the notes, plus, in
each case, accrued and unpaid interest to the date of purchase (the Excess
Proceeds Payment).

   We shall commence an Excess Proceeds Offer by mailing a notice to the
trustee and each holder stating:

     (i) that the Excess Proceeds Offer is being made pursuant to this
  "Limitation on Asset Sales" covenant and that all notes validly tendered
  will be accepted for payment on a pro rata basis;

     (ii) the purchase price and the date of purchase (which shall be a
  Business Day no earlier than 30 days nor later than 60 days from the date
  such notice is mailed) (the Excess Proceeds Payment Date);

     (iii) that any note not tendered will continue to accrue interest
  pursuant to its terms;

     (iv) that, unless we default in the payment of the Excess Proceeds
  Payment, any note accepted for payment pursuant to the Excess Proceeds
  Offer shall cease to accrue interest on and after the Excess Proceeds
  Payment Date;

     (v) that holders electing to have a note purchased pursuant to the
  Excess Proceeds Offer will be required to surrender the note, together with
  the form entitled "Option of the Holder to Elect Purchase" on the reverse
  side of the note completed, to the Paying Agent at the address specified in
  the notice prior to the close of business on the Business Day immediately
  preceding the Excess Proceeds Payment Date;

     (vi) that holders will be entitled to withdraw their election if the
  Paying Agent receives, not later than the close of business on the third
  Business Day immediately preceding the Excess Proceeds Payment Date, a
  telegram, facsimile transmission or letter setting forth the name of such
  holder, the principal amount of notes delivered for purchase and a
  statement that such holder is withdrawing his election to have such notes
  purchased; and

     (vii) that holders whose notes are being purchased only in part will be
  issued new notes equal in principal amount to the unpurchased portion of
  the notes surrendered; provided that each note purchased and each new note
  issued shall be in a principal amount of $1,000 or integral multiples
  thereof.

   On the Excess Proceeds Payment Date, the Company shall

     (i) accept for payment on a pro rata basis notes or portions thereof
  tendered pursuant to the Excess Proceeds Offer up to the Proportionate
  Share of such Excess Proceeds;

     (ii) deposit with the Paying Agent money sufficient to pay the purchase
  price of all notes or portions thereof so accepted; and

     (iii) deliver, or cause to be delivered, to the trustee all notes or
  portions thereof so accepted together with an officer's certificate
  specifying the notes or portions thereof accepted for payment by Primus.

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<PAGE>

The paying agent promptly shall mail to the holders of notes so accepted
payment in an amount equal to the purchase price, and the trustee promptly
shall authenticate and mail to such holders a new note equal in principal
amount to any unpurchased portion of the note surrendered; provided that each
note purchased and each new note issued shall be in a principal amount of
$1,000 or integral multiples thereof. We will publicly announce the results of
the Excess Proceeds Offer as soon as practicable after the Excess Proceeds
Payment Date. For purposes of this "Limitation on Asset Sales" covenant, the
trustee shall act as the paying agent.

   We will comply with Rule 14e-1 under the Securities Exchange Act of 1934 and
any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable, in the event that we receive such Excess
Proceeds under this "Limitation on Asset Sales" covenant and we are required to
repurchase notes as described above. (Section 1017)

 Limitation on Issuances of Guarantees of Indebtedness by Restricted
 Subsidiaries

   We will not permit any Restricted Subsidiary, directly or indirectly, to
guarantee, assume or in any other manner become liable with respect to any of
our Indebtedness, other than Indebtedness under Credit Facilities incurred
under clauses (i) and (ii) of the "Limitation on Indebtedness" covenant, unless
(i) such Restricted Subsidiary simultaneously executes and delivers a
supplemental indenture to the indenture providing for a Guarantee of the notes
on terms substantially similar to the guarantee of such Indebtedness, except
that if such Indebtedness is by its express terms subordinated in right of
payment to the notes, any such assumption, Guarantee or other liability of such
Restricted Subsidiary with respect to such Indebtedness shall be subordinated
in right of payment to such Restricted Subsidiary's assumption, Guarantee of
other liability with respect to the notes substantially to the same extent as
such Indebtedness is subordinated to the notes and (ii) such Restricted
Subsidiary waives, and will not in any manner whatsoever claim or take the
benefit or advantage of, any rights of reimbursement, indemnity or subrogation
or any other rights against Primus or any other Restricted Subsidiary as a
result of any payment by such Restricted Subsidiary under its Guarantee.

   Notwithstanding the foregoing, any Guarantee by a Restricted Subsidiary may
provide by its terms that it will be released and discharged automatically and
unconditionally upon (i) any sale, exchange or transfer, to any Person not an
Affiliate of us, of all of our and each Restricted Subsidiary's Capital Stock
in, or all or substantially all of the assets of, such Restricted Subsidiary
(which sale, exchange or transfer is not prohibited by the indenture) or (ii)
the release or discharge of the guarantee which resulted in the creation of
such Guarantee, except a discharge or release by or as a result of payment
under such guarantee. (Section 1018)

 Business of the Company

   We will not, and will not permit any Restricted Subsidiary to, be engaged
principally in any business or activity other than a Permitted Business.

 Limitation on Investments in Unrestricted Subsidiaries

   We will not make, and will not permit any of our Restricted Subsidiaries to
make, any Investments in Unrestricted Subsidiaries if, at the time thereof, the
aggregate amount of such Investments would exceed the amount of Restricted
Payments then permitted to be made pursuant to the "Limitation on Restricted
Payments" covenant. Any Investments in Unrestricted Subsidiaries permitted to
be made pursuant to this covenant (i) will be treated as the making of a
Restricted Payment in calculating the amount of Restricted Payments made by
Primus or a Subsidiary and (ii) may be made in cash or property (if made in
property, the Fair Market Value thereof as determined by our board of directors
(whose determination shall be conclusive and evidenced by a board resolution)
shall be deemed to be the amount of such Investment for the purpose of clause
(i)). (Section 1020)

Provision of Financial Statements and Reports

   We will file on a timely basis with the Securities and Exchange Commission,
to the extent such filings are accepted by the Commission and whether or not we
have a class of securities registered under the Securities

                                       36
<PAGE>

Exchange Act of 1934, the annual reports, quarterly reports and other
documents that we would be required to file if we were subject to Section 13
or 15 of the Exchange Act. All such annual reports shall include the
geographic segment financial information contemplated by Item 101(d) of
Regulation S-K under the Securities Act of 1933 and all such quarterly reports
shall provide the same type of interim financial information that, as of the
date of the indenture, currently is our practice to provide. We also will be
required (a) to file with the trustee, and provide to each holder, without
cost to such holder, copies of such reports and documents within 15 days after
the date on which we file such reports and documents with the Commission or
the date on which we would be required to file such reports and documents if
we were so required, and (b) if filing such reports and documents with the
Commission is not accepted by the Commission or is prohibited under the
Exchange Act, to supply at our cost copies of such reports and documents to
any prospective holder promptly upon request. (Section 1009)

Repurchase of Notes upon a Change of Control

   Upon the occurrence of a Change of Control, each holder shall have the
right to require us to repurchase all or any part of its notes at a purchase
price in cash pursuant to the offer described below (the Change of Control
Offer) equal to 101% of the principal amount thereof, plus accrued and unpaid
interest to the date of purchase (subject to the right of holders of record to
receive interest on the relevant interest payment date) (the Change of Control
Payment).

   Within 30 days following any Change of Control, we will mail a notice to
the trustee and each holder stating:

     (i) that a Change of Control has occurred, that the Change of Control
  Offer is being made pursuant to this "Repurchase of Notes upon a Change of
  Control" covenant and that all notes validly tendered will be accepted for
  payment;

     (ii) the purchase price and the date of purchase (which shall be a
  Business Day no earlier than 30 days nor later than 60 days from the date
  such notice is mailed) (the Change of Control Payment Date);

     (iii) that any note not tendered will continue to accrue interest
  pursuant to its terms;

     (iv) that, unless we default in the payment of the Change of Control
  Payment, any note accepted for payment pursuant to the Change of Control
  Offer shall cease to accrue interest on and after the Change of Control
  Payment Date;

     (v) that holders electing to have any note or portion thereof purchased
  pursuant to the Change of Control Offer will be required to surrender such
  note, together with the form entitled "Option of the Holder to Elect
  Purchase" on the reverse side of such note completed, to the Paying Agent
  at the address specified in the notice prior to the close of business on
  the third Business Day immediately preceding the Change of Control Payment
  Date;

     (vi) that holders will be entitled to withdraw their election if the
  Paying Agent receives, not later than the close of business on the third
  Business Day immediately preceding the Change of Control Payment Date, a
  telegram, telex, facsimile transmission or letter setting forth the name of
  such holder, the principal amount of notes delivered for purchase and a
  statement that such holder is withdrawing his election to have such notes
  purchased; and

     (vii) that holders whose notes are being purchased only in part will be
  issued new notes equal in principal amount to the unpurchased portion of
  the notes surrendered; provided that each note purchased and each new note
  issued shall be in a principal amount of $1,000 or integral multiples
  thereof.

   On the Change of Control Payment Date, we shall:

     (i) accept for payment notes or portions thereof tendered pursuant to
  the Change of Control Offer;

     (ii) deposit with the Paying Agent money sufficient to pay the purchase
  price of all notes or portions thereof so accepted; and

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<PAGE>

     (iii) deliver, or cause to be delivered, to the trustee, all notes or
  portions thereof so accepted together with an officer's certificate
  specifying the notes or portions thereof accepted for payment by Primus.

The paying agent promptly shall mail, to the holders of notes so accepted,
payment in an amount equal to the purchase price, and the trustee promptly
shall authenticate and mail to such holders a new note equal in principal
amount of any unpurchased portion of the notes surrendered; provided that each
note purchased and each new note issued shall be in a principal amount of
$1,000 or integral multiples thereof. We will announce publicly the results of
the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date. For purposes of this "Repurchase of Notes upon a Change
of Control" covenant, the trustee shall act as paying agent.

