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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q/A

(Mark One)  

ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2002

OR

o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission File No. 0-29092


PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
 
54-1708481
(I.R.S. Employer Identification No.)

1700 Old Meadow Road, Suite 300,
McLean, VA
(Address of principal executive offices)
 

22102
(Zip Code)

(703) 902-2800
(Registrant's telephone number, including area code)

        Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

        Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class
   Outstanding as of
October 31, 2002
Common Stock $.01 par value   64,899,126

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED

INDEX TO FORM 10-Q/A

EXPLANATORY NOTE

        The registrant is filing this Amendment to Form 10-Q to refile Exhibit 2.1 thereto in its entirety. The exhibit, as originally filed on November 14, 2002, omitted certain information with respect to which the registrant contemplated filing a confidential treatment request. The registrant subsequently has determined not to proceed with the confidential treatment request. No revisions have been made to the registrant's financial statements or any other disclosure contained in such Form 10-Q.


PART II.    OTHER INFORMATION

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

2


SIGNATURE

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


 
 
 
PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED

 
 
 
 
 
 
Date November 20, 2002
   By: /s/ Neil L. Hazard
Neil L. Hazard
 (Executive Vice President, Chief Operating Officer and
Chief Financial Officer)		  

3


CERTIFICATIONS

I, K. Paul Singh, the Chief Executive Officer of Primus Telecommunications Group, Incorporated (the "Company"), certify that:


1.
I have reviewed this quarterly report on Form 10-Q of the Company;

2.
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

 
a)
designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

 
b)
evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

 
c)
presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

 
a)
all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

 
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.
The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

 
 
 


November 20, 2002

 

/s/ K. Paul Singh
K. Paul Singh
Chief Executive Officer

4


CERTIFICATIONS

I, Neil L. Hazard, the Chief Financial Officer of Primus Telecommunications Group, Incorporated (the "Company"), certify that:


 
 
 

1.
I have reviewed this quarterly report on Form 10-Q of the Company;

2.
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

 
a)
designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

 
b)
evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

 
c)
presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

 
(a)
all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

 
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.
The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

 
 
 


November 20, 2002

 

/s/ Neil L. Hazard
Neil L. Hazard
Chief Financial Officer

5


EXHIBIT INDEX

Exhibit
Number
   Description
2.1   Customer Transfer Agreement by and between the Company and Cable & Wireless USA, Inc. dated as of September 13, 2002.

3.1
 
Amended and Restated Certificate of Incorporation of Primus; Incorporated by reference to Exhibit 3.1 of the Registration Statement on Form S-8, No. 333-56557 (the "S-8 Registration Statement").

3.2
 
Amended and Restated Bylaws of Primus; Incorporated by reference to Exhibit 3.2 of the Registration Statement on Form S-1, No. 333-10875 (the "IPO Registration Statement").

99.1
 
Certification; Incorporated by reference to Exhibit 99.1 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2002 (File No. 0-29092).

6



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INDEX TO FORM 10-Q/A
SIGNATURE
CERTIFICATIONS
CERTIFICATIONS
EXHIBIT INDEX

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Exhibit 2.1


CUSTOMER TRANSFER AGREEMENT

BY AND BETWEEN

CABLE & WIRELESS USA, INC.

AND

PRIMUS TELECOMMUNICATIONS, INC.

Dated as of September 13, 2002


TABLE OF CONTENTS

ARTICLE I   DEFINITIONS   1
    1.1   Definitions   1
    1.2   Interpretation   7
ARTICLE II   TRANSFER OF CUSTOMERS; ASSUMPTION OF ASSUMED OBLIGATIONS   7
    2.1   Transfer of Customers   7
    2.2   No Prohibited Transfer   8
    2.3   Mechanics of Transfer   8
    2.4   Excluded Assets   8
    2.5   Assumed Obligations   9
    2.6   Excluded Obligations   9
ARTICLE III   PURCHASE PRICE; ALLOCATION   9
    3.1   Payment of Purchase Price   9
    3.2   Allocation of Consideration for Acquired Assets   11
ARTICLE IV   REPRESENTATIONS AND WARRANTIES OF SELLER   11
    4.1   Due Incorporation   11
    4.2   Due Authorization   11
    4.3   Consents and Approvals; Authority Relative to this Agreement   12
    4.4   Litigation   12
    4.5   Title   12
    4.6   Financial Information   12
    4.7   Customer Deposits   12
    4.8   Seller CIC Code   13
    4.9   Acquired Contracts   13
ARTICLE V   REPRESENTATIONS AND WARRANTIES OF PURCHASER   13
    5.1   Due Incorporation   13
    5.2   Due Authorization   13
    5.3   Consents and Approvals; Authority Relative to this Agreement   14
    5.4   Litigation   14
    5.5   Financing   14
    5.6   Experience   14
    5.7   Independent Investigation   15
ARTICLE VI   COVENANTS   15
    6.1   Implementing Agreement   15
    6.2   Transition   15
    6.3   Consents and Approvals   15
    6.4   Cable & Wireless Name   16
    6.5   Brokers   17
    6.6   Preservation of Books and Records; Access   17
    6.7   Nonsolicitation   18
    6.8   Confidentiality   18
    6.9   Restrictive Covenant   19
    6.10   Equitable Relief   20
    6.11   Intellectual Property   20
ARTICLE VII   DELIVERIES   20
    7.1   Deliveries by Seller   20
    7.2   Deliveries by Purchaser   21
ARTICLE VIII   TERMINATION   21
    8.1   Termination   21
    8.2   Effect of Termination   21
ARTICLE IX   INDEMNIFICATION   21
    9.1   Survival   21
    9.2   Indemnification by Seller   22
    9.3   Indemnification by Purchaser   22
    9.4   Limitations on Liability of Seller   23
    9.5   Claims   23
    9.6   Notice of Third Party Claims; Assumption of Defense   24
    9.7   Settlement or Compromise   24
    9.8   Time Limits   24

i

    9.9   Knowledge   24
    9.10   Net Losses and Subrogation   25
    9.11   Purchase Price Adjustments   25
ARTICLE X   MISCELLANEOUS   25
    10.1   Expenses   25
    10.2   Amendment   25
    10.3   Notices   25
    10.4   Payments in Dollars   26
    10.5   Waivers   26
    10.6   Assignment   27
    10.7   No Third Party Beneficiaries   27
    10.8   Publicity   27
    10.9   Further Assurances   27
    10.10   Severability   27
    10.11   Entire Understanding   27
    10.12   Language   28
    10.13   Applicable Law   28
    10.14   Remittances   28
    10.15   Bulk Sales   28
    10.16   Jurisdiction of Disputes; Waiver of Jury Trial   28
    10.17   Schedules   28
    10.18   Disclaimer of Warranties   29
    10.19   Counterparts   29
    10.20   No Recourse   30