   We will comply with Rule 14e-1 under the Securities Exchange Act of 1934 and
any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in the event that a Change of Control occurs and
we are required to repurchase the notes under this "Repurchase of Notes upon a
Change of Control" covenant. (Section 1010)

   If we are unable to repay all of our indebtedness that would prohibit
repurchase of the notes or are unable to obtain the consents of the holders of
our indebtedness, if any, outstanding at the time of a Change of Control whose
consent would be so required to permit the repurchase of notes, then we will
have breached such covenant. Our failure to repurchase notes at the conclusion
of the Change of Control Offer will constitute an Event of Default without any
waiting period or notice requirements.

   There can be no assurances that we will have sufficient funds available at
the time of any Change of Control to make any debt payment (including
repurchases of notes) required by the foregoing covenant (as well as may be
contained in other of our securities which might be outstanding at the time).
The above covenant requiring us to repurchase the notes will, unless the
consents referred to above are obtained, require us to repay all indebtedness
then outstanding which by its terms would prohibit such note repurchase, either
prior to or concurrently with such note repurchase.

Consolidation, Merger and Sale of Assets

   We will not consolidate with, merge with or into, or sell, convey, transfer,
lease or otherwise dispose of all or substantially all of our property and
assets (as an entirety or substantially an entirety in one transaction or a
series of related transactions) to, any Person or permit any Person to merge
with or into us and we will not permit any of our Restricted Subsidiaries to
enter into any such transaction or series of transactions if such transaction
or series of transactions, in the aggregate, would result in the sale,
assignment, conveyance, transfer, lease or other disposition of all or
substantially all of our properties and assets or of us and our Restricted
Subsidiaries, taken as a whole, to any other Person or Persons, unless:

     (i) we will be the continuing Person, or the Person (if other than us)
  formed by such consolidation or into which we are merged or that acquired
  or leased such property and assets of us will be a corporation, partnership
  or trust organized and validly existing under the laws of the United States
  of America or any jurisdiction thereof and shall expressly assume, by a
  supplemental indenture, executed and delivered to the trustee, all of our
  obligations with respect to the notes and under the indenture;

     (ii) immediately after giving effect to such transaction, no Default or
  Event of Default shall have occurred and be continuing;

     (iii) immediately after giving effect to such transaction on a pro forma
  basis we, or any Person becoming the successor obligor of the notes, as the
  case may be, could Incur at least $1.00 of Indebtedness under paragraph (a)
  of the "Limitation on Indebtedness" covenant; and

     (iv) we deliver to the trustee an Officer's Certificate (attaching the
  arithmetic computations to demonstrate compliance with clause (iii)) and
  Opinion of Counsel stating that such consolidation, merger or transfer and,
  if required in connection with such transaction, the related supplemental
  indenture

                                       38
<PAGE>

  complies with this provision and that all conditions precedent provided for
  herein relating to such transaction have been complied with; provided,
  however, that clause (iii) above does not apply if, in the good faith
  determination of our board of directors, whose determination shall be
  evidenced by a board resolution, the principal purpose of such transaction
  is to change our state of incorporation; and provided further that any such
  transaction shall not have as one of its purposes the evasion of the
  foregoing limitations. (Section 801)

Events of Default

   The following events will be defined as "Events of Default" in the
indenture:

     (a) default in the payment of interest or liquidated damages, if any, on
  the notes when due and payable and continuance of such default for a period
  of 30 days;

     (b) default in the payment of principal of (or premium, if any, on) any
  note at its Stated Maturity, upon acceleration, redemption or otherwise;

     (c) default in the payment of principal or interest or liquidated
  damages, if any, on notes required to be purchased pursuant to an Excess
  Proceeds Offer as described under "Limitation on Asset Sales" or pursuant
  to a Change of Control Offer as described under "Repurchase of Notes upon a
  Change of Control";

     (d) failure to perform or comply with the provisions described under
  "Consolidation, Merger and Sale of Assets";

     (e) default in the performance of or breach of any other of our
  covenants or agreements in the indenture or under the notes (other than a
  default specified in clause (a), (b), (c) or (d) above) and such default or
  breach continues for a period of 30 consecutive days after written notice
  by the trustee or the holders of 25% or more in aggregate principal amount
  of the notes;

     (f) there occurs with respect to any issue or issues of Indebtedness of
  Primus or any Restricted Subsidiary having an outstanding principal amount
  of $10.0 million or more in the aggregate for all such issues of all such
  Persons, whether such Indebtedness now exists or shall hereafter be
  created,

       (A) an event of default that has caused the holder thereof to
    declare such Indebtedness to be due and payable prior to its Stated
    Maturity and such Indebtedness has not been discharged in full or such
    acceleration has not been rescinded or annulled by the earlier of

         (x) the expiration of any applicable grace period or

         (y) the thirtieth day after such default and/or

       (B) the failure to make a principal payment at the final (but not
    any interim) fixed maturity and such defaulted payment shall not have
    been made, waived or extended by the earlier of

         (x) the expiration of any applicable grace period or

         (y) the thirtieth day after such default;

     (g) any final judgment or order (not covered by insurance) for the
  payment of money in excess of $10.0 million in the aggregate for all such
  final judgments or orders against all such Persons (treating any
  deductibles, self-insurance or retention as not so covered) shall be
  rendered against us or any Restricted Subsidiary and shall not be paid or
  discharged, and there shall be any period of 30 consecutive days following
  entry of the final judgment or order that causes the aggregate amount for
  all such final judgments or orders outstanding and not paid or discharged
  against all such Persons to exceed $10.0 million during which a stay of
  enforcement of such final judgment or order, by reason of a pending appeal
  or otherwise, shall not be in effect;

     (h) a court having jurisdiction in the premises enters a decree or order
  for

       (A) relief in respect of us or any of our Significant Subsidiaries
    in an involuntary case under any applicable bankruptcy, insolvency or
    other similar law now or hereafter in effect,

                                       39
<PAGE>

       (B) appointment of a receiver, liquidator, assignee, custodian,
    trustee, sequestrator or similar official of us or any of our
    Significant Subsidiaries or for all or substantially all of our
    property and assets or those of our Significant Subsidiaries or

       (C) the winding up or liquidation of the affairs of Primus or any of
    its Significant Subsidiaries and, in each case, such decree or order
    shall remain unstayed and in effect for a period of 30 consecutive
    days; or

     (i) we or any of its Significant Subsidiaries

       (A) commences a voluntary case under any applicable bankruptcy,
    insolvency or other similar law now or hereafter in effect, or consents
    to the entry of an order for relief in an involuntary case under any
    such law,

       (B) consents to the appointment of or taking possession by a
    receiver, liquidator, assignee, custodian, trustee, sequestrator or
    similar official of us or any of our Significant Subsidiaries or for
    all or substantially all of the property and assets of Primus or any of
    its Significant Subsidiaries or

       (C) effects any general assignment for the benefit of creditors.
    (Section 501)

   If an Event of Default (other than an Event of Default specified in clause
(h) or (i) above) occurs and is continuing under the indenture, the trustee or
the holders of at least 25% in aggregate principal amount of the notes, then
outstanding, by written notice to us (and to the trustee if such notice is
given by the holders), may, and the trustee at the request of such holders
shall, declare the principal of, premium, if any, and accrued but unpaid
interest and liquidated damages, if any, on the notes to be immediately due and
payable. Upon a declaration of acceleration, such principal of, premium, if
any, and accrued interest and liquidation damages, if any, shall be immediately
due and payable. In the event of a declaration of acceleration because an Event
of Default set forth in clause (f) above has occurred and is continuing, such
declaration of acceleration shall be rescinded and annulled automatically if
the Indebtedness that is the subject of such Event of Default has been
discharged or the holders thereof have rescinded their declaration of
acceleration in respect of such Indebtedness, and written notice of such
discharge or rescission, as the case may be, shall have been given to the
trustee by us and countersigned by the holders of such Indebtedness or a
trustee, fiduciary or agent for such holders, within 60 days after such
declaration of acceleration in respect of the notes, and no other Event of
Default has occurred during such 60-day period which has not been cured or
waived during such period. If an Event of Default specified in clause (h) or
(i) above occurs, the principal of, premium, if any, and accrued interest and
liquidated damages, if any, on the notes then outstanding shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the trustee or any holder. The holders of at least a majority in
principal amount of the outstanding notes by written notice to us and to the
trustee, may waive all past defaults and rescind and annul a declaration of
acceleration and its consequences if, among other things, (i) all existing
Events of Default, other than the nonpayment of the principal of, premium, if
any, and accrued and unpaid interest and liquidated damages, if any, on the
notes that have become due solely by such declaration of acceleration, have
been cured or waived and (ii) the rescission, in the opinion of counsel, would
not conflict with any judgment or decree of a court of competent jurisdiction.
(Section 502)

   The holders of at least a majority in aggregate principal amount of the
outstanding notes may direct the time, method and place of conducting any
proceeding for any remedy available to the trustee or exercising any trust or
power conferred on the trustee. However, the trustee may refuse to follow any
direction that conflicts with law or the indenture, that may involve the
trustee in personal liability, or that the trustee determines in good faith may
be unduly prejudicial to the rights of holders of notes not joining in the
giving of such direction and may take any other action it deems proper that is
not inconsistent with any such direction received from holders of notes. No
holder may pursue any remedy with respect to the indenture or the notes unless:

     (i) the holder gives the trustee written notice of a continuing Event of
  Default;

     (ii) the holders of at least 25% in aggregate principal amount of
  outstanding notes make a written request to the trustee to pursue the
  remedy;

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<PAGE>

     (iii) such holder or holders offer the trustee indemnity satisfactory to
  the trustee against any costs, liability or expense;

     (iv) the trustee does not comply with the request within 60 days after
  receipt of the request and the offer of indemnity; and

     (v) during such 60-day period, the holders of a majority in aggregate
  principal amount of the outstanding notes do not give the trustee a
  direction that is inconsistent with the request.

   However, such limitations do not apply to the right of any holder of a note
to receive payment of the principal of, premium, if any, or interest or
liquidated damages, if any, on, such note or to bring suit for the enforcement
of any such payment, on or after the due date expressed in the notes, which
right shall not be impaired or affected without the consent of the holder.
(Sections 507, 508 and 512)

   The indenture will require certain of our officers to certify, on or before
a date not more than 90 days after the end of each fiscal year, that a review
has been conducted of our activities and our performance under the indenture
and that we have fulfilled all obligations thereunder or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
and the nature and status thereof. We also will be obligated to notify the
trustee of any default or defaults in the performance of any covenants or
agreements under the indenture. (Section 1008)

Defeasance or Covenant Defeasance of Indenture

   At our option and at any time, we may elect to have our obligations upon the
notes discharged with respect to the outstanding notes (defeasance). Such
defeasance means that we will be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding notes and to have satisfied all our
other obligations under such notes and the indenture insofar as such notes are
concerned except for

     (i) the rights of holders of outstanding notes to receive payments
  (solely from monies deposited in trust) in respect of the principal of,
  premium, if any, and interest and liquidated damages, if any, on such notes
  when such payments are due,

     (ii) our obligations to issue temporary notes, register the transfer or
  exchange of any notes, replace mutilated, destroyed, lost or stolen notes,
  maintain an office or agency for payments in respect of the notes and
  segregate and hold such payments in trust,

     (iii) the rights, powers, trusts, duties and immunities of the trustee
  and

     (iv) the defeasance provisions of the indenture.

   In addition, at our option and at any time, we may elect to have our
obligations released with respect to certain covenants set forth in the
indenture, and any omission to comply with such obligations will not constitute
a Default or an Event of Default with respect to the notes (covenant
defeasance). (Sections 1301, 1302, and 1303)

   In order to exercise either defeasance or covenant defeasance,

     (i) we must deposit or cause to be deposited irrevocably with the
  trustee, as trust funds in trust, specifically pledged as security for, and
  dedicated solely to, the benefit of the holders of the notes, cash in
  United States dollars, U.S. Government Obligations (as defined in the
  indenture), or a combination thereof, in such amounts as will be
  sufficient, in the opinion of a nationally recognized firm of independent
  public accountants, to pay and discharge the principal of, premium if any,
  and interest and liquidated damages, if any, on the outstanding notes on
  the Stated Maturity (or upon redemption, if applicable) of such principal,
  premium, if any, or installment of interest;

     (ii) no Default or Event of Default with respect to the notes will have
  occurred and be continuing on the date of such deposit or, insofar as an
  event of bankruptcy under clauses (h) or (i) of "Events of Default" above
  is concerned, at any time during the period ending on the 123rd day after
  the date of such deposit;

                                       41
<PAGE>

     (iii) such defeasance or covenant defeasance will not result in a breach
  or violation of, or constitute a default under any material agreement or
  instrument (other than the indenture) to which we are a party or by which
  we are bound;

     (iv) in the case of defeasance, we shall have delivered to the trustee
  an opinion of counsel stating that we have received from, or there has been
  published by, the Internal Revenue Service a ruling, or since January 29,
  1999, there has been a change in applicable federal income tax law, in
  either case to the effect that, and based thereon such opinion shall
  confirm that, the holders of the outstanding notes will not recognize
  income, gain or loss for federal income tax purposes as a result of such
  defeasance and will be subject to federal income tax on the same amounts,
  in the same manner and at the same times as would have been the case if
  such defeasance had not occurred;

     (v) in the case of covenant defeasance, we shall have delivered to the
  trustee an opinion of counsel to the effect that the holders of the notes
  outstanding will not recognize income, gain or loss for federal income tax
  purposes as a result of such covenant defeasance and will be subject to
  federal income tax on the same amounts, in the same manner and at the same
  times as would have been the case if such covenant defeasance had not
  occurred; and

     (vi) we shall have delivered to the trustee an officer's certificate and
  an opinion of counsel, each stating that all conditions precedent provided
  for relating to either the defeasance or the covenant defeasance, as the
  case may be, have been complied with. (Section 1304)

Modification and Waiver

   Modifications and amendments of the indenture may be made by us and the
trustee with the consent of the holders of not less than a majority in
aggregate principal amount of the outstanding notes; provided, however, that no
such modification or amendment may, without the consent of each holder affected
thereby,

     (i) change the Stated Maturity of the principal of, or any installment
  of interest on, any note,

     (ii) reduce the principal amount of, or premium or liquidated damages,
  if any, or interest on any note or extend the time for payment of interest
  on, or alter the redemption provisions of, any note,

     (iii) change the currency of payment of principal of, or premium if any,
  or interest on any note,

     (iv) impair the right of any holder of the notes to receive payment of,
  principal of and interest on such holder's notes on or after the due dates
  therefor or to institute suit for the enforcement of any payment on or
  after the Stated Maturity (or, in the case of a redemption, on or after the
  Redemption Date) of any note,

     (v) reduce the above-stated percentage of outstanding notes the consent
  of whose holders is necessary to modify or amend the indenture,

     (vi) modify any provision of any Guarantee of the notes in a manner
  adverse to the holders of the notes,

     (vii) waive a default in the payment of principal of, premium, if any,
  or accrued and unpaid interest or liquidated damages, if any, on the notes
  or

     (viii) reduce the percentage or aggregate principal amount of
  outstanding notes the consent of whose holders is necessary for waiver of
  compliance with certain provisions of the indenture or for waiver of
  certain defaults.

Governing Law and Submission to Jurisdiction

   The notes and the indenture will be governed by the laws of the State of New
York. We and the trustee will submit to the jurisdiction of the U.S. federal
and New York state courts located in the Borough of Manhattan, City and State
of New York for purposes of all legal actions and proceedings instituted in
connection with the notes and the indenture.

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<PAGE>

Currency Indemnity

   U.S. dollars are the sole currency of account and payment for all sums
payable by us under or in connection with the notes, including damages. Any
amount received or recovered in a currency other than dollars (whether as a
result of, or of the enforcement of, a judgment or order of a court of any
jurisdiction, in our winding-up or dissolution or otherwise) by any holder of a
note in respect of any sum expressed to be due to it from us shall constitute
only a discharge to us to the extent of the dollar amount which the recipient
is able to purchase with the amount so received or recovered in that other
currency on the date of that receipt or recovery (or, if it is not practicable
to make that purchase on that date, on the first date on which it is
practicable to do so). If that dollar amount is less than the dollar amount
expressed to be due to the recipient under any note, we shall indemnify the
recipient against any loss sustained by it as a result. In any event, we shall
indemnify the recipient against the cost of making any such purchase. For the
purposes of this paragraph, it will be sufficient for the holder of a note to
certify in a satisfactory manner (indicating the sources of information used)
that it would have suffered a loss had an actual purchase of dollars been made
with the amount so received in that other currency on the date of receipt or
recovery (or, if a purchase of dollars on such date had not been practicable,
on the first date on which it would have been practicable, it being required
that the need for a change of date be certified in the manner mentioned above).
These indemnities constitute a separate and independent obligation from our
other obligations, shall give rise to a separate and independent cause of
action, shall apply irrespective of any indulgence granted by any holder of a
note and shall continue in full force and effect despite any other judgment,
order, claim or proof for a liquidated amount in respect of any sum due under
any note.

Concerning the Trustee

   The indenture contains certain limitations on the rights of the trustee,
should it become a creditor of us, to obtain payment of claims in certain cases
or to realize on certain property received in respect of any such claim as
security or otherwise. The trustee will be permitted to engage in other
transactions; however, if the trustee acquires any conflicting interest, it
must eliminate such conflict within 90 days, apply to the Securities and
Exchange Commission for permission to continue or resign.

   The holders of a majority in principal amount of the outstanding notes will
have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. The indenture provides that in case an Event of Default
shall occur (which shall not be cured), the trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the trustee will be
under no obligation to exercise any of its rights or powers under the indenture
at the request of any holder of notes, unless such holder shall have offered to
the trustee security and indemnity satisfactory to it against any loss,
liability or expense.

Certain Definitions

   Set forth below is a summary of certain of the defined terms used in the
covenants and other provisions of the indenture. Reference is made to the
indenture for the full definition of all terms as well as any other capitalized
term used herein for which no definition is provided.

   "Acquired Indebtedness" is defined to mean Indebtedness of a Person existing
at the time such Person becomes a Restricted Subsidiary or assumed in
connection with an Asset Acquisition by Primus or a Restricted Subsidiary and
not incurred in connection with, or in anticipation of, such Person becoming a
Restricted Subsidiary or such Asset Acquisition; provided that Indebtedness of
such Person which is redeemed, defeased, retired or otherwise repaid at the
time of or immediately upon the consummation of the transactions by which such
Person becomes a Restricted Subsidiary or such Asset Acquisition shall not be
Indebtedness.

   "Affiliate" is defined to mean, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For purposes of this

                                       43
<PAGE>

definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as applied to
any Person, is defined to mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise. For purposes of the indenture "Affiliate" shall be deemed to include
Mr. K. Paul Singh.

   "Asset Acquisition" is defined to mean (i) an investment by Primus or any of
its Restricted Subsidiaries in any other Person pursuant to which such Person
shall become a Restricted Subsidiary of Primus or shall be merged into or
consolidated with Primus or any of its Restricted Subsidiaries or (ii) an
acquisition by Primus or any of its Restricted Subsidiaries of the property and
assets of any Person other than Primus or any of its Restricted Subsidiaries
that constitute substantially all of a division or line of business of such
Person.