EXHIBITS
 
 
 
 
 
 

Exhibit A
 
Master Assignment and Assumption Agreement
 
 
Exhibit B   Master Bill of Sale    
Exhibit C   Security Agreement    
Exhibit D   Transition Plan    

SCHEDULES
 
 
 
 

Schedule I
 
Regulatory Approvals
 
 
Schedule 1.1   Seller's Knowledge    
Schedule 2.1(a)(i)   8XX Numbers    
Schedule 2.1(a)(ii)   Agent Contracts    
Schedule 2.1(a)(iii)   Information and Records    
Schedule 3.2   Allocation of Consideration    
Schedule 4.3   Consents and Approvals    
Schedule 4.4   Litigation    
Schedule 4.5   Title to Properties    
Schedule 4.7   Customer Deposits    
Schedule 4.9   Defaults Under Acquired Contracts    
Schedule 5.3   Purchaser Consents; Authority    

ii


CUSTOMER TRANSFER AGREEMENT

        THIS CUSTOMER TRANSFER AGREEMENT is made as of the 13th day of September, 2002, by and between CABLE & WIRELESS USA, INC., a corporation incorporated under the laws of Delaware ("Seller"), and PRIMUS TELECOMMUNICATIONS, INC., a corporation incorporated under the laws of Delaware ("Purchaser"). Certain capitalized terms used herein are defined in Article I.


RECITALS

        Purchaser wishes to purchase from Seller, and Seller wishes to sell to Purchaser, the Acquired Assets, and Purchaser desires to assume from Seller, and Seller desires to assign to Purchaser, the Assumed Obligations, all upon the terms and subject to the conditions contained herein.

        On the date hereof, Seller and Primus Telecommunications Group, Incorporated have entered into a guaranty agreement pursuant to which Primus Telecommunications Group, Incorporated has guaranteed the obligations of Purchaser.

        NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements herein contained, Purchaser and Seller agree as follows:


ARTICLE I
DEFINITIONS

        1.1    Definitions.    The following terms shall have the following meanings for the purposes of this Agreement:

        "8XX Number" shall mean the 8XX numbers held by Seller which are set forth on Schedule 2.1(a)(i) opposite each Customer's name, including any pending applications for such numbers and any amendments, renewals, extensions or modifications thereof and additions thereto. For the sake of clarity, the 8XX Numbers do not include any local numbers.

        "Acquired Assets" shall mean Assets that are transferred to Purchaser pursuant to this Agreement.

        "Acquired Contracts" shall mean the Customer Contracts and the Agent Contracts that are transferred to Purchaser pursuant to this Agreement.

        "Affiliate" shall mean, with respect to any specified Person, any other Person which, directly or indirectly, controls, is under common control with, or is controlled by, such specified Person. The term "control" as used in the preceding sentence means, with respect to a corporation, the right to exercise, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the shares of such corporation, or with respect to any Person other than a corporation, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person.

        "Agent Contracts" shall mean all Contracts with sales representatives, distributors, dealers or other Persons engaged in sales or promotional activities with respect to Voice Services set forth on Schedule 2.1(a)(ii) that are in effect, and remain to be performed, on the applicable Migration Date, exclusively to the extent such Contracts relate to the provision of Voice Services to Migrated Customers.

        "Agreement" shall mean this Customer Transfer Agreement, including all Exhibits and Schedules hereto, as it may be amended, supplemented or otherwise modified from time to time in accordance with its terms.

        "Anti-Slamming Approvals" means the so called anti-slamming approvals with respect to the transfer of a Customer Contract that are required to be obtained by Seller and Purchaser from the applicable Governmental Authorities.

1


        "Assets" shall share the meaning set forth in Section 2.1(a).

        "Assignment and Assumption Agreement" shall mean the Master Assignment and Assumption Agreement between Purchaser and Seller attached hereto as Exhibit A.

        "Assumed Obligations" shall have the meaning set forth in Section 2.5.

        "Bill of Sale" shall mean the Master Bill of Sale between Purchaser and Seller attached hereto as Exhibit B.

        "Business Day" shall mean any day of the year other than (i) any Saturday or Sunday or (ii) any other day on which banks located in New York, New York generally are closed for business.

        "Cable & Wireless Name" shall mean the business name, brand name, trade name, trademark, service mark, logo and domain name "Cable & Wireless" and any business name, brand name, trade name, trademark, service mark and domain name that includes the words "Cable & Wireless" and any and all other derivatives thereof.

        "Claims" shall mean all warranties, indemnities or other rights or claims of Seller against third parties or otherwise, in each case to the extent arising exclusively under or related to the Assets subsequent to the Migration Date of the Customer Contract which is transferred with such Assets.

        "Confidential Information" shall have the meaning set forth in Section 6.8.

        "Consent" shall mean a consent, authorization or approval of a Person or a Governmental Authority.

        "Contract" shall mean any contract, lease, sales order, purchase order, agreement, indenture, mortgage, note, bond, warrant or instrument, including arrangements to provide a service or services pursuant to applicable tariff or contract.

        "Customer" shall mean a Person to whom Seller provides Voice Services.

        "Customer Contract" shall mean a Contract for the provision by Seller of Voice Services, with each class of Voice Services (e.g., 800, inter-exchange) under such a Contract deemed to be Voice Services under a separate Customer Contract.

        "Customer Deposit" shall mean a deposit held by Seller on behalf of a Customer pursuant to a Customer Contract.

        "Customer Disconnect Notice Condition" shall have the meaning set forth in the definition of Migration Date.

        "Default Rate" shall mean, at a point in time, the prime per annum rate charged by Citibank, N.A. to its corporate customers plus five percent (5%) per annum; provided, that in no event shall the Default Rate exceed the maximum interest rate permitted under applicable Law.

        "Disclosing Party" shall have the meaning set forth in Section 6.8.

        "Disconnect Notice" shall mean a disconnect notice that is sent to a Customer with respect to a Customer Contract as contemplated in the Transition Plan.

        "Disconnect Notice Customer Amount" shall have the meaning set forth in Section 3.1(h).