   "Asset Disposition" is defined to mean the sale or other disposition by
Primus or any of its Restricted Subsidiaries (other than to Primus or another
Restricted Subsidiary of Primus) of (i) all or substantially all of the Capital
Stock of any Restricted Subsidiary of Primus or (ii) all or substantially all
of the assets that constitute a division or line of business of Primus or any
of its Restricted Subsidiaries.

   "Asset Sale" is defined to mean any sale, transfer or other disposition
(including by way of merger, consolidation or sale-leaseback transactions) in
one transaction or a series of related transactions by Primus or any of its
Restricted Subsidiaries to any Person other than Primus or any of its
Restricted Subsidiaries of (i) all or any of the Capital Stock of any
Subsidiary, (ii) all or substantially all of the property and assets of an
operating unit or business of Primus or any of its Restricted Subsidiaries or
(iii) any other property and assets of Primus or any of its Restricted
Subsidiaries outside the ordinary course of business of Primus or such
Restricted Subsidiary and, in each case, that is not governed by the provisions
of the indenture applicable to mergers, consolidations and sales of assets of
Primus and which, in the case of any of clause (i), (ii) or (iii) above,
whether in one transaction or a series of related transactions, (a) have a Fair
Market Value in excess of $1.0 million or (b) are for net proceeds in excess of
$1.0 million; provided that (x) sales or other dispositions of inventory,
receivables and other current assets in the ordinary course of business and (y)
sales or other dispositions of assets for consideration at least equal to the
Fair Market Value (as determined in good faith by the board of directors, whose
determination shall be conclusive and evidenced by a board resolution) of the
assets sold or disposed of, to the extent that the consideration received would
constitute property or assets of the kind described in clause (i)(B) of the
second paragraph of the "Limitation on Asset Sales" covenant, shall not be
included within the meaning of "Asset Sale."

   "Average Life" is defined to mean, at any date of determination with respect
to any debt security, the quotient obtained by dividing (i) the sum of the
products of (a) the number of years from such date of determination to the
dates of each successive scheduled principal payment of such debt security and
(b) the amount of such principal payment by (ii) the sum of all such principal
payments.

   "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in The City of New York or
Richmond, Virginia are authorized or obligated by law or executive order to
close.

   "Capital Stock" is defined to mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) in equity of such Person, whether now outstanding
or issued after the date of the indenture, including, without limitation, all
Common Stock and Preferred Stock.

   "Capitalized Lease" is defined to mean, as applied to any Person, any lease
of any property (whether real, personal or mixed) of which the discounted
present value of the rental obligations of such Person as lessee, in conformity
with GAAP, is required to be capitalized on the balance sheet of such Person;
and "Capitalized Lease Obligation" is defined to mean the discounted present
value of the rental obligations under such lease.

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<PAGE>

   "Change of Control" is defined to mean such time as (i) a "person" or
"group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act)
becomes the ultimate "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of more than 50% of the total voting power of the then
outstanding Voting Stock of Primus on a fully diluted basis; (ii) individuals
who at the beginning of any period of two consecutive calendar years
constituted the board of directors (together with any directors who are members
of the board of directors on the date hereof and any new directors whose
election by the board of directors or whose nomination for election by Primus'
stockholders was approved by a vote of at least two-thirds of the members of
the board of directors then still in office who either were members of the
board of directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the members of such board of directors then in office;
(iii) the sale, lease, transfer, conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related transactions, of
all or substantially all of the assets of Primus and its Subsidiaries taken as
a whole to any such "person" or "group" (other than to Primus or a Restricted
Subsidiary); (iv) the merger or consolidation of Primus with or into another
corporation or the merger of another corporation with or into Primus with the
effect that immediately after such transaction any such "person" or "group" of
persons or entities shall have become the beneficial owner of securities of the
surviving corporation of such merger or consolidation representing a majority
of the total voting power of the then outstanding Voting Stock of the surviving
corporation; or (v) the adoption of a plan relating to the liquidation or
dissolution of Primus.

   "Closing Date" is defined to mean January 29, 1999.

   "Common Stock" is defined to mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's common stock, whether now
outstanding or issued after the date of the indenture, including, without
limitation, all series and classes of such common stock.

   "Consolidated Cash Flow" is defined to mean, for any period, the sum of the
amounts for such period of (i) Consolidated Net Income, (ii) Consolidated
Interest Expense, (iii) income taxes, to the extent such amount was deducted in
calculating Consolidated Net Income (other than income taxes (either positive
or negative) attributable to extraordinary and non-recurring gains or losses or
sales of assets), (iv) depreciation expense, to the extent such amount was
deducted in calculating Consolidated Net Income, (v) amortization expense, to
the extent such amount was deducted in calculating Consolidated Net Income, and
(vi) all other non-cash items reducing Consolidated Net Income (excluding any
non-cash charge to the extent that it represents an accrual of or reserve for
cash charges in any future period), less all non-cash items increasing
Consolidated Net Income, all as determined on a consolidated basis for Primus
and its Restricted Subsidiaries in conformity with GAAP.

   "Consolidated Fixed Charges" is defined to mean, for any period,
Consolidated Interest Expense plus dividends declared and payable on Preferred
Stock.

   "Consolidated Interest Expense" is defined to mean, for any period, the
aggregate amount of interest in respect of Indebtedness (including capitalized
interest, amortization of original issue discount on any Indebtedness and the
interest portion of any deferred payment obligation, calculated in accordance
with the effective interest method of accounting; all commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing; the net costs associated with Interest Rate Agreements;
and interest on Indebtedness that is Guaranteed or secured by Primus or any of
its Restricted Subsidiaries) and all but the principal component of rentals in
respect of Capitalized Lease Obligations paid, accrued or scheduled to be paid
or to be accrued by Primus and its Restricted Subsidiaries during such period.

   "Consolidated Net Income" is defined to mean, for any period, the aggregate
consolidated net income (or loss) of Primus and its Restricted Subsidiaries for
such period determined in conformity with GAAP; provided that the following
items shall be excluded in computing Consolidated Net Income (without
duplication): (i) solely for the purposes of calculating the amount of
Restricted Payments that may be made pursuant to clause (C) of the first
paragraph of the "Limitation on Restricted Payments" covenant described above,
the net

                                       45
<PAGE>

income (or loss) of any Person accrued prior to the date it becomes a
Restricted Subsidiary or is merged into or consolidated with Primus or any of
its Restricted Subsidiaries or all or substantially all of the property and
assets of such Person are acquired by Primus or any of its Restricted
Subsidiaries; (ii) any gains or losses (on an after-tax basis) attributable to
Asset Sales; (iii) except for purposes of calculating the amount of Restricted
Payments that may be made pursuant to clause (C) of the first paragraph of the
"Limitation on Restricted Payments" covenant described above, any amount paid
or accrued as dividends on Preferred Stock of Primus or Preferred Stock of any
Restricted Subsidiary owned by Persons other than Primus and any of its
Restricted Subsidiaries; (iv) all extraordinary gains and extraordinary losses;
and (v) the net income (or loss) of any Person (other than net income (or loss)
attributable to a Restricted Subsidiary) in which any Person (other than Primus
or any of its Restricted Subsidiaries) has a joint interest, except to the
extent of the amount of dividends or other distributions actually paid to
Primus or any of its Restricted Subsidiaries by such other Person during such
period.

   "Credit Facilities" is defined to mean, with respect to Primus, one or more
debt facilities or commercial paper facilities with banks or other
institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such
lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part form time to time.

   "Currency Agreement" is defined to mean any foreign exchange contract,
currency swap agreement and any other arrangement and agreement designed to
provide protection against fluctuations in currency values.

   "Default" is defined to mean any event that is, or after notice or passage
of time or both would be, an Event of Default.

   "Eligible Accounts Receivable" is defined to mean the accounts receivables
(net of any reserves and allowances for doubtful accounts in accordance with
GAAP) of any Person that are not more than 60 days past their due date and that
were entered into in the ordinary course of business on normal payment terms as
shown on the most recent consolidated balance sheet of such Person filed with
the Securities and Exchange Commission, all in accordance with GAAP.

   "Eligible Institution" is defined to mean a commercial banking institution
that has combined capital and surplus of not less than $500 million or its
equivalent in foreign currency, whose debt is rated "A-3" or higher or "A-" or
higher according to Moody's Investors Service, Inc. or Standard & Poor's
Ratings Group (or such similar equivalent rating by at least one "nationally
recognized statistical rating organization" (as defined in Rule 436 under the
Securities Act)) respectively, at the time as of which any investment or
rollover therein is made.

   "Employment Agreement" is defined to mean the employment agreement between
Primus and Mr. K. Paul Singh, dated June 1994.

   "Existing Indebtedness" is defined to mean Indebtedness outstanding on the
date of the indenture.

   "Fair Market Value" is defined to mean, with respect to any asset or
property, the sale value that would be obtained in an arm's length transaction
between an informed and willing seller under no compulsion to sell and an
informed and willing buyer.

   "GAAP" is defined to mean generally accepted accounting principles in the
United States of America as in effect from time to time, including, without
limitation, those set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as approved by
a significant segment of the accounting profession.

                                       46
<PAGE>

   "Government Securities" is defined to mean direct obligations of, or
obligations guaranteed by, the United States of America for the payment of
which obligations or guarantee the full faith and credit of the United States
is pledged.

   "Guarantee" is defined to mean any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such other Person (whether
arising by virtue of partnership arrangements, or by agreements to keep-well,
to purchase assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise) or (ii) entered into for
purposes of assuring in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); provided that the term "Guarantee"
shall not include endorsements for collection or deposit in the ordinary course
of business. The term "Guarantee" used as a verb has a corresponding meaning.

   "Incur" is defined to mean, with respect to any Indebtedness, to incur,
create, issue, assume, Guarantee or otherwise become liable for or with respect
to, or become responsible for, the payment of, contingently or otherwise, such
Indebtedness, including an Incurrence of Indebtedness by reason of the
acquisition of more than 50% of the Capital Stock of any Person; provided that
neither the accrual of interest nor the accretion of original issue discount
shall be considered an Incurrence of Indebtedness.