        "Dollars" or numbers preceded by the symbol "$" shall mean amounts in United States dollars.

        "Enforceability Limitations" shall have the meaning set forth in Section 4.2.

        "Equipment" shall mean, with respect to each Customer, all equipment, machinery, tools, spare parts and other items of tangible personal property owned by Seller and used exclusively to provide Voice Services that is installed at the site of such Customer on the Transfer Date.

2


        "Exchange Act" shall mean, the Securities Exchange Act of 1934, as amended.

        "Excluded Assets" shall have the meaning set forth in Section 2.4.

        "Excluded Obligations" shall have the meaning set forth in Section 2.6.

        "FCC Approval" shall mean clearance, with respect to the transfer of the Acquired Assets by Seller to Purchaser, from the Federal Communications Commission under Section 214 of the U.S. Federal Communications Act.

        "Goodwill" shall mean goodwill related to Seller's relationships in existence on the Transfer Date with the Customers, agents and other third parties who are parties to the Acquired Contracts, exclusively with respect to the Voice Services conducted therewith, excluding the goodwill associated with the Cable & Wireless Name.

        "Governmental Authority" shall mean the government of the United States or any foreign country or any state or political subdivision thereof or any entity, body or authority exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

        "Governmental Required Consent" shall mean, with respect to a Person, (i) compliance by such Person with, and filings by such Person under Section 13 of the Exchange Act and (ii) those Consents or filings with or required by a Governmental Authority solely by reason of the participation by Purchaser (where such Person is Seller) or by Seller (where such Person is Purchaser), in each case as opposed to any third party, in the transactions contemplated hereby and by the Related Agreements.

        "Gross Revenue" shall have the meaning set forth in Section 3.1(b).

        "Indemnified Person" shall mean the Person or Persons entitled to, or claiming a right to, indemnification under Article IX.

        "Indemnifying Person" shall mean the Person or Persons claimed by the Indemnified Person to be obligated to provide indemnification under Article IX.

        "Information and Records" shall mean, with respect to each Customer, all books, records, files, databases, plans, specifications, technical information, customer lists, supplier lists, price lists and sales records that are owned by Seller with respect to (a) the Customer Contract that is transferred by Seller to Purchaser and the Other Assets transferred therewith, hereunder, (b) such Customer and (c) which are generally described on Schedule 2.1(a)(iii), in the form maintained by Seller; provided, that Seller shall be entitled to retain copies of the Information and Records.

        "Law" shall mean any law, statute, regulation, ordinance, rule or governmental requirement enacted, promulgated or imposed by any Governmental Authority.

        "Lien" shall mean any lien (except for any lien for Taxes that are not yet delinquent or that are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with U.S. GAAP), mortgage, pledge or security interest.

        "Loss" or "Losses" shall mean any and all losses, liabilities, claims, damages, reasonable costs and reasonable expenses (including legal fees and expenses and costs of investigation).

        "Migrated Customer" shall mean a Customer under a Migrated Customer Contract.

        "Migrated Customer Contract" shall mean a Customer Contract for which the Migration Date has occurred.

        "Migration Date" shall mean (a) with respect to a Customer Contract pursuant to which switched Voice Services are provided to a Customer, the date on which, (i) (A) the transfer of the Seller CIC Code is registered with Neustar, Inc. and at the central office of the local exchange carrier with respect to such Customer Contract and (B) the switch is re-pointed by such local exchange carrier with respect

3


to such Customer Contract; and (ii) (A) Seller has received the FCC Approval and (B) Seller and Purchaser have received the Anti-Slamming Approvals for such Customer Contract; and (iii) Purchaser provides Voice Services to such Customer under such Customer Contract through the last day of the month in which the condition(s) in both of the immediately preceding clauses (i) and (ii) has occurred; and (b) with respect to a Customer Contract under which dedicated Voice Services are provided to a Customer, the date on which (i) (A) Seller has received the FCC Approval and (B) Seller and Purchaser have received the Anti-Slamming Approvals for such Customer Contract; and (ii) Purchaser provides Voice Services to such Customer under such Customer Contract through the last day of the month in which the condition in the last preceding clause (i) has occurred; provided, however, in the event Seller sends a Disconnect Notice to a Customer, whether before or after Purchaser is providing Voice Services to such Customer (but before all of the conditions in clauses (a)(i) and (ii) have occurred or the condition in clause (b)(i) has occurred, as applicable), the occurrence of the Migration Date for the Customer Contract of such Customer shall be further conditioned upon the Customer not having migrated from Purchaser to another Person for the provision of Voice Services before the end of the sixtieth (60th) day after the Seller sends the Disconnect Notice to such Customer (a "Customer Disconnect Notice Condition") and (x) in the event the Customer Disconnect Notice Condition is met with respect to such Customer Contract, the Migration Date for such Customer Contract shall be the last day of the month in which the Customer Disconnect Notice Condition is met and (y) in the event the Customer Disconnect Notice Condition is not met with respect to such Customer, the Migration Date for such Customer Contract shall be deemed not to have occurred for all purposes of this Agreement. In the event that, the transfer of the Seller CIC Code is required to be registered and re-pointed by multiple local exchange carriers, with respect to any Customer Contract, such Contract shall be partially transferred to Purchaser with respect to each local exchange carrier, as necessary.

        "Migration Deadline" shall have the meaning set forth in Exhibit D.

        "Order" shall mean any order, decree, ruling, judgment, injunction or stipulation of or with any court or other Governmental Authority

        "Other Assets" shall mean, with respect to a Customer, the Customer Deposit, Claims, Equipment, Goodwill, Information and Records and 8XX Numbers with respect to each Customer.

        "Permit" shall mean any permit, license, approval, certificate or other authorization required or granted by any Governmental Authority.

        "Permitted Liens" shall mean (i) workers', mechanics', materialmen's, repairmen's, suppliers', carriers' or similar Liens arising in the ordinary course of business with respect to obligations that are not yet delinquent or that are being contested in good faith by appropriate proceedings; (ii) any minor Liens which do not materially impair the value of the Equipment subject to such Lien or the use of such Equipment in the ordinary course of the business which exclusively uses same; and (iii) those Liens set forth in Schedule 4.5.

        "Person" shall mean any individual, corporation, proprietorship, firm, partnership, limited partnership, limited liability company, trust, association or other entity.

        "Proprietary Materials" shall have the meaning set forth in Section 6.11.

        "Purchase Price" shall have the meaning set forth in Section 3.1(a).

        "Purchaser" shall have the meaning set forth in the Preamble.

        "Purchaser Network" shall mean the telecommunications network operated by Purchaser to provide Voice Services.

        "Quarterly Installment Date" shall have the meaning set forth in Section 3.1(a)(ii).

        "Receiving Party" shall have the meaning set forth in Section 6.8.

4


        "Regulatory Approvals" shall mean the Consents of Governmental Authorities and Permits required to be received by Seller and/or Purchaser prior to the transfer of the Customer Contracts as specified on Schedule I hereto, which Schedule is divided by jurisdiction.

        "Related Agreement" shall mean the Assignment and Assumption Agreement, the Bill of Sale, the Security Agreement, and any Contract that is, or is to be, entered into on the date hereof in connection with this Agreement. The Related Agreements executed by a specified Person shall be referred to as "such Person's Related Agreements," "its Related Agreements" or another similar expression.

        "Security Agreement" shall mean the Security Agreement between Purchaser and Seller attached hereto as Exhibit C.

        "Seller" shall have the meaning set forth in the Preamble.

        "Seller CIC Code" shall mean the 0223 CIC Code used by Seller to provide the Voice Services.

        "Seller's Knowledge", or any similar expression with regard to the knowledge or awareness of or receipt of notice by Seller, means the actual, direct and personal knowledge of any of the individuals listed on Schedule 1.1.

        "Seller Network" shall mean the telecommunications network operated by Seller to provide Voice Services.

        "Taxes" shall mean all taxes, charges, fees, duties, levies or other assessments (including income, gross receipts, net proceeds, ad valorem, turnover, real and personal property (tangible and intangible), sales, use, franchise, excise, goods and services, value added, stamp, user, transfer, fuel, excess profits, occupational, interest equalization, windfall profits, severance, payroll, unemployment and Social Security taxes) which are imposed by any Governmental Authority, and such term shall include any interest, penalties or additions to tax attributable thereto (or to the nonpayment thereof).

        "Title and Authorization Warranty" shall mean a representation or warranty in Section 4.1, 4.2, 4.5, 5.1, 5.2, or 5.6.

        "Transition Plan" shall mean the transition plan attached hereto as Exhibit D.

        "U.S. GAAP" shall mean United States generally accepted accounting principles at the time in effect.

        "Voice Services" shall mean all retail switched voice telephony services (i.e., not any such services provided to a carrier) provided by Seller to Customers located in the U.S.

        1.2    Interpretation.    The headings preceding the text of Articles and Sections included in this Agreement and the headings to Schedules attached to this Agreement are for convenience only and shall not be deemed part of this Agreement or be given any effect in interpreting this Agreement. The use of the masculine, feminine or neuter gender or the singular or plural form of words herein shall not limit any provision of this Agreement. The use of the terms "including" or "include" shall in all cases herein mean "including, without limitation," or "include, without limitation," respectively. Reference to any Person includes such Person's successors and assigns to the extent such successors and assigns are permitted by the terms of any applicable agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually. Reference to any agreement (including this Agreement and each Related Agreement), document or instrument means such agreement, document or instrument as amended, supplemented or otherwise modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof. Underscored references to Articles, Sections, paragraphs, clauses, Exhibits or Schedules shall refer to those portions of this Agreement. The use of the terms "hereunder," "hereof," "hereto" and words of

5


similar import shall refer to this Agreement as a whole and not to any particular Article, Section, paragraph or clause of, or Exhibit or Schedule to, this Agreement.


ARTICLE II
TRANSFER OF CUSTOMERS;
ASSUMPTION OF ASSUMED OBLIGATIONS

        2.1    Transfer of Customers.    

        2.2    No Prohibited Transfer.    

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        2.3    Mechanics of Transfer.    Seller shall retain legal ownership of the Assets until the Migration Date of the Customer Contract which is to transfer with such Assets, as provided herein, including retention of all revenues under the Customer Contracts until the Migration Date with respect thereto.

        2.4    Excluded Assets.    Seller shall not transfer to Purchaser any additional assets (other than the Assets), or any right, title or interest of Seller therein other than as expressly provided in Section 2.1 (collectively, the "Excluded Assets"). None of the Excluded Assets shall be included in the term "Acquired Assets." Prior to the Migration Date with respect to a Customer Contract, such Customer Contract, and the other Assets which are to be transferred therewith, shall also be Excluded Assets.

        2.5    Assumed Obligations.    Purchaser shall assume all of the following liabilities and obligations of Seller and its Affiliates to the extent arising from the operation of the Acquired Assets (the "Assumed Obligations"):

        2.6    Excluded Obligations.    Except as expressly set forth in Section 2.5, Purchaser shall not assume or otherwise be liable for any liability, claim or obligation of Seller whatsoever.


ARTICLE III
PURCHASE PRICE; ALLOCATION

        3.1    Payment of Purchase Price.    

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        3.2    Allocation of Consideration for Acquired Assets.    The Purchase Price for the Acquired Assets shall be allocated among the Acquired Assets as set forth on Schedule 3.2. Each of Purchaser and Seller and their respective Affiliates shall file all necessary Tax returns and other forms (including Internal Revenue Service Form 8594) to report the transactions contemplated herein for U.S. federal, state, local and foreign income Tax purposes in accordance with such allocation, and shall not take any position inconsistent with such allocation. Any adjustment to the Purchase Price shall be allocated as provided in Treasury Regulation § 1.1060-1.


ARTICLE
IV REPRESENTATIONS AND WARRANTIES OF SELLER

        Seller represents and warrants to Purchaser as follows:

        4.1    Due Incorporation.    Seller is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. Seller has the requisite corporate power and authority to own, operate and lease its assets and to conduct its business as presently conducted, and is duly qualified to do business and in good standing (with respect to those jurisdictions that recognize the concept of good standing) to do business as a foreign corporation in each jurisdiction in which its ownership of the Assets makes such qualification necessary, other than such jurisdictions in which the failure to be so qualified or in good standing would not have a material adverse effect, individually or in the aggregate, (x) on the ability of Seller to perform its obligations under this Agreement and its Related Agreements or (y) on the ability of Seller to consummate the transactions required to be effected by it as contemplated hereby and thereby.