   "Indebtedness" is defined to mean, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto), (iv) all obligations of such
Person to pay the deferred and unpaid purchase price of property or services,
which purchase price is due more than six months after the date of placing such
property in service or taking delivery and title thereto or the completion of
such services, except Trade Payables, (v) all obligations of such Person as
lessee under Capitalized Leases, (vi) all Indebtedness of other Persons secured
by a Lien on any asset of such Person, whether or not such Indebtedness is
assumed by such Person; provided that the amount of such Indebtedness shall be
the lesser of (A) the Fair Market Value of such asset at such date of
determination and (B) the amount of such Indebtedness, (vii) all Indebtedness
of other Persons Guaranteed by such Person to the extent such Indebtedness is
Guaranteed by such Person, (viii) the maximum fixed redemption or repurchase
price of Redeemable Stock of such Person at the time of determination and (ix)
to the extent not otherwise included in this definition, obligations under
Currency Agreements and Interest Rate Agreements. The amount of Indebtedness of
any Person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and, with respect to contingent
obligations, the maximum liability upon the occurrence of the contingency
giving rise to the obligation, provided (i) that the amount outstanding at any
time of any Indebtedness issued with original issue discount is the face amount
of such Indebtedness less the remaining unamortized portion of the original
issue discount of such Indebtedness at such time as determined in conformity
with GAAP and (ii) that Indebtedness shall not include any liability for
federal, state, local or other taxes.

   "Interest Rate Agreement" is defined to mean interest rate swap agreements,
interest rate cap agreements, interest rate insurance, and other arrangements
and agreements designed to provide protection against fluctuations in interest
rates.

   "Investment" in any Person is defined to mean any direct or indirect
advance, loan or other extension of credit (including, without limitation, by
way of Guarantee or similar arrangement; but excluding advances to customers in
the ordinary course of business that are, in conformity with GAAP, recorded as
accounts receivable on the balance sheet of Primus or its Restricted
Subsidiaries) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the
account or use

                                       47
<PAGE>

of others), or any purchase or acquisition of Capital Stock, bonds, notes,
debentures or other similar instruments issued by, such Person. For purposes of
the definition of "Unrestricted Subsidiary," the "Limitation on Restricted
Payments" covenant and the "Limitation on Issuance and Sale of Capital Stock of
Restricted Subsidiaries" covenant described above, (i) "Investment" shall
include (a) the Fair Market Value of the assets (net of liabilities) of any
Restricted Subsidiary of Primus at the time that such Restricted Subsidiary of
Primus is designated an Unrestricted Subsidiary and shall exclude the Fair
Market Value of the assets (net of liabilities) of any Unrestricted Subsidiary
at the time that such Unrestricted Subsidiary is designated a Restricted
Subsidiary of Primus and (b) the Fair Market Value, in the case of a sale of
Capital Stock in accordance with the "Limitation on the Issuance and Sale of
Capital Stock of Restricted Subsidiaries" covenant such that a Person no longer
constitutes a Restricted Subsidiary, of the remaining assets (net of
liabilities) of such Person after such sale, and shall exclude the Fair Market
Value of the assets (net of liabilities) of any Unrestricted Subsidiary at the
time that such Unrestricted Subsidiary is designated a Restricted Subsidiary of
Primus and (ii) any property transferred to or from an Unrestricted Subsidiary
shall be valued at its Fair Market Value at the time of such transfer, in each
case as determined by the board of directors in good faith.

   "Lien" is defined to mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof, any sale with recourse against the seller or any Affiliate of the
seller, or any agreement to give any security interest).

   "Marketable Securities" is defined to mean: (i) Government Securities which
have a remaining weighted average life to maturity of not more than one year
from the date of Investment therein; (ii) any time deposit account, money
market deposit and certificate of deposit maturing not more than 180 days after
the date of acquisition issued by, or time deposit of, an Eligible Institution;
(iii) commercial paper maturing not more than 90 days after the date of
acquisition issued by a corporation (other than an Affiliate of Primus) with a
rating, at the time as of which any investment therein is made, of "P-1" or
higher according to Moody's Investors Service, Inc., or "A-1" or higher
according to Standard & Poor's Rating Group (or such similar equivalent rating
by at least one "nationally recognized statistical rating organization" (as
defined in Rule 436 under the Securities Act)); (iv) any banker's acceptance or
money market deposit accounts issued or offered by an Eligible Institution; (v)
repurchase obligations with a term of not more than 7 days for Government
Securities entered into with an Eligible Institution; and (vi) any fund 95% of
the assets of which consist of investments of the types described in clauses
(i) through (v) above.

   "Net Cash Proceeds" is defined to mean, (a) with respect to any Asset Sale,
the proceeds of such Asset Sale in the form of cash or cash equivalents,
including payments in respect of deferred payment obligations (to the extent
corresponding to the principal, but not interest, component thereof) when
received in the form of cash or cash equivalents (except to the extent such
obligations are financed or sold with recourse to Primus or any Restricted
Subsidiary of Primus) and proceeds from the conversion of other property
received when converted to cash or cash equivalents, net of (i) brokerage
commissions and other fees and expenses (including fees and expenses of counsel
and investment bankers) related to such Asset Sale, (ii) provisions for all
taxes (whether or not such taxes will actually be paid or are payable) as a
result of such Asset Sale without regard to the consolidated results of
operations of Primus and its Restricted Subsidiaries, taken as a whole, (iii)
payments made to repay Indebtedness or any other obligation outstanding at the
time of such Asset Sale that either (A) is secured by a Lien on the property or
assets sold or (B) is required to be paid as a result of such sale and (iv)
appropriate amounts to be provided by Primus or any Restricted Subsidiary of
Primus as a reserve against any liabilities associated with such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale, all as
determined in conformity with GAAP and (b) with respect to any issuance or sale
of Capital Stock, the proceeds of such issuance or sale in the form of cash or
cash equivalents, including payments in respect of deferred payment obligations
(to the extent corresponding to the principal, but not interest, component
thereof) when received in the form of cash or cash equivalents (except to

                                       48
<PAGE>

the extent such obligations are financed or sold with recourse to Primus or any
Restricted Subsidiary of Primus) and proceeds from the conversion of other
property received when converted to cash or cash equivalents, net of attorney's
fees, accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees incurred in connection
with such issuance or sale and net of taxes paid or payable as a result
thereof.

   "Permitted Business" is defined to mean the business of (i) transmitting, or
providing services relating to the transmission of, voice, video or data
through owned or leased transmission facilities, (ii) constructing, creating,
developing or marketing communications related network equipment, software and
other devices for use in a telecommunications business or (iii) evaluating,
participating or pursuing any other activity or opportunity that is related
primarily to those identified in clause (i) or (ii) above; provided that the
determination of what constitutes a Permitted Business shall be made in good
faith by the board of directors of Primus, whose determination shall be
conclusive and evidenced by a board resolution.

   "Permitted Investment" is defined to mean (i) an Investment in a Restricted
Subsidiary or a Person which will, upon the making of such Investment, become a
Restricted Subsidiary or be merged or consolidated with or into or transfer or
convey all or substantially all its assets to, Primus or a Restricted
Subsidiary; (ii) any Investment in Marketable Securities; (iii) payroll, travel
and similar advances to cover matters that are expected at the time of such
advances ultimately to be treated as expenses in accordance with GAAP; (iv)
loans or advances to employees made in the ordinary course of business in
accordance with past practice of Primus or its Restricted Subsidiaries and that
do not in the aggregate exceed $1.0 million at any time outstanding; (v) stock,
obligations or securities received in satisfaction of judgments; (vi)
Investments in any Person received as consideration for Asset Sales to the
extent permitted under the "Limitation on Asset Sales" covenant; and (vii)
Investments in any Person at any one time outstanding (measured on the date
each such Investment was made without giving effect to subsequent changes in
value) in an aggregate amount not to exceed 10.0% of Primus' total consolidated
assets.

   "Permitted Liens" is defined to mean (i) Liens for taxes, assessments,
governmental charges or claims that are being contested in good faith by
appropriate legal proceedings promptly instituted and diligently conducted and
for which a reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made; (ii) statutory Liens of
landlords and carriers, warehousemen, mechanics, suppliers, materialmen,
repairmen or other similar Liens arising in the ordinary course of business and
with respect to amounts not yet delinquent or being contested in good faith by
appropriate legal proceedings promptly instituted and diligently conducted and
for which a reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made; (iii) Liens incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security; (iv)
Liens incurred or deposits made to secure the performance of tenders, bids,
leases, statutory or regulatory obligations, bankers' acceptances, surety and
appeal bonds, government contracts, performance and return-of-money bonds and
other obligations of a similar nature incurred in the ordinary course of
business (exclusive of obligations for the payment of borrowed money); (v)
easements, rights-of-way, municipal and zoning ordinances and similar charges,
encumbrances, title defects or other irregularities that do not materially
interfere with the ordinary course of business of Primus or any of its
Restricted Subsidiaries; (vi) Liens (including extensions and renewals thereof)
upon real or personal property purchased or leased after the Closing Date;
provided that (a) such Lien is created solely for the purpose of securing
indebtedness Incurred in compliance with the "Limitation on Indebtedness"
covenant (1) to finance the cost (including the cost of design, development,
construction, acquisition, installation or integration) of the item of property
or assets subject thereto and such Lien is created prior to, at the time of or
within six months after the later of the acquisition, the completion of
construction or the commencement of full operation of such property or (2) to
refinance any Indebtedness previously so secured, (b) the principal amount of
the Indebtedness secured by such Lien does not exceed 100% of such cost and (c)
any such Lien shall not extend to or cover any property or assets other than
such item of property or assets and any improvements on such item; (vii) leases
or subleases granted to others that do not materially interfere with the
ordinary course of business of Primus and its