        4.2    Due Authorization.    Seller has full corporate power and authority to execute, deliver and perform this Agreement and its Related Agreements and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by Seller of this Agreement and its Related Agreements and the consummation by Seller of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action. Seller has duly and validly executed and delivered this Agreement and its Related Agreements. Assuming the due authorization, execution and delivery of this Agreement and its Related Agreements by Purchaser, this Agreement and its Related Agreements constitute Seller's legal, valid and binding obligation, enforceable against it in accordance with its respective terms, subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar Laws affecting creditors' rights generally from time to time in effect and to general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing with respect to those jurisdictions that recognize such concepts) (collectively, the "Enforceability Limitations").

        4.3    Consents and Approvals; Authority Relative to this Agreement.    

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        4.4    Litigation.    Except as disclosed in Section 4.4, there are no actions, suits, proceedings or other litigation pending, or, to Seller's Knowledge, threatened, by or against Seller or any of its Affiliates with respect to this Agreement or the Related Agreements or with respect to any of the Acquired Assets, or in connection with the transactions contemplated hereby or thereby that enjoins, restrains or prohibits, or has a reasonable likelihood of enjoining, restraining or prohibiting, this Agreement or any Related Agreement or the consummation of the transactions contemplated hereby or thereby.

        4.5    Title.    Except as disclosed in Schedule 4.5, Seller has good title to, and is the lawful owner of, all of the Assets, free and clear of any Lien (other than Permitted Liens). Except as set forth in Schedule 4.5 and subject to obtaining all applicable Consents (including Governmental Required Consents) and Permits, Seller has the full right to sell, convey, transfer, assign and deliver the Assets to Purchaser. Except as set forth in Schedule 4.5 and subject to obtaining and making all applicable Consents (including Governmental Required Consents), on the applicable Transfer Date, Seller shall convey to Purchaser title to the Acquired Assets, free and clear of any Lien (other than Permitted Liens).

        4.6    Financial Information.    Seller has provided Purchaser with the following information for the Voice Services provided by Seller for the twelve (12) months ended June 30, 2002: aggregate cycle revenues billed, received and outstanding, which information is accurate and complete in all material respects.

        4.7    Customer Deposits.    The Customer Deposits for each Customer Contract are set forth in Schedule 4.7.

        4.8    Seller CIC Code.    The Seller CIC Code is the only CIC Code used by Seller to provide Voice Services under the Customer Contracts.

        4.9    Acquired Contracts.    Except as disclosed in Schedule 4.9:

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        The representations and warranties in Sections 4.6 and 4.9 shall be deemed re-made on each Migration Date with respect to the financial information for the Acquired Contracts and the Acquired Contracts, respectively, which are transferred by Seller to Purchaser hereunder on such Migration Date, subject to Section 10.17.


ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER

        Purchaser represents and warrants to Seller as follows:

        5.1    Due Incorporation.    Purchaser is a corporation duly organized, validly existing and in good standing under the laws of Delaware with all requisite corporate power and authority to own, operate and lease its assets and to conduct its business as presently conducted.

        5.2    Due Authorization.    Purchaser has full corporate power and authority to execute, deliver and perform this Agreement and its Related Agreements and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by Purchaser of this Agreement and its Related Agreements, and the consummation by Purchaser of the transactions contemplated hereby and thereby, have been duly authorized by all necessary corporate action. Purchaser has duly and validly executed and delivered this Agreement and the its Related Agreements. Assuming due authorization, execution and delivery of this Agreement and its Related Agreements by Seller, this Agreement and its Related Agreements constitute its legal, valid and binding obligation, enforceable against it in accordance with their respective terms subject to the Enforceability Limitations.

        5.3    Consents and Approvals; Authority Relative to this Agreement.    

        5.4    Litigation.    There are no actions, suits, proceedings or other litigation pending, or, to Purchaser's knowledge, threatened, by or against Purchaser or any of its Affiliates with respect to this Agreement or the Related Agreements, or in connection with the transactions contemplated hereby or thereby that enjoins, restrains or prohibits, or has reasonable likelihood of enjoining, restraining or

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prohibiting, this Agreement or any Related Agreement or the consummation of the transactions contemplated hereby or thereby.

        5.5    Financing.    Purchaser has internal resources available in connection with the acquisition of the Assets which are in an aggregate amount sufficient to consummate the transactions contemplated hereby.

        5.6    Experience.    Purchaser holds all the Consents (other than Anti-Slamming Approvals), Permits, industry codes, NXX numbers, and facilities, and has in place and in operation all arrangements, that are necessary for Purchaser's use, occupancy or operation of the Assets, including service to third parties at a standard that meets or exceeds the quality of service provided to such third parties prior to the date hereof by Seller. Purchaser has successfully completed a migration from a third party network to the Purchaser Network of customers receiving retail switched voice telephony services that is at least as large and complex as the migration contemplated by this Agreement and the Related Agreements.

        5.7    Independent Investigation.    In making the decision to enter into this Agreement and the Related Agreements and to consummate the transactions contemplated hereby and thereby, other than reliance on the representations, warranties, covenants and obligations of Seller set forth in this Agreement and in Seller's Related Agreements, Purchaser has relied solely on its own independent investigation, analysis and evaluation of the Assets (including Purchaser's own estimate and appraisal of the value of the business, financial condition, operations and prospects of the Assets). Purchaser confirms to Seller that Purchaser is sophisticated and knowledgeable with respect to these matters and is capable of evaluating the matters set forth above.


ARTICLE VI
COVENANTS

        6.1    Implementing Agreement.    Subject to the terms and conditions hereof and thereof, each party hereto shall take all action required of it hereunder to fulfill its obligations under the terms of this Agreement (including, without limitation, the Transition Plan). Seller and Purchaser shall each otherwise use all commercially reasonable efforts to facilitate the consummation of the transactions contemplated hereby.

        6.2    Transition.    

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        6.3    Consents and Approvals.    

        6.4    Cable & Wireless Name.    

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        6.5    Brokers.    Seller shall indemnify Purchaser and its Affiliates against, and hold Purchaser and its Affiliates harmless from, any and all liability for any brokers' or finders' fees or other commissions arising with respect to brokers or finders retained or engaged by Seller or any of its Affiliates in respect of the transactions contemplated by this Agreement or any of Seller's Related Agreements, and (b) Purchaser shall indemnify Seller and its Affiliates against, and hold Seller and its Affiliates harmless from, any and all liability for any brokers' or finders' fees or other commissions arising with respect to brokers or finders retained or engaged by Purchaser or any of its Affiliates in respect of the transactions contemplated by this Agreement and Purchaser's Related Agreements.