                                       49
<PAGE>

Restricted Subsidiaries, taken as a whole; (viii) Liens encumbering property or
assets under construction arising from progress or partial payments by a
customer of Primus or its Restricted Subsidiaries relating to such property or
assets; (ix) any interest or title of a lessor in the property subject to any
Capitalized Lease or operating lease; (x) Liens arising from filing Uniform
Commercial Code financing statements regarding leases; (xi) Liens on property
of, or on shares of stock or Indebtedness of, any corporation existing at the
time such corporation becomes, or becomes a part of, any Restricted Subsidiary;
provided that such Liens do not extend to or cover any property or assets of
Primus or any Restricted Subsidiary other than the property or assets acquired
and were not created in contemplation of such transaction; (xii) Liens in favor
of Primus or any Restricted Subsidiary; (xiii) Liens arising from the rendering
of a final judgment or order against Primus or any Restricted Subsidiary of
Primus that does not give rise to an Event of Default; (xiv) Liens securing
reimbursement obligations with respect to letters of credit that encumber
documents and other property relating to such letters of credit and the
products and proceeds thereof; (xv) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties in
connection with the importation of goods; (xvi) Liens encumbering customary
initial deposits and margin deposits and other Liens that are either within the
general parameters customary in the industry or incurred in the ordinary course
of business, in each case, securing Indebtedness under Interest Rate Agreements
and Currency Agreements; (xvii) Liens arising out of conditional sale, title
retention, consignment or similar arrangements for the sale of goods entered
into by Primus or any of its Restricted Subsidiaries in the ordinary course of
business in accordance with the past practices of Primus and its Restricted
Subsidiaries prior to the Closing Date; (xviii) Liens existing on the Closing
Date or securing the notes or any Guarantee of the notes; (xix) Liens granted
after the Closing Date on any assets or Capital Stock of Primus or its
Restricted Subsidiaries created in favor of the holders; (xx) Liens securing
Indebtedness which is incurred to refinance secured Indebtedness which is
permitted to be Incurred under clause (iv) of paragraph (b) of the "Limitation
on Indebtedness" covenant; provided that such Liens do not extend to or cover
any property or assets of Primus or any Restricted Subsidiary other than the
property or assets securing the Indebtedness being refinanced; (xxi) Liens on
the property or assets of a Restricted Subsidiary securing Indebtedness of such
Subsidiary which Indebtedness is permitted under the indenture; and (xxii)
Liens securing Indebtedness under Credit Facilities incurred in compliance with
clauses (i) and (ii) of paragraph (b) of the "Limitation on Indebtedness"
covenant.

   "Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.

   "Preferred Stock" is defined to mean, with respect to any Person, any and
all shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's preferred or preference stock,
whether now outstanding or issued after the date of the indenture, including,
without limitation, all series and classes of such preferred or preference
stock.

   "Pro Forma Consolidated Cash Flow" is defined to mean, for any period, the
Consolidated Cash Flow of Primus for such period calculated on a pro forma
basis to give effect to any Asset Disposition or Asset Acquisition not in the
ordinary course of business (including acquisitions of other Persons by merger,
consolidation or purchase of Capital Stock) during such period as if such Asset
Disposition or Asset Acquisition had taken place on the first day of such
period.

   "Proportionate Share" is defined to mean, as of any date of calculation, an
amount equal to (i) the outstanding principal amount of notes as of such date,
divided by (ii) the sum of the outstanding principal amount of notes as of such
date plus the outstanding principal amount as of such date of all other
Indebtedness (other than Subordinated Indebtedness) of the Issuer the terms of
which obligate the issuer to make a purchase offer in connection with the
relevant Excess Proceeds or the Asset Sale giving rise thereto; provided that
if the terms of such other Indebtedness do not provide for proration of the
amount of such Indebtedness to be purchased with Excess Proceeds, the
"Proportionate Share" in respect of the notes may be zero.

   "Public Equity Offering" is defined to mean an underwritten primary public
offering of Common Stock of Primus pursuant to an effective registration
statement under the Securities Act.

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<PAGE>

   "Purchase Money Obligations" is defined to mean, with respect to each
Person, obligations, other than those under Capitalized Leases, Incurred or
assumed in the ordinary course of business in connection with the purchase of
property to be used in the business of such Person.

   "Redeemable Stock" is defined to mean any class or series of Capital Stock
of any Person that by its terms or otherwise is (i) required to be redeemed
prior to the Stated Maturity of the notes, (ii) redeemable at the option of the
holder of such class or series of Capital Stock at any time prior to the Stated
Maturity of the notes or (iii) convertible into or exchangeable for Capital
Stock referred to in clause (i) or (ii) above or Indebtedness having a
scheduled maturity prior to the Stated Maturity of the notes; provided that any
Capital Stock that would not constitute Redeemable Stock but for provisions
thereof giving holders thereof the right to require such Person to repurchase
or redeem such Capital Stock upon the occurrence of an "asset sale" or "change
of control" occurring prior to the Stated Maturity of the notes shall not
constitute Redeemable Stock if the "asset sale" or "change of control"
provisions applicable to such Capital Stock are no more favorable to the
holders of such Capital Stock than the provisions contained in "Limitation on
Asset Sales" and "Repurchase of Notes upon a Change of Control" covenants
described above and such Capital Stock specifically provides that such Person
will not repurchase or redeem any such stock pursuant to such provision prior
to Primus' offer to repurchase such notes as are required to be repurchased
pursuant to the "Limitation on Asset Sales" and "Repurchase of Notes upon a
Change of Control" covenants described above.

   "Restricted Subsidiary" is defined to mean any Subsidiary of Primus other
than an Unrestricted Subsidiary.

   "Significant Subsidiary" is defined to mean, at any date of determination,
any Subsidiary of Primus that, together with its Subsidiaries, (i) for the most
recent fiscal year of Primus, accounted for more than 10% of the consolidated
revenues of Primus or (ii) as of the end of such fiscal year, was the owner of
more than 10% of the consolidated assets of Primus, all as set forth on the
most recently available consolidated financial statements of Primus for such
fiscal year.

   "Stated Maturity" is defined to mean, (i) with respect to any debt security,
the date specified in such debt security as the fixed date on which the final
installment of principal of such debt security is due and payable and (ii) with
respect to any scheduled installment of principal of or interest on any debt
security, the date specified in such debt security as the fixed date on which
such installment is due and payable.

   "Strategic Subordinated Indebtedness" is defined to mean Indebtedness of
Primus Incurred to finance the acquisition of a Person engaged in a business
that is related, ancillary or complementary to the business conducted by Primus
or any of its Restricted Subsidiaries, which Indebtedness by its terms, or by
the terms of any agreement or instrument pursuant to which such Indebtedness is
Incurred, (i) is expressly made subordinate in right of payment to the notes
and (ii) provides that no payment of principal, premium or interest on, or any
other payment with respect to, such Indebtedness may be made prior to the
payment in full of all of Primus' obligations under the notes; provided that
such Indebtedness may provide for and be repaid at any time from the proceeds
of a capital contribution, the sale of Common Stock (other than Redeemable
Stock) of Primus, or other Strategic Subordinated Indebtedness Incurred, after
the Incurrence of such Indebtedness.

   "Subordinated Indebtedness" is defined to mean Indebtedness of Primus
subordinated in right of payment to the notes.

   "Subsidiary" is defined to mean, with respect to any Person, any
corporation, association or other business entity of which more than 50% of the
outstanding Voting Stock is owned, directly or indirectly, by such Person and
one or more other Subsidiaries of such Person.

   "Trade Payables" is defined to mean any accounts payable or any other
indebtedness or monetary obligation to trade creditors created, assumed or
Guaranteed by Primus or any of its Restricted Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods and
services.

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<PAGE>

   "Transaction Date" is defined to mean, with respect to the Incurrence of any
Indebtedness by Primus or any of its Restricted Subsidiaries, the date such
Indebtedness is to be Incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.

   "Unrestricted Subsidiary" is defined to mean (i) any Subsidiary of the
Company that at the time of determination shall be designated an Unrestricted
Subsidiary by the board of directors in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The board of directors may designate
any Restricted Subsidiary of Primus (including any newly acquired or newly
formed Subsidiary of Primus) to be an Unrestricted Subsidiary unless such
Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property
of, Primus or any Restricted Subsidiary; provided that (A) either (I) the
Subsidiary to be so designated has total assets of $1,000 or less or (II) if
such Subsidiary has assets greater than $1,000, that such designation would be
permitted under the "Limitation on Restricted Payments" covenant described
above, and (B) such Subsidiary is not liable, directly or indirectly, with
respect to any Indebtedness other than Unrestricted Subsidiary Indebtedness.
The board of directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary of Primus; provided that immediately after giving effect
to such designation (x) Primus could Incur $1.00 of additional Indebtedness
under the first paragraph of the "Limitation on Indebtedness" covenant
described above and (y) no Default or Event of Default shall have occurred and
be continuing. Any such designation by the board of directors shall be
evidenced to the trustee by promptly filing with the trustee a copy of the
board resolution giving effect to such designation and an officer's certificate
certifying that such designation complied with the foregoing provisions.

   "Unrestricted Subsidiary Indebtedness" is defined to mean Indebtedness of
any Unrestricted Subsidiary (i) as to which neither Primus nor any Restricted
Subsidiary is directly or indirectly liable (by virtue of Primus or any such
Restricted Subsidiary being the primary obligor on, guarantor of, or otherwise
liable in any respect to, such Indebtedness), and (ii) which, upon the
occurrence of a default with respect thereto, does not result in, or permit any
holder of any Indebtedness of Primus or any Restricted Subsidiary to declare, a
default on such Indebtedness of Primus or any Restricted Subsidiary or cause
the payment thereof to be accelerated or payable prior to its Stated Maturity.

   "U.S. Subsidiary" is defined to mean any corporation or other entity
incorporated or organized under the laws of the United States or any state
thereof.