        6.6    Preservation of Books and Records; Access.    

        6.7    Nonsolicitation.    

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        6.8    Confidentiality.    "Confidential Information" means certain technical and/or commercial information, including, but not limited to, processes, strategies, data, know-how, trade secrets, designs, photographs, drawings, specifications, technical literature and other tangible and intangible information or material provided by one party (a "Disclosing Party") to the other party (a "Receiving Party"), whether in written, oral, electronic or other form, that is identified as confidential by the Disclosing Party, or information to which the Receiving Party obtains access by virtue of its performance under this Agreement and the Migration Plan. The identity of the Migrated Customers shall be deemed to be Confidential Information of Purchaser and shall be treated by Seller in accordance with the terms of this Section 6.8.

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        6.9    Restrictive Covenant.    

        6.10    Equitable Relief.    Notwithstanding any other provision of this Agreement, it is understood and agreed that the remedy of indemnity payments pursuant to Article IX and other remedies at Law would be inadequate in the case of any breach of the covenants contained in Sections 6.4, 6.7, 6.8, 6.9 and 6.11. Accordingly, either party shall be entitled, without the necessity of proving actual damages or posting any bond, to equitable relief, including the remedy of specific performance or injunction, with respect to any breach or threatened breach of such covenants and Purchaser (on behalf of itself and its Affiliates) consents to the entry thereof.

        6.11    Intellectual Property.    

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ARTICLE VII
DELIVERIES

        7.1    Deliveries by Seller.    On the date hereof, Seller shall deliver to Purchaser the following:

        7.2    Deliveries by Purchaser.    On the date hereof, Purchaser shall deliver to Seller the following:


ARTICLE VIII
TERMINATION

        8.1    Termination.    This Agreement may be terminated, and the transactions contemplated herein may be abandoned, at any time:

In the event of termination by Seller or Purchaser pursuant to this Section 8.1 (other than Section 8.1(a)), written notice thereof shall be given to the other party.

        8.2    Effect of Termination.    If this Agreement is terminated pursuant to Section 8.1(a), all obligations of the parties hereunder shall terminate, except for the obligations set forth in Sections 6.5 (Brokers), Section 6.8 (Confidentiality), 8.2 (Effect of Termination), 10.1 (Expenses), 10.8 (Publicity) and Article X, which shall survive the termination of this Agreement, and except that, if such termination occurs after the first Migration Date, Article III, Section 6.6 (Books and Records), Section 6.7 (Nonsolicitation), Section 6.9 (Restrictive Covenant) (solely with respect to of the Acquired Customers for which Purchaser is current in its payment obligations under Section 3.1 on the termination date, and remains current thereafter), Section 6.10 (Equitable Relief), Section 6.11 (Intellectual Property) and Article IX shall also survive. No such termination of this Agreement shall relieve any party from liability for any prior breach of this Agreement.

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ARTICLE IX
INDEMNIFICATION

        9.1    Survival.    The representations and warranties of the parties hereto contained herein shall survive for a period of one (1) year after the date hereof, except that Title and Authorization Warranties shall survive for seven (7) years after the date hereof. Neither Purchaser nor Seller shall have any liability with respect to claims first asserted in connection with any representation or warranty after the survival period specified therefor in this Section 9.1.

        9.2    Indemnification by Seller.    Subject to Section 9.4, Seller agrees to indemnify Purchaser against, and agrees to hold Purchaser harmless from, any and all Losses incurred or suffered by Purchaser arising out of any of the following:

        9.3    Indemnification by Purchaser.    Purchaser agrees to indemnify Seller against, and agrees to hold Seller harmless from, any and all Losses incurred or suffered by Seller arising out of any of the following:

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        9.4    Limitations on Liability of Seller.    Notwithstanding any other provision of this Agreement

        9.5    Claims.    As promptly as is reasonably practicable after becoming aware of a claim for indemnification under this Agreement not involving a claim, or the commencement of any suit, action or proceeding, of the type described in Section 9.6, but in any event no later than ten (10) Business Days after first becoming aware of such claim, the Indemnified Person shall give notice to the Indemnifying Person of such claim, which notice shall specify the facts alleged to constitute the basis for such claim, the representations, warranties, covenants and obligations alleged to have been breached and the amount that the Indemnified Person seeks hereunder from the Indemnifying Person, together with such information as may be necessary for the Indemnifying Person to determine that the limitations in Section 9.4 have been satisfied or do not apply; provided, that the failure of the Indemnified Person to give such notice shall not relieve the Indemnifying Person of its obligations under this Article IX except to the extent (if any) that the Indemnifying Person shall have been prejudiced thereby.

        9.6    Notice of Third Party Claims; Assumption of Defense.    The Indemnified Person shall give notice as promptly as is reasonably practicable, but in any event no later than five (5) Business Days after receiving notice thereof, to the Indemnifying Person of the assertion of any claim, or the commencement of any suit, action or proceeding, by any Person not a party hereto in respect of which indemnity may be sought under this Agreement (which notice shall specify in reasonable detail the nature and amount of such claim together with such information as may be necessary for the Indemnifying Person to determine that the limitations in Section 9.4 have been satisfied or do not

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apply); provided, that the failure of the Indemnified Person to give such notice shall not relieve the Indemnifying Person of its obligations under this Article IX except to the extent (if any) that the Indemnifying Person shall have been prejudiced thereby. The Indemnifying Person may, at its own expense, (a) participate in the defense of any such claim, suit, action or proceeding and (b) upon notice to the Indemnified Person, at any time during the course of any such claim, suit, action or proceeding, assume the defense thereof with counsel of its own choice and in the event of such assumption, shall have the exclusive right, subject to clause (i) in the proviso of Section 9.7, to settle or compromise such claim, suit, action or proceeding. If the Indemnifying Person assumes such defense, the Indemnified Person shall have the right (but not the duty) to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the Indemnifying Person. Whether or not the Indemnifying Person chooses to defend or prosecute any such claim, suit, action or proceeding, all of the parties hereto shall cooperate in the defense or prosecution thereof.

        9.7    Settlement or Compromise.    Any settlement or compromise made or caused to be made by the Indemnified Person (unless the Indemnifying Person has the exclusive right to settle or compromise under clause (b) of Section 9.6) or the Indemnifying Person, as the case may be, of any such claim, suit, action or proceeding of the kind referred to in Section 9.6 shall also be binding upon the Indemnifying Person or the Indemnified Person, as the case may be, in the same manner as if a final judgment or decree had been entered by a court of competent jurisdiction in the amount of such settlement or compromise; provided, that (i) no obligation, restriction or Loss shall be imposed on the Indemnified Person as a result of such settlement or compromise without its prior written consent, which consent shall not be unreasonably withheld, and (ii) the Indemnified Person will not compromise or settle any claim, suit, action or proceeding without the prior written consent of the Indemnifying Person, which consent shall not be unreasonably withheld.

        9.8    Time Limits.    Any right to indemnification or other recovery under this Article IX shall only apply to Losses with respect to which the Indemnified Person shall have notified the Indemnifying Person within the applicable time period set forth in Section 9.2 or 9.3, as the case may be. If any claim for indemnification or other recovery is timely asserted under this Article IX, the Indemnified Person shall have the right to bring an action, suit or proceeding with respect to such claim within one (1) year after first giving the Indemnifying Person notice thereof, but may not bring any such action, suit or proceeding thereafter.

        9.9    Knowledge.    Notwithstanding anything contained herein to the contrary, no party shall have (a) any liability for any breach of any representation or warranty by such party, if the other party or any of its officers, employees, counsel or other representatives (i) had knowledge at or before the date hereof of the facts as a result of which such representation or warranty was breached or (ii) received at or before the date hereof a document disclosing such facts or (b) any liability for any breach of or failure to perform any covenant or obligation of such party if the other party or any of its officers, employees, counsel or other representatives (i) had knowledge at or before the date hereof of such breach or failure or (ii) received at or before the date hereof a document disclosing such breach or failure.

        9.10    Net Losses and Subrogation.    

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        9.11    Purchase Price Adjustments.    To the extent permitted by Law, any amounts payable under Section 9.2 or Section 9.3 shall be treated by Purchaser and Seller as an adjustment to the Purchase Price.


ARTICLE X
MISCELLANEOUS

        10.1    Expenses.    Each party hereto shall bear its own fees and expenses with respect to the transactions contemplated hereby, provided, that Purchaser shall pay all sales, use, value added, stamp, transfer, service, recording and like Taxes and fees imposed by any Governmental Authority in connection with the transfer and assignment of the Acquired Assets.

        10.2    Amendment.    This Agreement may be amended, modified or supplemented but only in writing signed by Purchaser and Seller.

        10.3    Notices.    Any notice, request, instruction or other document to be given hereunder by a party hereto shall be in writing and shall be deemed to have been given, (a) when received if given in person or by courier or a courier service, or (b) on the date of transmission if sent by facsimile transmission (receipt confirmed) on a Business Day during or before the normal business hours of the intended recipient, and if not so sent on such a day and at such a time, on the following Business Day:

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or to such other individual or address as a party hereto may designate for itself by notice given as herein provided.

        10.4    Payments in Dollars.    Except as otherwise provided herein or in a Related Agreement, all payments pursuant hereto shall be made by wire transfer in Dollars in same day or immediately available funds without any set-off, deduction or counterclaim whatsoever.

        10.5    Waivers.    The failure of a party hereto at any time or times to require performance of any provision hereof shall in no manner affect its right at a later time to enforce the same. No waiver by a party of any condition or of any breach of any term, covenant, representation or warranty contained in this Agreement shall be effective unless in writing, and no waiver in any one or more instances shall be deemed to be a further or continuing waiver of any such condition or breach in other instances or a waiver of any other condition or breach of any other term, covenant, representation or warranty.

        10.6    Assignment.    This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided, that no assignment of this Agreement or any rights or obligations hereunder, by operation of Law or otherwise, shall be made by either party without the written consent of the other party, other than, in the case of Seller, to an Affiliate or successor in interest. Any assignment in violation of the preceding sentence shall be null and void ab initio.

        10.7    No Third Party Beneficiaries.    This Agreement is solely for the benefit of the parties hereto and, to the extent provided herein, their respective Affiliates, and no provision of this Agreement shall be deemed to confer upon other third parties any remedy, claim, liability, reimbursement, cause of action or other right.

        10.8    Publicity.    Seller and Purchaser agree to hold confidential the terms and provisions of this Agreement and the Related Agreement and the terms of the transactions contemplated hereby and thereby. Notwithstanding the foregoing, nothing in this Section 10.8 shall prevent either party or its Affiliates from (a) making any public announcement or disclosure required by Law or the rules of any stock exchange or other regulatory authority, (b) discussing this Agreement or any of the Related Agreements or its contents or the transactions contemplated hereby or thereby with officers, directors, employees, representatives and agents of such party and its Affiliates and with those Persons whose approval, agreement or opinion, as the case may be, is required for consummation of such particular transaction or transactions, or (c) enforcing its rights hereunder.

        10.9    Further Assurances. Upon the reasonable request of Purchaser, Seller shall execute and deliver, and cause to be executed and delivered, to Purchaser such deeds, assignments and other instruments as may be reasonably requested by Purchaser and are required to effectuate completely the transfer and assignment to Purchaser of Seller's right, title and interest in and to the Acquired Assets.

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        10.10    Severability.    If any provision of this Agreement shall be held invalid, illegal or unenforceable, the validity, legality or enforceability of the other provisions hereof shall not be affected thereby, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue.

        10.11    Entire Understanding.    This Agreement, the Related Agreements and the Non-Disclosure Agreement between Seller and Purchaser dated as of June 2, 2002 set forth the entire agreement and understanding of the parties hereto with respect to the transactions contemplated hereby and supersede any and all prior agreements, arrangements and understandings among the parties relating to the subject matter hereof.

        10.12    Language.    Seller and Purchaser agree that the language used in this Agreement is the language chosen by the parties to express their mutual intent, and that no rule of strict construction is to be applied against Seller or Purchaser.

        10.13    Applicable Law.    This Agreement shall be governed by and construed and enforced in accordance with the internal Laws of the State of Virginia without giving effect to the principles of conflicts of law thereof.

        10.14    Remittances.    All remittances, payments, mail and other communications relating to the Acquired Assets or the Assumed Obligations received by Seller shall be promptly turned over to Purchaser by Seller. All remittances, payments, mail and other communications relating to the Excluded Assets or the Excluded Obligations received by Purchaser shall be promptly turned over to Seller by Purchaser.

        10.15    Bulk Sales.    Purchaser hereby waives compliance by Seller with the provisions of the Laws of any jurisdiction relating to the bulk sale or transfer of assets that may be applicable to the transfer of the Acquired Assets.