   "Voting Stock" is defined to mean with respect to any Person, Capital Stock
of any class or kind ordinarily having the power to vote for the election of
directors, managers or other voting members of the governing body of such
Person.

   "Wholly Owned," with respect to any Subsidiary, is defined to mean a
Subsidiary of Primus if all of the outstanding Capital Stock in such Subsidiary
(other than any director's qualifying shares or Investments by foreign
nationals mandated by applicable law) is owned by Primus or one or more Wholly
Owned Subsidiaries of Primus.

Registration Rights and Liquidated Damages

   Primus entered into an agreement with the selling noteholder, pursuant to
which we agreed to file with the Securities and Exchange Commission, subject to
the provisions described below, the registration statement on an appropriate
form permitting registration of the notes to permit resales of the notes held
by the selling noteholder. If we do not cause the registration statement to be
declared effective by the Securities and Exchange Commission by October 28,
1999 (a Registration Default), additional cash interest (Liquidated Damages)
shall accrue on the notes commencing upon the occurrence of such Registration
Default in an amount equal to .50% per annum of the principal amount of notes.
The amount of Liquidated Damages shall increase by an additional .50% per annum
of the principal amount of notes with respect to each subsequent 90-day period
(or portion thereof) until the Registration Default has been cured, up to a
maximum rate of Liquidated Damages of 1.5% per annum of the principal amount of
notes. Immediately upon the cure of the

                                       52
<PAGE>

Registration Default, there shall be no further accrual of Liquidated Damages
with respect to the notes. We also agreed to pay any reasonable and customary
expense incurred by the selling noteholder in the sale of such notes in a
private placement or brokered transaction pursuant to which all or
substantially all of the notes are sold in one (or one series of) non-
registered or registered transactions in accordance with the Securities Act and
applicable state securities laws.

                                       53
<PAGE>

                       FEDERAL INCOME TAX CONSIDERATIONS

   The following is a general discussion of certain material United States
federal income tax consequences of the exchange of the existing notes for the
registered notes, and the ownership and disposition of the registered notes for
holders who acquire the registered notes in exchange for existing notes. This
discussion is limited to holders who hold both the existing notes and the
registered notes as capital assets, within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended.

   This discussion does not address all aspects of United States federal income
taxation that may be applicable to investors in light of their particular
circumstances, or to investors subject to special treatment under United States
federal income tax law (including, without limitation, certain financial
institutions, insurance companies, tax-exempt entities, dealers in securities,
persons who have acquired notes as part of a straddle, hedge, conversion
transaction or other integrated investment or constructive sale or persons
whose functional currency is not the United States dollar).

   This discussion is based on provisions of the Code, Treasury regulations
promulgated thereunder, and administrative and judicial interpretations
thereof, all as in effect on the date hereof and all of which are subject to
change, possibly with retroactive effect.

   EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO SUCH INVESTOR OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE NOTES INCLUDING THE APPLICABILITY OF ANY FEDERAL ESTATE OR
GIFT TAX LAWS, ANY STATE, LOCAL OR FOREIGN TAX LAWS, ANY CHANGES IN APPLICABLE
TAX LAWS AND ANY PENDING OR PROPOSED LEGISLATION OR REGULATIONS.

   As used in this section, the term "U.S. holder" means a beneficial owner of
a Note that is, for United States federal income tax purposes,

  .  a citizen or resident of the United States,

  .  a corporation or partnership created or organized under the laws of the
     United States or of any political subdivision thereof,

  .  an estate the income of which is subject to United States federal income
     taxation regardless of its source, or

  .  a trust, if a United States court is able to exercise primary
     supervision over the administration of such trust and one or more United
     States persons have the authority to control all substantial decisions
     of such trust or the trust has a valid election in effect under
     applicable U.S. Treasury regulations to be treated as a U.S. person.

   The term "non-U.S. holder" means a beneficial owner of a Note other than a
U.S. Holder.

U.S. Taxation of U.S. Holders

   Payments of Interest. Stated interest payable on the registered notes
generally will be included in the gross income of a U.S. holder as ordinary
interest income at the time accrued or received, in accordance with such U.S.
holder's method of accounting for United States federal income tax purposes.

   We may be required to pay liquidation damages to U.S. holders of the
registered notes. Although the matter is not free from doubt, we intend to take
the position that a U.S. holder of a registered note should be required to
report the liquidated damages as ordinary income for United States federal
income tax purposes when the liquidated damages accrue or are received in
accordance with the holder's method of accounting. It is possible, however,
that the Internal Revenue Service may take a different position, in which case
the timing and amount of income may be different.


                                       54
<PAGE>

   Disposition of the Notes. The exchange of the existing notes for the
registered notes will not be a taxable event for U.S. federal income tax
purposes. The holding period of the registered note will include the U.S.
holder's holding period of the existing note, and the basis of the registered
note will be the same as the basis in the existing note immediately before the
exchange.

   On the sale, exchange, redemption, retirement at maturity or other
disposition of a registered note, a U.S. holder generally will recognize
capital gain or loss (except as noted in the next paragraph) equal to the
difference between the amount realized and the U.S. holder's adjusted tax basis
in the registered note. The capital gain or loss will be long-term capital gain
or loss if the holding period for the registered note (that includes the
holding period for the existing note) exceeds one year at the time of the
disposition. Generally, the maximum tax rate for individuals on long term
capital gain is 20%.

   To the extent a portion of the amount realized on the disposition of the
registered note is attributable to interest, it will be taxed as ordinary
income and not capital gain. A portion of the amount realized will be
attributable to interest if there is accrued but unpaid interest at the time of
the disposition, or if the U.S. holder purchased the existing notes (other than
at original issuance) at a market discount, as defined in the Internal Revenue
Code of 1986, as amended. If a U.S. holder bought an existing note for an
amount less than the stated redemption price at maturity, he or she should
consult with his or her tax advisor to determine if there is market discount in
the registered note, and the impact of the market discount on the taxation of
the holding and disposition of the registered note.

 Bond Premium

   If a U.S. holder purchased an existing note for an amount in excess of the
amount payable at the maturity date, the U.S. holder may deduct the excess as
amortizable bond premium over the aggregate terms of the existing notes and the
registered notes under a yield to maturity formula. The deduction is available
only if an election is made by the U.S. holder, and the election will apply to
all obligations owned or acquired by the U.S. holder. The U.S. holder's
adjusted basis in the existing notes and the registered notes will be reduced
to the extent of the amortizable bond premium.

U.S. Taxation of Non-U.S. Holders

   Payments of Interest. In general, under current U.S. tax law, payments of
interest received by a non-U.S. holder will not be subject to United States
withholding tax, provided that the non-U.S. holder

  .  does not actually or constructively own 10% or more of the total
     combined voting power of all of our classes of stock entitled to vote,

  .  is not a bank whose receipt of interest is described in Section
     881(c)(3)(A) of the Internal Revenue Code,

  .  is not a controlled foreign corporation that is related to us actually
     or constructively through stock ownership, and

  .  either

    .  the beneficial owner of the registered note provides us or our
       paying agent with a properly executed certification on IRS Form W-
       8BEN (or suitable substitute form), signed under penalties of
       perjury, that the beneficial owner is not a "U.S. person" for U.S.
       federal income tax purposes and that provides the beneficial owner's
       name and address, or

    .  a securities clearing organization, bank or other financial
       institution that holds customers' securities in the ordinary course
       of its business holds the registered note and certifies to us or our
       agent under penalties of perjury that the IRS Form W-8BEN (or a
       suitable substitute form) has been received from the beneficial
       owner of the registered note or a qualifying intermediary and
       furnishes the payor a copy thereof.

   Payments of interest not exempt from U.S. federal withholding tax as
described above, or not exempt because of a change of law effective after the
date of the original issuance of the existing note, will be subject

                                       55
<PAGE>

to such withholding tax at the rate of 30%, unless reduced or eliminated under
an applicable income tax treaty, and unless the beneficial owner of the
registered note provides us or our paying agent, as the case may be, with a
properly executed

  .  IRS Form W-8BEN (or successor form) claiming an exemption from or
     reduction of withholding under the benefit of a tax treaty or

  .  IRS Form W-8ECI (or successor form) stating that interest paid on the
     registered note is not subject to withholding tax because it is
     effectively connected with the beneficial owner's conduct of a trade or
     business in the United States.

   It is unclear whether the payment of liquidated damages to a non-U.S.
holder will be subject to withholding of U.S. federal income tax, and we may
withhold 30% from any such payments made to non-U.S. holders.

   Treasury regulations that are to be effective with respect to payments made
after December 31, 2001 provide alternative methods for satisfying the
certification requirements described in the preceding paragraph. Those
regulations also will require, in the case of registered notes held by a
foreign partnership, that the certification described above be provided by
each partner.

 Disposition of the Registered Notes.

   The exchange of an existing note for a registered note will not be a
taxable event for a non-U.S. holder.

   A non-U.S. holder generally will not be subject to U.S. federal income tax
(and no tax will be withheld) with respect to gain realized on the sale,
exchange or other disposition of a registered note, unless

  .  the gain is effectively connected with a U.S. trade or business
     conducted by the non-U.S. holder or

  .  the non-U.S. holder is an individual who is present in the United States
     for 183 or more days during the taxable year of the Disposition and
     certain other conditions are met.

   Effectively Connected Income. If interest and other payments received by a
non-U.S. holder with respect to the registered notes, including proceeds from
the sale or exchange of the registered notes, are effectively connected with
the conduct by the non-U.S. holder of a trade or business within the United
States (or the non-U.S. holder is otherwise subject to U.S. federal income
taxation on a net basis with respect to such holder's ownership of the notes),
the non-U.S. holder will generally be subject to the rules described above
under "U.S. Taxation of U.S. Holders" (subject to any modification provided
under an applicable income tax treaty). The non-U.S. holder may also be
subject to the U.S. "branch profits tax" if the holder is a corporation.