        10.16    Jurisdiction of Disputes; Waiver of Jury Trial.    In the event any party to this Agreement commences any litigation, proceeding or other legal action in connection with or relating to this Agreement, any Related Agreement or any matters contemplated hereby or thereby, each party to this Agreement hereby (a) agrees that any such litigation, proceeding or other legal action may be brought in a federal court of competent jurisdiction located within the Eastern District of Virginia; (b) agrees that in connection with any such litigation, proceeding or action, such party will consent and submit to personal jurisdiction in any such court described in clause (a) of this Section 10.16 and to service of process upon it in accordance with the rules and statutes governing service of process; (c) agrees to waive to the full extent permitted by Law any objection that it may now or hereafter have to the venue of any such litigation, proceeding or action in any such court or that any such litigation, proceeding or action was brought in an inconvenient forum; (d) agrees as an alternative method of service to service of process in any such litigation, proceeding or action by mailing of copies thereof to such party at its address set forth in Section 10.3; (e) agrees that any service made as provided herein shall be effective and binding service in every respect; and (f) agrees that nothing herein shall affect the rights of either party to effect service of process in any other manner permitted by Law. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY DISPUTE IN CONNECTION WITH OR RELATING TO THIS AGREEMENT, ANY RELATED AGREEMENT OR ANY MATTERS CONTEMPLATED HEREBY OR THEREBY, AND AGREES TO TAKE ANY AND ALL ACTION(S) NECESSARY OR APPROPRIATE TO EFFECT SUCH WAIVER.

        10.17    Schedules.    Any information disclosed pursuant to any Schedule hereto or otherwise disclosed to Purchaser in writing shall be deemed to be disclosed to Purchaser for all purposes of this Agreement and the Related Agreements. Neither the specification of any Dollar amount or any item or matter in any provision of this Agreement nor the inclusion of any specific item or matter in any Schedule hereto is intended to imply that such amount, or higher or lower amounts, or the item or

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matter so specified or included, or other items or matters, are or are not material, and no party shall use the fact of the specification of any such amount or the specification or inclusion of any such item or matter in any dispute or controversy between the parties as to whether any item or matter not specified herein or included in any Schedule hereto is or is not material for purposes of this Agreement or any Related Agreements. Neither the specification of any item or matter in any provision of this Agreement nor the inclusion of any specific item or matter in any Schedule hereto is intended to imply that such item or matter, or other items or matters, are or are not in the ordinary course of business, and no party shall use the fact of the specification or the inclusion of any such item or matter in any dispute or controversy between the parties as to whether any item or matter not specified herein or included in any Schedule hereto is or is not in the ordinary course of business for purposes of this Agreement or any Related Agreements. Seller may, from time to time prior to or on each Migration Date, by notice in accordance with the terms of this Agreement, supplement or amend any Schedule hereto, including one or more supplements or amendments to correct any matter which would constitute a breach of any representation, warranty, covenant or obligation contained herein. If, however, Seller and Purchaser effect the transfer of the Assets scheduled to be transferred by Seller to Purchaser on such Migration Date, any such supplement and amendment will be effective to cure and correct for all other purposes any breach of any representation, warranty, covenant or obligation which would have existed if Seller had not made such supplement or amendment, and all references to any Schedule hereto which is supplemented or amended as provided in this Section 10.17 shall for all purposes after the applicable Migration Date be deemed to be a reference to such Schedule as so supplemented or amended, provided that no such supplement or amendment made after a Migration Date shall cure any breach existing on any prior Migration Date with respect to the Acquired Assets transferred by Seller to Purchaser on such prior Migration Date.

        10.18    Disclaimer of Warranties.    Seller makes no representations or warranties with respect to any projections, forecasts or forward-looking statements provided to Purchaser. There is no assurance that any projected or forecasted results will be achieved. EXCEPT TO THE EXTENT OF THE EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE IV, SELLER IS SELLING THE ACQUIRED ASSETS ON AN "AS IS, WHERE IS" BASIS AND DISCLAIMS ALL OTHER WARRANTIES, REPRESENTATIONS AND GUARANTEES, WHETHER EXPRESS OR IMPLIED. SELLER MAKES NO REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE AND NO IMPLIED WARRANTIES WHATSOEVER. Purchaser acknowledges and agrees that neither Seller, its Affiliates, any of their respective representatives nor any other Person has made any representation or warranty, express or implied, as to the accuracy or completeness of any memoranda, charts, summaries, schedules or other information heretofore made available by Seller, its Affiliates or their respective representatives to Purchaser, any of its Affiliates or their representatives or any information that is not included in this Agreement or the Schedules hereto, and neither Seller, its Affiliates, any of their respective representatives nor any other Person will have or be subject to any liability to Purchaser, any of its Affiliates or their representatives resulting from the distribution of any such information to, or the use of any such information by, Purchaser, any of its Affiliates or any of their agents, consultants, accountants, counsel or other representatives.

        10.19    Counterparts.    This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

        10.20    No Recourse.    In no event shall Purchaser have any recourse against any individual named on Schedule 1.1 personally under, related to, in connection with, or arising out of, this Agreement, including with respect to any representation and warranty in this Agreement or any of the Related Agreements, and Purchaser irrevocably releases all such individuals from any personal liability or obligation under, related to, in connection with, or arising out of this Agreement and the Related Agreements.

*    *    *

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        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the date first above written.


 
 
 
  CABLE & WIRELESS USA, INC.

 
By:
/s/  PATRICIA Y. LEE      
   

 
Name:
Patricia Y. Lee
   

 
Title:
Vice President and Associate
   
    General Counsel, Assistant Secretary
   

 
 
 
  PRIMUS TELECOMMUNICATIONS, INC.

 
By:
/s/  JAY ROSENBLATT      
   

 
Name:
Jay Rosenblatt
   

 
Title:
Co-President
   

[Signature Page for Customer Transfer Agreement]

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QuickLinks

CUSTOMER TRANSFER AGREEMENT
TABLE OF CONTENTS
CUSTOMER TRANSFER AGREEMENT
RECITALS
ARTICLE I DEFINITIONS
ARTICLE II TRANSFER OF CUSTOMERS; ASSUMPTION OF ASSUMED OBLIGATIONS
ARTICLE III PURCHASE PRICE; ALLOCATION
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER
ARTICLE VI COVENANTS
ARTICLE VII DELIVERIES
ARTICLE VIII TERMINATION
ARTICLE IX INDEMNIFICATION
ARTICLE X MISCELLANEOUS