Backup Withholding and Information Reporting

   In general, information reporting requirements will apply to certain
payments of principal, interest and liquidated damages paid on registered
notes and to the proceeds of sale of a registered note made to U.S. holders
other than certain exempt recipients (such as corporations). U.S. holders also
may be subject to backup withholding at a rate of 31% on payments of
principal, liquidated damages and interest on, and the proceeds of the sale or
exchange of, the registered notes. In general, backup withholding will apply
to the payments if the U.S. holder

  .  fails to furnish a taxpayer identification number (TIN) which, for an
     individual, would be his or her Social Security number,

  .  furnishes an incorrect TIN, or

  .  fails to report in full payments of interest or dividends.

   Information reporting and backup withholding generally will not apply to
payments made to a non-U.S. holder who provides the certification described
under "U.S. Taxation of non-U.S. holders--Payments of Interest" or otherwise
establishes an exemption from backup withholding, provided that neither we or
the paying agent have actual knowledge that the holder is a U.S. person.

                                      56
<PAGE>

                               SELLING NOTEHOLDER

   The notes were originally issued by us and sold to the selling noteholder in
a transaction exempt from the registration requirements of the Securities Act.
The selling noteholder, or its transferees, pledgees, donees or successors, may
from time to time offer and sell any or all of the notes pursuant to this
prospectus.

   The following table contains information as of October 22, 1999, with
respect to the selling noteholder and the principal amount of notes
beneficially owned by the selling noteholder that may be offered pursuant to
this prospectus.

<TABLE>
<CAPTION>
                                 Notes
Selling                    Beneficially Owned                         Notes Beneficially
Noteholder                Prior to Offering(1) Notes Being Offered Owned After the Offering
- ----------                -------------------- ------------------- ------------------------
<S>                       <C>                  <C>                 <C>
Telegroup, Inc., an Iowa
 corporation............      $45,467,000          $45,467,000                $0
</TABLE>
- --------
(1) Assumes that all of the Notes beneficially owned by the selling noteholder
    and being offered under this Prospectus are sold, and that the selling
    noteholder acquires no additional Notes before the completion of this
    offering.

                              PLAN OF DISTRIBUTION

   We will not receive any of the proceeds of the sale of the notes offered by
this prospectus. The notes may be sold from time to time:

  .  directly by any selling noteholder to one or more purchasers,

  .  to or through underwriters, brokers or dealers,

  .  through agents on a best-efforts basis or otherwise, or

  .  through a combination of such methods of sale.

   If notes are sold through underwriters, brokers or dealers, the selling
noteholder will be responsible for underwriting discounts or commissions or
agents' commissions.

   The notes may be sold:

  .  in one or more transactions at a fixed price or prices, which may be
     changed,

  .  at prevailing market prices at the time of sale or at prices related to
     such prevailing prices,

  .  at varying prices determined at the time of sale, or

  .  at negotiated prices.

  .  the notes may be distributed by the selling noteholder to one or more of
     its creditors or stockholders pursuant to a plan of liquidation. Any
     recipient of a note pursuant to any such plan who subsequently resells
     the notes may be deemed to be an underwriter pursuant to the Securities
     Act.

   Such sales may be effected in transactions (which may involve crosses or
block transactions):

  .  on any national securities exchange or quotation service on which the
     notes may be listed or quoted at the time of sale,

  .  in the over-the-counter market, or

  .  in transactions otherwise than on such exchanges or services or in the
     over-the-counter market.

   In connection with sales of the notes, any selling noteholder may:

  .  enter into hedging transactions with brokers, dealers or others, which
     may in turn engage in short sales of the notes in the course of hedging
     the positions they assume,

  .  sell short and deliver notes to close out such short positions, or

  .  loan or pledge notes to brokers, dealers or others that in turn may sell
     such securities.


                                       57
<PAGE>

   The selling noteholder may pledge or grant a security interest in some or
all of the notes owned by it, and if it defaults in the performance of its
secured obligations, the pledgees or secured parties may offer and sell the
notes from time to time pursuant to this prospectus. The selling noteholder may
also transfer and donate shares in other circumstances in which case the
transferees, donees, pledgees or other successors in interest will be the
selling noteholders for purposes of this prospectus.

   The selling noteholder may sell short the notes and may deliver this
prospectus in connection with such short sales and use the notes covered by
this prospectus to cover such short sales.

   Primus does not intend to apply for listing of the notes on any securities
exchange. Accordingly, Primus cannot assure that any trading market will
develop or have any liquidity.

   The selling noteholder and any brokers, dealers, agents or underwriters that
participate with the selling noteholder in the distribution of the notes may be
deemed to be "underwriters" within the meaning of the Securities Act, in which
event any commissions received by such brokers, dealers, agents or underwriters
and any profits realized by the selling noteholder on the resales of the notes
may be deemed to be underwriting commissions or discounts under the Securities
Act.

   There can be no assurance that the selling noteholder will sell any or all
of the notes pursuant to this prospectus. In addition, any securities covered
by this prospectus which qualify for sale pursuant to Rule 144, Rule 144A of
the Securities Act or any other available exemption from registration under the
Securities Act may be sold under Rule 144, Rule 144A or such other available
exemption rather than pursuant to this prospectus.

   We have agreed to pay any reasonable and customary expenses incurred by the
selling noteholder in the sale of the notes in a private placement or brokered
transaction pursuant to which all or substantially all of the notes are sold in
one (or one series of) non-registered or registered transactions in accordance
with the Securities Act and applicable state securities laws.

                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

   The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be a part of this Prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934:

   1. Annual Report on Form 10-K for the fiscal year ended December 31, 1998;

   2. Quarterly Report on Form 10-Q for the quarterly period ended March 31,
1999;

   3. Quarterly Report on Form 10-Q for the quarterly period ended June 30,
1999;

   4. Proxy Statement for our 1999 Annual Meeting filed on April 29, 1999;

   5. Current Report on Form 8-K dated June 23, 1998;

   6. Current Report on Form 8-K dated January 14, 1999 and Amendment to
Current Report on Form 8-K dated February 4, 1999.

   7. Current Report on Form 8-K dated June 8, 1999.

   8. Current Report on Form 8-K dated July 12, 1999.

                                       58
<PAGE>

   9. Current Report on Form 8-K dated July 14, 1999 and Amendment to Current
Report on Form 8-K dated August 2, 1999 (But not with respect to (i) the
Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 1999 and (ii)
the Unaudited Pro Forma Consolidated Statement of Operations for the three
months ended March 31, 1999); and

   10. Current Report on Form 8-K dated July 26, 1999.

   11. Current Report on Form 8-K dated August 5, 1999.

   12. Current Report on Form 8-K dated October 13, 1999.

   13. Current Report on Form 8-K dated October 18, 1999.

   14. Current Report on Form 8-K dated October 20, 1999.

   You may request a copy of these filings, at no cost, by calling or writing
to:

     Primus Telecommunications Group, Incorporated
     1700 Old Meadow Road, Suite 300
     McLean, Virginia 22102
     Attention: David Slotkin, Deputy General Counsel
     Telephone: (703) 902-2800

                      WHERE YOU CAN FIND MORE INFORMATION

   This prospectus is part of a registration statement we filed with the SEC.
You should rely only on the information or representations provided in this
prospectus or any prospectus supplement. We have authorized no one to provide
you with different information. We are not making an offer of these securities
in any state where the offer is not permitted. You should not assume that the
information in this prospectus or any prospectus supplement is accurate as of
any date other than the date on the front of the document.

   We are subject to the informational requirements of the Securities Exchange
Act of 1934 and in accordance therewith file reports and other information with
the Securities and Exchange Commission, which reports include our financial
information set forth in full. Such reports and other information filed by us
can be inspected and copied at public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, NW, Judiciary Plaza, Washington,
D.C. 20549; Seven World Trade Center, 13th Floor, New York, New York 10048; and
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. For further
information concerning the Commission's public reference rooms, the Commission
can be reached at 1-800-SEC-0330. The Commission also maintains a Web site that
contains reports, proxy an information statements, and other information
regarding registrants that file electronically with the Commission. The site
may be accessed at http://www.sec.gov.

                                 LEGAL MATTERS

   The validity of the notes offered hereby is being passed upon for us by
Pepper Hamilton LLP. Mr. John DePodesta, "of counsel" to Pepper Hamilton LLP,
is a director and an Executive Vice President of Primus, and as of October 15,
1999, is the beneficial owner of 383,198 shares of our common stock.

                                    EXPERTS

   The consolidated financial statements of Primus as of December 31, 1998 and
1997 and for each of the three years in the period ended December 31, 1998,
that are incorporated into this prospectus by reference from Primus's Annual
Report on Form 10-K for the year ended December 31, 1998, have been audited by
Deloitte

                                       59
<PAGE>

& Touche LLP, independent auditors, as stated in their report, and have been so
incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.

   The consolidated financial statements of TresCom International, Inc. at
December 31, 1997 and 1996, and for each of the three years in the period ended
December 31, 1997, incorporated by reference in this prospectus and
registration statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon incorporated by reference
elsewhere herein, and are included in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.

   The combined financial statements of Telegroup, Inc. and certain
subsidiaries as of December 31, 1997 and 1998, and for each of the years in the
three-year period ended December 31, 1998, have been incorporated by reference
herein and in the registration statement in reliance upon the report of KPMG
LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing. The report of KPMG LLP covering the December 31, 1998 combined
financial statements contains an explanatory paragraph that states that
Telegroup, Inc. has filed for protection under Chapter 11 of the United States
Bankruptcy Code due to significant financial and liquidity problems. These
circumstances raise substantial doubt about its ability to continue as a going
concern. The combined financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

                                       60
<PAGE>




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                 Primus Telecommunications Group, Incorporated

                                  $45,467,000

                         11 1/4% SENIOR NOTES DUE 2009

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

                                   PROSPECTUS
                                October 28, 1999

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